Findings Of Fact On March 17, 1994, the Department issued a request for proposal, RFP- DOT-93/94-9025, for the provision of rest area/welcome station security services for the Department's districts geographically identified as 1, 2, 3, 5, and 7. The request for proposal (RFP) contained instructions to proposers, a scope of services, and attachments. Pursuant to the RFP, sealed technical and price proposals were to be submitted to the Department's headquarters no later than 2:30 p.m., April 20, 1994. The RFP contained the procedure which the Department would follow to evaluate and score competing proposals. Petitioner, Intervenor, and others timely submitted proposals to be evaluated by the Department. After reviewing the proposals, the Department posted its proposed tabulations for each of the districts. This posting, on May 10, 1994, identified the proposer to whom the Department intended to award the contract in each of the districts. Petitioner was ranked first in district 5. The intended award for district 5 is not in dispute. Petitioner was ranked second in districts 1, 2, and 7. Intervenor was ranked first in those districts. Petitioner was ranked third in district 3. Intervenor was ranked first in that district, and another proposer ranked second ahead of Petitioner. On May 13, 1994, Petitioner timely filed a notice of intent to protest the intended awards to Intervenor in districts 1, 2, 3, and 7. Subsequently, Petitioner timely filed the formal written protest which is the subject of this case. During the last week in June, 1994, the Secretary of the Department issued a declaration of emergency pursuant to Section 120.53(5), Florida Statutes, and awarded the contracts notwithstanding the pendency of this case. As a result, before the end of June, 1993, the Department and Intervenor executed contracts for districts 1, 2, 3, and 7; each with a July 1, effective date. The substantial interests of Petitioner are affected by the Department's award to Intervenor of the contracts for districts 1, 2, 3, and 7, as are the interests of Intervenor to support those contracts. Section 1.1 of the RFP defined "proposer" as follows: For the purpose of this document, the term "proposer" means the prime Consultant acting for itself and those individuals, partnerships, firms, or corporations comprising the proposer's team. The term "proposal" means the complete response of the proposer to the request or invitation for proposals, including properly completed forms and supporting documentation. Section 1.7 of the RFP established the "qualifications for consultant services" as follows: General The Department will determine whether the proposer is qualified to perform the services being contracted based upon the Consultant demonstrating in its proposal satisfactory experience and capability in the work area. The proposer shall include the necessary experienced personnel and facilities to support the activities associated with this contract. Qualifications of Key Personnel Those individuals who will be directly involved in the project must have demonstrated experience in the areas delineated in the scope of work. Individuals whose qualifications are presented will be committed to the project for its duration unless otherwise excepted by the Contract Manager. Authorizations and Licenses The Consultant must be authorized to do business in the State of Florida. Such authorization and/ or licenses should be obtained by the proposal due date and time, but in any case, will be required prior to award of the contract. For corporate authorization, contact: Florida Department of State Division of Corporations The Capitol Building Tallahassee, Florida 32399 (904)487-6052 Review of Facilities After the proposal due date and prior to contract award, the Department reserves the right to perform or have performed, an on-site review of the proposer's facilities. This review will serve to verify data and representations submitted by the Proposer and to determine whether the proposer has an adequate, qualified, and experienced staff, and can provide overall management facilities. The review will also serve to verify whether the Proposer has finan- cial capability adequate to meet the contract requirements. In the event the Department determines that the size or nature of the proposer's facilities or the number of experienced personnel (including technical staff) are not reasonably adequate to ensure satisfactory contract performance, the Department has the right to reject the proposal. Section 1.8 of the RFP provided: General The Department reserves the right to accept or reject any or all proposals received and reserves the right to make an award without further discussion of the proposals submitted. Therefore, the proposals should be submitted initially in the most favorable manner. It is understood that the proposal will become a part of the official file on this matter without obligation to the Department. Responsiveness of Proposals All proposals must be in writing. A responsive proposal is an offer to perform the scope of services called for in this Request for Proposal. Proposals found to be non-responsive shall not be considered. Proposals may be rejected if found to be irregular or not in conformance with the requirements and instructions herein contained. A proposal may be found to be irregular or non- responsive by reasons, including, but not limited to, failure to utilize or complete prescribed forms, conditional proposals, incomplete proposals, indefinite or ambiguous proposals, improper and/or undated signatures. Multiple Proposals Proposals may be rejected if more than one proposal is received from an individual, firm, partnership, or corporation, or combination thereof, under the same or different names. Such duplicate interest may cause the rejection of all proposals in which such proposer has participated. Subconsultants may appear in more than one proposal. Other Conditions Other conditions which may cause rejection of proposals include evidence of collusion among proposers, obvious lack of experience or expertise to perform the required work, or failure to perform or meet financial obligations on previous contracts, or in the event an individual, firm, partnership, or corporation is on the United States Comptroller General's List of Ineligible Contractors for Federally Financed or Assisted Projects. Proposal will be rejected if not delivered or received on or before the date and time specified as the due date for submission. Waivers The Department may waive minor informalities or irregularities in proposals received where such is merely a matter of form and not substance, and the correction or waiver of which is not prejudicial to other proposers. Minor irregularities are defined as those that will not have an adverse effect on the Department's interest and will not affect the price of the Proposals by giving a proposer an advantage or benefit not enjoyed by other proposers. Section 1.10 of the RFP provided: 1.10 Contractual Obligations The general terms and conditions of any agree- ment between the Department and the selected proposer will be guided by State procedures. Each individual, partnership, firm or corporation that is part of the proposer's team, either by joint venture, or subcontract, will be subject to, and comply with, the contractual requirements. The basic form of Agreement shall be the State of Florida Department of Transportation's Contractual Service Agreement, attached hereto as Attachment II. Section 1.19 of the RFP provided: 1.19 Award of the Contract The Department intends to award the contract to the responsible and responsive proposer whose proposal is determined to be the most advantageous to the Department IN EACH DISTRICT. Section 1.21 of the RFP provided: 1.21 Contract Execution The Department and the successful proposer will enter into a contract establishing the obligations of both parties, FOR EACH DISTRICT. Section 1.16.2 of the RFP provided: 1.16.2 Technical Proposal(Part I)(6 copies) (Do not include price information in Part I) The Proposer must submit six (6) copies of the technical proposal which are to be divided into the sections described below. Since the Department will expect all technical proposals to be in this format, failure of the Proposer to follow this outline may result in the rejection of the proposal. The technical proposal must be submitted in a separate sealed package marked "Technical Proposal Number RFP-DOT-93/94-9025." EXECUTIVE SUMMARY The Executive Summary is to be written in non- technical language to summarize the proposer's experience, overall capabilities, and approaches for accomplishing the services specified herein. The proposer is encouraged to limit the summary to no more than ten (10) pages. PROPOSER'S MANAGEMENT PLAN The Proposer shall provide a management plan which explains the approach, capabilities, and means to be used to administer and manage the work. Administration and Management Proposer should include a description of the organizational structure and management style established and the methodology to be used to provide quality services and to maintain schedules; as well as the means of coordination and communication between the organization and the Department. Identification of Key Personnel Project Manager: Provide the name of Project Manager on Proposer's team, as well as a resume. A description of the functions and responsibilities of the person relative to the task to be performed is required. The approximate percent of time to be devoted exclusively for this project and to the assigned tasks also must be indicated. Contract Supervisors: Provide the names and resumes of all supervisors proposed. If you are proposing on more than one District, the number of supervisors should be consistent with the number of Districts being proposed. PROPOSER'S TECHNICAL PLAN Technical Approach This section should explain the approach, capabilities, and means to be used in accomp- lishing the tasks in the Scope of Services for each District. (i.e.; number of security guards, phones, vehicles, backup capabilities for equipment and personnel, etc.) Facility Capabilities A description and location of the proposer's facilities as they currently exist and as they will be employed for the purpose of this work must be identified. Section 1.17 of the RFP provided the criteria for the proposal evaluation. That section provided, in part: Evaluation Process: A Selection Committee, hereinafter referred to as the "Committee", will be established to review and evaluate each proposal submitted in response to this Request for Proposal (RFP). The Committee will be comprised of at least three persons with background, experience, and/or professional credentials in the service area. The Contractual Services Office will distribute to each member of the Committee a copy of each technical proposal. The committee members will independently base their evaluation of each proposal on the same criteria in order to assure that values are uniformly established. The Committee will evaluate each technical proposal on its own merit without compar- ison to proposals submitted by other firms and individuals. The Committee will assign points, utilizing the technical evaluation criteria identi- fied herein and complete a technical summary. * * * During the process of evaluation, the Committee will conduct examinations of proposals for responsiveness to requirements of the RFP. Those determined to be non-responsive will be automatically rejected. The Committee shall make a determination of the responsibility level of each Proposer. Proposals that are determined to have been submitted by non-responsible Proposers will be so marked. Criteria for Evaluation Technical Proposal Technical evaluation is the process of reviewing the Proposer's Executive Summary, Management Plan, and Technical Plan for understanding of project, qualifications, technical approach and capabilities, to assure a quality product. Price Proposal SEPARATE EVALUATION WILL BE DONE BY EACH DISTRICT PROPOSED Price evaluation is the process of examining a prospective price without evaluation of the separate cost elements and proposed profit of the potential provider. Price analysis is conducted through the comparison of price quotations submitted FOR EACH DISTRICT. The criteria for price evaluation shall be based upon the following formula: (Low Price/Proposer's Price) x Weighted Price Points = Total Points Point Distribution (Weighted Values) The following point system is established for scoring the proposals: Point Value Technical Proposal 30 Price Proposal 70 Certified Minority Business Enterprise 10 Total Points 110 Borg-Warner Protective Services Corporation (Borg-Warner ) timely submitted a response to the RFP and proposed to provide services to the Department by using its affiliates or subsidiaries in each of the districts. Borg-Warner identified Wells Fargo Guard Service Inc. of Florida (Wells Fargo) as the service provider for districts 1 and 2; NYCO and Burns International as the providers for district 3; and Burns International for district 7. Prior to submitting its proposal, Borg-Warner communicated with the Department to inform it of the plan to submit its response as Borg-Warner offering the services of its operating divisions in each geographical area. The Department approved the concept of one proposal with each district clearly identified by provider. Wells Fargo is wholly-owned by Borg-Warner. Burns International Security Services, Inc., was a former corporate name for the entity now known as Borg-Warner. Burns International Security Services is a fictitious name that has been registered to Borg-Warner (or its predecessors) since 1982. "NYCO" is a fictitious name registered to Borg-Warner. The following Department employees served on the selection committee that evaluated and scored the RFP proposals: Larry Alan Reese All districts Dominic Richard All districts Richard A. Marino District 1 R.S. Manning District 2 Thomas W. Cook, Jr. District 3 Raymond D. Benedict District 7 Mr. Reese was the chairman of the selection committee; his point awards together with scores from two other members were tabulated for each district to arrive at the assignment of points for each proposer for criteria 1 (technical proposal). The price proposal (worth a point value up to 70) is not in dispute. The selection committee did not calculate the points assigned for price and it is presumed such calculations have been computed correctly. Similarly, points for firms utilizing certified minority business enterprise participation (worth a point value up to 10) are not in dispute. The selection committee did not tabulate the points assigned for MBE participation, and it is presumed such calculations have been computed correctly. All submittals were screened by the Department's contract services office to verify the proper forms (both in type and quantity) were timely submitted by each proposer. Such review is not in dispute. At all times material to this case, Borg-Warner has been appropriately licensed, or has submitted materials to become licensed, as required by the RFP. No administrative action has been taken to deny or limit Borg-Warner's right to do business through its affiliates or subsidiaries in Florida. Borg-Warner's proposal clearly and accurately identified the subsidiaries or affiliates who were to perform services in each geographic district proposed. The selection committee members were employees of the Department with experience in the areas of contracts, maintenance, and service requirements. While the members had limited, if any, expertise in terms of providing security services, each member has had experience in evaluating a management plan for providing services for the Department. It is found that such experience and the directions of the RFP adequately apprised them of the criteria for scoring the proposals for this RFP. Mr. Richard drafted the scope of services for this RFP and relied on his research of another contract and applicable statutes and rules. Mr. Reese participated in the administration of the Department's first contract for security guard services and assisted Mr. Richard. Mr. Marino, who is the maintenance contracts engineer for District 1, participated in the administration of the Department's first contract for security guard services. He has 25 years of experience with the Department, has drafted and reviewed scopes of services for other projects, and has reviewed RFP proposals for at least one other service contract. Mr. Manning, a maintenance engineer in District 2, participated in the administration of the Department's first contract for security guard services. He has 33 years of experience with the Department. Mr. Cook, an assistant district maintenance engineer in District 3, participated in the administration of the Department's first contract for security guard services. He has worked for the Department 23 years and has scored other RFP proposals in the past. Mr. Benedict, a maintenance contract engineer in District 7, participated in the administration of the Department's first contract for security guard services. He has written scopes of services for other projects and reviewed RFP proposals for another services contract. None of the criteria within the technical proposal for evaluation are of such a complex or technical nature that the selection committee members would not fully understand the proposals being submitted. Additionally, such criteria were not challenged as vague or ambiguous. No proposal was rejected as vague or ambiguous. The RFP sought submittals from contractors who could best ensure that properly licensed security guards would be at each rest area or welcome station 24 hours per day, seven days per week. Such contractor was to provide supervision for such guards to assure that they followed applicable laws and the general criteria set forth in the scope of services. Of the 30 possible points allowed for the technical proposal, 20 were identified for management, the other 10 points were split between the technical plan and facilities. Aside from the point distribution set forth in paragraph 45, the selection committee members were given discretion as to how, within the given parameters, to assign the points scored. Each reviewer scored the points consistently within the parameters described above and consistently assigned points as they deemed appropriate within that guideline. That is, for example, each consistently scored the 20 points for management in the same manner for each proposer. While the selection committee members individually may not have used the same method for scoring (each had discretion in applying the given criteria), each was consistent to their own system of evaluation when applying it to each proposal. Each evaluation was consistent with the RFP instructions to independently evaluate each proposal on the same criteria to assure uniform values. Each evaluator scored each proposal on its own merit without comparison to another proposal. The proposals were not ranked against one another but, rather received scores based upon the reviewer's comparison of it to the RFP terms. The committee members did not reject any proposal, or fail to review any, due to its nonresponsiveness to the RFP. The committee members did not reject any proposal, or fail to review any, because the proposer was deemed nonresponsible. The committee members had flexibility in scoring the proposals but did so consistently for each submittal reviewed. Borg-Warner submitted an unambiguous offer to perform the scope of services called for in the RFP and, therefore, its proposal was responsive. At all times material to the RFP Borg-Warner was able to perform the services called for in the RFP. Borg-Warner's proposal included all forms and was appropriately signed and dated. Its proposal was not conditional. The Borg-Warner proposal met the "other conditions" criteria found at Section 1.8.4 of the RFP. Moreover, it is found that no credible evidence was offered to establish collusion or other misconduct in connection with the submittal of this proposal. No proposer was favored or disadvantaged by the method or procedures utilized by the Department in the award of this project.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Department of Transportation enter a final order dismissing Petitioner's challenge to the award of RFP-DOT-93/94-9025 to Borg-Warner. DONE AND RECOMMENDED this 31st day of January, 1995, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of January, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-3160BID Rulings on the proposed findings of fact submitted by the Petitioner: 1. Paragraphs 1 through 9, 27, 30, 31, 38, 42, 43, 51, 52, 55, 61, 62, 63, 65, 66, 67, 68, 71, 72, 73, 74, 87, 88, 89, 99, 105, 106, 109, 110, 111, 114, and 115 are accepted. Paragraph 10 is rejected as vague or irrelevant. Paragraph 11 is rejected as vague or irrelevant. Paragraph 12 is rejected as contrary to the weight of the credible evidence. Paragraph 13 is rejected as irrelevant or contrary to the weight of the credible evidence. Paragraph 14 is rejected as contrary to the weight of the credible evidence. Petitioner's argument is misplaced: since Borg-Warner may perform security services state-wide it makes little difference whether it chooses to use its foot or its hand or some other portion of its corporate body to perform the services. Since all must account to the head, they are not in competition with each other. In this case, Borg-Warner designated which affiliate, division, or subsidiary would perform the work for each district identified. Paragraph 15 is rejected as irrelevant. Paragraph 16 is rejected as contrary to the weight of the credible evidence or irrelevant. See comment to paragraph 14 above. Paragraph 17 is rejected as irrelevant. Paragraph 18 is rejected as contrary to the weight of the credible evidence. Paragraph 19 is rejected as contrary to the weight of the credible evidence. Paragraph 20, the first sentence, is accepted. The second sentence is rejected as speculative or irrelevant. Paragraph 21, the first sentence, is accepted. The remainder is rejected as irrelevant or contrary to the weight of the credible evidence. Paragraph 22 is rejected as irrelevant. Paragraphs 23 through 26 are rejected as contrary to the weight of the credible evidence or irrelevant. Paragraph 28 is rejected as incomplete or contrary to the exhibit when reviewed in its totality. Paragraph 29 is rejected contrary to the weight of the credible evidence. The second sentence of paragraph 32 is accepted; the remainder is rejected as contrary to the weight of the credible evidence. Paragraph 33 is rejected as irrelevant. With regard to paragraph 34 it is accepted that Borg-Warner acquired companies which became members of it corporate family; regardless of whether those entities are doing business under fictitious names or otherwise, it is clear they were properly identified and authorized by the parent to perform the services in each of the districts proposed. Paragraphs 35 and 36 are rejected as contrary to the weight of credible evidence or irrelevant. Paragraph 37 is rejected as vague, incomplete or contrary to the weight of credible evidence. Paragraph 39 is rejected as irrelevant. Paragraph 40 is rejected as repetitive, irrelevant or contrary to the weight of credible evidence. Paragraph 41 is rejected as irrelevant. Paragraph 44 is rejected as irrelevant or contrary to the weight of credible evidence. Paragraph 45 is rejected as irrelevant. Paragraph 46 is rejected as irrelevant or contrary to the weight of credible evidence. Paragraphs 47 through 50 are rejected as irrelevant or contrary to the weight of credible evidence. With regard to paragraph 53 the first sentence is accepted; the remainder is rejected as irrelevant or contrary to the weight of credible evidence. With regard to paragraph 54 the first three sentences are accepted; the remainder is rejected as irrelevant or contrary to the weight of credible evidence. Paragraphs 56 (including all subparts), 57, 58, and 59 are rejected as irrelevant or contrary to the weight of credible evidence. With regard to paragraph 60 and others which state what the committee "may" do, the committee had the authority to do many things, it was not required to take any specified action such that the failure to exercise its authority automatically constituted some breach of their duties. As there is no evidence that the committee acted arbitrarily or favored one proposer over another, its decision not to take action is not a material issue. Therefore, the paragraph is rejected as contrary to the weight of the total evidence or irrelevant. Where paragraphs 61 through 63 and 65 through 67 have been accepted they have been considered to accurately state what occurred, no conclusion should be reached that should suggest the actions were inappropriate or contrary to the duties given to them. Paragraph 69 is rejected as contrary to the weight of credible evidence. Paragraph 70 is rejected as irrelevant or contrary to the weight of credible evidence. Paragraph 75 is rejected as contrary to the weight of credible evidence. Paragraph 76 is rejected as incomplete, inaccurate or contrary to the weight of credible evidence. Paragraphs 77 through 86 are rejected as irrelevant or contrary to the weight of credible evidence. While some portions of the proposed findings are accurate the totality of what the paragraphs suggest, that the committee inappropriately scored the responses, is rejected as contrary to the weight of the evidence. Paragraph 90 is rejected as an incomplete statement and is therefore rejected as contrary to the weight of credible evidence. Paragraph 91 is rejected as contrary to the weight of credible evidence. Paragraphs 92 through 95 are rejected as contrary to the weight of credible evidence or irrelevant. Paragraph 96 is rejected as argument. Paragraph 97 is rejected as irrelevant. Paragraph 98 is rejected as argument and contrary to the weight of credible evidence. Paragraphs 100 through 104 are rejected as contrary to the weight of credible evidence. Paragraph 107 is rejected as contrary to the weight of credible evidence. Paragraph 108 is rejected as contrary to the weight of credible evidence and argument. Paragraph 112 is rejected as contrary to the weight of credible evidence. Paragraph 113 is rejected as irrelevant. Rulings on the proposed findings of fact submitted by the Respondent: Paragraphs 1 through 6, 8 through 14, 16 through 41, 43 through 47, 49 through 54, 57, 58, 59, paragraph erroneously marked 39 after 60, 61 through 68, 70, and 71 are accepted. With regard to paragraph 7, Section 1.7.3 not 1.7.2 specifically stated: The Consultant must be authorized to do business in the State of Florida. Such authorization and/or licenses should be obtained by the proposal due date and time, but in any case, will be required prior to award of the contract. * * *[Emphasis added.] In light of the foregoing, it is expressly found that the RFP only mandated licensure at the time of the contract and not at the time of the RFP proposal. With regard to paragraph 15, the response filed by Borg-Warner identified the entities through whom the work would be performed as its "divisions." See letter dated 20 April 1994, Joint Ex. 3. However, the record in this case (and the RFP response in its totality) make it clear that Borg- Warner proposed to use its "divisions" or its affiliates or its subsidiaries, whichever name should be used, which are controlled by the parent entity to perform the services in the districts identified. There was no confusion as to which sub-entity would perform the service. Additionally, it is expressly found that the parent Borg-Warner, at all times material to this case, owned or controlled its affiliates. Paragraph 42 is rejected as argument. Paragraph 48 is rejected as argument. Paragraph 55 is rejected as irrelevant. Paragraph 56 is rejected as an incomplete statement. It is found, however, that three-person committees utilizing consistent review criteria as to each proposal reviewed would produce objective results despite the subjectiveness involved in each individual review. If criteria are consistently applied the three results taken together are reliable. Paragraph 60 is rejected as an incomplete statement. The proposals were to be evaluated on an individual basis reviewed against the criteria of the RFP; that is what the committee members did. That they may have compared responses from one proposer to the next is understandable; however, the scores given related not to each other but to the criteria of the RFP. With regard to paragraph 69, the evaluation process is described in Section 1.17.1 of the RFP, that section does not specify that every word of every page must be read. However, it is presumed that the committee will be required to fairly review the documents submitted. In this case, it is found that while every word of every page may not have been read, the individual members consistently and thoroughly reviewed the proposals submitted. Except as explained herein, paragraph 69 is rejected as argument. Paragraph 72 is rejected as argument. Rulings on the proposed findings of fact submitted by the Intervenor: Paragraphs 1 through 12, 19, 20, 24 through 31, 33, 34, 36, 38 through 48, 50, 51, and 55 are accepted. Paragraphs 13 through 18 are rejected as irrelevant. The RFP required licensure and compliance with Chapter 493 at the time of contracting. Paragraph 21 is rejected as repetitive or unnecessary. Paragraphs 22 and 23 are rejected as irrelevant or repetitive. Paragraph 32 is rejected as repetitive or irrelevant. The last sentence of paragraph 35 is accepted; otherwise rejected as incorrect or inaccurate quote. Paragraph 37 is rejected as incorrect summary and repetitive. Paragraph 49 is rejected as irrelevant. Paragraphs 52 and 53 rejected as vague or contrary to the weight of the evidence. Paragraph 54 is rejected as irrelevant. COPIES FURNISHED: Paul R. Ezatoff Katz, Kutter, Haigler, Alderman, Marks & Bryant, P.A. Post Office Box 1877 Tallahassee, Florida 32302-1877 Thomas H. Duffy Department of Transportation Haydon Burns Building, Room 562 605 Suwanee Street Tallahassee, Florida 32399-0458 Bruce Culpepper Davisson F. Dunlap, Jr. D. Andrew Byrne Pennington & Haben, P.A. Post Office Box 10095 Tallahassee, Florida 32302-2095 Ben G. Watts, Secretary ATTN: Eleanor F. Turner, M.S. 58 Department of Transportation Haydon Burns Building 605 Suwanee Street Tallahassee, Florida 32399-0458 Thorton J. Williams General Counsel 562 Haydon Burns Building 605 Suwanee Street Tallahassee, Florida 32399-0458
The Issue The issue is whether respondent acted fraudulently, arbitrarily, illegally, or dishonestly in proposing to award a contract for DASD drives and controllers to EMC Corporation.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background Respondent, Department of Health and Rehabilitative Services (HRS), operates a computer system known as the Florida System (system). That system is used to store and process large quantities of client benefit information. Because of various deficiencies in the system, the 1993 legislature authorized HRS to make an expenditure from other appropriated moneys to enhance the performance of the system and to meet federal certification requirements. HRS was required, however, to execute a contract and encumber the moneys for the new services no later than June 30, 1994, or forfeit the appropriation. This controversy involves a dispute between HRS, intervenor, EMC Corporation (EMC), the vendor ranked first by HRS and selected as the winner of the contract, and petitioner, International Business Machines Corporation (IBM), the second ranked vendor. Because of the above time constraints and threatened loss of moneys, HRS has requested that this matter be resolved on an expedited basis so that a final order can be entered and a contract signed by June 30, 1994, the end of the current fiscal year. By way of background, on January 14, 1994, HRS issued a request for proposal (RFP) inviting various vendors to submit proposals for providing direct access storage devices (DASD) and controllers for the system. The RFP is more specifically identified as RFP 94-10BB-DSD. HRS structured its request for services as an RFP rather than an invitation to bid because it knew there was more than one product on the market that could meet its requirements, the RFP process gives it more flexibility and would result in a better price, and the RFP process allows vendors more options in providing a solution to a problem. As amended, the RFP called for a bidder's conference to be held on February 2, 1994, written proposals to be filed with HRS by 2:00 p.m. on March 14, 1994, and all proposals to be opened the same day. Thereafter, the offers were to be evaluated by a team of HRS employees whose role was to evaluate the various proposals and assign each proposal a score. A selection committee then had the responsibility of preparing a final report and recommendation for the HRS deputy secretary for administration. The authority to make a final decision rested with that individual. HRS originally anticipated a contract start date of April 1, 1994, but later changed this to May 1, 1994. That date is now in suspense pending the outcome of this case. Three vendors submitted a total of five proposals in response to the RFP. They included IBM and EMC, both of whom submitted two offers, identified as the IBM-1, IBM-2, EMC-1 and EMC-2 proposals, respectively, and Hitachi Data Systems, who is not a party in this case. After an evaluation of all proposals was conducted by the evaluation team, it recommended that the EMC-2 proposal be selected. This recommendation was accepted by the selection committee, which then submitted a final report and recommendation to the HRS deputy secretary for administration, Lowell Clary. After reviewing the report and recommendation, Clary issued a notice of intent to award the contract to EMC on April 19, 1994. Upon receipt of this advice, IBM timely filed its protest, as amended, alleging that EMC's proposal was deficient in four respects and that its IBM-2 proposal should have been ranked first. Subsequent efforts to informally conciliate the dispute have obviously been unsuccessful. The Specifications HRS currently uses 3390 DASD disc drives on its IBM 9021-900 mainframe computer. By its RFP, HRS seeks to purchase additional disc drives and associated controllers to enhance the system's storage capacity and ability to process the data from storage to the processor. Once installed, these enhancements should significantly improve the response time of the system and complete the financial management section of the child support system. The DASD is a device that stores data or information. The DASD is controlled by a controller, a box containing electrical circuitry that manages the movement of data stored in the DASD between that device and the mainframe computer (CPU) which processes the data. The controllers are attached to the CPU by channels, which are the paths between the storage system and the CPU. Data can be moved through copper or fiberoptic cables (channels), with fiberoptic providing much faster transfer than copper. Finally, the word "cache" is used in computer jargon to describe the storage of data in the controller as opposed to the storage of data in the DASD unit. Data is moved to and from cache through sophisticated algorhythms. Because data in cache is stored on computer memory chips, the retrieval of data from cache is substantially faster than the retrieval of data from DASD. The specifications for the equipment to be supplied by the vendor are found in paragraphs 1.1 and 1.2 on page 9 of the RFP, as amended. Those paragraphs read in pertinent part as follows: Statement of Need The Department currently uses 3390 DASD drives on its IBM 9021-900 mainframe computer. The department wishes to purchase two to four 3390-A28 DASD or equivalent and four (4) to eight (8) 3390-B2C DASD or equivalent. In order to support these devices two (2) to three (3) additional 3990-006 controllers or equivalent will also be purchased. This bid is for new DASD and Controller devices or equivalent hardware. If equivalent hardware is proposed the DASD and Controllers must be capable of being managed by IBM's software, and the SMS software support capabilities must be at the latest release level. Also, the maintenance vendor and the cost of maintenance for a period not less than three years after the warranty must be identified. The DASD Controllers must be capable of containing at least one gigabyte of CACHE memory (a minimum of 256 MB of CACHE is required in this proposal). Any Controller/DASD Configuration proposed for these bid requirements must be capable of functioning in ESCON mode. Statement of purpose The department will purchase the proposed equipment in increments as funds become available. The initial purchase will consist of at least two (2) 3390-A28 DASD or equivalent, at least four (4) 3390-B2C DASD or equivalent and at least two 3390-006 controllers or equivalent. The remaining devices will be purchased as funds become available. * * * Equivalent is defined in paragraph JJ. of the definitions section of the RFP as "(c)apable of providing equal or superior performance and having equal or greater capacity." In wording the definition in this manner, HRS intended to give a very broad interpretation to the word "equivalent," and to allow vendors maximum flexibility in providing a solution to HRS's equipment needs. Importantly, HRS did not intend to make IBM the sole source for supplying the equipment. Thus, if a vendor could provide equivalency with a single controller and all other specified functionality, that was permissible under the RFP. Also, paragraph 4.1 of the RFP provides in part that a material deviation may not be waived by the department. A deviation is material if, in the department's sole discretion, the deficient response is not in substantial accord with this Request for Proposal's requirements, provides an advantage to one proposer over other proposers, has a potentially significant effect on the quantity or quality of items proposed, or on the cost to the department. Material deviations cannot be waived. (Emphasis in original) This provision is consistent with the requirements of HRS Rule 10-13.012, Florida Administrative Code, which provides that the "Department shall reserve the right to waive minor irregularities in an otherwise valid bid or proposal." The statement of need in paragraph 1.1 used IBM nomenclature because that is a common language that HRS personnel use, and it is one that is commonly understood in the computer industry. As noted earlier, however, HRS was simply looking for a solution to its need for more data storage and data transfer capacity, and it was not dictating that the equipment proposed be identical to that described using IBM nomenclature. Several other RFP requirements are pertinent to this dispute. First, the RFP required that "(e)ach controller shall support eight (8) channels," or a total of sixteen. This meant that each control unit should have eight-channel capability, or a total of sixteen channel connections. The controller technology also had to be ESCON (enterprise systems connection) capable, that is, capable of using fiberoptic technology (rather than copper cables) in the event HRS later decided to upgrade its equipment. Contrary to IBM's assertion, there was no requirement in the RFP concerning "concurrent I/O's," an acronym for input/output operations. Thus, in order to satisfy the RFP, the unit did not have to have a specified number of channel directors with the ability to make simultaneous data transfers between the storage device and the CPU. In terms of cache capacity, HRS required a storage subsystem having at least 120 gigabytes, with the ability to later upgrade to a maximum capacity of 240 gigabytes. Finally, the successful vendor was required to post a performance bond, and it would not receive any payments under the contract until the equipment was functioning at 99 percent availability for thirty consecutive days within a ninety day period. Otherwise, the equipment would be removed at the firm's expense and the contract terminated. The EMC-2 and IBM-2 Proposals In its EMC-2 proposal, EMC proposed to furnish one Symmetrix 9100-9016 unit at a unit price of $561,000 for a total price of $561,000. This unit combines the DASD and the controller in a single box. It can be configured to function as up to four controllers. The unit proposed by EMC provides 136 gigabytes of capacity and can be expanded to provide 272 gigabytes. The unit uses a different architecture than that used by IBM and takes approximately one-sixth of the floor space of the proposed IBM units. Thus, it requires less electrical power and produces less heat, thereby reducing the cost of electricity and air-conditioning by 80 percent to 87 percent. IBM took a very literal approach to the RFP's Statement of Need and concluded that any equipment proposed as equivalent must be identical to the IBM equipment described in the Statement of Need. Under IBM's construction of the RFP, since the Statement of Need described two IBM 3390-006 controllers, two controllers must be supplied in order to be equivalent. Similarly, since one IBM 3390-006 has capacity for eight concurrent I/Os, IBM erroneously concluded that the RFP required eight concurrent I/Os. While one IBM 3390-006 controller configured with Model 3 DASD as proposed in the IBM-2 proposal can handle 180 gigabytes of capacity and can satisfy the minimum capacity requirements, two IBM 3390-006 controllers were necessary in order to handle the RFP's maximum capacity requirements of 240 gigabytes. Thus, IBM offered equipment with the following characteristics: 8 concurrent I/Os, 16 ESCON channels, and the capacity to handle up to 360 gigabytes. The Evaluation Process In conjunction with this project, HRS established an HRS DASD and Controller Project Team which consisted of an evaluation team and a selection committee. The evaluation team was divided into two segments, a technical evaluation team with five members and a business evaluation team with two members. The selection committee consisted of two members. All team and committee members were HRS employees. Prior to the opening of the proposals, all members of the evaluation team were given an evaluation manual to be used in evaluating the responses to the RFP. In addition, on February 21, 1994, all team members were required to attend an "in-depth" training session. Ten days after the RFP was released, a bidder's conference was held in Tallahassee. The purpose of the conference was to discuss the contents of the RFP and firms' inquiries and recommended changes. Among other vendors, representatives of IBM and EMC were in attendance. It should be noted that no vendor had previously challenged any part of the specifications within the statutory three day time period for doing so. Firms were also afforded the opportunity to submit written inquiries to HRS to which HRS replied in writing. Three questions were submitted by IBM, all designed to elict an admission from HRS that IBM was the sole source of the equipment. HRS declined to agree with this premise. On March 14, 1994, the technical proposals were opened. A determination was first made as to each vendor's compliance with mandatory requirements. In this case, all proposals were found to comply with the mandatory requirements. The proposals were then evaluated on both a technical and business basis. Under the technical evaluation, which consisted of two sections, corporate capabilities and technical approach, each team member scored the proposal using pre-established criteria on eighteen technical criteria and eight corporate criteria. Points ranging from 0 to 4 were assigned for each criterion in descending value based on whether the proposal received a superior, good, acceptable, poor, or no value rating. A maximum of 400 points could be achieved on this part of the evaluation, with 300 available for the technical approach and 100 points available for the corporate capabilities. Each proposal was then assigned final weighted points according to the formulas presented in the RFP. As it turned out, the IBM-1, IBM-2, EMC-1, EMC-2 and Hitachi proposals received 395, 396, 356, 338 and 283 points, respectively. It should be noted that during the technical scoring process, each proposal was scored on its own merits and not by comparing one proposal with another, and all technical scoring was completed before the cost proposals were opened. Under the business evaluation, the proposals were evaluated on the basis of equipment and maintenance costs. Because cost was a very important factor to HRS, it was allocated 60 percent of the total points. According to the RFP, the vendor submitting the lowest priced proposal would receive 540 points while 60 points would be awarded the vendor proposing the lowest maintenance costs for the first three years of the contract. The higher costing proposals were awarded points pro rata based on an RFP formula. In this case, the EMC-2 proposal carried a price of $561,000, with no maintenance costs for the first three years, as compared to the cost on the IBM-2 proposal of $1,148,216, the second ranked offer. Therefore, the EMC-2 proposal received the full 600 points while the IBM-2 offer received only 293 points. Based on the above evaluation, which was done in a fair and consistent manner in accordance with the HRS evaluation manual, the final scores were allocated as follows: Proposer Technical Points Cost Points Total Points IBM-1 395 242 637 IBM-2 396 293 689 EMC-1 356 246 602 EMC-2 338 600 938 Hitachi 283 368 651 Given these rankings, the selection team issued its final report and recommendation on April 13, 1994, recommending that the EMC-2 proposal be ranked first and that EMC be awarded the contract. Was EMC's proposal nonresponsive? Initially, because no proof was submitted at hearing as to IBM's claim that EMC did not submit three corporate references who used EMC equipment similar in magnitude and scope to that requested in the RFP, that allegation has been deemed to have been abandoned. Remaining at issue are contentions that EMC-2's proposal was nonresponsive in two respects and deficient in one other respect. As to the alleged nonresponsive features of the proposal, IBM claims that (a) EMC-2's proposal contains technology which is not yet available on the market in the time required under the terms of the RFP, and (b) the 9100 model proposed by EMC is not of equal or superior performance or of equal or greater capacity to two IBM 3990-006 controllers. As to the other alleged deficiency, IBM contends that the specifications of the 9100 model vary from the specifications described in the EMC-2 proposal and thus EMC will have an advantage over other proposers if it is allowed to substitute equipment or not meet specifications. IBM first contends that the EMC-2 proposal contains technology which is not yet available on the market in the time required under the terms of the RFP. In this regard, the evidence shows that EMC introduced a 5500 model in November 1992. That unit uses a large amount of cache and a five and one- quarter inch disk technology. Sometime later, EMC began to develop a new unit with "somewhat less" capacity than the 5500 unit but using a much newer and higher density disc drive in the five and one-quarter inch format with the capability of storing nine gigabytes of capacity. During the preliminary stages of the development of the model, EMC referred to it as the "Jaguar," because of its high performance technology. Before publicly marketing the unit, EMC briefly identified the model as the 9100 unit because it had nine gigabyte capacity. Later on, however, EMC elected to place the device within its 5000 series in part to reflect to the industry that the device uses the same technology as EMC's existing 5500 series and in part to avoid confusion with a competitor's recent introduction of a 9000 series machine. Accordingly, the model number was changed to 5200-9 because it had smaller capacity than the existing 5500 model, but used nine gigabyte disc drives. The first 9100/5200 technology was delivered to Delta Airlines on January 10, 1994, and the second and third units were delivered to The Home Depot, Inc. and General Accident Insurance Company of America within the next few months. In April 1994, or after the model was already in use, EMC published a marketing brochure and on May 12, 1994, it offically announced the introduction of the new unit. When the RFP package was prepared, EMC had not yet made a decision to rename the 9100 unit a 5200-9 model, and thus it used the 9100 nomenclature throughout its proposal. Even so, Karin Morris, the HRS systems programmer administrator, established that this type of error (i. e., changes in model numbers) occurs "regularly" on RFP submissions by data processing vendors, and it is of no concern to the agency. Because model 5200 (previously known as 9100) was current technology at the time the EMC-2 proposal was submitted, IBM's contention to the contrary is rejected. It is further found that, for all practical purposes, models 5200 and 9100 are one and the same in that they have the same cache and amount of disc drives, and when EMC referred in its proposal to model 9100, it was referring to what is now known as the model 5200-9. Thus, EMC did not substitute technology after its proposal was opened, nor did it obtain an unfair advantage over the other vendors by making this change. The change in model number was a minor irregularity, and one that could be waived by HRS. IBM next contends that the EMC-2 proposal contains a material error and that the unit described therein does not meet the RFP specifications. More specifically, in paragraph 4 of Tab 3 of the proposal, EMC gave the following description of the proposed hardware: Within the Symmetrix unit, up to eight (8) control units may be defined to the operations system. In addition, the unit allows up to eight concurrent I/O's. The maximum number of parallel channels is sixteen, or will allow up to thirty two ESCON channels for the unit. In drafting the RFP, an EMC account executive inadvertently described the characteristics of the EMC 5500 model rather than the new 5200 model. At the outset of hearing EMC conceded that the above descriptive language was in error, and that it did not discover the error until it was pointed out by IBM during a deposition taken on May 25, 1994, or just two days prior to hearing. The language should have read as follows: Within the Symmetrix unit, up to four (4) control units may be defined to the operations system. In addition, the unit allows up to four (4) concurrent I/O's. The maximum number of parallel channels is sixteen, or will allow up to sixteen ESCON channels for the unit. Like EMC, HRS became aware of the error at the deposition taken on May 25, 1994. It views the error as immaterial because none of the eighteen technical criteria in the manual considered by the evaluation committee addressed the number of concurrent I/Os the equipment must be able to accomplish. This is confirmed by the fact that none of the evaluator's scoresheets gave material consideration to that matter. Indeed, with the possible exception of subpart C on question 8, no evaluation criterion specifically related to the above language. Even if the EMC-2 proposal was reevaluated and a zero given for question 8, it would not result in a change in the rankings. At the same time, by amending its proposal in this respect, EMC did not obtain an advantage over other vendors since factors not relevant to the technical scoring criteria can not afford a competitive advantage. Given these considerations, it is found that the error in paragraph 4 of Tab 3 is immaterial, and HRS could properly waive this minor irregularity. Finally, IBM contends that the single EMC model 9100 (5200) was not of equal or superior performance or of equal or greater capacity to two IBM 3990- 006 controllers. The more credible and persuasive evidence supports a finding, however, that the 5200-9 model has eight actual channel capability, it has ESCON channel capability, it has a total potential cache of 272 gigabytes, it is the equivalent of two 3390-A28 DASDs, four 3390-B2C DASDs and two 3390-006 Mod 6s in that it provides the same capabilities and functionalities and the same result to customers as IBM equipment, and thus it satisfies the equivalency requirements of the RFP. Therefore, it is found that the EMC-2 proposal is responsive in all respects to the RFP and that HRS properly ranked that proposal first.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered by respondent awarding the contract for RFP 94-10BB-DSD to EMC Corporation and dismissing with prejudice the protest of International Business Machines Corporation, Inc. DONE AND ENTERED this 16th day of June, 1994, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of June, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-2588BID Petitioner: Partially accepted in findings of fact 2 and 4. Partially accepted in finding of fact 2. Partially accepted in finding of fact 6. Rejected as being contrary to the more credible and persuasive evidence. Partially accepted in finding of fact 13. Partially accepted in finding of fact 16. Partially accepted in finding of fact 18. Partially accepted in finding of fact 17. Partially accepted in finding of fact 4. Partially accepted in finding of fact 10. Partially accepted in findings of fact 5, 9 and 21. 12-13. Partially accepted in finding of fact 21. Partially accepted in finding of fact 6. Partially accepted in finding of fact 13. Rejected. See findings 22 and 23. Rejected. See findings 9 and 22. Rejected. See findings 22 and 23. Rejected. See findings 6, 8 and 9. Rejected as being irrelevant. See finding 9. Rejected as being contrary to the more credible and persuasive evidence. Partially accepted in finding of fact 13. Rejected as being contrary to the more credible and persuasive evidence. Respondent: 1. Partially accepted in finding of fact 2. 2. Partially accepted in finding of fact 3. 3. Partially accepted in finding of fact 5. 4. Partially accepted in finding of fact 14. 5-6. Partially accepted in finding of fact 18. 7. Partially accepted in finding of fact 19. 8-9. Covered in preliminary statement. 10. Partially accepted in finding of fact 6. 11. Partially accepted in finding of fact 8. 12-13. Partially accepted in finding of fact 6. 14. Partially accepted in finding of fact 15. 15. Partially accepted in finding of fact 10. 16. Rejected as being unnecessary. 17. Partially accepted in finding of fact 8. 18. Partially accepted in finding of fact 23. 19. Rejected as being unnecessary. 20-24. Partially accepted in finding of fact 20. 25. Rejected as being unnecessary. 26. Partially accepted in finding of fact 20. 27. Partially accepted in finding of fact 19. 28. Rejected as being unnecessary. 29. Partially accepted in finding of fact 20. 30. Partially accepted in finding of fact 16. 31. Partially accepted in finding of fact 23. 32-33. Partially accepted in finding of fact 21. 34-36. Partially accepted in finding of fact 22. Intervenor: Partially accepted in finding of fact 2. Partially accepted in finding of fact 5. Partially accepted in finding of fact 2. 4-5. Partially accepted in finding of fact 15. Rejected as being unnecessary. Partially accepted in finding of fact 14. Partially accepted in finding of fact 3. 9-13. Partially accepted in finding of fact 16. 14-15. Partially accepted in finding of fact 17. 16. Partially accepted in finding of fact 4. 17-19. Partially accepted in finding of fact 18. Partially accepted in finding of fact 4. Partially accepted in findings of fact 6 and 15. 22-24. Partially accepted in finding of fact 6. 25. Partially accepted in finding of fact 5. 26-27. Partially accepted in finding of fact 8. 28. Partially accepted in finding of fact 15. 29-33. Partially accepted in finding of fact 9. 34. Partially accepted in finding of fact 10. 35-39. Partially accepted in finding of fact 20. 40. Partially accepted in finding of fact 12. 41. Rejected as being unnecessary. 42. Partially accepted in finding of fact 6. 43-44. Partially accepted in finding of fact 10. 45. Partially accepted in finding of fact 11. 46. Partially accepted in finding of fact 12. 47-48. Partially accepted in finding of fact 21. 49. Partially accepted in finding of fact 23. 50. Partially accepted in finding of fact 22. 51. Partially accepted in finding of fact 20. 52. Partially accepted in finding of fact 11. 53. Partially accepted in finding of fact 23. Note - Where a proposed finding has been partially accepted, the remainder has been rejected as being irrelevant, unnecessary, not supported by the evidence, subordinate, or a conclusion of law. COPIES FURNISHED: Robert L. Powell, Agency Clerk Department of Health and Rehabilitative Services Building One, Room 407 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Kimberly J. Tucker, Esquire Building One, Room 407 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Hume F. Coleman, Esquire Post Office Drawer 810 Tallahassee, Florida 32302-0800 Daniel W. Schenck, Esquire 4111 Northside Parkway HO7K2 Atlanta, Georgia 30327 William A. Freider, Esquire Building E, Suite 200 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Terrence J. Russell, Esquire P. O. Box 1900 Fort Lauderdale, Florida 33302-1900 Margaret-Ray T. Kemper, Esquire 215 South Monroe Street Suite 815 Tallahassee, Florida 32301
The Issue Whether Respondent Department of Transportation’s intended decision to conduct negotiations with Xerox State and Local Solutions, Inc., under ITN-DOT-13/14-8001-SM is contrary to the Department’s governing statutes, rules, or policies or to the solicitation specifications.
Findings Of Fact The ITN The Department is an agency of the State of Florida charged with planning, acquiring, leasing, constructing, maintaining, and operating toll facilities and cooperating with and assisting local governments in the development of a statewide transportation system. § 334.044(16)-(22), Fla. Stat. (2013).1/ The Department is authorized to enter contracts and agreements to help fulfill these duties. See §§ 20.23(6) and 334.044(7), Fla. Stat. FTE is a legislatively created arm of the Department and is authorized to plan, develop, own, purchase, lease, or otherwise acquire, demolish, construct, improve, relocate, equip, repair, maintain, operate, and manage the Florida Turnpike System. § 338.2216(1)(b), Fla. Stat. FTE is also authorized to cooperate, coordinate, partner, and contract with other entities, public and private, to accomplish these purposes. Id. The Department has the express power to employ the procurement methods available to the Department of Management Services under chapter 287, Florida Statutes.2/ § 338.2216(2), Fla. Stat.; see also Barton Protective Servs., LLC v. Dep’t of Transp., Case No. 06-1541BID (Fla. DOAH July 20, 2006; Fla. DOT Aug. 21, 2006). OOCEA (now known as the Central Florida Expressway Authority), MDX, and THEA are legislatively created or authorized agencies of the State with the power to fix, alter, charge, establish, and collect tolls, rates, fees, rentals, and other charges for the services and facilities system. §§ 348.0003(1)- .0004(2)(e), Fla. Stat. Each of these authorities has the power to enter contracts and to execute all instruments necessary or convenient for the carrying on of its business; to enter contracts, leases, or other transactions with any state agency or any other public body of the State; and to do all acts and things necessary or convenient for the conduct of its business and the general welfare of the authority in order to carry out the powers granted to it by law. § 348.0004(2)(g), (h), (k), Fla. Stat. On November 1, 2013, the Department advertised the ITN, soliciting proposals from vendors interested in participating in competitive negotiations for the award of a contract to provide a CCSS and associated operations and maintenance. The ITN was issued pursuant to section 287.057, Florida Statutes. The purpose of the ITN is to replace the existing customer service center systems of FTE, OOCEA, THEA, and MDX with a CCSS that can be expanded over time to include other tolling and transit agencies in the State of Florida. The CCSS is expected to process nearly all electronic toll transactions in Florida. The successful vendor will enter a contract directly with the Department. The Department will then enter agreements with the other authorities to address coordinated and joint use of the system. Generally, the ITN sets forth a selection process consisting of two parts. Part one involves: (a) the pre- qualification, or shortlisting, of vendors in order to determine a vendor’s eligibility to submit proposals; and (b) the proposal submission, evaluation, and ranking. Part two is the negotiation phase. The instant proceeding relates only to part one. Part two -- negotiations -- has yet to occur. The TRT and Selection Committee – The Evaluators Cubic alleges that “not all of the members of either [the Technical Review or Selection Committee] teams had the requisite experience or knowledge required by section 287.057(16)(a)1., Florida Statutes.” Accenture alleges that “the Selection Committee did not collectively have expertise in all of the subject areas covered by th[e] ITN.” Section 287.057(16)(a) provides in part that the agency head shall appoint “[a]t least three persons to evaluate proposals and replies who collectively have experience and knowledge in the program areas and service requirements for which commodities or contractual services are sought.”3/ In accordance with the requirements of section 287.057(16)(a), the ITN established a Technical Review Team (TRT) that would be “composed of at least one representative from each Agency and may include consultant (private sector) staff.” The ITN also provided for a Selection Committee that would be “composed of executive management at the Agencies.” Each agency executive director appointed two individuals from their agency to the TRT. Each agency director was familiar with the background and qualifications of their appointees, who had experience in various aspects of tolling operations including tolling, software, finance, and procurement. The following individuals were appointed to serve on the TRT. Bren Dietrich, a budget and financial planner for FTE, has an accounting degree and has worked at FTE for 12 years in budget and financial planning. Mr. Dietrich has been a technical committee member for seven or eight procurements. Mohamed Hassan, a senior operations manager for FTE, has been in information technology for nearly 40 years and with FTE for 22 years handling all aspects of software development and maintenance for the state’s largest tolling authority. Mr. Hassan’s expertise is in software development and maintenance. Mr. Hassan oversees staff that is responsible for maintaining the database application systems, hardware, communications coming in and going out of the customer service center, and any development projects such as transaction processing or account management system upgrades. Steve Andriuk is a deputy executive director for MDX and oversees all tolling operations within MDX’s jurisdiction. Mr. Andriuk’s tolling background goes beyond his tenure at MDX, as he previously was an executive director at Chesapeake Bay Bridge Authority. Jason Greene, MDX’s comptroller of financial controls and budget manager, has a background in finance and accounting and in project management. Mr. Greene has been with MDX for 11 years. Lisa Lumbard, who has been with OOCEA for 16 years, is the interim chief financial officer and previously was the manager of accounting and finance. Ms. Lumbard runs OOCEA’s finance and accounting office and has both procurement experience and substantial experience in the financial aspects of back- office tolling. David Wynne is the director of toll operations of OOCEA and is responsible for the overall collection of all tolls and for the violation enforcement process. Mr. Wynne has held some iteration of this position for approximately 11 years and worked for OOCEA for 16. He also has both procurement and substantial tolling experience. Robert Reardon, THEA’s chief operating officer, is responsible for THEA’s day-to-day operations, including tolls. Mr. Reardon has been with THEA for six years and has experience as a technical evaluator for public procurements. Rafael Hernandez is THEA’s manager of toll operations and oversees all toll operations within THEA’s jurisdiction. The TRT members collectively have the requisite knowledge and experience in tolling, software, finance, and procurement. The following individuals constituted the Selection Committee. Diane Gutierrez-Scaccetti has been FTE’s executive director since 2011 and worked for the New Jersey Turnpike Authority for over 20 years, the last two as executive director and the previous 14 as deputy executive director. Laura Kelley is OOCEA’s deputy director over finance administration and the interim executive director. Ms. Kelly has 30 years’ experience in transportation finance and management, 15 of which occurred at the Department and eight of which occurred at OOCEA overseeing information technology, finance, and procurement. Javier Rodriguez, MDX’s executive director, oversees all MDX operations, including planning, finance, operations, and maintenance functions. Mr. Rodriguez has been with MDX for seven years and was with the Department for over 15 years prior to his employment with MDX. Joseph Waggoner has been THEA’s executive director for approximately seven years. Prior to joining THEA, he was with the Maryland Department of Transportation for nearly 30 years, six of which were in tolling operations. ITN section 2.6.2 provides as follows: Following Proposal Oral Presentations by all short-listed Proposers (see section 2.25 Proposal Oral Presentations for additional details) the Technical Review Team members will independently evaluate the Proposals based on the criteria provided in Section 2.5.2 and will prepare written summary evaluations. There will then be a public meeting of the Selection Committee at the date, time and location in Table 1-2 Procurement Timeline. The Technical Review Team’s compiled written summary evaluations will be submitted to the Selection Committee. The Technical Review and Selection Committee will review and discuss the individual summary evaluations, and the Selection Committee will come to consensus about ranking the Proposers in order of preference, based on their technical approach, capabilities and best value. In addition to the Technical Review Team, the Selection Committee may request attendance of others at this meeting to provide information in response to any questions. The ITN is structured such that both the TRT and the Selection Committee have shared responsibility for evaluating proposals, with the Selection Committee having ultimate responsibility for ranking the Proposers for the negotiations stage of the procurement process. Combining the eight members of the TRT with the four members of the Selection Team means that there were a total of 12 individuals tasked with the responsibility of evaluating the proposals prior to the negotiations stage of the process. Pre-Qualification and Rankings In the pre-qualification portion of the ITN, interested vendors initially submitted reference forms to demonstrate that the vendors met the minimum project experience set forth in the ITN. Vendors meeting this requirement were invited to give a full-day Pre-Qualification Oral Presentation to the TRT in which each vendor was given the opportunity to demonstrate its proposed system. Under ITN section 2.6.1, A Technical Review Team will attend the Pre- Qualification Oral Presentations and will develop scores and written comments pertaining to the reviewed area(s) identified in Section 2.5.1. The Technical Review Team will be composed of at least one representative from each Agency and may include consultant (private sector) staff. The scores provided by each Technical Review Team member for each area of the Pre- Qualification Oral Presentations will be totaled and averaged with the scores of the other Technical Review Team members to determine the average score for an area of the Pre-Qualification Oral Presentation. The average score for each area of a Pre- Qualification Oral Presentation will then be totaled to determine a total Pre- Qualification Oral Presentation score. Each vendor’s Pre-Qualification Oral Presentation was then scored based on criteria set forth in ITN section 2.5.1. Any vendor that received a score of 700 or higher was “short- listed” and invited to submit proposals. Put differently, those receiving a score of at least 700 were deemed qualified to submit formal proposals. ITN section 2.5.1 provides that the “review/evaluation of the Pre-Qualification Oral Presentations will not be included in decisions beyond determining the initial short-list of Proposers to proceed in the ITN process.” Accordingly, the scores assigned in the pre-qualification phase were irrelevant after the short-listing. Six vendors submitted pre-qualifications responses, including Xerox, Accenture, and Cubic. On January 21, 2014, the Department posted its short-list decision, identifying that all six vendors, including Xerox, Accenture, and Cubic, were deemed qualified to submit formal written proposals to the ITN (the “First Posting”). As required by section 120.57(3)(a), Florida Statutes, the posting stated, “Failure to file a protest within the time prescribed in Section 120.57(3), Florida Statutes, or failure to post the bond or other security required by law within the time allowed for filing a bond shall constitute a waiver of proceedings under Chapter 120, Florida Statutes.” This posting created a point of entry to protest, and no vendor initiated a protest. After the First Posting, short-listed vendors submitted technical and price proposals and made Proposal Oral Presentations. ITN section 2.24 provides detailed instructions for technical and price proposal preparation and submission. ITN section 2.25 (as amended by Addendum 8) sets forth the process for short-listed vendors to make Proposal Oral Presentations to the TRT. Short-listed Proposers will each be scheduled to meet with the Technical Review Team for Proposal Oral Presentations of their firm’s capabilities and approach to the Scope of Work and Requirements within the time period identified in Table 1-2 Procurement Timeline. Short-listed Proposers will be notified of a time and date for their Proposal Oral Presentation. Proposal Oral Presentation sessions are not open to the public. The Selection Committee will attend these Presentations. In advance of the Proposal Oral Presentations Proposers will be given detailed instructions on what the format and content of the Proposal Oral Presentation will be, including what functionality shall be demonstrated. The Department may also provide demonstration scripts to be followed. Proposers should be prepared to demonstrate key elements of their proposed System and Project approach and to respond to specific questions regarding their Proposals. These Proposal Oral Presentations will be used to present the Proposer’s approach and improve understanding about the Department’s needs and expectations. The Technical Review Team will participate in all Proposal Oral Presentations. After each Oral Presentation, each individual on the Technical Review Team will complete a written summary evaluation of each Proposer’s technical approach and capabilities using the criteria established in Section 2.5.2 in order to assure the Technical Proposal and Oral Presentations are uniformly ranked. The evaluation will consider both the Technical Proposal and the Oral Presentations. ITN section 2.5.2 is titled “Best Value Selection” and provides as follows: The Department intends to contract with the responsive and responsible short-listed Proposer whose Proposal is determined to provide the best value to the Department. “Best value,” as defined in Section 287.012(4), F.S., means the highest overall value to the state, based on objective factors that include but are not limited to . . . . ITN section 2.5.2 goes on to delineate seven “objective factors,” or evaluation criteria, on which proposals would be evaluated: Company history Project experience and qualifications Proposed Project approach to the technical requirements Proposed approach to the Project plan and implementation Proposed approach to System Maintenance Proposed approach to Operations and performance Price ITN section 2.6.2 explains the process for evaluation of technical proposals and Proposal Oral Presentations and states that: Following Proposal Oral Presentations by all short-listed Proposers (see Section 2.25 Proposal Oral Presentations for additional details) the Technical Review Team members will independently evaluate the Proposals based on the criteria provided in Section 2.5.2 and will prepare written summary evaluations. There will then be a public meeting of the Selection Committee at the date, time and location in Table 1-2 Procurement Timeline. The Technical Review Team’s compiled written summary evaluations will be submitted to the Selection Committee. The Technical Review Team and Selection Committee will review and discuss the individual summary evaluations, and the Selection Committee will come to consensus about ranking the Proposers in order of preference, based on their technical approach, capabilities and best value. In addition to the Technical Review Team, the Selection Committee may request attendance of others at this meeting to provide information in response to any questions. Of the six short-listed vendors, five submitted proposals and gave Proposal Oral Presentations, including Xerox, Accenture, and Cubic. The Department then undertook a ranking using the evaluation criteria delineated in ITN section 2.5.2. To perform this ranking, TRT members individually evaluated the proposals and prepared detailed, written evaluations that tracked the evaluation criteria factors. The TRT’s evaluations, together with proposal summaries prepared by HNTB, were provided to the Selection Committee in preparation for a joint meeting of the TRT and Selection Committee on April 9, 2014. At the April 9th meeting, the TRT and Selection Committee members engaged in an in-depth discussion about the bases for and differences between the individual TRT members’ rankings and evaluations. Thereafter, the Selection Committee made its ranking decision. On April 10, 2014, the Department posted its ranking of vendors, with Xerox first, Accenture second, and Cubic third (the “Second Posting”). The Second Posting also announced the Department’s intent to commence negotiations with Xerox as the first-ranked vendor.4/ If negotiations fail with Xerox, negotiations will then begin with second-ranked vendor Accenture, then Cubic, and so on down the order of ranking until the Department negotiates an acceptable agreement. Accenture and Cubic each timely filed notices of intent to protest the Second Posting and timely filed formal written protest petitions and the requisite bonds. Negotiations are not at Issue ITN section 2.26 provides: Once Proposers have been ranked in accordance with Section 2.6.2 Proposal Evaluation, the Department will proceed with negotiations in accordance with the negotiation process described below. Proposers should be cognizant of the fact that the Department reserves the right to finalize negotiations at any time in the process that the Department determines that such election would be in the best interest of the State. Step 1: Follow the evaluation process and rank Proposals as outlined in Section 2.6 Evaluation Process. Step 2: The ranking will be posted, in accordance with the law (see Section 2.27), stating the Department’s intent to negotiate and award a contract to the highest ranked Proposer that reaches an acceptable agreement with the Department. Step 3: Once the posting period has ended, the Negotiation Team will undertake negotiations with the first-ranked Proposer until an acceptable Contract is established, or it is determined an acceptable agreement cannot be achieved with such Proposer. If negotiations fail with the first-ranked Proposer, negotiations may begin with the second-ranked Proposer, and so on until there is an agreement on an acceptable Contract. The Department reserves the option to resume negotiations that were previously suspended. Negotiation sessions are not open to the public and all negotiation sessions will be recorded by the Department. Step 4: The Negotiation Team will write a short plain statement for the procurement file that explains the basis for Proposer selection and how the Proposer’s deliverables and price will provide the best value to the state. Step 5: The Department will contract with the selected Proposer. As Accenture and Cubic protested the decision by the Department to enter negotiations with Xerox (and because of the automatic stay provision of section 120.57(3), Florida Statutes) the negotiation phase of the procurement never commenced. Thus, this proceeding concerns the Department’s actions up to the Second Posting, and not what may happen during future negotiations. Second Posting and Intended Award Section 1.2 of the ITN sets forth the procurement timeline for the CCSS project. The ITN originally indicated that the “Posting of Ranking/Intended Award” would occur on March 31, 2014. By addendum issued on February 13, 2014, the date for “Posting of Ranking/Intended Award” was changed to April 10, 2014. Section 1.3.1 of the ITN provides an agenda for the April 10, 2014, “Meeting to Summarize and Determine Ranking/Intended Award.” Section 2.27 of the ITN is labeled “POSTING OF RANKING/INTENDED AWARD.” Section 2.27.1, Ranking/Intended Award, provides that “[t]he Ranking/Intended Award will be made to the responsive and responsible Proposer that is determined to be capable of providing the best value and best meet the needs of the Department.” Section 2.27.2 is labeled “Posting of Short- list/Ranking/Intended Award” and provides in part that “[a]ny Proposer who is adversely affected by the Department’s recommended award or intended decision must . . . file a written notice of protest within seventy-two hours after posting of the Intended Award.” Joint Exhibits 10 and 12 are copies of forms used to announce the rankings of the Proposers. It is not clear from the record if these forms are a part of the ITN. Nevertheless, the forms are identical in format. Each form has three boxes that follow the words “TYPE OF POSTING.” The first box is followed by the word “Shortlist,” the second box is followed by the word “Ranking,” and the third box is followed by the words “Intended Award.” The form also has three columns that coincide with the three boxes previously referenced. The three columns are respectively labeled, “X indicates shortlisted vendor,” “ranking of negotiations,” and “X indicates intended award.” With respect to the last two columns, explanatory comments appearing at the bottom of the form read as follows: ** Ranking: The Department intends to negotiate separately and will award a contract to the highest ranked vendor that reaches an acceptable agreement with the Department. The Department will commence negotiations with the number one ranked vendor until an acceptable contract is agreed upon or it is determined an acceptable agreement cannot be reached with such vendor. If negotiations fail with the number one ranked vendor, negotiations may begin with the second-ranked vendor, and so on down the order of ranking until the Department is able to negotiate an acceptable agreement. *** Intended Award: “X” in the Intended Award column indicates the vendor whom the Department intends to award the contract to, but does not constitute an acceptance of any offer created by the vendor’s proposal or negotiations. No binding contract will be deemed to exist until such time as a written agreement has been fully executed by the Department and the awarded vendor. If irregularities are subsequently discovered in the vendor’s proposal or in the negotiations or if the vendor fails to submit required [b]onds and insurance, fails to execute the contract, or otherwise fails to comply with the ITN requirements, the Department has the right to undertake negotiations with the next highest vendor and continue negotiations in accordance with the ITN process, reject all proposals, or act in the best interest of the Department. On April 10, 2014, the Department issued a posting wherein the “Ranking” box was checked and the “Intended Award” box was not. According to Sheree Merting, it was a mistake to have only checked the “Ranking” box because the box labeled “Intended Award” should have also been checked. Petitioners contend that by not simultaneously checking both the “Ranking” and “Intended Award” boxes that the Department materially changed the process identified in the ITN. Protesters’ arguments as to this issue appear to be more related to form than substance. In looking at the plain language of the ITN, it reasonably appears that the Department intended to simultaneously announce the “Ranking” and “Intended Award.” The fact that the Department failed to combine these two items in a single notice is of no consequence because neither Cubic nor Accenture have offered any evidence establishing how they were competitively disadvantaged, or how the integrity of the bidding process was materially impaired as a consequence of the omission. In other words, Sheree Merting’s confessed error of not checking the “Intended Award” box contemporaneously with the “Ranking” box is harmless error. See, e.g., Fin. Clearing House, Inc. v. Fla. Prop. Recovery Consultants, Inc., Case No. 97-3150BID (Fla. DOAH Nov. 25, 1997; Dep’t of Banking & Fin. Feb 4, 1998)(applying harmless error rule to deny protest where agency initially violated provisions of section 287.057(15), Florida Statutes, by selecting two evaluators instead of three required by statute, but later added required evaluator). Sequential Negotiations As previously noted, section 2.26 of the ITN provides that following the ranking of the short-list proposers, the “Negotiation Team will undertake negotiations with the first- ranked Proposer until an acceptable Contract is established . . . [and] [i]f negotiations fail with the first-ranked Proposer, negotiations may begin with the second-ranked Proposer, and so on until there is an agreement on an acceptable Contract.” Petitioners assert that the Department has abandoned the sequential negotiation process set forth in section 2.26 and has announced “that it will conduct the procurement negotiations only with Xerox as the number one ranked proposer” and that the process of negotiating with only one proposer is contrary to the law because section 287.057(1)(c) “requires that the Department negotiate with all proposers within the competitive range.” Diane Gutierrez-Scaccetti testified as follows (T: 1119): Q: Now, you understand that as a result of the rankings that were posted on April 10th, negotiations under this ITN are to proceed with only a single vendor, is that right? A: I believe the ITN provided for consecutive negotiations starting with the first-ranked firm and then proceeding down until we reached a contract. Contrary to Petitioners’ assertions, the evidence establishes that the Department intends to follow the negotiation process set forth in section 2.26. Petitioners’ contention that section 287.057(1)(c) does not authorize sequential negotiations is a challenge to the terms, conditions, and specifications of the ITN and should have been filed within 72 hours after the posting of the solicitation as required by section 120.57(3)(b). Petitioners have waived their right of protest with respect to this issue. Petitioners’ waiver notwithstanding, section 287.057(1)(c) does not preclude the type of sequential negotiation process set forth in section 2.26 of the ITN. Section 287.057(1)(c) provides in part that “[t]he invitation to negotiate is a solicitation used by an agency which is intended to determine the best method for achieving a specific goal or solving a particular problem and identifies one or more responsive vendors with which the agency may negotiate in order to receive the best value.” (Emphasis added). Section 287.057(1)(c)4. provides that “[t]he agency shall evaluate replies against all evaluation criteria set forth in the invitation to negotiate in order to establish a competitive range of replies reasonably susceptible of award [and] [t]he agency may select one or more vendors within the competitive range with which to commence negotiations.” (Emphasis added). The opening paragraph of section 287.057(1)(c), which is essentially the preamble portion of the ITN provisions, expresses the purpose for which the ITN process was developed, to wit: “to determine the best method for achieving a specific goal or solving a particular problem.” In furtherance of the stated purpose, the Legislature instructs, in the preamble, that the process should “identif[y] one or more responsive vendors with which the agency may negotiate in order to receive the best value.” If the preamble is read in statutory isolation, then one could reasonably conclude that if the agency identifies more than one responsive vendor then the agency should negotiate with each of the vendors “in order to receive the best value.” Arguably, the preamble merely looks at vendor “responsiveness” as the guidepost for determining with whom the agency shall negotiate. Mere “responsiveness” however, is clearly not the only standard for selecting a vendor through the ITN process and illustrates why this portion of the statute cannot be read in isolation. As previously noted, subparagraph four of section 287.057(1)(c), provides that the agency “shall . . . establish a competitive range of replies reasonably susceptible of award,” and once this is done, “[t]he agency may select one or more vendors within the competitive range with which to commence negotiations.” (Emphasis added). By using the word “may” in subparagraph four, the Legislature is authorizing agencies to exercise discretion when selecting vendors with whom to negotiate. In exercising its discretion, agencies can decide to negotiate with a single vendor or with multiple vendors. An agency’s exercise of its discretion is not absolute and the “check” on the exercise of its discretion, in the context of the instant case, is a bid protest whereby an unsuccessful bidder can attempt to prove that the procurement process was impermissibly tainted. Contrary to Petitioners’ allegations, the sequential negotiation process utilized by the Department in the present case does not run afoul of section 287.057. Petitioners forcefully argue that they have been shutout of the negotiation process because neither of them was ranked first. This assertion mischaracterizes the nature of the sequential negotiation process used by the Department. The evidence shows that if the Department fails to come to terms with Xerox, then negotiations may begin with the second-ranked vendor, and so on down the order of ranking until the Department negotiates an acceptable agreement. The truth of the matter is that neither of the protesters has been shutout of the negotiations. It is simply the case that neither occupies the preferred position of being the highest ranked, short-listed vendor. Petitioners also argue that the Florida Department of Transportation Commodities and Contractual Services Procurement Manual – 375-040-020, prohibits sequential negotiations. For invitations to negotiate, the manual provides: There are two general negotiation methods used: Competitive Method A – Vendors are ranked based on technical qualifications and negotiations are conducted commencing with the first ranked vendor. Competitive Method B – Vendor qualifications are evaluated and vendors may be short-listed. Negotiations of scope and price will be conducted with short-listed or all vendors. An award is made to the vendor with the best combination of proposal, qualifications, and price. According to Petitioners, the ITN does not comport with either Method A or Method B. Again, Petitioners failed to timely challenge the ITN specifications regarding sequential negotiations and thus have waived this argument. Even if the merits of the argument are considered, Petitioners’ argument fails. The methods described in the manual are not the only methods available to the Department; in fact, the manual, by stating that “there are two general negotiation methods used (emphasis added),” recognizes that the methods are subject to refinement or modification as the Department deems best to meet the perceived needs of a particular solicitation as long as the final method complies with section 287.057(1), Florida Statutes. Further, the procurement manager for the ITN, Sheree Merting, testified that the shell, or template, provided by the Department’s central office, and used when drafting an invitation to negotiate, contains a combination of the manual’s methods A and B, which is referred to as A/B. The order of negotiations provided for in the ITN and reiterated in the First and Second Postings is not, therefore, inconsistent with the Department’s policies or procedures. Best Value Decision Petitioners contend that the Department, via the Second Posting, has already (and improperly) determined which vendor will provide the best value to the State even though negotiations have not yet occurred. This contention is not supported by the evidence. ITN section 2.5.2 states the Department’s intent to contract with the vendor whose proposal is determined to provide the best value and sets forth the statutorily mandated objective factors, or criteria, on which proposals will be evaluated. ITN section 2.6.2 provides that the TRT and Selection Committee will review and discuss the TRT members’ individual summary evaluations and the Selection Committee “will come to consensus about ranking the Proposers in order of preference, based on technical approach, capabilities and best value.” The evidence reflects that the evaluation factors were applied during the evaluation process to formulate a best value ranking, but the question of which vendor ultimately provides the best value to the State will not be conclusively determined until after negotiations are concluded. See § 287.057(1)(c)4., Fla. Stat. (“After negotiations are conducted, the agency shall award the contract to the responsible and responsive vendor that the agency determines will provide the best value to the state, based on the selection criteria.”). As testified by Ms. Gutierrez- Scaccetti, “[t]he Selection Committee agreed upon the ranking of firms. It has not made an award.” This is consistent with the ITN and Florida law, which require award to the best value proposer after negotiations. Evaluation Criteria Properly Followed As explained above, ITN section 2.5.2 sets forth the evaluation factors that the TRT and Selection Committee were to use in evaluating proposals. Petitioners allege that the TRT and Selection Committee did not follow the ITN and based their evaluations and rankings on factors other than those listed in ITN section 2.5.2. The evidence establishes that the TRT did in fact use these factors, as evidenced by the detailed evaluation summaries prepared by each of the eight TRT members, which almost uniformly tracked these factors. Seven of these summaries are organized by headings that mirror the seven criteria of section 2.5.2. The remaining summary, prepared by TRT member Mohamed Hassan, was formatted in terms of pros and cons, but nonetheless addressed all of the section 2.5.2 evaluation criteria. Reflective of the TRT’s approach, TRT member David Wynne prepared detailed, typed proposal summaries that are four pages long and single-spaced for each proposal. Mr. Wynne’s summaries capture his deliberate thought process in ranking the proposals and include headings that directly tie back to the evaluation criteria in the ITN. His summaries include specific details from each proposal justifying his qualitative assessment of the proposals. For example, he discusses the benefits of Xerox’s Vector 4G tolling platform, Xerox’s proposed project schedule, and maintenance. Mr. Wynne even included a breakdown of the pricing and his thoughts on how the pricing compared to the other vendors. The other TRT members had equally detailed summaries. When read as a whole, these summaries demonstrate that the TRT engaged in a rational, deliberative, and thoughtful evaluation of the proposals based on the ITN criteria. Additionally, the TRT members testified that they applied the ITN section 2.5.2 factors in conducting their evaluations. Thus, the evidence demonstrates that the TRT members did as instructed in the ITN and evaluated proposals based on ITN section 2.5.2’s factors. There is no credible basis to find that the section 2.5.2 criteria were not the bases of the TRT’s evaluations, rankings, and narratives. The evidence also establishes that the Selection Committee applied ITN section 2.5.2 factors in reaching its decision. The Selection Committee reviewed the TRT summaries, along with a detailed notebook prepared by HNTB, the Department’s consultant. The HNTB notebook was a comprehensive summary of information compiled from the vendors’ voluminous proposals and organized in a digestible format to aid the Selection Committee’s review, including helpful summaries providing head-to-head objective comparisons of vendor pricing, software development, and vendors’ exceptions and assumptions. The HNTB notebook of materials objectively compiled the content taken directly from the vendors’ own proposals and included no editorial comments or opinions by the Department’s consultants. Moreover, the HNTB notebook contained a chart summarizing the TRT’s rankings by TRT member, along with copies of each TRT member’s detailed written summaries. It also contained a detailed, 36-page pricing summary that pulled price information directly from the vendors’ proposals and summarized the information in a manner that allowed for easy side-by-side comparison. The notebook also included a systems matrix summary that was prepared by taking proposed systems information directly from the vendors’ proposals and combining it in a format that could be easily processed. In fact, the notebook even included pages copied directly from the proposals. Armed with the comprehensive TRT summaries and the HNTB notebook, the Selection Committee then engaged the TRT in a thoughtful and detailed discussion and analysis of the qualitative merits of each vendor’s proposal -- all within the bounds of the section 2.5.2 criteria. Petitioners contend that during the TRT and Selection Committee’s discussions, issues such as risk were improperly considered. Although “risk” was not a separately labeled criterion under section 2.5.2 (“risk of solution” is, however, referenced as a sub-bullet), risk is inherently a significant consideration in each of the evaluation factors. Stated differently, the concept of risk is integral to the ITN section 2.5.2 factors, and the Department properly considered such risks. For example, a vendor’s prior project experience -- whether it has successfully completed similar projects before -- was a listed criterion, which is directly relevant to the risk the Department would take in selecting a vendor, that is, the risk that the vendor’s experience is or is not sufficient to assure a timely project completion and quality services under the ITN. Indeed, section 287.057(1)(c) requires that the Department consider prior experience. Another example of risk considered by at least one Selection Committee member was the potential that Accenture’s project manager would not be assigned solely to this project, but might be shared with Accenture’s Illinois tolling project (“local presence commitment” is referenced as a sub-bullet in section 2.5.2). The evidence shows that Accenture stopped short of saying without qualification that its project manager would be released from Illinois and solely assigned to CCSS. This uncertainty raised a risk concern whether the critical project implementation would be properly managed. Considerations such as these are rational and reasonable. There is a Reasonable Basis for the Department’s Ranking Petitioners further contend that there was no reasonable basis for the Department’s intended decision to begin negotiations with Xerox. However, as explained above, the evidence demonstrates the opposite as the TRT and Selection Committee collectively discussed and considered the evaluation criteria and the Selection Committee reached consensus on moving forward to negotiations with Xerox. Moreover, there is ample evidence that the Selection Committee’s decision was rational and reasonable. The TRT and Selection Committee’s discussion at the April 9, 2014, meeting where the ranking decision was reached, demonstrates the studied analysis by which the evaluations were conducted. At the meeting, the four Selection Committee members, who had already reviewed the TRT members’ individual rankings and evaluations, each questioned the TRT members about their assessments of the proposals. Selection Committee members asked about the bases for the differences between the individual TRT members’ evaluations, and the TRT members explained why they ranked the vendors the way they did. The discussion revolved around the top three ranked vendors, Xerox, Accenture, and Cubic, which one TRT member described as being “head and shoulders above the rest” -- that is, above the vendors ranked fourth and fifth. As noted above, the Selection Committee members’ primary focus in these discussions was on risk assessment -- the financial risks, operations risks, and information technology risks that the TRT members believed accompanied each proposal. Major Selection Committee items of discussion included modifications to the existing systems, proprietary versus off- the-shelf software issues, and the vendors’ proximity to Florida. Additional discussion points included the risk associated with Accenture’s use of multiple subcontractors and Cubic’s lack of experience with certain tolling systems. From these discussions, it appears that the overriding factor behind the Selection Committee’s ranking decision at the April 9 meeting was Xerox’s proven experience with other similar and large tolling projects, including some of the country’s largest tolling systems, which Accenture and Cubic simply did not possess.5/ As one Selection Committee member expressed, Xerox brought a “comfort level” that did not exist with Accenture and Cubic. Moreover, Xerox, with 78 percent, is the leader in the evaluative category that looks at the percentage of the company’s existing baseline system that meets the CCSS requirements -- more than Accenture’s and Cubic’s combined percentages. As the percentage of existing baseline system compliance increases, the implementation risks decrease. Selection Committee members Diane Gutierrez-Scaccetti and Joseph Waggoner expressed the importance of this based on their firsthand experience with existing tolling systems in use for their respective agencies. In sum, this analysis and assessment is a valid and reasonable basis for the Department’s decision. Cubic also contends that such analysis is improper because the ITN allowed transit firms to submit proposals, thus making tolling experience an irrelevant evaluative factor. This contention fails because by prequalifying transit firms to bid, the Department was not precluded from considering a vendor’s specific tolling experience as part of the evaluative process. Contrary to Cubic’s allegation, the factors listed in ITN section 2.5.2, including “Project Experience and Qualifications,” contemplate tolling experience as being part of the relevant analysis. Therefore, the Selection Committee was fully authorized under the ITN to consider the benefits of a proven commodity -- a firm with Xerox’s extensive tolling experience. The Selection Committee’s qualitative assessment that, on the whole, Xerox was the better choice for commencing negotiations was supported by reason and logic and was wholly consistent with the ITN specifications. Petitioners further argue that the Department’s ranking decision is inconsistent with the pre-qualification scoring, where Accenture and Cubic each scored slightly higher than Xerox. This argument fails as ITN section 2.5.1 expressly provides that the evaluations and scoring of the Pre-Qualification Oral Presentations will not be included in decisions beyond determining the initial short-list. Regardless, these three vendors were essentially tied in that scoring: Accenture’s score was 885.38, Cubic’s was 874.75, and Xerox’s was 874.00. Petitioners also contend that the Selection Committee’s ranking decision is inconsistent with the ranking decision of the TRT majority. The ITN is clear, however, that the Selection Committee would be the final arbiter of ranking. No Demonstrations Were Cancelled The procurement timeline in the original ITN allotted ten business days for Proposal Oral Presentations. The revised timeline in Addendum 8 allotted two days. Cubic asserts that this reduction in presentation time occurred because the Department, without explanation, cancelled planned vendor demonstrations that were to occur during Proposal Oral Presentations, thus placing Cubic at a disadvantage as it was unable to present its demonstrations to Selection Committee members. Cubic also asserts that the cancellation of demonstrations is an indication that the Department had already made up its mind to select Xerox. The ITN and the testimony are unequivocal that no demonstrations were “cancelled.” ITN section 2.25 contemplates that the Department may request demonstrations in the proposal evaluation phase but in no way states that demonstrations will be held. Section 2.25 also provides that if any demonstrations were to be held, they would be as directed by the Department. Thus, the ITN did not guarantee Cubic any presentation, as Cubic suggests. Moreover, all vendors were treated equally in this regard. Further, the evidence reflects that the decision to hold demonstrations only during the Pre-Qualification Presentations was made when the ITN was released and that the Department never planned to have vendor demonstrations at the Proposal Oral Presentations. Indeed, during the mandatory pre- proposal meeting, the Department informed all vendors of the planned process, to include one demonstration at the pre- qualification phase and an oral presentation and question-and- answer session during the proposal and ranking phase. In short, Cubic presented no credible evidence in support of its allegations regarding the alleged cancellation of the demonstrations or any resulting harm. Exceptions and Assumptions were properly considered The ITN required vendors, in their technical proposals, to identify assumptions and exceptions to contract terms and conditions. Significantly, the ITN states that the Department is not obligated to accept any exceptions, and further that exceptions may be considered at the Department’s discretion during the evaluation process. ITN Technical Proposal Section 9 provides, in its entirety: Technical Proposal Section 9: Exceptions and Assumptions If Proposers take exception to Contract terms and conditions, such exceptions must be specified, detailed and submitted under this Proposal section in a separate, signed certification. The Department is under no obligation to accept the exceptions to the stated Contract terms and conditions. Proposers shall not identify any exceptions in the Price Proposal. All exceptions should be noted in the certification provided for in Proposal Section 9. Proposers shall not include any assumptions in their Price Proposals. Any assumptions should be identified and documented in this Section 9 of the Proposal. Any assumptions included in the Price Proposals will not be considered by the Department as a part of the Proposal and will not be evaluated or included in any Contract between the Department and the Proposer, should the Proposer be selected to perform the Work. Failure to take exception in the manner set forth above shall be deemed a waiver of any objection. Exceptions may be considered during the Proposal evaluation process at the sole discretion of the Department. Petitioners allege that the ITN did not clearly set forth how vendors’ exceptions and assumptions would be treated and that the Department accordingly failed to consider such exceptions and assumptions. This is a belated specifications challenge and therefore has been waived. Regardless, the evidence demonstrates that both the TRT and Selection Committee did, in fact, consider the exceptions and assumptions in the evaluation and ranking of proposers. The TRT and Selection Committee were instructed to consider exceptions and assumptions and to give them the weight they deemed appropriate subject to staying within the confines of the ITN’s section 2.5.2 criteria. Consistent with these instructions, some TRT members included comments regarding exceptions and assumptions in those members’ evaluation summaries, reflecting that exceptions and assumptions were considered during the evaluation process. Other TRT members considered the exceptions of minimal significance given that the Department would address them during negotiations and was not bound to agree to any. Indeed, the evidence was that it was the Department’s intent to sort out the exceptions and assumptions in the negotiation process and, again, that the Department need not agree to any exceptions initially set forth by the vendors. Thus, the Department acted rationally and within the bounds of the ITN and its discretion when considering exceptions and assumptions. The Selection Committee Reached Consensus Accenture alleges that the Selection Committee failed to carry out its duty to reach a “consensus” in ranking vendor proposals. The evidence establishes the exact opposite. The ITN provides that the Selection Committee will come to “consensus” about ranking the vendors in order of preference, based on technical approach, capabilities, and best value. A consensus does not require unanimity. According to the testimony of Selection Committee member Javier Rodriguez, who was the only Selection Committee member who voted for Accenture as his first choice, “at the end, Xerox got three votes from the Selection Committee; Accenture got one. So for me, consensus meant: Are we in consensus to move forward with Xerox? And as I said at the selection meeting, I didn’t object. So from a consensus standpoint, we’re moving on to starting negotiations with Xerox, and that was the intent.” Therefore, the unrebutted evidence is that the Selection Committee did, in fact, reach consensus. Subject Matter Experts Accenture contends that the TRT and Selection Committee made use of subject matter experts in the course of the evaluation and ranking in violation of Florida statutory requirements and governing procurement policies. The record, however, is void of any substantial competent evidence in support of these allegations. Tim Garrett is the tolls program manager for HNTB under the General Engineering Consulting contract for FTE. Mr. Garrett was the overall project manager assigned to support FTE in the development and execution of the ITN. He and other HNTB employees, such as Wendy Viellenave and Theresa Weekes, CPA, provided support to both TRT and Selection Committee members in regards to summarizing proposals and defining the process. There is no evidence that any employee of, or sub-consultant to, HNTB communicated qualitative assessments or opinions about any of the competing proposals to TRT or Selection Committee members. Rather, the evidence shows that HNTB facilitated the TRT’s and Selection Committee’s evaluation work by presenting to the committee members data in the form of summaries, charts, and recapitulations pulled from the voluminous technical and price proposals submitted by the five competing vendors. Other than the support provided by HNTB, the record is essentially devoid of evidence that proposal evaluators made use of subject matter experts.6/ But in any event, neither Petitioner has made a showing that the use of subject matter experts is proscribed by governing statutes, rules, policies, or the specifications of the ITN. Although the use of subject matter experts was not addressed in the ITN itself, the Department, before the Pre- Qualification Oral Presentations in early January 2014, issued written “Instructions to Technical Review Committee.” These instructions authorized TRT members to confer with subject matter experts during the procurement process on specific technical questions and subject to certain additional parameters, as follows: Subject Matter Experts Subject matter experts are authorized to support the TRC on specific technical questions that the TRC members may have throughout the procurement process. Subject matter experts may respond to questions on any aspect of the procurement or proposal, but may not be asked to, nor will they support, the evaluation of proposals, which is the responsibility of each TRC member. A subject matter expert can discuss the specific elements of the ITN and a vendor’s proposal with a TRC member, but they cannot meet with more than one TRC member at a time, unless in a public meeting – subject to the Procurement Rules of Conduct stated above. The subject matter experts are fact finders. A subject matter expert cannot disclose the specific questions asked by another TRC member. No evidence has been presented to establish that the Instructions to Technical Review Committee, as to the use of subject matter experts, violated Florida law or the terms of the ITN, or that any subject matter expert -- whether affiliated with HNTB or not -- failed to perform within the parameters set forth in the Instructions.7/ Both Petitioners devoted significant hearing time to the FTE consultancy work of John McCarey, McCarey Consultants, LLC, and John Henneman, an employee of Atkins Engineering, Inc., and sub-consultant to HNTB. There has been no showing by Petitioners that either Mr. McCarey or Mr. Henneman served as a subject matter expert to any member of the TRT or Selection Committee or that either had improper contacts in regards to the evaluation or ranking of the vendors. The undisputed evidence is that Mr. McCarey did not serve as a subject matter expert for any of the evaluators. As for Mr. Henneman, although one TRT member testified in deposition that he “believe[d]” Mr. Henneman was a technical expert or considered one of the subject matter experts, there is no evidence that Mr. Henneman served as a subject matter expert for any of the evaluators -- TRT or Selection Committee. In sum, there is simply no evidence that any of the subject matter experts had any improper influence on the TRT or Selection Committee members.8/ No Improper Contacts, Attempts to Influence, or Bias Cubic alleges that there was improper contact between the Department and Xerox during this protest that violates the statutorily imposed “cone of silence” for procurements. Cubic also asserts that there were attempts by Xerox to influence the evaluations or rankings based on the Department’s, or the other agencies’, past or existing relationships with Xerox or Xerox’s acquired entities. There simply is no record support for the assertions that there was any improper contact or any attempt by any person to influence the Department’s evaluations or rankings based on past or existing relationships between the Department and Xerox or Xerox’s acquired entities. Xerox’s counsel did not have any contact with the TRT or the Selection Committee prior to the filing of the protests and the attendant “stop” of the procurement process pursuant to section 120.57(3)(c), Florida Statutes. The only contact Xerox’s counsel had with TRT or Selection Committee members was as a participant with the Department’s counsel in pre-deposition meetings with some witnesses designated by Petitioners -- all in the context of ongoing litigation following the filing of Accenture’s and Cubic’s protest petitions. This contact is essentially no different than Petitioners’ contact with Department personnel in depositions and the trial, as well as during the section 120.57(3)(d)1., Florida Statutes, settlement conference with the Department. Furthermore, all such contact was after both the TRT’s and the Selection Committee’s work under the ITN was completed and the said contact was of no import to the procurement process. In short, there is no evidence of attempts by Xerox to influence the process, improper contact between Xerox and the Department, or Department bias in favor of Xerox. Responsiveness of Xerox’s Proposal The evidence, at best, is that the Department has yet to fully vet the representations made in the proposals by the respective Proposers, including Xerox. Protesters suggest that such a full vetting is a condition precedent to negotiations. Such an argument, however, ignores ITN section 2.12, which has to be reconciled with ITN section 2.9.1 b). ITN section 2.9.1 b) provides in part that “[t]he Proposer shall have Key Team members with the following experience at the time of Proposal submission.” The section then goes on to list several positions that fall within the “Key Team Personnel” category. Petitioners contend that the Contract Project Manager, Quality Assurance Manager, and Human Resources Manager proposed by Xerox fail to meet the “Qualifications of Key Team Personnel” set forth in ITN section 2.9.1 b), thus rendering the Xerox proposal nonresponsive. ITN section 2.12 provides in part that “[a]fter the Proposal due date and prior to Contract execution, the Department reserves the right to perform . . . [a] review of the Proposer’s . . . qualifications [and that] [t]his review will serve to verify data and representations submitted by the Proposer and may be used to determine whether the Proposer has an adequate, qualified, and experienced staff.” Xerox’s omission, at this point in the process, amounts to a non-material deviation from the ITN specifications given that ITN section 2.12 reserves in the Department the right to review key personnel representations made by Xerox, and any other short-listed Proposer, at any time “prior to Contract execution.” Cubic also contends that Xerox and Accenture submitted conditional Price Proposals rendering their proposals non- responsive under ITN section 2.16. The analysis turns on the provisions of Technical Proposal Section 9: Exceptions and Assumptions, which provides a detailed description of how exceptions and assumptions are to be provided by vendors, and explains that “[e]xceptions may be considered during the Proposal evaluation process at the sole discretion of the Department.” As provided by the ITN, all vendors included a detailed listing of exceptions and assumptions in their Technical Proposal. Consistent with the discretion afforded to the Department under ITN Technical Proposal Section 9 to consider listed exceptions during the Proposal evaluation process, the Department then made the following inquiry of each of the Proposers: Please identify whether your price proposal is based on the Department’s acceptance of the Exceptions in Section 9 of your technical proposal? Please identify whether your price proposal is based on the Department’s acceptance of the Assumptions in Section 9 of your technical proposal? Xerox responded to both inquiries as follows: “The Xerox price proposal is based on the assumptions and general risk profile created by the inclusion of Section 9. We assume the parties will reach mutual agreement on the issues raised in Section 9 without a material deviation in the price proposal.” In addition to providing written answers to the questions, the vendors also addressed these issues in the Proposal Oral Presentations in response to questions by the Department. By the end of the Proposal Oral Presentations, all three vendors had made clear to the Department that resolution of exceptions and assumptions would not affect the proposed price. For example, Xerox’s senior executive in charge of the procurement, Richard Bastan, represented that there is no financial implication to any of the exceptions and that Xerox would honor the terms and conditions and the scope of services in the ITN for the price set forth in the Price Proposal. Accordingly, none of the proposals were improperly conditioned, and Xerox, Accenture, and Cubic were treated equally. Cubic also contends that Xerox’s proposal was nonresponsive as Xerox allegedly failed to meet the stated experience minimums for transactions processed and accounts maintained. There is, however, no credible evidence to support this contention. Indeed, the evidence is that the Department, through its consultant HNTB, verified these requirements by calling the referenced projects. Moreover, Xerox met or exceeded the stated minimums with its New York project reference. The Department’s decision that Xerox was responsive on this issue is logical, reasonable, and supported by the evidence. Price Proposals ITN section 2.5.2 lists “price” as a factor to consider in determining “Best Value.” The vendors’ price proposals were presented to the TRT members for purposes of conducting their evaluations. Price was also an appropriate factor for consideration by the Selection Committee. Accenture argues that “[t]he ITN does not indicate how pricing will be considered by FDOT during the selection process.” Accenture’s contention that the ITN failed to disclose the relative importance of price is a challenge to the terms, conditions, and specifications of the ITN and should have been filed within 72 hours after the posting of the solicitation, as required by section 120.57(3)(b). Accenture has waived its right of protest with respect to this issue. Conflict of Interest Accenture complains that “[n]either Mr. Henneman nor Mr. McCarey submitted conflict of interest forms as required under the Department’s Procurement Manual . . . [because both] were present during the oral presentations made by the vendors in connection with this procurement.” Accenture also complains that Wendy Viellenave never disclosed that her husband works for TransCore, a company that is a subcontractor for Xerox. Ms. Viellenave’s husband currently works for TransCore as a maintenance and installation manager in California and has not worked in Florida in nearly twenty years. There is no credible evidence that Ms. Viellenave, through the relationship with her husband, has any “significant” direct or indirect -- financial or otherwise -- interest in TransCore that would interfere with her allegiance to the Department. The fact that Ms. Viellenave is married to an individual that works for a Xerox subcontractor is insufficient, in itself, to establish a real or potential conflict of interest. Jack Henneman currently runs the back office operation for FTE at its Boca Raton facility. His future role for the CCSS is as project manager for the implementation of the CCSS. Mr. Henneman became aware of the CCSS procurement through his work on a Florida Transportation Commission Report that culminated in 2012. This report documented the cost efficiencies for all of the tolling authorities in Florida. Mr. Henneman attended some of the Pre-Qualification Demonstrations as his schedule would permit because he is the “go-forward” project manager for the CCSS implementation. Mr. Henneman formerly worked for ACS from 2002 – 2009, and met Ms. Gutierrez-Scaccetti during his employment with the company. Mr. Henneman was the transition manager for the transfer of the back office operation of the New Jersey Turnpike from WorldCom to ACS. Mr. Henneman did not have any contact with Ms. Gutierrez-Scaccetti from approximately 2009 to 2012. In his capacity as the “go-forward” project manager, Mr. Henneman reviewed the technical proposals submitted by the vendors in the instant proceeding but he did not have any discussions with the TRT members or the Selection Committee members about the proposals. He reviewed the technical proposals for the purpose of educating himself so that he would be better prepared to carry out his functions as the “go-forward” project manager. John McCarey is a sub-consultant to FTE general engineering contractor, Atkins. Mr. McCarey has a future role as being a part of the negotiations group for the CCSS. Mr. McCarey formerly worked for Lockheed for approximately 25 years and then spent 5 years working for ACS. Mr. McCarey was the chief financial officer for ACS’s State and Local Solutions Group at one time. Mr. McCarey left the employment of ACS in 2006. Mr. McCarey currently assists with various functions, including work on issues with the consolidation of the back office systems of OOCEA and FTE. For approximately 10 years before becoming a sub-consultant, Mr. McCarey had not had any contact with Ms. Gutierrez-Scaccetti. As it relates to the CCSS project, there is no persuasive evidence that Mr. McCarey provided recommendations to the TRT or the Selection Committee.
Recommendation Based on the Findings of Fact and Conclusions of Law, it is recommended that Petitioners’ protests be dismissed. DONE AND ENTERED this 4th day of September, 2014, in Tallahassee, Leon County, Florida. S LINZIE F. BOGAN 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 4th day of September, 2014.
Findings Of Fact On April 10, 1978, the Department, through its Division of Purchasing, submitted an Invitation to Bid on State Contract number 451-600-38-BS, to various vendors of copying equipment to secure contracts for the State's annual requirements of bond and bond-like magazine-finish paper copying machines. The Invitation to Bid included General Conditions, Special Conditions and technical specifications which described the various categories of copying equipment based on type, class and system. Paragraph 7 of the General Conditions of the Invitation to Bid provided, in part, that: 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, file number and bid number. Failure to comply with this condition will result in bidder waiving his right to dispute the bid specifications. Paragraph 8 of the General Conditions provided that: The award hereunder is subject to the provisions of Chapter 112, Florida Statutes. All bidders must disclose with their bid the name of any officer, director or agent who is also an employee of the State of Florida, or any of its agencies. Further, all bidders must disclose the name of any State employee who owns, directly or indirectly, an interest of ten percent (10 percent) or more in the bidder's firm or any of its branches. Finally, paragraph 10 of the General Conditions, covering service and warranty, reads as follows: Unless otherwise specified, the bidder shall define any warranty service and replacements that will be provided during and subsequent to this contract. Bidders must explain on an attached sheet to what extent warranty and service facilities are provided. In addition to the General Conditions, the Invitation to Bid also contained Special Conditions, several of which are pertinent to this proceeding. Paragraph 6(A) concerning machine A cost, provides that: In determining the per copy cost of each type and class of copy machine bidders must include installation and removal costs as well as verify operation of all equipment and training of key operators and warranty for operation of one (1) year. On an Outright Purchase Plan the monthly machine costs shall be determined by dividing the purchase price by 36 months. To this figure add the current monthly cost for preventive maintenance service. In paragraph 29 (D) , the Special Conditions require that: A copy of the manufacturer's standard warranty must be submitted with the proposal. A warranty is required against defective material, workmanship, and failure to perform in accordance with required performance criteria, for a period of not less than one year from date of acceptance. Replacement of all parts found defective, including all labor and materials, within the warranty period shall be made without cost to the State. Finally, paragraph 30 of the Special Conditions provides that: All questions concerning conditions and specifications shall be directed in writing to this office for receipt no later than May 1, 1978. Inquiries must reference the date of bid opening and bid number. Failure to comply with this condition will result in bidder waiving his right to dispute the bid conditions and specifications. Written response to all questions will be mailed to all bidders by May 10, 1978. For the Type I/Class 1 and Type I/Class 1-A categories, the Department received responsive bids from Petitioner and Saxon. Petitioner submitted its bid on June 30, 1978. Saxon submitted its bid from which the Department computed an average per-copy cost of $.0613. In arriving at this figure, the Department applied the following methodology: The $2,525 total cost of the Saxon machine was divided by 36 months, resulting in a figure of $70.14; Saxon's current monthly maintenance cost of $27.71 was then multiplied by 24 months, and that figure was divided by 36 to arrive at a monthly pro-rated maintenance cost of $18.47 for the three year life of the machines; this figure was then added to the $70.14 to arrive at a total monthly machine cost of $88.61. When supply costs and labor costs for various copy volumes were added to the fixed monthly machine costs, an average per-copy cost of $.0613 resulted. Petitioner, however, used a different methodology in formulating its bid and calculating its per-copy cost. Petitioner's methodology was as follows: Petitioner's total machine cost of $2,475 was divided by 36 months, resulting in a figure of $68.75; to this figure was added the current monthly maintenance cost of $10.00, which, when added to the above figure, resulted in a monthly machine cost of $78.75. When supply costs and labor costs were added for various monthly volumes, an average per-copy cost of $.0624 resulted for Petitioner's machine. The essential difference in the bid submitted by Petitioner and that submitted by Saxon is that Saxon amortized its 24-month cost of preventive maintenance over a period of 36 months with the understanding that the first 12 months of preventive maintenance would be furnished by Saxon to the State at no cost. Petitioner, on the other hand, computed its monthly maintenance cost at a flat rate for the full 36-month period apparently assuming that the one-year warranty required in the Special Conditions would necessitate Petitioner's also furnishing preventive maintenance for the first year at no cost. Petitioner therefore contends in its Third Amended Petition that the Department erred in its computations which concluded that Saxon had submitted the low bid in that Petitioner, like Saxon, provides the first year of preventive maintenance at no charge to the State and that: When the first year of maintenance, $120.00, is taken out of [Petitioner's] computation, it results in a copy cost of $.0605, whereas Saxon's stated cost A is $.0613. The manufacturer's warranty submitted by Petitioner with its bid provides, in part, that: Canon U.S.A., Inc. warrants all Canon Copier Products for a period of one year from date of installation against defective material and workmanship. All broken or defective parts not caused by accident or misuse will be replaced at contractors expense, including nonconsumable parts, labor and transportation, if any. Canon U.S.A., Inc. also warrants Canon Copiers against failure to perform in accordance with required performance criteria. Although the Special Conditions require that bidders supply a one-year warranty against defective material, workmanship and failure to perform in accordance with required performance criteria, there is no requirement that a bidder agree to provide cost-free preventive maintenance. Other than Petitioner's notation in its bid of a $10.00 monthly maintenance cost, Petitioner makes no other notation in its bid with respect to the provision of cost-free preventive maintenance. Further, the evidence clearly establishes that the types of services contemplated by the phrase "preventive maintenance" were different from, and outside the "warranty" requirements. The warranty requirements amount essentially to a guarantee of performance for the first 12 months of machine life, whereas the phrase "preventive maintenance" clearly was intended to cover periodic servicing of the machines short of actual repairs of mechanical malfunctions. Had Petitioner intended that its warranty cover cost- free preventive maintenance for the first year of machine life, it should have, but did not, so indicate in response to paragraph 10 of the General Conditions requiring a bidder to define to what extent warranty and service facilities are to be provided. The warranty requirements for outright purchase of copying equipment contained in paragraph 29(D) of the Special Conditions do not include an express or implied requirement that a bidder provide preventive maintenance service at no cost during the first year following purchase of copying equipment. Further, the cost formulas contained in paragraph 6A of the Special Conditions do not require a bidder to include a cost for current monthly preventive maintenance service which it does not intend to charge, and there is no prohibition in that paragraph against expressing the actual monthly preventive maintenance cost for the months in which these costs will be charged. Petitioner failed to submit written questions concerning its interpretation of any of the conditions in the Invitation to Bid or to question the Department's interpretation of those provisions. Additionally, Petitioner failed to define, in accordance with paragraph 10 of the General Conditions, the warranty service which it intended to provide, and likewise failed to express any intent to provide preventive maintenance service at no cost during the first year following possible purchase of its equipment. The Department properly accepted Petitioner's cost data for machine costs set forth in its bid, and properly calculated a per-copy cost for the three-year period without altering Petitioner's machine cost data. Based solely upon data supplied by Petitioner and Saxon, the Department has correctly determined, according to the formula set forth in the bid request, that Saxon's per-copy cost for equipment in the Type I/Class 1 and Type I/Class 1-A categories is lower than that submitted by Petitioner. Petitioner next contends that the Department's bid specifications for bond paper copying machines in the Type I/Class 4 and Type IV/Class 5 System A categories allowed only for machines utilizing a selenium drum, whereby precluding the use of Petitioner's machine which was equipped with a cadmium sulfide drum. Petitioner asserts that the Department " . . . has failed to demonstrate any justification . . ." for the use of a selenium, as opposed to a cadmium sulfide drum, and that " . . . [b]ased on latest available industry-wide data, there is no reason to distinguish between the [selenium] and the [cadmium sulfide] drum used in Petitioner's copying equipment." Although the Department acknowledged that it had no written rules or criteria established for the writing of technical specifications in the Type I/Class 4 and Type IV/Class 5 System A categories, the Department decided on the use of selenium drums in these categories based upon at least five years favorable experience with the selenium drum. Based upon this experience, and a familiarity with literature in the machine copier field, the Department determined that machines equipped with the selenium drum were generally guaranteed for greater volumes than a cadmium sulfide drum equipped machine, and that machines with selenium drums were less susceptible to breakdown in greater volume categories. On the other hand, information available to the Department indicated that machines with cadmium sulfide drums were less likely to withstand heavy usage in types and classifications requiring greater copy volume. Finally, on this issue, at no time prior to the opening of the bids in these categories did Petitioner either question the Department's specifications or attempt to have the Department amend its specifications in these types and classes in order to allow for machines equipped with cadmium sulfide drums. Petitioner neither submitted to the Department prior to bid opening, nor submitted any evidence at the hearing in this cause to substantiate its allegations that the Department was not justified in requiring machines with selenium drums in these categories. In addition, Petitioner failed to submit any evidence to substantiate its allegation that, based upon latest available industry-wide data, there was no rational basis to distinguish between the selenium and cadmium sulfide drums. In its third and fourth affirmative defenses, the Department asserts that Petitioner, in submitting its bid, failed to disclose the name of a corporate officer who was also an employee of the State of Florida, and also failed to disclose indirect ownership of ten percent (10 percent) or more of the Petitioner corporation by an employee of the State of Florida. In view of the foregoing Findings of Fact concluding that the Department reasonably interpreted and correctly applied the bid specification pertaining to the calculation of monthly preventive maintenance costs for the Type I/Class 1 and Type I/Class 1-A categories and that the Department's bid specification requiring a selenium drum for the Type I/Class 4 and Type IV/Class 5 System A categories was a reasonable one, it is unnecessary to reach, and this Recommended Order does not reach the question of whether Petitioner complied or failed to comply with the requirements of Chapter 112, Florida Statutes.
The Issue The central issue in this case is whether Petitioner should be awarded Bid No. 432-730-310-W for configurations 1, 2, and 3, Service Area 1.
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, I make the following findings of fact: The ITB for Bid No. 432-730-310-W consisted of three sections: general conditions, special conditions, and technical specifications. Bidders were evaluated on their technical and non-technical responses to the ITB. Once the Department determined the bidders to be compliant with their non-technical responses, they were ranked according to the evaluation award criteria described in Appendix F of the ITB. Once ranked, the Department forwarded the bid responses to the engineering staff of the Division of Communications for a technical review. This technical review consisted of verifying a lowest compliant bidder and a competitive compliant bidder. To complete the technical review the engineering staff considered the responses submitted on the ITB forms, technical literature provided by the bidder, and technical responses submitted to supplement other information. To the extent that an ambiguity in one response was satisfactorily explained elsewhere in the bid documentation, the bidder was given the benefit of the doubt and found to be responsive to the ITB. Prior to submitting bids, all bidders were given an opportunity to raise questions regarding the ITB at a pre-bid conference conducted by the Department. Petitioner's representative attended the conference and received a copy of the specimen bid. The ITB required specific mandatory responses. Failure to include the mandatory information resulted in the disqualification of the bid. An equipment list for the baseline system was a mandatory requirement of the ITB. Identification of the manufacturer and the part number, if any, were required to be provided. Another mandatory feature required by the ITB was a "handsfree" intercom. The ITB defined this feature as follows: Handsfree answer and talk back on intercom: Enables a station user to answer an intercom call through the station instrument's internal speaker/microphone without lifting the instruments handset. (This feature shall not be controlled by the calling party instrument intercom button.) Speed-dialing was another mandatory feature of the ITB. This feature could be provided at the station (an individual telephone) or by the system. If at the station, there was no requirement that the instrument retain memory in the event of a power outage. The central memory of the system, however, had to retain its memory in the event of a power failure. The ITB prohibited a method of programming which required access to the inside of the Key Service Unit (KSU) to make switch settings or set a switch to enter and/or leave the program mode. All mandatory operational service features of the ITB were listed on page 27, Section 3.4. Optional operational service features and equipment were listed on page 34, Section 3.16.8 of the ITB. An optional operational feature listed was "Station Message Detail and Equipment." The bidding of an SMDR or an option for an SMDR was not required. No bidder was disqualified because it failed to bid an SMDR or an SMDR option. All bidders were required to submit a spare parts price list. Any bidder failing to submit the list was disqualified. Any bidder which submitted the list automatically met the requirement. The lists were not evaluated as art of the bid criteria and no bidder was disqualified based upon the content of the information supplied on the list. Configuration 1 The Department determined Petitioner to be the seventh lowest bidder for configuration 1. Lower bidders, in order of their ranking, were Henkels & McCoy, Southern Bell Advanced, St. Joe Communications, Inter-Tel, Lanier Business, and Tel-Plus Communications. Tel Plus was considered the low compliant bidder and Inter-Tel was the competitive compliant bidder. Following a complete review of the bid responses, the parties agreed that Southern Bell Advanced, St. Joe Communications, and Lanier Business were non-compliant for configuration 1. The Henkels & McCoy bid provided a "handsfree" feature as described above in paragraph 8. The Henkels & McCoy bid did not provide an SMDR or an SMDR option. The Inter-Tel bid did not provide an SMDR or an SMDR option. The Tel Plus bid included a spare parts price list. The Tel Plus bid included an equipment list for the baseline system, however, such list did not completely and accurately describe the baseline system. The discrepancies with the equipment list were fully explained elsewhere in Tel Plus' bid response. Configuration 2 The Department determined Petitioner to be the fourth lowest bidder for configuration 2. Lower bidders, in order of their ranking, were Inter-Tel, Tel Plus Communications, and St. Joe Communications. St. Joe was determined to be non-compliant, leaving Tel Plus as the low compliant bidder and Inter-Tel as the competitive compliant bidder. The Inter-Tel bid provided a statement indicating the equipment bid would be modified to relocate a "DIP" switch to the outside of the KSU. This modification was necessary to comply with the requirement described in paragraph This modification is a minor, simple procedure done by many technicians. No documentation was provided as to how Inter-Tel intended to make the modification. The parties agreed, however, that the modification could be done. The Inter-Tel bid provided the speed-dialing feature described in paragraph 9 at the station. The findings of fact relating to configuration 1 and the Tel Plus bid are applicable to configuration 2. Configuration 3 The Department determined Petitioner to be the seventh lowest bidder for configuration 3. Lower bidders, in order of their ranking, were Business Telephone Systems, Henkels & McCoy, Marcom Telecommunications, Lanier Business, Tel Plus Communications, and Inter-Tel. Inter-Tel was determined to be the low compliant bidder with Henkel & McCoy the competitive compliant bidder. Following a complete review of the bid responses, the parties agreed that Marcom, Tel Plus and Lanier were non- compliant for configuration 3. The Business Telephone bid included a spare parts price list. The Business Telephone bid failed to include on the baseline equipment list the surge protector part number, however, such information was provided elsewhere in the bid response. The Business Telephone bid failed to include a part number for wiring, however, the part number for wiring was not required. The Henkels & McCoy bid included a spare parts price list. The Henkels & McCoy bid failed to list a console card on the baseline equipment list, however, this was to be provided with the console which was properly described elsewhere in the bid response. The findings of fact relating to configuration 2 and the Inter-Tel bid are applicable to configuration 3. Petitioner's bid for configuration 1 was $3641.08. The lowest responsive bid was $2343.00. Petitioner's bid for configuration 2 was $5407.97. The lowest responsive bid was $4723.00. Petitioner's bid for configuration 3 was $12,136.90. The lowest responsive bid was $9271.00. The parties stipulated that Petitioner timely filed its notice of intent to protest and the formal protest of bid award.
Recommendation Based on the foregoing, it is RECOMMENDED that the Department of General Services enter a Final Order dismissing the formal protest of the Petitioner. DONE and ENTERED this 5th day of January, 1988, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of January, 1988. APPENDIX Rulings on Findings of Fact submitted by Petitioner: Paragraph 1 is accepted. Paragraph 2 is accepted. Paragraph 3 is accepted in part. The information requested on the spare parts price list was for planning purposes only. Response of hourly rate etc. was not required to comply with the ITB. Paragraph 4 is accepted; see Finding of Fact paragraph 13. Paragraph 5 is accepted. 6 With regard to paragraphs 6-8, to the extent such paragraphs track the language of the ITB they are accepted; however, the SMDR or SMDR option was not a mandatory item of the bid. It was indicated as an optional operational feature. To the extent paragraph 9 sets forth optional operational features (as described in Section 3.16.8 of the ITB) it is accepted; however this specific proposed Finding is irrelevant and unnecessary to the conclusion of issues raised in this proceeding. Paragraph 10 is accepted. Paragraph 11 is rejected. The SMDR or SMDR option was an optional operational feature. No bidder was disqualified because it did not have the SMDR or an SMDR option. Paragraph 12 is accepted. Paragraph 13 is accepted. Paragraph 14 is accepted. Paragraph 15 is accepted. Paragraph 16 is accepted. Paragraph 17 is accepted. With regard to paragraphs 18-20, to the extent such paragraphs track the information on p.23 of ITB they are accepted; however, the listing of the printed circuit card may not be required when bid as a component of the console which is properly described in the bid response. Paragraphs 21-23 are accepted, however, speed dialing may be provided at the station which does not require memory retention. Paragraph 24 is accepted. Paragraphs 25-26 are accepted. Paragraphs 27-29 are accepted. Paragraphs 30-33 are rejected. Each paragraph makes a conclusion contrary to the weight of evidence. Paragraph 34 is accepted. Paragraph 35 is rejected as unnecessary. For the reasons explained in the conclusions of law, whether Petitioner was or was not compliant is not material. Assuming, arguendo, Petitioner was compliant, it still lacked sufficient standing to challenge the awards. Paragraph 36-38 are rejected as contrary to the weight of evidence. Paragraphs 39-40 are accepted. Paragraphs 41-44 are rejected as contrary to the weight of the evidence. Rulings on Findings of Fact submitted by the Department. Paragraphs 1-7 are accepted. Paragraph 8 is accepted to the extent it rephrases the definition found in the ITB. Paragraphs 9-11 are accepted. With regard to paragraph 12, the system was required to retain memory. Accordingly, that reference is accepted, however, the station was not required to retained memory. Paragraphs 13-15 are accepted. Paragraphs 16-18 are accepted. Paragraphs 19-21 are accepted. Paragraph 22 is accepted in part as it correctly restates the ranking of the bidders; the rest of the paragraph is rejected as argumentative. Paragraph 23 is accepted in part as it correctly states the ranking of the bidders and disqualifications; however the rest is rejected as argumentative. Paragraph 24 is accepted in part as it correctly states the ranking of the bidders, however, the rest is rejected as argumentative. Paragraph 25 is rejected as unnecessary. Paragraph 26 is accepted. COPIES FURNISHED: Edward W. Dougherty, Jr., Esquire Post Office Box 11127 Tallahassee, Florida 32302-3127 Susan B. Kirkland, Esquire Department of General Services 453 Larson Building Tallahassee, Florida 32399-0955 Joseph W. Lawrence, II, Esquire Post Office Box 589 Tallahassee, Florida 32302-0589 Ronald W. Thomas, Executive Director Department of General Services Room 133, Larson Building Tallahassee, Florida 32399-0955
The Issue 1. Whether the proposals submitted by Consultec and EDS met the mandatory requirements of the Request for Proposals, and, if not, whether the proposal submitted by GTE met the mandatory requirements; (2) Whether the evaluation of the proposals by HRS was infected with substantial, material irregularities which resulted in an arbitrary scoring and evaluation process; (3) Whether GTE has standing to contest the award of the contract to Consultec; and (4) Whether GTE has waived any of the issues it has raised due to its failure to timely challenge the terms and conditions of the Request for Proposals.
Findings Of Fact General Background of the RFP On January 6, 1987, HRS released a Request for Proposals for Florida Medicaid Program Fiscal Agent Services (RFP) for qualified organizations to implement and operate a certifiable Medicaid Management Information System (MMIS) for the Florida Medicaid Program. There were several reasons why HRS wanted a new MMIS system for the Florida Medicaid Program. First, the current system was more than ten years old and, although enhanced and modified numerous times, had been determined to be archaic. Second, the federal government indicated to HRS that it would not participate in future funding of the operation of the current system. Third, the federal government recommended that Florida purchase a new system. In February 1986, HRS began the process of preparing the RFP to be used in selecting the fiscal agent for the new MMIS. The process began with the development of an Advanced Planning Document (APD). Since the federal government pays for the large majority of Medicaid services, the federal Health Care Financing Administration (HCFA) of the Department of Health and Human Services (HHS) is very much involved in the various stages of the state procurement process. The purpose of the APD, which describes in detail the planned procurement process, is to obtain federal approval of the procurement process proposed by the state to ensure federal financial participation. The APD was submitted to and approved by HCFA. After approval of the APD, HRS contracted with Peat, Marwick, Mitchell and Company-Compass Consulting Group (PMM Compass) for consultant services regarding HRS's Medicaid fiscal agent procurement. PMM Compass is a nationally known consulting firm in Medicaid procurements. Its function was to review the proposed evaluation section of the RFP and to prepare a detailed evaluation plan, including written evaluation instruments and an evaluation manual, evaluation procedures, and evaluation training and materials, which would be used in evaluating the fiscal agent business and technical proposals. After the RFP was prepared, it was submitted to HCFA for approval. HCFA oversees federal financial participation in the Medicaid program and reviews state RFP's for MMIS systems to ensure that federal acquisition regulations have been met. The HCFA approved the RFP on November 28, 1986. On December 8, 1986, the Information Technology Resource Procurement Advisory Council of the Department of General Services approved the RFP. On January 6, 1987, the RFP was issued. Section 60.800 of the RFP provided that any party adversely affected by the bid solicitation must file a notice of protest within 72 hours after receipt of the RFP. No one filed a protest contesting any of the provisions of the RFP. On April 6, 1987, proposals were received from the following three offerors: Consultec, Inc. (Consultec), EDS Federal Corporation (EDS), and GTE Data Services, Inc. (GTE), subcontracting with The Computer Company (TCC). The RFP The RFP was issued for the procurement of fiscal agent services for the Florida Medicaid Program. The contractor chosen will serve as the HRS fiscal agent to administer the state's Medicaid program. The contractor must furnish all computer hardware, computer software, personnel, and other necessary resources to process approximately 24 million Medicaid claims each year and to keep current track of all Medicaid providers and recipients. The contractor must design and implement the computer and personnel systems to provide these services, must implement necessary changes to the system during the life of the contract, and must perform certain tasks to turn the system over to the state or to the new contractor at the end of the contract term. The total dollar amount paid during the contract will be approximately 45 to 50 million dollars. The RFP is a two-volume document containing approximately 500 pages, including the Appendix which is Volume II. The RFP consists of nine sections which are numbered 10, 20, 30, and so forth through 90. Section 10 provides an administrative overview; Section 20 provides a summary of the present system; Section 30 outlines the scope of the work required setting forth the responsibilities of the contractor and of the state; Section 40 sets forth the Florida MMIS System requirements; Section 50 contains the terms and conditions of the contract; Section 60 sets forth the procurement procedures; Section 70 contains the required contents of the technical proposal, which includes sections concerning corporate background and experience, project organization and staffing, project management and control, work plan and schedule, MMIS system description, and data processing; Section 80 sets forth the required content and format of the business proposal, which contains each offeror's price information; and Section 90 relates to the manner in which the proposals will be evaluated. The RFP provided that the proposal should be submitted in two parts: the technical proposal and the business proposal. The technical and business proposals had to be sealed separately, though submitted simultaneously, and would be open at different stages. The technical proposals were opened on April 6, 1987; the business proposals were opened on June 15, 1987, after scoring of the technical proposals was completed. Each technical proposal was several volumes in length. The Evaluation Process The evaluation process was conducted in accordance with the formal evaluation plan developed by the RFP Project Director, Tom Arnold, and PMM Compass. Section 90 of the RFP set forth the manner in which proposals would be evaluated. The evaluation was conducted in five phases: Phase 1, Evaluation of Mandatory Requirements of Technical Proposals; Phase 2, Evaluation of Technical Proposals; Phase 3, Evaluation of Mandatory Requirements of Business Proposals; Phase 4, Evaluation of Business Proposals; and Phase 5, Ranking of Proposals. The way in which the proposals would be evaluated in each of the five phases was described in Section 90 of the RFP. Phase 1 The first phase of the evaluation process was to review the technical proposals submitted by the offeror to ascertain whether the proposals complied with all the mandatory requirements of the RFP. The purpose of Phase 1, as stated in Section 90.200 of the RFP, was to determine whether each technical proposal was sufficiently responsive to the RFP to permit a complete evaluation. This phase of the evaluation was performed on a "pass-fail" basis and was conducted immediately following the proposal due date. Section 90.200 of the RFP lists the 27 questions that would be used to determine whether the technical proposals met the mandatory requirements of the RFP. HRS considered that an offeror met the mandatory requirements for the technical proposals if an affirmative answer could be given to all 27 questions. The 27 questions were divided into two categories, proposal submission and technical proposals. The questions under the proposal submission category were questions such as the following: Was the proposal received by HRS no later than 2:00 P.M. (Eastern Standard Time) on April 6, 1987? Did the vendor submit separate, sealed business and technical proposals and the required proposal bond? Is this the only proposal? (Alternate proposals not allowed). Are there fifteen (15) copies of the technical proposal? Does each copy of the technical proposal contain the required transmission letter? The questions under the technical proposal category were simply questions to ensure that each of the sections required to be included in the technical proposal had in fact been included. There were eight questions to correspond to the eight sections that were required. Each question was worded in the same manner, such as, "Is a Corporate Background and Experience section included? All three offerors submitted technical proposals that were determined to be sufficiently responsive to the RFP to permit a complete evaluation. Each offeror received a "pass" designation for all questions except GTE. GTE did not receive a pass on Question No. 4, which required that 15 copies of technical proposal be submitted. GTE submitted only 14 complete copies of its technical proposal by the deadline. However, HRS determined this was a minor irregularity, and GTE was allowed to submit the missing volume of its technical proposal the following day. In the appendix to the RFP a "minor irregularity is defined as follows: Minor irregularities are those exceptions which will not have an adverse effect on costs or performance. The first phase of the evaluation process was conducted by Tom Arnold, Tom Wallace, and Barbara Thrower of HRS. This phase was completed within 3 or 4 hours after the proposals had been opened. The mandatory requirements portion of the HRS evaluation manual was used in determining whether each offeror met the mandatory requirements. The same 27 questions listed in the RFP were contained in the evaluation manual. The evaluators were instructed in the manual to assign a "pass" score to each item for which their response to the question defined in the item is "yes." Phase 2 After determining that all of the technical proposals met the mandatory requirements and were sufficiently responsive to permit a complete evaluation, Phase 2 of the Evaluation Process was begun. The purpose of Phase 2 was to measure the individual merit of each technical proposal in each of several areas according to preestablished criteria. A maximum of 2,000 points could be received for each technical proposal. The basic categories evaluated and their maximum number of points were: Corporate Background and Experience 200 pts. Project Organization and Staffing 225 pts. Technical Approach 225 pts. Project Management and Control 150 pts. Work Plan and Schedule 200 pts. MMIS Description 800 pts. Data Processing 200 pts. Proposals were evaluated through four separate methods: (1) Review of the written response to the RFP; (2) Oral presentation; (3) Visits to sites where each offeror operated a baseline system; and (4) Reference checks. The RFP advised the offeror of the scoring system for the technical proposals and the ways in which information would be obtained. The offerors were advised by the RFP that detailed evaluation criteria had been developed for each of the categories listed. Further, for each of the categories listed, the RFP contained a paragraph which was meant to "describe generally the factors covered by the detailed criteria." Section 90.390 of the RFP set forth the manner in which points would be assigned to the technical proposal. Section 90.390 reads as follows: Scoring of the seven areas in each technical proposal shall be done using preestablished criteria and predefined scoring values. Each criterion within an area will be independently scored by evaluators. Indivi- dual raw scores from the evaluators, for each criterion, for each offeror's proposal, will be averaged then multiplied by a predetermined weight to get a weighted point value for that criterion. Scoring weights will not be available to the evaluation committee, but will be applied to raw scores by other designated staff. Weighted point values for all criteria in an offeror's proposal will then be tallied. The final technical score for each proposal is then calculated using the following methodology: A maximum of two thousand (2,000) weighted points will be assigned to the highest passing technical proposal. . . . The formula to be used to award all other offerors a proportional amount of points was also included. The formal evaluation and initial scoring of the technical and business proposals was performed by a Technical Evaluation Committee (Evaluation Committee) appointed by the Secretary of HRS. The Committee consisted of eleven members with backgrounds and experiences in MMIS program development, data processing, and financial analysis. While the members of the Evaluation Committee did not formulate the evaluation criteria which were used, they were well-qualified to apply the evaluation criteria provided. Further, on March 24-27, 1987, prior to the receipt of Proposals on April 6, HRS Sponsored a three and one- half day training session for the members of the Evaluation Committee. Judith Hansen, a consultant with PMM Compass, headed the training sessions. During the course of these training sessions, the evaluators went over each of the criteria on which proposals were to be judged to ensure that all of the evaluators understood the scoring criteria in the categories they would be scoring. Ten of the Evaluation Committee members were responsible for evaluating the technical proposals in Phase 2 of the evaluation process. The individuals were divided into subgroups representing each of the seven categories to be evaluated. Five of the categories had three evaluators. The MMIS Description category had six evaluators, and the Technical Approach category had five evaluators. None of the members of the Evaluation Committee was an evaluator in each of the seven categories; the most categories scored by any one evaluator was four. Each member of the Evaluation Committee scored each of the proposals in the categories to which they were assigned; however, to ensure that each proposal was judged solely by the detailed evaluation criteria provided rather than against each other, an evaluator was permitted to have only one proposal before him to score at a time. Evaluators were also instructed not to discuss their scoring with the other evaluators but to independently score each proposal. The Evaluation Committee began reviewing the technical proposals on April 7, 1987, the day after proposals were submitted. Proposals were evaluated by the committee members at the Government Employee's Credit Union, a location away from their normal work place. Each evaluator was given a technical proposal and was allotted two days simply to read the particular proposal and become familiar with it. They then began to evaluate the proposal in the categories assigned. When the evaluators had finished the first proposal, they turned in both the proposal they were reviewing and their scoring manual for that proposal and received another offeror's technical proposal to read and evaluate. Each evaluator was given a separate scoring manual for each of the offerors which contained the criteria to be used in scoring the proposal in the assigned categories. Each category had criteria to be scored. Different categories had a different number of criteria. For example, the Corporate Background and Experience category had fifteen criteria; the Project Management and Control had eight; and the MMIS Description had 49 criteria. Each criterion in every category was to be scored from zero to ten by the evaluator. A zero was to be given when the offeror had omitted the particular aspect of the area or did not establish the capability to perform it. One to three points was "poor," four to six points was "average," seven to nine points was "good," and ten points was excellent. The scoring manual was organized with the criterion to be scored, and matters that might be considered under that criterion, on the left-hand page. The scoring sheet for that criterion was on the right-hand page. The scoring sheet contained a space for the numerical points awarded and also provided space for comments to indicate the reason for the score given. All proposals were initially scored based on the information provided in the proposals. The scores were Subsequently reviewed and revised, if appropriate, as additional information became available through the reference checks, the oral presentations, and the on-site visits. The evaluations of the technical proposals took over two months to complete. Throughout this period, but after the initial scoring was completed, debriefing sessions were conducted with the evaluators to ensure that the evaluators neither misunderstood nor overlooked relevant information from the proposals, reference checks, oral presentations, or site visits. Reference checks were conducted to verify both the corporate capabilities of the offeror and the qualifications of proposed senior project personnel. The reference checks were conducted by two members of the Evaluation Committee, Diana Flagg and George Strickland. These two individuals were chosen to conduct the reference checking because of their skills and abilities--they both had experience in contract management functions and dealing with state agencies-- because their workload was such that they had the time available. Ms. Flagg and Mr. Strickland were given a reference check manual that had been prepared as part of the evaluation package which contained the questions to be asked; however, they were not told which references to call. After discussing the matter, they decided to contact three (3) different states as corporate references for each of the bidders. They used the following criteria to determine which states to contact: (a) whether the state used the same baseline system proposed by the offeror for Florida; (b) whether the state had recent experience with the offeror; and (c) whether the state had experience with the development and operations of MMIS systems that would be similar to Florida's. The term "baseline system" refers to the proposed subsections of a certifiable, operational MMIS. An MMIS is comprised of six to seven federally required general system design subsections. The RFP defined "Baseline System" as "[t]he basic systems code used for the FMMIS consisting of, at the minimum, the Claims Processing Subsystem, the Reference Subsystem and the MAR Subsystem." The RFP required offerors to propose a certifiable operational MMIS and stated that the baseline system had to be operational in some state. Therefore, contacting the states that had the same or a similar baseline system as that proposed for Florida was the important factor in choosing the states to be contacted. Based on the three criteria stated, HRS decided to contact Montana, Ohio and Washington for Consultec; Georgia, Tennessee and Virginia for GTE/TCC; and Arkansas, Kentucky and Georgia for EDS. The corporate reference checks were conducted in the following manner: After deciding the states to be contacted, Ms. Flagg and Mr. Strickland jointly called the person listed by the offeror as the corporate reference for that state. Upon reaching the listed person, Mr. Strickland asked the corporate reference the predetermined questions in the reference check manual regarding that state's experience with the offeror. The reference was asked to rate the offeror on a scale of 0 to 4 and to give comments supporting the score where appropriate. To insure accuracy, both Ms. Flagg and Mr. Strickland recorded both the scores and the comments given by the reference for each offeror. After each call was completed, they compared their notes to make sure the reference's scores and comments were accurately transcribed. The personnel reference checks were conducted by Ms. Flagg and Mr. Strickland in the same manner. The personnel references called were those listed as references in the proposal for the individual, except in one case the listed reference referred the evaluators to another individual who had worked more closely with the person being checked. After the corporate and personnel reference checks were completed, the reference check manual containing the information received was made available to all of the evaluators for use in scoring the proposals. Oral presentations by each offeror were held on May 26, 27, 28, 1987. The orals provided the offerors with a chance to present their proposals and provided the committee with an opportunity to obtain answers to questions developed during their initial review of the proposals, to observe the offerors in action, and to request clarification of an offeror's proposal. The offerors were advised at the beginning of the presentation that any answers given at the oral presentation would be considered part of the proposal. In addition to the oral presentation, six members of the Evaluation Committee, plus the project director and the evaluation oversight manager, made visits to one installation site where each offeror's baseline system was operational. The site visits gave the evaluators an opportunity to see the offerors in action and to speak with state personnel in person about the offeror. The following site visits were made: June 1-2 EDS Little Rock, Arkansas June 3-4 GTE Data Services/The Computer Company Nashville, Tennessee June 8-9 Consultec, Inc. Jefferson City, Missouri Columbus, Ohio For Consultec, two locations rather than one were visited because while Ohio utilizes the Consultec baseline system bid in Florida, Consultec does not-run the system. In Missouri, on the other hand, Consultec is operating an MMIS system originally designed by EDS. Thus, by visiting two locations, HRS was able to evaluate Consultec's baseline system and analyze Consultec's operations and capabilities as a fiscal agent. The information received as a result of the site visits was recorded in the Site Visits Manual for each offeror. The manual contained the questions to be asked at each site and was part of the evaluation package. As with the Reference Check Manual, the Site Visits Manual was made available to all of the evaluators. On June 15, 1987, after the scoring of the technical proposals was completed by the Evaluation Committee, the raw scores assigned by each evaluator for each criterion were transferred to a summary scoring document. The scores were averaged then multiplied by the weight factor assigned to that criterion. The weighted scores for each of the criteria in each category were then added together, providing a total score for category. The following are the weighted scores received by each offeror, rounded to the nearest whole number: Corporate Background Consultec EDS GTE and Experience 107 139 98 Project Organization and Staffing 128 115 112 Technical Approach 132 121 127 Project Management and Control 87 95 75 Work Plan & Schedule 88 118 80 MMIS Description 425 473 418 Data Processing 126 135 135 1093 1196 1045 34. Since EDS had the highest total points scored, it received 2,000 points for its technical proposal. The others received a comparable point value determined by dividing the offeror's score by EDS's score and multiplying the result by 2,000. Consultec received 1,828 points, and GTE received 1,747 points. The completed technical evaluation points were locked in a bank vault and were not disclosed. On June 15, 1987, the business proposals were publicly opened. Prior to that time the sealed business proposals had been kept in the vault. Thus, no one knew the contents of the business proposals while the technical proposals were being evaluated. At the public opening, the business proposal summary pricing schedules were read to all offerors and posted at HRS. Phase 3 Following the public opening of the business proposals, HRS reviewed the business proposals for compliance with the mandatory requirements for business proposals contained in the RFP. HRS conducted this "pass-fail review" of the business proposals by determining whether the business proposals submitted by each offeror complied with the requirements of Section 90.400 of the RFP. The first two paragraphs of this Section read: The purpose of this phase is to determine if the business proposal is sufficiently responsive to the RFP to permit a complete evaluation. The following items will be reviewed as mandatory requirements: Section 90.400 of the RFP then lists 19 questions regarding the business proposals submitted by offerors. HRS considered an offeror as having met the mandatory requirements for the business proposals if an affirmative answer could be given to all 19 questions contained in Section 90.400. All three offerors submitted business proposals which were determined to have met the mandatory requirements for business proposals contained in the RFP. Phase 4 The business proposals then underwent a more detailed review by three of the HRS evaluators, all of whom were accountants and two of whom were CPAs. This review was to determine whether the business proposal for each offeror was consistent with that offeror's technical proposal and whether the calculations in the pricing schedules contained in the business proposals were accurate. For each offeror, the overall business proposal was determined to be consistent with the technical proposal. Minor arithmetic errors and inconsistencies were noted by the evaluators on each of the business proposals. For example, GTE's installation task salaries appeared to be unreasonable compared to the effort required to complete the tasks proposed in the technical proposal. Although all three evaluators noted this problem, it was determined that the inconsistency was not significant enough, considering the entire project, to merit rejection of the bid. The evaluators noted that Consultec had combined the building and utility categories on the pricing schedules, but found this also to be insignificant Section 90.520 of the RFP provides as follows: "Any business proposal that is incomplete or in which there are significant inconsisten- cies or inaccuracies may be rejected by HRS. (e.s.) As specified in the RFP, points were awarded for the business proposal as follows: the lowest evaluated operational price, the total fixed price per claim for the five-year contract period, was awarded 850 points; the lowest total installation price, the sum of the planning, design and development, acceptance testing and implementation tasks, was awarded 50 points; the lowest systems personnel billing rate was awarded 50 points; the lowest total field representative price was awarded 25 points; and the lowest hourly cost of CPU time was awarded 25 points. The other offerors in each category were awarded a proportional share of the maximum points allowable. The price per claim category received 850 of the 1,000 possible points because this payment represents the most important work to be performed under the contract and because payment will occur during at least five years of the contract. The fixed price per claim is of vital importance to the state because it allows the risk of claims volume variance to be transferred to the contractor. A 10 million variance in annual claims volume, from 19 million to 29 million was established in the RFP, with provision for dealing with claims volume outside the range parameters. There is considerable risk for abnormal claims variance due to program changes that can occur during the life of the contract such as federal establishment of new eligibility groups, new services, or redefined claims definitions. The state legislature may require additional Medicaid services or additional eligibles. However, a fixed price per claim limits the cost of handling increased processing services. The following table displays the points awarded for the business proposals by offeror: Consultec EDS GTE Installation Price 23 43 50 ($7,439,321) ($4,030,129) ($3,433,822) Price Per Claim 850 620 689 ($.2652) ($.3637) ($.3270) Composite Hourly Rate 29 21 50 for Systems Personnel ($95/hr) ($134/hr) ($55/hr) Provider Field Reps 23 25 21 for Five years ($1,892,820) ($1,810,380) ($2,124,450) Price for CPU Time 25 13 4 ($1,100) ($3,625) ($400) TOTAL 951 722 814 Phase 5 After the proposals were rated by the Technical Evaluation Committee, points awarded to the business proposals were added to the technical points to determine the ranking and recommendation of the committee. The ranking and recommendation of the committee along with supporting materials were conveyed to the Steering Committee, composed of four HRS executives. The Proposal Evaluation Committee's Report to the Steering Committee provided a 116 page detailed summary of the overall evaluation results, concluding with the Evaluation Committee's ranking of proposals, which were as follows: Consultec EDS GTE Technical Proposal 1,828 2,000 1,747 Business Proposal 951 722 814 Total 2,779 2,722 2,561 Ranking 1 2 3 In addition to receiving the Evaluation Committee's report, the Steering Committee, through Mr. Moody, one of its members, became aware of a letter written by Senator Grant to the Secretary of HRS concerning the evaluation of the proposals. Attached to the letter was a position paper prepared by GTE which attempted to compare the business proposals submitted by Consultec and GTE by considering the "future value of funds" or "time value of money" based on interest that could be earned on the difference between Consultec's installation price and GTE's installation price. Mr. Moody, a CPA, had been assigned the task of responding to the letter and the position paper. Mr. Moody raised the topic with the Steering Committee and also explained the deficiencies in the GTE analysis. After a thorough review of the Evaluation Committee's report, the Steering Committee was satisfied with the evaluation process. The Steering Committee unanimously recommended the selection of Consultec as the contractor for fiscal agent services for the State of Florida. The Secretary of HRS concurred with the recommendation, and by letter dated July 9, 1987, the offerors were notified of the intent to award the contract to Consultec. GTE filed its notice of protest on July 15, 1987, and its Formal Written Protest on July 24, 1987. After announcing its decision to award the contract to Consultec, HRS informed HCFA of its choice and submitted to HCFA a revised APD reflecting the costs contained in Consultec's business proposal. After reviewing this document and, having previously approved the evaluation process used in selecting the successful offeror, HCFA informed HRS that it did not need any additional information in order to approve the contract award and that the initial review indicated that approval would be granted at the appropriate federal financial participation rate. However, HCFA cannot give the state final approval while the contract award is being disputed. DID THE PROPOSALS SUBMITTED BY CONSULTEC MEET THE MANDATORY REQUIREMENTS OF THE RFP? FINANCIAL STATEMENTS Among the several sections required in each technical proposal was one entitled "Corporate Background and Experience." The required contents of this section were set forth in Sections 70.400 through 70.440 of the RFP. Section 70.400 stated: The Corporate Background and Experience section shall include for the offeror and each sub-contractor (if any): details of the background of the company, its size and resources, details of corporate experience relevant to the proposed fiscal agent contract, financial statements, and a list of all current or recent Medicaid or related projects. The detailed requirements for each of the required elements listed in Section 70.400 was contained in the subsequent sections to the RFP. The requirement for financial statements was detailed in Section 70.420 as follows: Financial statements for the contracting entity shall be provided for each of the last three years, including at a minimum: balance sheets statement of income statements of changes in financial position auditors' reports notes to financial statements summary of significant accounting policies The word "shall" is defined in the Glossary of the RFP as "[i]ndicates a mandatory requirement or condition to be met." After the RFP was released but prior to the submission of bids, HRS provided an opportunity for all prospective offerors to submit written questions to HRS regarding the terms and conditions of the RFP. After receiving these questions, HRS sent all prospective offerors both the written questions submitted by the various prospective offerors and HRS' written responses to them. During this process, one bidder, EDS, submitted the following question to HRS: Since our parent corporation does not publish financial statements for each of its individual subsidiaries, will the financial statements for the parent company be satisfactory? In response, HRS provided all prospective bidders with the following answer: It is the department's intent to review the financial stability of each offeror. Offerors should present appropriate documen- tation to meet this requirement. From the answer given, it is apparent that HRS did not intend to preclude the submission of consolidated financial statements but did intend that each offeror should include "appropriate documentation" to allow HRS to review, and evaluate, the financial stability of the offeror. Like EDS's parent corporation, Consultec's parent, General American Life Insurance Company (General American), has a policy of not releasing the financial statements of its subsidiaries. Based on this policy and HRS' written response to the EDS question, Consultec submitted with its proposal the consolidated financial statements of its parent, General American. Consultec also submitted an annual report showing Consultec achieved a before tax income of $3.4 million in 1985. In its response to the RFP, Consultec indicated that the financial resources of General American backed any agreement Consultec entered into, as follows: The considerable resources of General American ensure Consultec's financial stability. Additionally, our access to the resources of our parent company (including manpower, data processing facilities, and financial support) ensures the successful performance of any contractual obligations. Because of this support, Consultec has greater capacity now than at any time in its corporate history to meet any and all contractual requirements and commitments. However, the General American consolidated, audited financial statements contained in the Consultec proposal contained no ascertainable information about the separate financial condition or financial performance of Consultec. Section 90 of the RFP explained how the technical proposals would be evaluated and specified what items would be considered "mandatory requirements." Technical proposal Mandatory Requirement No. 21 asks only the general question, "Is a Corporate Background and Experience section included? (Section 70.400)". A Corporate Background and Experience section was included in Consultec's submission. The detailed evaluation of criteria under the Corporate Background and Experience section occurred under the Phase 2 Evaluation of Technical Proposals. Oral presentations were considered a part of the technical proposal evaluation process. During Consultec's oral presentation, HRS asked Consultec to clarify its proposal by stating whether General American would be financially responsible for the Florida MMIS project. In a follow-up question, Mr. Tom Arnold asked Consultec if it would consider either submitting separate financial statements for Consultec or agreeing that General American would guarantee Consultec's performance if Consultec were awarded the contract. Consultec responded to this request by submitting a letter to HRS wherein Consultec stated that General American was willing to guarantee Consultec's performance under the contract. This letter was signed by Richard Martz, Senior Vice President of Consultec. RFP specifically stated that the state reserved the right to request amendments to the proposals or to waive minor irregularities. The purpose of the oral presentations was to clarify any information provided in the technical proposals. Further, the financial statements were considered in scoring only one criterion in the Corporate Background and Experience section which was worth a total of 10 points. Finally, GTE included in its proposal the financial statements of its parent, GTE Corporation, and all three evaluators considered the financial strength of GTE's parent in award points for that criterion. GTE also scored more points in this area than Consultec. Consultec received no material advantage over other offerors by submitting consolidated financial statements. If Consultec's failure to include its own financial statements in the technical proposal can be considered a deviation at all from the requirements of the RFP, in light of HRS's clarification of those requirements, it certainly cannot be considered a deviation that would require the rejection of its proposal. CONSISTENCY OF THE BUSINESS AND TECHNICAL PROPOSALS Sections 90.500 and 90.510 of the RFP provide: 90.500.--Each business proposal successfully meeting the mandatory requirements reviewed in Phase 3 will be examined to determine if the business proposal is consistent with the technical proposal and its calculations are accurate. 9O.510--Any business proposal that is incomplete or in which there are significant inconsistencies or inaccuracies may be rejected by HRS. The state reserves the right to reject all proposals. In its Formal Protest, GTE alleged that Consultec's business and technical proposals were not consistent because Consultec "front-end loaded" its proposal. "Front-end loading" means moving a cost from the later part of a contract to the front or charging for a cost that will not be incurred until later in the contract. Section 80 of the RFP describes the RFP's requirements for the business proposals. In the business proposal, each offeror sets forth the costs of its proposed FMMIS. The RFP directs each offeror to include in its business proposal "a firm fixed price for each of the requirements contained on the pricing schedule. . . ." One of the five requirements is installation costs. Section 81.210 of the RFP states that Pricing Schedule B of the business proposal summarizes the four major tasks involved in the installation phase of the Florida MMIS system as described in the RFP. Those four major tasks are described in the RFP at Sections 30.120 through 30.450. The offeror is directed to "schedule the fees for each of these tasks on the detailed Schedules B-1 through B-4" and is told that "[t]hese fees will form the basis from which the installation price is determined." Section 80.120 similarly states that "the installation price will be calculated as the combined sums of the prices of the Planning Task, Design and Development Task, Acceptance Testing Task and the Implementation Task." As required by the RFP, Consultec submitted a business proposal including Pricing Schedule B, which set out the price components of its installation price by task. One line item of the price components is labeled "computer resources." GTE's argument is that the cost of certain computer equipment (computer hardware and software) which Consultec included in the installation price under "computer resources," should have been allocated over the life of the contract and included in the operational price. Consultec's total price bid for the installation phase was $7,439,321, as compared to $4,030,129 for EDS and $3,433,822 for GTE. These differences are largely explained by differences in the cost item, "computer resources." These costs total $3,049,809 for Consultec, $1,130,856 for EDS, and $608,493 for GTE. The treatment of the acquisition price of the computer equipment to be purchased by Consultec is not consistent with generally accepted accounting practices. Proper accounting practices would distribute the cost of the equipment over its useful life rather than charging the entire purchase price as an initial cost in the installation period. Nevertheless, nothing in the RFP required the use of "generally accepted accounting practices" in allocating costs. Nothing in the RFP required that the costs of purchasing the computer equipment be made a part of the operations costs, by allocation over the life of the contract, as opposed to being charged as an installation cost at the time of purchase. Section 30.220 specifically states that it is the contractor's responsibility in carrying out the Design and Development Task, described as part of the installation phase, to [a]cquire the equipment to be used for the design, development, implementation, and operation of the new system." GTE has failed to show how Consultec's business proposal was inconsistent with its technical proposal. The purpose of requiring consistency between the two proposals, generally, is to ensure that each bidder has sufficient funds in its business proposal to perform the tasks required in the technical proposal. If computer hardware to be used during the life of the contract is purchased during the installation phase, the expense is incurred and paid for at that time, and inclusion of such cost as an installation cost is appropriate. GTE also argues that Consultec's business and technical proposals are inconsistent because Consultec has failed to provide sufficient data entry operators in their proposal. GTE attempted to establish this shortage through the testimony of Ms. Clark. However, there were discrepancies in her calculations and she was confused in her testimony. Further, her testimony was based on several assumptions that Consultec did not necessarily make or have to make. Finally, Ms. Clark's calculations indicated that Consultec was short 10 data entry operators in the first year of operation, yet Consultec provided 49 data entry operators the first year--the same number provided by both EDS and GTE in their proposals. In short, there was no competent evidence presented to show that Consultec's proposal provided for an insufficient number of data entry operators. After HRS announced its intent to award the contract to Consultec, HCFA reviewed Consultec's technical and business proposals to determine whether they were consistent with one another. After conducting this consistency review, it was HCFA's conclusion that Consultec's technical and business proposals were consistent. PRICING SCHEDULES - CORPORATE REGISTRATION In its formal protest, GTE alleged that Consultec "modified several of the pricing schedules in its proposals so that the cost categories submitted were different from those required." This was not included as an issue in respondent GTE's prehearing statement, and at the hearing, GTE presented no evidence that any such modifications were material or gave Consultec an advantage. In its formal protest GTE alleged that the corporate charter number provided by Consultec in its transmission letter was for a corporation named "General American Consultec, Inc." This was not included as an issue in GTE's prehearing statement, and there was no evidence presented to support this allegation. WAS THE EVALUATION OF THE PROPOSALS BY HRS INFECTED WITH SUBSTANTIAL, MATERIAL IRREGULARITIES? CRITERIA USED IN THE TECHNICAL EVALUATION. In evaluating the technical proposals, the HRS evaluators used an evaluation or scoring manual which contained the criteria to be used in scoring the technical proposal in each of the seven sections or categories. In its Formal Protest, GTE alleged that the scoring manual used by the HRS evaluators contained criteria and tests which were materially different from those set forth in RFP. The RFP evaluation criteria for the "Corporate Background and Experience" section of the proposal included, among others: (a) large scale data processing development and implementation experience, (b) medical claims processing experience, and (c) medicaid and MMIS experience. The RFP evaluation criteria for the "Data Processing" section of the proposal included, among others: (a) telecommunications network support, and (b) telecommunications experience. GTE has no previous MMIS contracts, but is the country's fourth-largest data processing company. It designed and submitted its proposal expecting to be graded on large-scale data processing experience, telecommunications network support and telecommunications network experience. Mr. Brandenburg, a Medicaid project director for GTE, testified that he felt HRS' scoring manual did not give any weight to an offeror's large scale data processing experience or telecommunications network experience even though these were listed as items HRS would consider in the RFP. However, several of the scoring criteria reference communication links, telecommunications network support, telecommunications network experience and number of persons engaged in claims processing operations. Further, in scoring GTE on criteria 8, 13 and 5 under the Data Processing section, the evaluators referred to GTE's section on telecommunciation experience and support. Section 90 of the RFP made it quite clear that proposals would be evaluated based on preestablished criteria that had been developed for each of the various sections of the technical proposals. The RFP stated that paragraphs 90.320 - 90.380 described "generally" the factors covered by the criteria. In essence, because "large-scale data processing development and implementation experience" was listed as one of the factors that would be covered by the criteria under Corporate Management and Experience, GTE assumed that it would be accorded more weight than it was in the evaluation criteria. Mr. Brandenburg felt that too much consideration was given to MMIS experience in the evaluation process and not enough to experience outside the MMIS industry. However, section 90.310 of the RFP provides: Offerors should note that the entire evaluation will place considerable emphasis on demonstrated experience directly applicable to MMIS transfer or replacement, modification development, and Medicaid fiscal agent operations. In summary, there was no competent evidence presented to support GTE's allegation that the scoring manual used to evaluate the proposals contained criteria that was materially different than those set forth in the RFP. THE EVALUATION PROCESS AND REFERENCE CHECKS Although the RFP set forth generally the criteria to be used in evaluating the technical proposal, the specific criteria used in evaluating the proposal were not included in the RFP. However, the RFP made it clear to offerors that there were predetermined criteria that would be used. The RFP indicated that information would be obtained from reference checks, from the proposal itself, from site visits, and from oral presentations. The RFP specified that the raw scores from the evaluators for each criterion would be averaged and then multiplied by a predetermined weight to get the point value for each criterion. None of the offerors protested the method of evaluating the proposals. Further, there was no evidence presented to suggest that the use of undisclosed weights was irregular. The initial recommended weights from the evaluation expert, PMM Compass, were modified by the Issuing Officer to reflect the areas most important to Florida, then reviewed with and approved by HCFA officials. Mr. Larry Platt of HCFA confirmed that the use of non-disclosed weights is very typical. Indeed, he had not been involved in any procurements in which weights were disclosed to offerors. He also confirmed that it was customary not to include the detailed evaluation criteria in the RFP. GTE also challenged the manner in which corporate reference checks were conducted. In this regard, Dr. Elton Scott testified that it would have been better if the HRS evaluators had contacted all the states where the offerors had certifiable MMIS systems even though this would result in as many as 18 states being contacted for one offeror and as few as 3 for another. Dr. Scott admitted, however, that if, due to time restraints or other reasons, less than all of the listed references could be contacted, it was reasonable to contact those states which used a baseline system similar to the offeror's proposed system for Florida, to contact states with recent experience with the offeror, and to contact states with experience similar to Florida's. Larry Platt has had extensive experience with state RFPs in his position with HCFA and his testimony is accepted. He testified that it was important that an equal number of references be contacted for each offeror and that a state's decision to contact three corporate references for each offeror was reasonable. He further testified that contacting states with recent experience with the offeror and states with the same baseline system were the criteria normally used in determining which states should be contacted as references. In support of its contention that the corporate reference checks were unreliable due to the number of references contacted, GTE introduced into evidence the depositions of Joel Schnedler, Jeff Harriott, Helen Condry, Ruth Fisher, and Robert Kelly, to show that, had additional references been contacted, GTE's corporate reference checks would have been better. However, with one exception, these individuals are Medicaid officials in states purposefully not contacted by HRS as corporate references. Mr. Schnedler is employed by the State of Missouri, which was not contacted because the baseline system operated by Consultec in Missouri was designed and installed by EDS. Ms. Condry is employed by the State of West Virginia, which was not contacted as a corporate reference for GTE/TCC because TCC's responsibilities in West Virginia are limited--TCC does not perform many of the provider relations and some of the other operations. Ms. Fisher is employed by the State of Delaware, which was not contacted as a corporate reference for GTE/TCC because the baseline system used in Delaware has not been certified by the federal government, a requirement for the baseline system proposed for Florida. Robert Kelly is an employee of the State of Pennsylvania, which was not contacted as a corporate reference for GTE/TCC because the baseline system operated in Pennsylvania was not developed, designed or installed by GTE or TCC. GTE contended that it received lower scores on the corporate background and experience questions dealing with MMIS experience solely because the experience shown in its proposal for that area was that of a subcontractor, TCC. In fact, the evaluators did not penalize GTE's proposal in this or any other manner. If the evaluators had not considered the MMIS experience of TCC in evaluating GTE's proposal, GTE would have received zero points in this area for the simple reason that GTE had no previous MMIS experience. Although Ms. Flagg testified that her scoring might have been different if GTE's and TCC's roles were reversed, it does not mean GTE did not receive proper credit for TCC's experience. If their roles were reversed, GTE and TCC would be performing different functions, and thus the scoring would very likely be different. The evaluation of the technical proposals in this case may not have been perfect; however, a review of the entire evaluation package and the evaluation manuals completed by the individual evaluators reveals that the evaluation was thorough and fair. The evaluation package was reviewed by HCFA section by section to determine whether the evaluation process ensured open and free competition. The evaluation package was approved by HCFA. Mr. Platt felt that the evaluation manual was "a very thorough job." Mr. Platt reviewed the evaluation itself after it was completed to ensure that the evaluation plan had been followed. He was satisfied with the process. The completed evaluation manuals show that the evaluators performed their tasks conscientiously and were well-informed. The analyses performed by Dr. McClave revealed high consistency among evaluators and good inter-evaluator reliability. These results support the conclusion that the evaluation procedure was reliable. There was no evidence to suggest that scores were assigned arbitrarily or that the evaluation process was infected with substantial material irregularities. PRESENT VALUE EVALUATION: As stated previously, the RFP provided that business proposals would be scored according to a preestablish point system for the five different types of costs required to be bid. The various categories of costs and the maximum number of points to be awarded to the low bidder for each category were: Max. Pts. Available Installation Price 50 Price Per Claim 850 Hourly Rate for Systems Personnel 50 Provider Field Representatives 25 Price for CPU Time 25 From the above scoring system contained in the RFP, prospective offerors knew or should have known that the State did not propose to evaluate bids on a present value basis. At the time that the RFP was developed, Mr. Arnold was aware of Section 287.0572, Florida Statutes, which requires the use of present value methodology to evaluate the cost of contracts "which require the payment of money for more than 1 year and include provisions for unequal payment streams or unequal time payment periods." Mr. Arnold did not believe that the statute applied to this RFP, and therefore did not change the scoring system. Merrill Moody is the Assistant Secretary for Administration. In that capacity, Mr. Moody oversees personnel, budget, finance, accounting, staff development and training, revenue enhancements, contracting, purchasing, leasing, management systems, audit, and quality control for HRS. Mr. Moody is a CPA, has been employed by HRS for nine years, and oversees a 60 million dollar budget. Like Mr. Arnold, Mr. Moody had considered whether Section 287.0572, Florida Statutes, applied to this procurement prior to the issue being raised by GTE. It was Mr. Moody's considered opinion that the statute did not apply because the contract does not call for an uneven payment stream. Dr. McClave, an expert in econometrics, testified that there is not enough certainty in this RFP to say whether or not there are unequal payment streams, and, accordingly, whether or not the statute applies. He also explained why the application of the statute would be an exercise in futility. First, the only part of the contract arguably subject to present value analysis is the installation phase. This takes place within the first year of the contract and, accordingly, makes it practically impossible to do a useful present value analysis. Furthermore, even if the installation phase payments could be construed as an unequal payment stream within the meaning of the statute, the statute does not require a present value analysis to be applied to unequal payment streams which are to take place under a contract whose duration is less than one year. To apply a present value analysis to the installation phase price would be counterproductive. During the installation phase, the contractor is to be paid at certain points during the first year at which milestones or tasks are completed. At such points, the contractor is to be paid a certain percentage of the total installation price. If a present value analysis were performed, the proposal most highly valued would be that in which all tasks would be finished on the last day of the contract, clearly not a result in the state's best interest. The application of present value analysis to the remaining four fixed price components of the bids is simply not necessary. Each one of the remaining categories called for a fixed price for a certain unit of services to be delivered to HRS by the contractor. There is clearly not an unequal payment stream or unequal time payment periods for these items. Where there is a fixed price for a unit of service, there is obviously no need to apply a present value analysis. If, for example, HRS knows that it will be charged $.2652 per claim by Consultec as opposed to $.3270 per claim by GTE, Consultec's price will always be lower regardless of claim volume. To apply a present value analysis to the cost per claim, systems personnel hourly rate, and CPU hourly rate would create uncertainty in the cost evaluation. This is because the RFP did not specify the number of claims or hours involved. The RFP contained an estimate of between nineteen and twenty-nine million Medicaid claims per year, a ten million claim difference. Likewise, the number of hours of systems personnel time and CPU time is not specified. To conduct a present value analysis assumptions would have to be made. If the assumptions prove wrong, the lowest present value cost bid could become the most costly contract. Dr. James E. Pitts, an expert in the field of economics, agreed with Dr. McClave's conclusion that given the range of possible volumes on the number of claims as well as in systems personnel and computer time, a present value analysis would provide a "horrendous" range of possible present values and the analysis would be extremely sensitive to the assumptions that would be made. Although a present value analysis of the cost of the proposal would require certain assumptions to be made, and thus swould provide a comparison of costs that is not as accurate as comparing the fixed rate costs, a present value analysis can be performed using reasonable assumptions. However, the present value analyses of both GTE and HRS show that Consultec's business proposal yields the lowest present value. Accordingly, had a present value analysis been performed, Consultec would remain the lowest bidder. GTE's expert Dr. Scott, HRS' expert Dr. McClave, and Consultec's expert Dr. Pitts all agreed that even when a present value analysis was used, Consultec's bid remained less than GTE's. THE EDS BID GTE alleged that the proposal submitted by EDS did not comply with the mandatory requirements of the RFP in two respects: (1) It submitted consolidated financial statements; (2) it proposed to supply one element of the FMMIS by using a subcontractor's "propriety" software. The first allegation has been previously discussed in reference to the Consultec proposal. The submission of consolidated financial statements did not make EDS's proposal unresponsive. The financial statements were used as a source of information from which the financial stability and corporate background of the offeror could be evaluated. As to the second allegation, GTE has simply failed to show how EDS's proposal materially deviated from the requirements of the RFP. EDS's transmittal letter stated that EDS would use Health Information Designs (HID) as a subcontractor to produce Drug Utilization Review Reports, thus subcontracting out a total of .78 percent of the work as measured by total contract price. The letter from HID stated that it would not "convey access to or title in any of HID's proprietary DURbase software or system documentation." When EDS was questioned at the oral presentation about how it would comply with Section 50.900, which would be part of the contract to be entered into and requires that HRS shall receive "a royalty-free, nonexclusive, and irrevocable license to reproduce, publish, or otherwise use . . . all software . . . and documentation comprising the Florida MMIS", EDS responded that the purchase of DUR-based services was the procuring of services, not software. Further, if the subcontractor's statement in its letter is considered a deviation from the requirements of the RFP, then EDS complied with the requirements of Section 70.100 of the RFP by identifying and explaining the deviation in the transmittal letter. There was no evidence presented to show that the deviation was material or that the state could not accept the proposal with the deviation. Section 50.000 provides that modification of the contract can be made by mutual agreement of the state and contractor.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order awarding the contract for the Florida MMIS system to Consultec. DONE and ENTERED this 19th day of November, 1987, in Tallahassee, Florida. DIANE A. GRUBBS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of November, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-3188BID GTE's proposed findings of fact 1-19. Accepted generally, though not with same wording or quotations. 20-21. Rejected due to contrary findings. 22-27. Accepted as true but not included in detail in RO because unnecessary. 28-33. Rejected as irrelevant, except to the degree these paragraphs reflect that Consultec intends to purchase computer equipment in the installation phase and charge the cost during the installation phase. Rejected - no competent substantial evidence (CSE) that Florida will pay for costs not attributable to this contract. Accepted in part; rejected in part by contrary finding. 36-40. Rejected as unnecessary. Rejected as not supported by CSE. Accepted. Rejected as not supported by CSE. 44-45. Accepted. 46-53. Rejected as unnecessary. Accepted. Rejected as unnecessary. First sentence accepted, second rejected. Rejected. 58-59. Rejected as irrelevant. Accepted to the degree relevant. Accepted generally. Rejected as unnecessary. Accepted generally. Accepted generally. Rejected. 66-70. Accepted to the degree relevant. 71. Rejected. 72-73. Accepted, except for last sentence which is rejected as not supported by CSE. 74-77. Accepted generally. 78. Rejected as irrelevant, there was no evidence of bias in scoring. 79-81. Rejected generally by contrary finding. Rejected as unnecessary, last part of last sentence rejected for lack of CSE. Accepted generally. 84-85. Rejected by contrary findings. HRS's proposed findings of fact 1-26. Accepted generally. 27-34. Accepted to the degree that Dr. McClave's analyses support the conclusion that the evaluation process was reliable. Accepted generally. Rejected, not supported by cited reference. Though criterion 2 related to the prime contractor, the criterion also related to financial resources not MMIS experience. Last part of paragraph accepted. 37-39. Accepted generally. Accepted generally; however, first sentence rejected because the evaluation manuals of all three evaluators reflect that the guarantee was factor in scoring. However, the comments also reflect that it was not the only consideration. Accepted in part. Part relating to GTE rejected as unnecessary. Last sentence rejected in that letter is not in the exhibit cited. 42-51. Accepted generally. 52. Rejected as unnecessary. 53-54. Accepted generally that Consultec had computer equipment costs in installation phase. Unnecessary. Accepted generally. Unnecessary. Unnecessary. 59-60. Accepted generally. 61-80. Accepted generally. 81-82. Unnecessary. Consultec's proposed findings of fact 1-18. Accepted. 19. Accepted, except as to date and when scoring was begun. 20-38. Accepted generally. 39. Accepted generally, except third from last sentence. 40-42. Accepted generally. Rejected, in that was not reflected in information known at time of evaluation. Accepted generally. Rejected as unnecessary, but accepted as true. 46-55. Accepted to the degree necessary considering Ms. Clark's testimony was not credible. 56-98. Accepted generally but included in order only to the degree necessary. COPIES FURNISHED: Douglas L. Mannheimer, Esquire M. Stephen Turner, Esquire BROAD AND CASSEL 300 E. Park Avenue Post Office Drawer 11300 Tallahassee, Florida 32302 C. Gary Williams, Esquire Jann Johnson, Esquire Steven C. Emmanuel, Esquire AUSLEY, McMULLEN, McGEHEE CAROTHERS AND PROCTOR Post Office Box 391 Tallahassee, Florida 32302 H. Michael Madsen, Esquire James Hauser, Esquire MESSER, VICKERS, CAPARELLO, FRENCH AND MADSEN First Florida Bank Building Suite 701 215 South Monroe Street P. O. Box 1876 Tallahassee, Florida 32302-1876 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue The issue in this case is whether the Department of Insurance acted according to the requirements of law in reviewing submissions of vendors responding to the Department's request for proposals for provision of licensure and examination services.
Findings Of Fact The Department of Insurance is the state agency responsible for licensure and regulation of insurance agents in Florida pursuant to the Insurance Field Representative Licensing Procedures Law set forth at Chapter 626, Florida Statutes. Persons seeking to become licensed by the Department are required to take and pass an examination. Insurance Testing Corporation (ITC) develops and administers insurance licensure examinations in other states. Assessment Systems Incorporated (ASI) develops and administers insurance licensure examinations in other states. Since 1990, the Department has contracted with the University of South Florida (USF) for exam administration. The contract was to expire on September 30, 1994. It has been twice extended and is currently set to expire on September 30, 1996. The parties have standing to participate in this proceeding. On December 29, 1995, the Department of Insurance issued a Request for Proposal Number 95/96-07 (RFP) seeking the provision of testing development and administration services. The RFP was prepared through a collaborative effort within the Department. In issuing the RFP, the Department intended to broaden the level of services obtained from a contracted vendor and to take advantage of the expertise of companies already in the business of regulatory examination provision. The Department issued an RFP to permit vendors to generate their own programs for licensure and examination programs. The alternative, an Invitation to Bid, would have required vendors to bid on a program designed by the Department. The RFP provided that the contract between the Department and the successful vendor would consist of the RFP, addenda and amendments to the RFP, and the successful vendor's proposal. The RFP also provided that Department reserved the right to negotiate with the selected contractor, to waive minor irregularities and to reject all submissions. The RFP provided a schedule and deadlines as follows: submission of questions and requests for clarification by vendors, January 15, 1996; the preproposal conference with vendors, January 22, 1996; submission of proposals, February 12, 1996; oral presentations by vendors, February 19, 1996; and posting of the intended award, February 23, 1996. There was no protest to the RFP's specifications. Submissions were received from five vendors. The RFP evaluation panel scheduled separate oral presentations by the five vendors submitting proposals. The purpose of oral presentations was to permit the vendors to present their proposals and to respond to questions from the evaluation committee. The first thirty minutes of each one-hour presentation were reserved for the vendor presentation; the second thirty minutes were reserved for questions from the evaluation panel to vendor representatives. Vendors were not invited to and did not attend the oral presentations of other vendors. For reasons discussed herein, ITC's proposal was deemed non-responsive and was not evaluated. After completion of oral presentations, the evaluation panel independently reviewed and scored the proposals (other than ITC's) and submitted the scores to the Department's purchasing office. The purchasing office opened and scored the vendors cost proposals, then calculated the vendors' total scores. Of the proposals which were evaluated, ASI's received the highest total score of 134.5 points. The second highest score, 115 points, was received by USF. The Department posted a Notice of Intended Award to ASI on February 23, 1996. On February 23, 1996, ITC contacted the Department purchasing director and requested a copy of the ASI proposal. At that time, ITC was advised that a notice of protest would be due on February 28, 1996. ITC filed a Notice of Protest on February 28, 1996. ITC filed a formal protest on March 8. 1996. Although the State of Florida insurance licensure tests are currently administered by USF, the Department retains ownership of the questions ("test items") used in the examination. Upon the expiration of the contract with USF, all test items are to be returned to the Department. The test items used in Florida insurance exams are developed by employees of the Department with experience in the subject matter being tested. Test items have been revised and updated by USF according to psychometric principles. The Department desires to continue ownership of the "Florida bank" of test items. Section 2.1B of the RFP, "EXAMINATION DEVELOPMENT," states: The Department currently retains ownership of all test items in use for existing exams. The Department shall maintain exclusive owner- ship of the items developed, item bank(s), examinations, and all related materials deve- loped for use in fulfilling the requirements of this RFP. The Contractor will be respons- ible for continued development and maintenance of an item bank for use in preparing the examinations.... Section 2.2 of the RFP, "Related Requirements and Information," states: Use of any test items owned by the Department or developed to fulfill obligations resulting from a contract entered into as a result of this RFP for any purpose other than those covered by said contract is prohibited with- out advance written authorization by the De- partment. Any violation of this provision will result in immediate cancellation of the contract and/or legal actions against the contractor. Vendors were allowed to submit questions and requests for clarification by January 15, 1996. At the preproposal conference, an addendum to the RFP was issued which included the Department's responses to vendor requests for clarification. All potential vendors received the addendum. As did other vendors, ITC submitted question and requests for clarification. ITC question Number 8 states: The Department claims ownership of all existing test questions and requires owner- ship of all items, examinations, and related materials used in the Florida tests. This requirement precludes the use of previously developed, calibrated, and validated banks of items owned by the major providers of insur- ance license examinations. It thus requires the development and maintenance of a completely separate bank of test questions for Florida. This can be done only at considerable expense, which must be reflected in the test fees. Is it truly the Department position that all questions used in Florida insurance tests will be or become the property of the Depart- ment? Is this a negotiable item? The Department's response to ITC's question Number 8 states: The desire of the Department to retain owner- ship of its test items does not preclude the use of previously developed, calibrated and validated banks of items. Subject to the approval of the Department, the selected vendor may use test items it has already de- veloped as long as the subject/line of auth- ority listings for Florida are adhered to and are in accordance with Florida law and administrative rules. It is the Department's position that all items currently owned by the Department or developed for the Department in fulfillment of services requested through this RFP, re- main the property of the Department. This is not a negotiable item. ITC question Number 22 states: Will the Department grant the contractor the right to use test items owned by the Depart- ment in other states where it has testing contracts. If so, what guarantees will the Department offer that the Department will treat these questions as confidential material in the future, when they are used in other states. The Department's response to ITC's question Number 22 states: Yes, the Department will grant the vendor authority to use test items owned by the Department in other states where it has testing contracts. However, some agreement would have to be reached regarding the vendor's liability and responsibility should any test item become compromised as a result of such use. The question relating to the Department offering a guarantee that it will treat such questions as confidential when they are in use in other states is not understood. Obviously, the Department would not want to compromise its own test items. By February 12, 1996, the deadline for submission of proposals, five vendors had submitted responses to the RFP, including ITC, ASI and USF. On the question of test item creation, ITC's proposal states: Generally, we provide the entire bank of questions that are used in the tests of a state we serve. Florida is unusual in providing a bank of questions to start with. Our approach to questions for the Florida tests will follow three tracks. First, we will use the questions in the current Florida tests. Second, we will identify those ques- tions in our own bank that are appropriate for use in Florida. Third, we will write additional questions where shortages are identified in the banks, or to cover add- itional topics in the study manuals. ITC's proposal further states, "ITC staff will write and develop all of the new test questions. We will not rely upon Department staff or the Florida insurance industry...to write any of the new questions required for your tests." On the question of test item ownership, ITC's proposal states: Since you currently own a bank of test ques- tions, we understand that you will want to own a bank of test questions when a contract you may establish with us comes to an end. We currently own our bank of questions and would not want to relinquish ownership to that bank as a result of contracting with Florida. Therefore, our proposal is to divide the bank ownership according to four criteria: (1) Ownership of questions in the original Florida bank will remain with Florida; (2) ownership of questions in ITC's bank as of contracting will remain with ITC; (3) owner- ship of ITC-developed questions that are Florida specific and not applicable to other states will be assigned to Florida; (4) ownership of ITC-developed questions that are applicable to other states will remain with ITC. Florida questions that are materially revised by ITC will be considered ITC questions. During the ITC oral presentation, the evaluation panel sought clarification of ITC's position on test item ownership. ITC indicated that its position was as set forth in the proposal. The issue of test item ownership was the central question discussed at ITC's oral presentation. Essentially, the ITC proposal provides that at the close of any potential contract period, the Department will own the questions it currently owns and only those ITC-developed questions that are specific to Florida and to no other state. Further, under the proposal, ITC would be able to "materially revise" any question in the current Florida test item bank and claim ownership of the revised question. Neither ITC's proposal nor its oral presentation provided reliable information as to what would constitute a "material revision" of a test item. After the oral presentations were concluded, the evaluation panel and Department purchasing personnel determined that the ITC proposal did not comply with RFP's requirement related to test item ownership. The ITC proposal was disqualified and was not evaluated by the panel. The evidence fails to establish that the Department acted improperly in disqualifying the ITC proposal. The evidence establishes that the ITC proposal fails to meet the requirements of the RFP relating to ownership of test items, and was properly disqualified from further evaluation. As set forth in the RFP, the Department requires "exclusive ownership of the items developed, item bank(s), examinations, and all related materials developed for use" in providing examination and licensure services to the Department. RFP Addendum Number 1 clearly states "the Department's position that all items currently owned by the Department or developed for the Department in fulfillment of services requested through this RFP, remain the property of the Department" and further states that the item is not negotiable. The purpose of the Department's insistence on ownership of test items is to assure that, at the conclusion of the contract period, the Department will own the questions which have been prepared by the successful vendor for use in Florida exams. ITC's proposal fails to provide the Department with test item ownership as specifically required by the RFP and addendum. ITC asserts that on the question of test item ownership, its proposal is essentially the same as the proposal submitted by ASI. The evidence fails to support the assertion. ASI's proposal states: ASI acknowledges that the Department currently owns all examination items in use for existing exams. Furthermore, the Depart- ment will also retain ownership of all items developed for use in Florida examinations. Unlike the ITC proposal, the ASI proposal clearly states that the Department will own all items developed for use on the Florida exam. Items developed for the Florida exam will be owned by the Department, whether or not the items are applicable to other states. ITC asserts that the inclusion of cost information within the body of the RFP warrants disqualification of the ASI proposal. The evidence fails to support the assertion. Each vendor was evaluated on compliance with Florida Certified Minority Business Enterprise (CMBE) contracting goals. Evaluation points were awarded if a vendor established that CMBE firms would receive at least 10 percent of the contract award. Section 2.4 of the RFP, "Proposal Form and Content," provides instructions on how to structure a vendor proposal and states: ...ATTENTION IS CALLED TO SECTION 1.8. ANY REFERENCE TO COST IN PARAGRAPHS (A) THROUGH (G) BELOW MAY DISQUALIFY THAT PROPOSAL. Paragraphs (A) through (G) include items related to technical portions of vendor proposals. Section 1.8 addresses copies of proposals and states, "[c]ost proposals must be labelled as such and be submitted in a separate envelope." ASI's proposal included the following statement: ...ASI has signed a Letter of Agreement with Stallion Properties Management of Tallahassee to provide certain real estate and property management services specifically related to the Department's RFP and this Proposal. In total, it is estimated that ASI's Letter of Agreement with Stallion Properties Management will provide a total income of approximately $600,000.00 to Stallion over the term of ASI's three year contract with the Department. This project income to Stallion represents ten percent of the total projected income that ASI will earn should we be awarded the Department's contract. The requirement for submission of sealed cost proposals is intended to assure that the technical review of proposals is not influenced by cost factors. Other than to note compliance with the CMBE goal, the members of the evaluation panel did not extrapolate the ASI disclosure to determine the total ASI cost proposal. There is no evidence that the ASI disclosure affected the panel's evaluation of the proposal. Had the ASI technical proposal included its total cost proposal, evaluation panel members would have referred the issue to the Department's purchasing office. Apparently because the panel members did not note the inclusion of the CMBE total and did not extrapolate cost information based on the CMBE disclosure, the members did not refer the matter to purchasing. Because no other vendor included cost information within the technical portion of the proposals, there was no comparative cost information available for evaluation until the cost proposals were opened by Department purchasing personnel. Cost proposals were reviewed after the evaluation of technical factors was completed. ITC asserts that ASI's proposal modification after the proposals had been opened and during the oral presentation warrants rejection of ASI's proposal. The evidence fails to support the assertion. Section 2.1L of the RFP, "COLLECTION AND REMITTANCE OF FEES," states: The Department requires the collection of certain fees from applicants for services related to the licensure and examination process. It is intended that the Contractor collect these fees, as necessary and appropri- ate, and remit these fees daily (exclusive of weekends and State of Florida holidays) in a manner acceptable to the Department. It is intended that the Contractor retain its fee for services as provided for in the contract and remit the balance to the Department as appropriate. The Department is currently not prepared to accept electronic funds transfers in this area, however, it is interested in proposals which could accommodate such tran- sactions during the contract period. The Department contemplates technological enhance- ments in the Receipt's database within the contract period, however it is unable to specify the details of such at this time. Contractor must be able to accommodate such technological changes and enhancements. If any invoices are required to be submitted by the contractor to the Department, they must be submitted in a manner acceptable to the Department and in detail sufficient for a pre- audit and postaudit thereof. The Contractor shall have a system which maintains certain data, as specified by the Department, related to its activities in this area. The Department had indicated that a vendor could collect the total fee, deduct the vendor service charge, and remit the balance of the fee to the Department. Prior to the preproposal conference, ITC submitted a question (Number 21) seeking information on how fees were to be conveyed to the Department. In Addendum Number 1, the Department indicated that a response to the question would be provided in a second addendum to be issued after the preproposal conference. In the second addendum, the Department's response to ITC's question Number 21 states: The Department intends for the vendor to receive, on behalf of the Department, certain fees currently paid by licensure applicants and/or exam candidates. These fees may be paid by personal check, certified check or money order. Cash cannot be accepted. All checks or money orders must be made payable to the Florida Department of Insurance and must be deposited by the vendor into a state concentration account (with Barnett Bank) or a clearing fund in the name of the Department. The Department will assist in establishing these accounts. The Department will require a daily accounting of all monies collected and/or deposited. This information must be in the format prescribed by the Department. This information must be transmitted via an automated system compatible with the Department's existing information systems in this area. The vendor will be required to submit in- voices to the Department for services rendered on a monthly basis. Such invoices must be in sufficient detail for pre-audit and post-audit purposes and be in a format prescribed by the Department. The Department's response in addendum Number 2 specifically noted that the Department's position had changed. ASI's proposal states: Fees will be collected on the day of examina- tion and/or license issuance. This method will eliminate late payment processing. We will collect examination fees payable to ASI. This will minimize reconciliation tasks for the Department, and will allow accounting efforts to focus on those fees collected on behalf of the Department. Application re- venues will be shared with the vendor, based on prices stipulated in the price proposal and associated processing volumes. Appli- cation and fingerprinting fees will be collected via checks made payable to the Department. ASI will provide a reconcilia- tion of these fees, and daily deposits will be made to the Department's account. ASI will invoice the Department for its applica- tion screening services on a monthly basis. ASI's proposal further states: As part of the standard project planning process, [ASI will work side-by-side with the Department to identify specific requirements to be included in the implementation plan, including fee collection procedures], de- tailed invoice requirements, and the most appropriate method to transmit detailed tran- saction information to the Department.... [emphasis supplied] The proposed fee collection process suggested by ASI is inconsistent with applicable Florida law and does not follow the procedure set out by the Department in Addendum Number 2. Section 2.4 of the RFP, "Proposal Form and Content," subsection (C) "Work Plan" states: Describe in narrative form your plan for accom- plishing the work described....Modifications of requirements of this RFP are permitted, however, reasons for changes should be fully explained and justified. " At the oral presentation, and prior to evaluation of the proposals, the evaluation panel advised ASI that the fee collection proposal was not legally appropriate. ASI representatives indicated that they were attempting to provide an improved fee reconciliation process and were not aware that Florida law prohibited their fee collection plan. ASI utilizes the two-check fee payment system in some of the states where ASI administers licensing exams. At the oral presentation, ASI representatives assured that, as specifically stated in the proposal, ASI was committed to working with the Department "...to identify specific requirements to be included in the implementation plan, including fee collection procedures...." ASI representatives stated that the fee collection procedure desired by the Department would be accomplished within the costs set forth in the proposal. Although ASI's fee collection procedure does not follow the method suggested in the RFP, such does not warrant rejection of the ASI proposal. As stated in the RFP, ASI's modification of the RFP requirement was permitted where the reasons for changes were fully explained and justified. ITC implies that ASI can't provide the services offered in the ASI proposal within the fee and cost structure set forth in the response to the RFP. There is no credible evidence supporting the implication.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Insurance enter a Final Order DISMISSING the case and awarding the contract to Assessment Systems, Incorporated. DONE and ENTERED this 21st day of May, 1996 in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of May, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 96-1330BID To comply with the requirements of Section 120.59(2), Florida Statutes, the following constitute rulings on proposed findings of facts submitted by the parties. Petitioner The Petitioner's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 6. Rejected, not supported by the weight of the evidence. Rejected, subordinate. Rejected, not supported by the weight of the evidence. Rejected, comment on testimony is not finding of fact. Rejected, unnecessary. The ITC proposal is not responsive to the Department's requirement of test item ownership. 12-13. Rejected, contrary to the weight of the evidence. Rejected, immaterial. Rejected, subordinate. Rejected, not supported by the weight of the evidence. 22. Rejected, subordinate. 23-24. Rejected, unnecessary. Rejected, subordinate. Rejected, unnecessary. Rejected, not supported by the weight of the evidence. Respondent The Respondent's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 2. Rejected, subordinate. 3-5. Rejected, unnecessary. 7-8. Rejected, unnecessary. 14. Rejected, irrelevant. 20-23. Rejected, unnecessary. 34-37. Rejected, cumulative. 48-59. Rejected, cumulative. 61-62. Rejected, irrelevant. 63-69. Rejected, cumulative. Rejected, unnecessary. Rejected, cumulative. 83. Rejected, cumulative. 96. Rejected, unnecessary. Intervenor ASI Intervenor ASI's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: Rejected, unnecessary. Intervenor USF Intervenor USF's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 20-21. Rejected, unnecessary. Rejected, subordinate. Rejected, subordinate. Rejected, unnecessary. Rejected as to use of phrase "final offer;" the ASI RFP specifically committed to working with the Department on fee collection procedures. Rejected, unnecessary. 45. Rejected, subordinate. 50. Rejected, unnecessary. COPIES FURNISHED: Bill Nelson State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner, General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300 Carl D. Motes, Esquire Maguire, Voorhis and Wells, P.A. 2804 Remington Green Circle, Suite 4 Tallahassee, Florida 32317-2429 Frank Fernandez, Esquire Thomas Valentine, Esquire Department of Insurance Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0333 William B. Graham, Esquire Richard N. Sox, Jr., Esquire Bateman and Graham, P.A. 300 East Park Avenue Tallahassee, Florida 32301 Regina L. DeIulio, Esquire Office of the General Counsel University of South Florida 4202 East Fowler Avenue, ADM 250 Tampa, Florida 33620-6250
The Issue Whether the Florida Department of Transportation’s (“Respondent” or “Department”) intended award of a contract for integrated corridor management modeling software to Aimsun, Inc. (“Intervenor” or “Aimsun”), is contrary to the Department’s governing statutes, rules, policies, or the solicitation specifications; and, if so, whether the decision was clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact The Department is the state agency responsible for coordinating and planning a safe, viable, and balanced transportation system serving all regions of the state, and to assure the compatibility of all components of the system. See § 334.044, Fla. Stat. (2018). The RFP On February 22, 2018, the Department posted the RFP to the state vendor bid system, seeking vendors that could provide Integrated Corridor Management Modeling (“ICMM”) software. There were no challenges to the terms, conditions, or specifications contained in the RFP. The RFP describes the overall goal to acquire ICMM for the Central Florida Regional Integrated Corridor Management System (“ICMS”), which is initially centered on the I-4 Corridor and its “influence area,” including the interstate, a commuter- rail line, transit bus service, park-and-ride lots, major regional arterial streets, toll roads, and other transportation facilities. While the ICMS project focuses on the Orlando region initially, the goal of the Department is to develop a modular approach to ICMS which will be scalable to District 5 in its entirety. As summarized by Shaleen Srivastava, Petitioner’s Vice President, the Department is building a “model of the actual traffic situation [in the I-4 corridor] in the virtual world.” The ICMS is composed of three main systems, the relevant one being the Decision Support System (“DSS”). The DSS will be developed to provide a system to review and evaluate the current and predicted conditions of the Central Florida transportation network in order to help operators make smart decisions in managing both recurring and non-recurring congestion conditions. The DSS components are an Expert Rules Engine (“ERE”), a Predictive Engine (“PRE”), and an Evaluation Engine (“EVE”) that will build and select response plans to be evaluated, model the predicted outcomes of the selected response plans, evaluate and score the plans, coordinate with operators and local agency maintainers, and invoke the approved response plan actions. Through the RFP, the Department seeks a vendor to supply a Commercial Off-the-Shelf (“COTS”) software product which will be the core of the PRE. The RFP Exhibit A contains the scope of services for the project and describes in detail the requirements for the PRE. The PRE is envisioned to provide predictions of the network performance 30 minutes into the future. The PRE will have three main functions that must be met by the COTS software: 1) maintenance, 2) evaluation, and 3) offline signal simulations. The third role of the PRE is to simulate and provide measures of effectiveness for the optimized signal timing plans and coordination that will be developed by the signal optimization tool that will be part of the ICMS. The PRE is an integral component of, and must interface seamlessly with, the DSS. All of the technical requirements for the PRE/COTS are listed in Exhibit A, Table 2. The proposer must verify that its software is demonstrated to meet each of the 55 requirements. The RFP incorporates a number of required forms, including a Proposed Staffing and Availability worksheet (“staffing worksheet”), which directs proposers to provide the following information for up to 10 core staff members: List the Key Personnel, including job titles, of the Team that will be involved with this contract. Include the number of years of experience each person has in the specific job title and the type of experience they have, as well as any certifications and education. List the availability for each team member in percentage of hours per year. According to the RFP, proposals may be found to be irregular or non-responsive if they do not utilize or complete prescribed forms. Processing of Responses Both PTV and Aimsun are potential vendors which submitted timely proposals to the District 5 Procurement Unit in response to the RFP. The Procurement Unit opened the technical proposals on April 10, 2018, then distributed the proposals to the members of the Technical Review Committee (“TRC”), who evaluated and scored the technical proposals. The TRC was composed of District 5 staff with technical expertise relevant to traffic management: Traffic Design Engineer Ayman Mohamed, Transportation Modeler Jason Learned, and Freeways Engineer Jeremy Dilmore. TRC members evaluated and scored the technical proposals on a scoresheet template provided by the Procurement Unit. The template was divided into three sections, which correspond with the three sections of the RFP: Software Description and Functionality, Support and Integration Approach, and Software Deployment/Project History. The maximum score for each section was 35 points. TRC members completed their evaluation and scoring and returned their evaluation, and summaries thereof, to the Procurement Unit on April 17, 2018. Aimsun received a total score of 93 for its technical proposal. PTV received a total score of 78.67. Following opening of the price proposals, Aimsun was selected to receive the ICMM contract. Responsiveness of Aimsun’s Proposal Petitioner’s first contention is that the Department’s intended award to Aimsun is contrary to the bid specifications because Aimsun did not include the staffing worksheet, which rendered Aimsun’s proposal non-responsive. It is undisputed that the Aimsun proposal considered by the TRC did not include the required staffing worksheet. According to the Procurement Supervisor, the TRC is responsible for determining responsiveness of proposals.1/ In scoring section 2, Support and Integration Approach, Mr. Mohamed noted, “Aimsun provided general description of their supporting staff. Aimsun did not provide staffing plan showing key staff members and their availability toward the project.” Mr. Mohamed gave Aimsun 31 out of 35 possible points on this section. Mr. Learned gave Aimsun 30 out of a possible 35 points on this section. Mr. Learned noted, “Has staffing plan, but does not show availability – staff has worked on projects listed in the project history. Support staff housed in NYC office, which will facilitate communication with FDOT.” Mr. Dilmore gave Aimsun 33 out of a possible 35 points on this section. Mr. Dilmore noted, “Aimsun’s product requires development. It is unclear about availability of staff.” Despite the absence of the staffing worksheet from Aimsun’s proposal, Mr. Mohamed was satisfied Aimsun could support the COTS product identified in this proposal. In arriving at his conclusion, Mr. Mohamed considered the information contained in Section 2.4 of Aimsun’s proposal, which listed each staff member who would support the project, as well as each component of the project which they would support. Both Mr. Learned and Mr. Dilmore also relied upon the staffing information contained in Section 2.4 of Aimsun’s proposal in arriving at their scores of 30 and 33, respectively. Despite the absence of the required staffing worksheet, each evaluation committee member was satisfied that Aimsun demonstrated the ability to support the COTS software solution proposed. The record does not support a finding that Aimsun’s failure to include the required staffing form gave Aimsun a competitive advantage or benefit over PTV. Arbitrary Scoring Petitioner next contends that the Department scored its proposal arbitrarily, or otherwise in error, compared to its scoring of Aimsun. Staff Availability Petitioner cites, as the most egregious example, the TRC scores it received for section 2. This section requires the proposer to discuss how they will support the implementation of the modeling software as part of the ICMS development and deployment, as well as a description of how the proposer supports software integrations, application development, and general modeling support. This is the section which required the inclusion of the staffing worksheet. On this section, Petitioner received a 10 out of a possible 35 points from Mr. Dilmore. Mr. Dilmore noted, “The development staff generally has low availability. Their approach to training is 4 week courses. The implementability will be difficult [but] is generally acceptable. PTV takes exception to the SLAs [which] are part of the contract.” PTV takes umbrage at Mr. Dilmore’s severe deduction of points for perceived “lack of staff availability” when Aimsun received only minor point deductions, even though it wholly failed to include the required form detailing its staff availability. While PTV’s proposal does, in fact, propose low availability of staff,2/ that shortcoming was not the sole basis for the low score Mr. Dilmore’s assigned. As Mr. Dilmore noted on his score sheet, and explained at final hearing, in addition to availability issues, his score reflected concerns with PTV’s failure to agree to the Department’s Service Level Agreement (“SLA”), proposed approach to training, and issues with implementing the software. Department SLA The Department’s SLA sets the required timeframes for response to, and repair of, system maintenance requests and system failures. For example, the SLA sets a maximum response time of 15 minutes, during normal operating hours, for priority one failures. Likewise, the SLA sets a maximum repair time of one hour for such failures during normal operating hours. Rather than agreeing to the Department’s SLA, PTV stated that it “adopts its own standard [SLA] terms,” and explained that it is “open to discussion” on the content and terms of a final agreement. PTV did not include a copy of its standard SLA for review by the Department, but instead noted that it could be “provided upon request.” The SLA is critical to the Department. If a vendor does not agree to the Department SLA, the Department is not assured that the failures in the PRE software function, which drives the DSS, will be repaired timely. The SLA is so critical that it includes a liquidated damages clause for damages caused by the vendor’s failure to comply with the required timeframes. In contrast to PTV, Aimsun took no exception to the Department’s SLA and agreed to comply with it. The Department’s scoring of PTV’s proposal was reasonable, especially in light of the importance of the Department’s SLA. Training The vendor is required to operate, maintain, and support the COTS software system for two years after its deployment. The vendor must provide at least two training courses on the DOT premises in the use of the planning aspects of the software. Additionally, the vendor must provide administrator training for the PRE on Department premises after the integration with ICMS is complete. Mr. Mohamed gave PTV a 32 out of 35 points on this section. Mr. Mohamed’s concern was with PTV’s approach to training of Department staff. PTV proposed two separate training sessions for Department staff, each lasting four weeks. Mr. Mohamed commented that the trainings “could be unfeasible for most of the essential senior staff.” Mr. Learned gave PTV a 25 out of 30 points on this section. He also noted that the proposed trainings were not optimal and that the preferred approach was tiered training based on the Department staff member’s “level of use,” meaning that the amount of training should correlate with the staff member’s responsibilities related to the software. In contrast to PTV, Aimsun proposed two tiers of training: a first-level training for staff to master all the basic concepts of the software, and a second level which includes a detailed walk-through of the methodology and workflow for modelers who have previous practical experience. The Department’s scoring of PTV’s proposal on this issue was reasonable based on the level of training proposed. Software Description and Functionality The Department also reasonably deducted points from PTV’s proposal in section 1, Software Description and Functionality. Mr. Mohamed, Mr. Learned, and Mr. Dilmore scored PTV’s proposal 32, 30, and 30 out of 35, respectively, on section 1. PTV failed to verify that its software met all of the technical requirements for the PRE/COTS listed in Exhibit A, Table 2. Of the 55 requirements, PTV indicated that its COTS was only partially compliant with seven of the technical requirements. Further, PTV’s proposed software, DATEX2, is a European data format, which will require conversion to interface with the Department’s U.S. data format.3/ Mr. Learned testified that these conversions would require the Department to incur additional costs--both monetary and temporal. It also raised the questions of whose task it would be to complete the conversion and when conversion would take place. In addition, since the PRE is the driver of, and a critical interface with, the DSS, the necessity for conversion is not advantageous to the Department. In comparison to PTV’s proposal, Aimsun’s proposal verified that its COTS complied with all 55 technical requirements. The Department’s scoring of PTV’s proposal was reasonable and supported by the importance of the interface between the PRE and the DSS. Software Deployment/Project History PTV also received lower scores than Aimsun on section 3, Software Deployment/Project History. Mr. Mohamed, Mr. Learned, and Mr. Dilmore assigned scores of 27, 25, and 25, respectively. PTV has not previously deployed DATEX2 anywhere in the United States. All of its prior deployments were in Europe and the Middle East. This is significant because traffic operations (i.e., signal systems) and driver behavior are significantly different in North America than in Europe and the Middle East. By contrast, Aimsun’s project history includes two prior U.S. deployments, along with its European and Australian experience. The most relevant project is that of the San Diego I-15 ICMS, where Aimsun’s COTS was deployed successfully in 2013 and serves as the real-time modeling tool for the DSS in the San Diego interstate corridor ICMS project. That project is the exact model the Department is seeking to construct for the I-4 Corridor ICMS. Aimsun is currently involved in ongoing maintenance of the San Diego project. The Department did not arbitrarily score PTV’s proposal regarding section 1. Aimsun’s experience was the most relevant and demonstrated success with deployments interfacing with the DSS to support an ICMS. Scoring Contrary to RFP Criteria In scoring the proposals on availability, the TRC members also considered that most of the key PTV staff are not located in the United States. Only two key staff members, Shaleen Srivastava and Chetan Joshi, are located in the U.S., and those two members were proposed to devote to the project 15 percent and 30 percent of their annual work hours, respectively. TRC members expressed concern that international time zone differences would affect the responsiveness and availability of PTV to support the project, especially in the event of system failures. PTV posits that, in deducting points for the location of its staff outside of the U.S., the Department applied criteria that were not contained in the RFP. PTV argued that if the Department only wanted U.S.-based staff, it must have included that in the RFP criteria. Mr. Srivastava testified that someone on his staff, not necessarily someone listed on the worksheet, would be available 24 hours a day to take the Department’s calls and address any maintenance or failure issues. While Mr. Srivastava’s testimony was credible, it does not erase the Department’s reasonable concern with the availability of key staff. Mr. Srivastava conceded that the key staff listed on the worksheet would not always be available to the Department because of differences in international time zones. That, coupled with PTV’s lack of commitment to the Department’s SLA, justifies the TRC members’ deductions on section 2 of PTV’s proposal. The Department did not impose criteria which were outside of the RFP.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Transportation enter a final order dismissing PTV America, Inc.’s Petition. DONE AND ENTERED this 2nd day of November, 2018, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 2nd day of November, 2018.
The Issue The issues presented for decision in this case are: 1) whether DEM’s proposed award of the contract pursuant to Request for Proposals, DEM 06/07-10 “Emergency Notification System Pilot Program” (RFP) to NTI is contrary to DEM’s governing statutes, rules, policies or the solicitation specifications; 2) whether DEM’s failure to reject Roam’s proposal as non-responsive is contrary to DEM’s governing statutes, rules, policies or the solicitation specifications; 3) whether DEM’s failure to disqualify Roam from consideration of a contract award because of Roam’s contact with DEM during the no contact period is contrary to DEM’s governing statutes, rules, policies or the solicitation specifications; 4) whether DEM’s failure to reject NTI’s proposal as non-responsive for failure to include pricing information beyond the seven month pilot period is contrary to DEM’s governing statutes, rules, policies or the solicitation specifications; 5) whether NTI has violated Section 287.075, Florida Statutes, and is ineligible for an award of the contract; and 6) whether pursuant to Section 120.57(3), Florida Statutes, a de novo proceeding to determine whether DEM’s action deeming Roam’s proposal responsive to the RFP by virtue of scoring that RFP is contrary to DEM’s governing statutes, its rules or policies or the solicitation specifications.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of the proceeding, including the Joint Pre-Hearing Stipulation of the parties, the following findings of fact are made: DEM issued a Request for Proposals, entitled DEM 06/07- 10 “Emergency Notification System Pilot Program” (“RFP”) on September 18, 2007, for the purpose of implementing an emergency notification pilot program in Brevard, Pasco, Polk and Orange counties which would deploy unlimited complete, time-sensitive notices to warn citizens, local emergency management entities and state and regional entities against disasters. The deployed system was required to send voice calls to landlines and cell phones; text to cell phones and email accounts; and messages to TTY/TDD receiving devices for the hearing impaired. The pilot program was to be funded through “Specific Appropriation 1621W” for two million dollars in non-recurring funds from the Emergency Management Preparedness and Assistance Trust Fund. The pilot program was to last seven months beginning on December 1, 2007, and ending June 30, 2008. The RFP did not request pricing for the pilot program to extend beyond June 30, 2008. The RFP set forth certain mandatory requirements that could not be waived as minor irregularities by DEM. Specifically, the Evaluation Criteria section of the RFP stated in pertinent part: “A non-responsive proposal shall include, but not be limited to, those that: i) are irregular or are not in conformance with the requirements and instructions contained herein . . .; iii) fail to utilize or complete prescribed forms; iv) are conditional proposals . . .; vi) propose a project that . . . will require additional funding to implement . . .” The RFP further stated with emphasis: “THE RESPONSIVENESS OF A PROPOSAL SHALL BE DETERMINED BASED UPON THE DOCUMENTS SUBMITTED WITH THE PROPOSAL. A NON-RESPONSIVE PROPOSAL WILL NOT BE CONSIDERED.” The RFP further explained: DEM may waive minor irregularities in the proposals received where such are merely a matter of form and not substance, and the corrections of such ARE NOT PREJUDICIAL to other respondents. Variations which are not minor shall not be waived. (Emphasis in original.) The RFP mandated that all proposals comply with the language in the legislative appropriation for the project, which stated as follows: From the funds in Specific Appropriation 1621W, $2,000,000 in non-recurring funds in the Emergency Management Preparedness and Assistance Trust Fund shall be used to implement a pilot program in Brevard, Pasco, Polk and Orange counties for the purpose of deploying unlimited complete, time-sensitive notices quickly and easily to citizens, local emergency management entities, and state and regional entities to warn against disasters and provide community outreach and education notifications. The deployed service should be able to send voice calls to landlines and cell phones; text to cell phones and email accounts; and TTY/TDD receiving devices for the hearing impaired. The RFP further stated in the Scope of Work section: This Pilot Program is subject to Legislative appropriation and as such, all annual subscriber costs and maintenance fees for the life of the project must be anticipated by the responsive bidder when calculating proposal, and will not be billable upon implementation as a separate charge to the State, Counties, or individuals participating in this program. Id. at 25. (Underlining in original.) RFP. DEM proposed to award a “fixed fee contract” under the Respondents were allowed to submit written questions regarding the RFP to DEM in letter or email form on or before October 1, 2007. According to the RFP, Respondents were not permitted to contact DEM between the advertisement of the RFP on September 18, 2007, until the end of the 72-hour period following the agency posting of the notice of the intent to award, except to submit questions regarding the RFP in written form on or before October 1, 2007. The closing date for submission of proposals in response to the RFP was October 9, 2007. Eleven proposals were submitted, with two being rejected upon opening as non- responsive for failure to meet form requirements. Each of the nine remaining proposals was reviewed by the evaluation committee. Of the nine proposals scored, only the proposal submitted by NTI offered unlimited voice and text messages at a fixed price.1 Although the RFP required an unlimited, fixed- price system, and the evaluation committee could not determine what would be the ultimate price to the state for proposals that did not offer a fixed price, the evaluation committee scored all nine proposals, regardless of whether they offered unlimited messages for a fixed price. The evaluation committee did not make a determination of whether the nine remaining proposals were responsive to the RFP, but rather chose to evaluate all proposals, regardless of whether the vendor offered unlimited minutes for a fixed price, so that they “could evaluate all potential technologies” in making a recommendation of what system would be of most benefit to the state. The evaluation committee, however, was unable to perform an “apples-to-apples” comparison of the proposals because they did not all offer unlimited voice and text minutes for a fixed price. Many proposals such as the one submitted by Roam, offered a set number of voice and text minutes at a fixed price, and then offered additional voice and text minutes at a per minute rate above the base price. Although the Roam system had the ability to provide unlimited voice and text messages, Roam did not give the state a firm price for such unlimited usage. Thus, there was no way DEM could determine the ultimate cost to the state of Roam’s system. Since the evaluation committee could not compare pricing proposals among vendors simply by looking at the proposals, the committee decided to compare systems by applying a minimum level of usage to all proposals that did not offer unlimited voice and text minutes to arrive at an estimate of what DEM might spend on testing any given system. This usage assumption by DEM regarding a number of voice minutes and text messages for testing the system is because many vendors, including Roam, did not follow the instructions of the RFP and failed to submit a fixed price for unlimited messages. Had all vendors submitted fixed price unlimited proposals, as required under the RFP, DEM would not have had to engage in estimating how many voice and text minutes it would use to test the system under the pilot program and would not have adjusted vendors’ proposed prices. DEM made a minimum estimate of three million messages to be sent via voice and three million messages to be sent via text over the course of the pilot period simply to test the system. This figure was based on three messages being sent to an estimated one million households in the pilot area. DEM evaluators admitted, however, that there was really no way to tell how many messages would be used in the pilot program and that the actual number could easily exceed the three million message estimate. DEM tests each of its systems at least monthly. Notably, DEM’s estimates did not take into account actual usage of the system apart from testing. As established by testimony at the final hearing, during just one weather event, it is possible that the number of messages offered in Roam’s base proposal would be exceeded and the state would incur additional costs. Roam’s proposal offered 300,000 voice minutes included in its base price. Based on DEM’s minimum usage estimate, the Evaluation Committee added $135,000 to Roam’s proposal for the additional 2,700,000 minutes at five cents per minute to reach an estimated price for voice minutes. Roam admits that DEM has the right to project any number of voice minutes for use in the pilot program and does not contest that DEM could use the three million estimate if applied evenly to all proposals. Roam’s proposal also offered 300,000 “Enhanced SMS” text messages as included in its base price, and indicated that additional messages were available at a rate of five cents per message, “if necessary.” Although Roam’s proposal stated that DEM would only be charged for additional messages over the base 300,000 if the messages did not go through Roam’s free gateway and an aggregator were used, the necessity for usage of such an aggregator is unclear. The evaluation committee could not determine from Roam’s proposal how many messages would go through the free gateway and how many would be charged at five cents per message. DEM was under no obligation to seek clarification from Roam regarding its proposal, and was not allowed to consider any additional information outside of Roam’s proposal in making its award decision. NTI met the RFP’s requirements for unlimited minutes for unlimited voice and text messages at a fixed price. Because NTI’s proposal provided for unlimited voice and text messages, DEM did not add any additional amounts to NTI’s cost proposal. In addition to cost adjustments for voice and text messages, DEM also added an additional $100,000 to the price of Roam’s proposal for implementation of a system in Orange County. Roam asserts in its formal written protest that the reason it did not allocate funds for deployment in Orange County was because “Orange County is an existing fully deployed customer, and that, as a result, implementation of the pilot project in that county presents an opportunity for cost savings.” Although Roam’s proposal stated that there was an existing system in Orange County, this system is owned by Orange County, not by Roam. Roam’s proposal gave no indication whether Orange County had given approval for use of its system in the pilot program. Additionally, DEM could not determine from Roam’s proposal whether the state would incur additional charges for use of Orange County’s system. Roam has nothing in writing from Orange County confirming that the state could use that system in the pilot program without charge. Roam further admits that the Orange County system is currently only set up to provide text notifications. As a result of the cost adjustments made to Roam’s base proposal of $300,000.00 for additional voice and text messages and for deployment of the system in Orange County, DEM assigned Roam’s proposal a cost of $670,000.00. Since NTI had offered unlimited voice and text messages at a fixed price in its proposal, DEM did not need to make any adjustments to its cost proposal of $583,333.00. The RFP required that vendors provide a cost for implementing and operating the proposed system for the seven- month pilot period and that vendors supply a cost analysis referring to cost categories as set forth on page 27 of the RFP. NTI’s proposal provided all cost information required by the RFP. There is no indication that vendors were to provide cost information for any period beyond the seven-month pilot period. Evaluation committee members testified that they only evaluated cost effectiveness of a proposal for the pilot period as was required under the RFP. Roam’s proposal also did not offer pricing beyond the pilot period. Roam’s representative, Richard Tiene, violated the requirement that a vendor not contact the agency during the period of “no contact” as set forth in the RFP. The general prohibition on contact between vendors and the agency issuing a procurement is stated in Section 287.057(24), Florida Statutes, and set forth in the RFP is as follows: No Contact Period: Respondents to this solicitation or persons acting on their behalf may not contact, between the release of the solicitation and the end of the 72- hour period following the agency posting the notice of intended award, excluding Saturdays, Sundays, and state holidays, any employee or officer of the executive or legislative branch concerning any aspect of this solicitation, except in writing to the procurement officer or as provided in the solicitation documents. Violation of this provision may be grounds for rejecting a response. Since the RFP was released on September 18, 2007, and the notice of intended award posted on October 17, 2007, the period of no contact between vendors and the agency began on September 18, 2007, and extended through October 20, 2007. The only exception to the general prohibition on contact with the agency during the “no contact” period was that vendors were permitted to send questions in writing to the chair of the evaluation committee, Charles Hagan, relating to the procurement through October 1, 2007. Specifically, vendors were instructed by the RFP as follows: No verbal inquiries will be accepted. Written questions from prospective contractors will be accepted in letter form or by email by the contact person through the date specified above under Proposal Solicitation Schedule/Timetable (refer to Deadline for Submission of Written Inquiries). Responses to written questions timely received by the contact person will be posted as an Addendum to this RFP on the DMS Vendor Bid System website on or before the date specified above under Proposal Solicitation Schedule/Timetable (refer to Deadline for Posting an Addendum on the DMS Vendor Bid System). (Underlining in original.) On October 17, 2007, Roam’s representative, Richard Tiene, telephoned evaluation committee chair, Charles Hagan, on his cell phone after business hours to make inquiries regarding the RFP. Mr. Hagan advised Mr. Tiene that he could not speak with him and advised him to put anything he had to say in writing. On October 18, 2007, Mr. Tiene again contacted Mr. Hagan by sending him an email attempting to persuade the evaluation committee to select Roam’s proposal over NTI’s. The phone call and email to Mr. Hagan were both within 72 hours of DEM's posting its notice of intent to award the contract under the RFP to NTI on October 17, 2007. Roam asserts that NTI should be disqualified for bid award because NTI participated in the drafting of the RFP through involvement in creating the language for Specific Appropriation 1621W that was incorporated by DEM in the RFP. No proof establishes any request by NTI that the appropriations language be included in the RFP, and this assertion by Roam is not credited. The only recorded evidence regards NTI’s participation in the appropriations process and establishes that NTI’s representative simply requested to review the appropriations language prior to submission to the Legislature and Governor for approval. NTI’s substantial interests are affected by Roam’s attempt to overturn DEM’s intended award of the contract under the RFP to NTI.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended the Division of Emergency Management award the contract under Request for Proposals, DEM 06/07-10 “Emergency Notification System Pilot Program” to the NTI Group, Inc. DONE AND ENTERED this 23rd day of April, 2008, in Tallahassee, Leon County, Florida. S DON W. DAVIS 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 23rd day of April, 2008.
