The Issue Whether the Department of Children and Family Services' (FDCF) notice of intent to award the contract for RFP No. MF650TH was contrary to the agency's rules or policies, or the proposal specifications and whether the Petitioner established that FDCF's decision was clearly erroneous, contrary to competition, arbitrary or capricious.
Findings Of Fact 1. The parties' Joint Prehearing Stipulation specified, in pertinent part, as follows: ADMITTED FACTS The following facts are admitted by all parties and will require no proof at hearing: On or about January 23, 1998, the Department issued RFP No. MF650TH ("the RFP"), Automated Fingerprint Identification System (AFIS). The purpose of the RFP was to solicit proposals from qualified proposers to design, develop and implement an automated fingerprint identification system, or AFIS, and to procure a statewide fingerprint identification capability for applicants and recipients of public assistance. The RFP was subsequently amended by Addendums 1, 2, 3, and 4 dated February 18, February 26, March 9, and March 16, 1998, respectively. Two vendors, Lockheed Martin and Sagem Morpho, submitted proposals in response to the RFP on March 23, 1998. The Department posted notice of its intent to award the contract described in the RFP to Morpho on April 17, 1998. On April 22, 1998, Lockheed Martin timely submitted a notice of intent to protest the proposed award to Sagem Morpho, pursuant to the terms of the RFP and Section 120.57(3), Florida Statutes. On May 1, 1998, Lockheed Martin filed its Formal Written Protest and Petition for Formal Administrative Proceeding. Jayne Paris served as Procurement Manager for the AFIS RFP. Connie Reinhardt served as Project Manager for the AFIS project. AGREED UPON ISSUES OF LAW The parties have agreed on the following issues of law: The Administrative Law Judge shall conduct a hearing pursuant to Section 120.57(3), Florida Statutes. All parties have standing to participate in this proceeding. ISSUES OF FACT WHICH REMAIN TO BE LITIGATED. The following issues of fact remain to be litigated: Whether Morpho's AFIS proposal was responsive to the RFP. Whether Lockheed Martin's AFIS proposal was responsive to the RFP. Lockheed Martin contends that the following additional facts remain to be litigated: What the Department's policy is with respect to evaluation of cost proposals on RFPs. Whether and when the Department altered its method of evaluating the AFIS cost proposals. The reason the Department decided not to use the cost proposal ranking and fatal criteria checklist which had been previously prepared. Whether the addenda to the RFP provided supplemental RFP instructions and incorporated clarifications in response to questions submitted by potential proposers. ISSUES OF LAW WHICH REMAIN FOR DETERMINATION BY THE JUDGE The following issues of law remain for determination by the Court: Whether Morpho's AFIS proposal was materially responsive to the RFP. Whether Lockheed Martin's AFIS proposal was materially responsive to the RFP. Lockheed Martin contends that the following additional issues of law remain for determination by the Judge: Whether any minor irregularities waived by the Department in evaluating and scoring the AFIS proposals met the definition of a "minor irregularity" under Rule 60A- 1.002(16), F.A.C. Whether the Department may alter its proposal evaluation methods after proposals have been received by it. Whether the Department's proposed award of the AFIS contract to Morpho is contrary to the Department's governing statutes, rules, or policies, or the AFIS RFP specifications. Whether the Administrative Law Judge shall conduct a de novo proceeding pursuant to Section 120.57(3), Florida Statutes, to determine whether the Department's proposed action is contrary to its governing statutes, rules, or policies, or the AFIS RFP specifications. Lockheed's unilateral statements of issues do not bind the parties or the undersigned but are included so that the pending Motion to Strike may be addressed in the Conclusions of Law, infra. At formal hearing, Petitioner Lockheed contended that Morpho's proposal was not responsive to the RFP and that Lockheed should be awarded the contract. Intervenor Morpho contended that its proposal was responsive and that Lockheed's proposal was not responsive. FDCF contended that both proposals were responsive and that the proposed final agency action to award the contract to Morpho should be carried out. The RFP solicited proposals from qualified proposers to design, develop and implement an Automated Fingerprint Identification System (AFIS) and to procure a statewide fingerprint identification capability for applicants and recipients of public assistance. (Agreed Facts). AFIS is intended to support the client certification process for the benefit programs delivered through the Department's electronic Benefits Transfer program (EBT). The current EBT programs include Food Stamps, Temporary Assistance to Needy Families -- Work and Gain Economic Self-Sufficiency (TANF-WAGES), and the Refuge Assistance (RA) programs. The Department had determined that AFIS is the only acceptable biometric technology. The RFP included the following pertinent provisions: General Provisions – The procurement process will provide for the evaluation of proposals and selection of the winning proposals according to applicable state and federal laws and administrative regulations. All responses received by the closing deadline, unless determined to be non-responsive will be evaluated by an evaluation team. (Exhibit P-1. pp. 66-67). Statement of Purpose The objective of this Request for Proposals (RFP) is to obtain proposals from qualified proposers to design, develop and implement the AFIS in accordance with the requirements defined in Section B of this RFP. FDCF intends to procure a statewide fingerprint identification capability for applicants and recipients of public assistance programs as stated above. Through this competitive solicitation, the FDCF desires to obtain a comprehensive identification service which represents the best value for the state, and which provides all hardware, (with the exception of existing administrative terminals as discussed in RFP Section B, subsection 6), software, communications networks, central site operations, terminal operations training, system administration training, operational support, maintenance, and other services. State personnel will be utilized to operate the system's imaging, fraud investigation, and administrative workstations located at state facilities. The system will include a central identification system to maintain fingerprint and photographic identification records and perform duplicate fingerprint record search and verification. It will also include workstations for creation of the fingerprint and photo identification records and for support of administrative and fraud investigation activities. Evaluation of Technical Proposals Part A Fatal Criteria Failure to comply with all Fatal Criteria will render a proposal non-responsive and ineligible for further evaluation. For a list of Fatal Criteria, see Appendix XIX. Any technical proposal that is incomplete, non-responsive, contains cost or pricing data, or in which there are significant inconsistencies or inaccuracies will be rejected by the FDCF. No points will be awarded for complying with the Fatal Criteria. 1.7 Acceptance of Proposals . . . Untimely proposals will be rejected as unresponsive. * * * All responsive proposals timely submitted will be evaluated. No proposed changes to the terms and conditions set out in this RFP, its appendices and any addenda will be accepted and submission of a proposal which purports to do so will make the proposal non- responsive. The FDCF may waive minor irregularities, but need not do so. Where the FDCF waives minor irregularities, such waiver shall in no way modify the RFP requirements or excuse the proposer from full compliance with the RFP specifications and other contract requirements if the proposer is awarded the contract. * * * The FDCF reserves the right to reject any or all proposals, cancel the RFP, or waive minor irregularities when to do so would be in the best interest of the State of Florida. Minor irregularities are those which will not, in the opinion of the contact person, have significant adverse effect on overall competition, cost or performance. 2. Proposal Format * * * The proposal should be prepared concisely and economically, providing a straightforward description of services to be provided and capabilities to satisfy the requirements of this RFP. Emphasis should be on completeness and clarity of content. In order to expedite the evaluation of proposals, it is essential that proposers follow the format and instructions contained herein. For purposes of this section, the terms "shall, will and must" are intended to identify items that are required to be submitted as part of the proposal. Failure to comply with all such requirements will result in the proposal being rejected as non-responsive. 3.3 Tab 3. Transmittal Letter Each copy of the proposal must include a transmittal letter in the form of a standard business letter and must be signed by an individual authorized to legally bind the proposer. It shall include at a minimum: * * * A statement indicating that the proposer and any proposed subcontractors are corporations or other legal entities and that each satisfied all licensing requirements of state or federal law and that they are authorized to do business within the State of Florida. All subcontractors must be identified. A statement indicating the percentage of work to be done by the proposer and by each subcontractor as measured by the percentage of total proposed price. A statement identifying the proposer's and any proposed subcontractor's federal tax identification number(s). 3.12 Tab 11. Technical Proposal: Corporate Qualifications . . . This section must also identify and describe the corporate capabilities of any proposed subcontractors and must include three (3) references for each subcontractor including names, addresses, and telephone numbers, and a description of the services which are being provided. Subcontractors not identified in the proposal will not be permitted to perform any work under any contract which results from the RFP. Cost Proposed Format The following information is intended to provide proposers with instructions and a format for submitting cost quotations. Cost quotations must be submitted using the provided pricing schedules. Responses that do not provide cost proposals in the required format will be rejected. Unless otherwise noted, the costs quoted shall apply for the entire term of the contact. Proposers are encouraged to identify means to reduce the cost of AFIS services in Florida. As part of the cost proposal, proposers should identify cost reduction factors, the rationale for costs savings, and any options in service that would produce such cost savings. In order to assess FDCF options, proposers are requested to submit AFIS system costs in two ways—as a bundled price per add transaction and as an unbundled price. The selection of the contract pricing method— either bundled or unbundled—shall be at the sole discretion of the FDCF. The FDCF will not make any corrections to arithmetic or other errors in the cost proposal. All numbers submitted will be assumed by the FDCF to be accurate even if an error appears likely. Proposers are cautioned to assure the accuracy of any amounts submitted because they will be held to the amounts which appear in the cost proposal throughout the term of any contract which results from this RFP as well as any extension or renewals of that contract. The RFP provided blank pricing schedules in the required format for submitting bundled and unbundled proposals. The RFP required proposers to submit prices based on alternative bundled and unbundled methods. Under the first method, proposers were to provide one lump sum price per record added to the AFIS database. An "add" is the function by which a fingerprint image is programmed into the computer and no match is found, indicating that fingerprint is not already in the system. Under that method, the provider was to be paid based on the number of fingerprints added to the database. (Schedules 1A and 1B). Under the second method, proposers were to provide a price per add, a price per inquiry (when the system searches the existing database), and prices for all hardware, broken down by type of hardware. This is called unbundled pricing. (Schedules 2A and 2B). As to unbundled pricing, the RFP specifically provided: Proposers must also provide unbundled pricing under the two communications network assumptions. Unbundled pricing includes a unit price per record added to the database, a unit price per workstation, and a unit price per printer. The cost of system development, implementation and operations must be reflected in the unit prices per add or inquiry. Schedule 3 applied to a POS Verification Study. The RFP also required a way to resolve smudged print identifications: 5.3.7. Identification Searching c) Workstations must provide the capability to launch identification search transactions using selected client records with or without minutiae editing. The RFP also required proposers to submit a thumb print option: Option to Add Thumb Prints . . . The department is also considering the option of capturing and storing both thumb prints, in addition to both index fingers, for each applicant household member required to comply. In order to help the department assess this option, the proposer shall provide an incremental price per record added to the database. . . There is no guarantee that the department will exercise the option to capture and store thumb prints. However, should the department decide to exercise this option, the successful proposer's system must be capable of supporting this option. The proposer was to provide the incremental price to capture and store thumb prints in Schedule 4. The RFP required proposers to submit a technical proposal and a separate sealed cost proposal. The RFP contemplated FDCF doing a completeness review against the "Fatal Criteria" provided in the RFP before the agency technically evaluated the proposals. The RFP presumed that those proposals which failed the completeness review would not be technically evaluated. No points were to be assigned via the completeness review. The RFP also contemplated that the cost proposals would remain sealed unless, and until, a proposer had passed the technical evaluation with at least 400 points. The evaluation system set out in the RFP provided for ranking proposals based on 600 possible points for the technical proposals and 400 possible points for the cost proposals. Any score less than 400 points on the technical proposal would mean the proposer could not be evaluated for cost. On March 23, 1998, the day of submittal, the technical responses were opened by Jayne Paris. She was FDCF's Procurement Manager and contact person for this RFP. In doing the completeness review, Ms. Paris compared the technical proposals with the Fatal Criteria checklist for completeness. She also reviewed each proposer's Supplemental Proposal Sheet for completeness and to be sure each proposer had promised compliance with all RFP requirements. She also reviewed each proposer's transmittal letter to be sure neither proposer intended to deviate from the RFP requirements. This completeness review was witnessed by Project Director, Connie Reinhardt, to assure the integrity and accuracy of the process. Although a consultant's checklist geared to federal contract review of cost proposal compliance was in the contract file which FDCF is required to maintain on every project, this checklist was only a suggestion which FDCF had rejected and had not included in the RFP. Ms. Paris did not apply it. Both Morpho and Lockheed used conditional language in their respective transmittal letters. Morpho's transmittal letter stated, "In the event that these stated requirements and assumptions are subsequently altered by the issuing agency, or are proved [sic] to be invalid due to actual experience, Sagem Morpho, Inc. reserves the right to make appropriate modifications to its scheduling or pricing." Lockheed asserts that by this language Morpho attempted to change the terms of the RFP, condition Morpho's prices, and include "pricing information" contrary to the RFP. The RFP required that each proposer identify in its transmittal letter all proposed subcontractors by name, corporate status, eligibility through licensure for state projects, the percentage of subcontract work each subcontractor would be doing, and federal tax identification number, and also provide three references for each contractor. It also provided that any subcontractors not identified by the proposer could not work on the contract. Lockheed's transmittal letter did not propose any subcontractors. It merely stated that Lockheed anticipated the need for a maintenance subcontractor beginning in June 1999, approximately 13 months after the start of the contract, and that Lockheed anticipated submitting a request for approval of a subcontractor by March 1999. Lockheed stated as its reason for the absence of subcontractor information that waiting until June 1999 would result in selection of a subcontractor that would provide the service levels demanded by Lockheed and FDCF. FDCF concedes that if a proposer intended to deviate from the RFP requirements, i.e. if the transmittal letter created a significant variance from the RFP specifications, that variance would have rendered that proposal substantively unresponsive at the completeness review, and no further evaluation of that proposal should have taken place. (TR-133; Exhibits P-2; P-3; DCF's PRO at page 7) However, in her initial completeness review of the respective proposals for the Fatal Criteria, signed management summary material checklist, and transmittal letter, Ms. Paris, in fact, only considered whether all necessary parts of each proposer's response were included. The Fatal Criteria only applied to the technical response. Ms. Paris deferred consideration of the content or effect of each proposer's "extraneous language" related in Findings of Fact 18-20 to the subsequent technical and cost evaluations. Therefore, Lockheed and Morpho were treated equally at the completeness review, because neither was disqualified as non-responsive nor docked any points on the basis of their respective transmittal letters. Ms. Paris' reason for not finding the transmittal letters unresponsive was apparently based at that stage on Section 1.7 of the RFP, which would hold the proposer to the RFP specifications despite waivers of irregularities. The next day, March 24, 1998, Ms. Paris provided the technical evaluation team with Sections I and III of an Evaluation Manual, which included the introduction and the substantive Evaluation Criteria Parts C-K. Ms. Paris also conducted a training session during which she provided a briefing on the evaluation process and instructions to the evaluation team members. The evaluation team was to evaluate only the technical merit of each proposal. Sections II and IV of the Evaluation Manual, which had been prepared for FDCF by outside consultants, were removed before the manual was distributed to the evaluation team on the basis that these sections were cost-related and the technical evaluation team members, whose duties did not include consideration of cost, were not to use them. The technical evaluation team members individually and independently evaluated the technical portion of each proposal and scored each technical response using a scale of 0 to 4 points, as instructed in Part I of the Evaluation Manual. With the exception of questions requiring a "yes" or "no" answer, scores were assigned as follows: 0 = no value; proposer demonstrated no capability to satisfy the Department's needs, ignored this area, or has so poorly described the proposal for this criteria that understanding it is not possible. 1 = poor; proposer demonstrated little or no direct capability to satisfy the Department's needs, or has not covered this area, but there is some indication of marginal capability. 2 = acceptable; proposer demonstrated adequate capability to satisfy the department's needs 3 = good; proposer demonstrated more than just adequate capability and good approach to satisfy the Department's needs. 4 = superior; proposer demonstrated excellent capability and an outstanding approach to satisfy the Department's needs. This scoring concept comports with the RFP, pp 67-68. A proposer had to receive a minimum score of 400 technical points before FDCF would open, review, and rank that proposer's cost proposal. FDCF determined that both Petitioner and Intervenor met this requirement. Morpho received 582.99 points out of a possible 600 points. Lockheed received 559.88 points. Under the scoring system, neither the Fatal Criteria nor the management summary were entitled to any points, so neither proposer was scored any points on those bases during the technical evaluation. "Minutiae editing" is the process of correcting misinformation details in an original fingerprint image which is smudged. Under Section 5.3.7 of the RFP, the system's workstations were required to have the capability to launch identification searches of fingerprint images "with or without minutiae editing." Morpho's system as proposed can launch a search and find a match after minituae editing. Lockheed's system could search, but its proposal candidly admitted that the Lockheed system could not match prints after minutiae editing. FDCF waived this technical problem with Lockheed's proposed system as an "immaterial irregularity" because the RFP expressly provided that proposers would be bound by the terms of the RFP. The RFP required submittal of a thumb print option but reserved the right of FDCF to unilaterally exercise the option. Lockheed submitted Schedule 4, providing for the thumb print identification option, quoting a cost of $0. However, Lockheed conditioned that $0 quote on FDCF accepting Lockheed's proposal at the time of the initial contract. Morpho did not submit any Schedule 4, and Morpho's technical proposal shows this omission was probably inadvertent. FDCF waived as "immaterial" Lockheed's extraneous language conditioning the thumb print option in its proposal and likewise waived Morpho's complete failure to submit a Schedule 4 for the thumb print option pursuant to the RFP. The optional thumb print function had no impact on ultimate scoring of the respective proposals because no value was assigned to it. FDCF has taken the position that since the technical evaluation team did not consider either proposal to be technically "nonresponsive," then all flaws or omissions were properly waived. The cost proposals remained sealed until after the technical proposals were scored by the technical evaluation team. At formal hearing, FDCF personnel testified that it was never FDCF's intent to enter into a contract for the thumb print option at the time of the initial contract and that the thumb print option was purely for future informational purposes. The RFP used mandatory language to ensure that cost proposals would be submitted in two ways -- a bundled price and an unbundled price. The bundled and unbundled pricing schedules were mutually exclusive, and the point system set up in the RFP assigned equal weight to the scoring of the bundled and unbundled price schedules. FDCF reserved the unilateral right to select either bundled or unbundled pricing as its procurement method. Cost proposals were to be scored using a formula which compared each proposer's price to the lowest price proposal. Of the 400 points possible for cost proposals, 195 points were allocated by the RFP to the bundled pricing schedules (Schedules 1A and 1B), 195 points were allocated to the unbundled pricing schedules (Schedules 2A and 2B), and 10 points were allocated to the POS Verification Study (Schedule 3). The RFP clearly indicated that both bundled and unbundled prices were required to be submitted on the provided Schedule format "in order to assess FDCF options." FDCF did not decide until after scoring the cost proposals and immediately before it was ready to post the Notice of Intent to Award to Morpho, that it would elect to contract based on the bundled cost proposals. Up until that moment, the bundled and unbundled price schedules had some significance to FDCF, if only for flexibility in procurement. The RFP specified that FDCF would not own any of the equipment (hardware) for which it was seeking single unit prices in the unbundled schedules. Nonetheless, on the unbundled pricing schedules provided in the RFP, proposers were required to provide an unbundled unit price per workstation and unit price per printer. On Schedules 2A and 2B, "Unbundled Pricing," Morpho did not provide an entry in dollars and cents for fraud workstation printers or administrative workstation printers. Rather, Morpho's schedule inserted in those spaces, "included in w/s (workstation) price" or "included above." Lockheed also had some extraneous language on one of its schedules as opposed to just a dollar amount, but cost breakout was clear. Morpho considered the printers part of the imaging and fraud investigation workstations because the RFP required a dedicated printer for each workstation and the RFP specified FDCF would not own or maintain any hardware. Ms. Paris reviewed each cost proposal for compliance with Section C of the RFP. She was concerned about whether Morpho's "unbundled" schedules complied with the RFP. The RFP defined waiveable "minor irregularities" as "those which will not, in the opinion of the contact person, have significant adverse effect on the overall competition, cost or performance." Upon advice of her supervisor, Connie Reinhardt, and FDCF's General Counsel, Ms. Paris determined both proposals to be responsive, and substituted a price of "zero" in the questionable spaces on Morpho's "unbundled" schedules, despite the absence of a pricing break-out between the fraud workstations and printers or between the administrative workstations and printers on Morpho's "unbundled" schedules. Ms. Paris conceded that she was never referred to Rule 68-1.001(16) Florida Administrative Code,1 which defines "minor irregularity" in terms of effect on cost. Ms. Paris was told that only items which had an effect on the overall scores of the responding proposers' cost proposals could not be waived. The cost proposals were not evaluated and scored subjectively as the technical proposals had been. No Fatal Criteria applied to this third review phase. Scoring was to be based on a purely mathematical formula devised prior to distributing the RFP. The RFP drafters had contemplated ranking the respective cost proposals by simply inserting the dollar values each proposer placed on the unbundled unit price list into a computer program. Ms. Paris attempted to rank the cost proposals. To assure the integrity of the process, Chris Haggard, Automation Specialist, physically entered cost proposal figures into the computer program. Ms. Paris instructed him to ignore any "extraneous language" on the schedules of both proposers. The computer program would not accept the "zeros" inserted by FDCF. Without any substitutions by Ms. Paris, Morpho had bid "zero" in the space indicating there would be no charge for the unbundled unit price per inquiry, thereby intending to signify that there would be no charge for this function. The record does not suggest that this proper use of "zero" had any effect on the computer program. Ms. Reinhardt viewed the problem with FDCF's imputed zero components as a purely technical problem with the computer program and not an "irregularity" under the RFP. The computer program was adjusted to accommodate the imputed zeroes and produce a spreadsheet. On unbundled Item 14, FDCF ranked Morpho with a score of one and Lockheed with 15, the maximum. On Item 15, the fraud workstation color printer, Morpho was ranked 15 and Lockheed was ranked zero. On Item 16, the administration workstation, Morpho was ranked three; Lockheed was ranked 15. On Item 17, the administration workstation printer, Morpho was ranked 15 and Lockheed was ranked zero. Pursuant to the adjusted spreadsheet, Morpho received a score of 343 for its cost proposal, and Lockheed received a score of 240. Even if Morpho had received zero points for the printers and work stations (lines 14-17 of the Unbundled Schedules), and if Lockheed had received the maximum number of points available on these items, Morpho still would have received the higher score for its cost proposal. At the disputed fact hearing, FDCF gave as its justification for imputing "zero" for bundling language in Morpho's "unbundled" schedules the following reasoning: because FDCF had requested unbundled prices purely for future contracts, not the contract to arise out of this RFP, for informational purposes, or for a cost benefit analysis for state budget purposes; because the RFP specified that FDCF would neither own nor maintain any of the hardware proposed for this RFP; because Morpho's failure to conform to the unbundled price format was not "irregular" if Morpho did not sell printers independently and Morpho used the unbundled schedules in a manner consistent with Morpho's offer; because the zero imputed by FDCF reflected accurately the integrated costs in effect; because Morpho was not charging separately for the printers; because FDCF's insertion of "zero" constituted no unfair economic advantage to Morpho; and finally, because having chosen the bundled option, FDCF believed the Morpho proposal will save a great deal of money and "represent the best value for the state."2 The RFP specified that the successful proposer would be responsible for the "cost of system development, implementation, and operations" for the contract term as well as any extensions and include that cost in either the unbundled unit price per record added (per add) or the price per inquiry (per inquiry) in Schedules 2A and 2B. There is no RFP requirement that the maintenance portion be "unbundled" further. "Cost of . . . operations" meant "cost of maintenance." According to Richard Woodard, who was responsible for the Morpho cost proposal, including Item 9, Morpho's price per add of $6.70 on Schedule 2A included $.80 for maintenance. However, at formal hearing, Lockheed elicited from Ms. Paris testimony that even though Morpho had indicated that maintenance was not included in its unbundled schedules, FDCF had decided to hold Morpho to the prices shown in their per add or per inquiry line item (TR-61), and that because of Morpho's own extra schedule attached to the bottom of unbundled pricing Schedule 2A, Morpho's maintenance price over 5 years could be calculated on current maintenance prices. (TR-62) When the prices are calculated mathematically over the life of the contract they do not correspond to the $.80 per add testified to by Mr. Woodard.3 Morpho's maintenance cost schedule and the provisions within Morpho's "Comments on Unbundled Pricing" indicated that only 12 months of warranty were included with the equipment identified in Morpho's unbundled pricing schedules and that after 12 months, maintenance contracts would be negotiated. FDCF ignored this as "extraneous language," and did not consider it to be a material irregularity. The Morpho bundled cost proposal was calculated on an average of 2.2 persons per file who would require finger imaging and matching. Morpho asserted that these calculations had been made on a "worst case scenario" based on RFP Addendum 3's specification that an actual number cannot be provided. It is expected that less than 2.2 persons per case will be printed. Lockheed selected a number less than 2.2 per file, and asserted that Morpho's "worst case" scenario is, in effect, a "best case" scenario because the higher the number of prints, the less Morpho can afford to charge per add; that by selecting the 2.2, Morpho has materially failed to comply with the RFP specification which estimated less than 2.2 persons per file, and that because Morpho also inserted the extraneous language in its transmittal letter as set out in Finding of Fact 19, supra., Morpho's proposal not only varied the express terms of the RFP by the use of "2.2" but also included "pricing information" in its transmittal letter and conditioned its prices on the potentially false assumptions stated or on a figure greater than a figure "less than 2.2," as required by the RFP.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Florida Department of Children and Family Services enter a final order rejecting all proposals. DONE AND ENTERED this 21st day of December, 1998, in Tallahassee, Leon County, Florida. ELLA JANE P. 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 Filed with the Clerk of the Division of Administrative Hearings this 21st day of December, 1998.
The Issue Whether Petitioner's bid protest should be dismissed for failure to state with specificity the underlying facts of the protest or facts sufficient to form a basis for a bid protest.
Findings Of Fact The Petitioner filed a bid protest of Invitation To Bid (ITB) No. 13- 550-002-A for raised pavement markers. Petitioner was disqualified from award of the bid due to the failure to meet the requirement that the products bid must be on the Florida Department of Transportation Qualified Products List at the time of the bid opening. Petitioner's Formal Protest contains no specific allegations of fact and as such is not in conformance with Rule 60Q-2.004(3), Florida Administrative Code, and Section 120.53(5)(b), Florida Statutes. On December 20, 1995, the Hearing Officer, sua sponte, entered an order requiring Petitioner to file an amended Formal Protest stating with specificity the facts and law which form the basis for its protest. The document filed by Petitioner in response to the order in essence: States there are on-going discussions with the Florida Department of Transportation, ("FDOT") District V Secretary and the Florida Department of Transportation Secretary that should preempt any further litigation. Complains that Section 316.0745(4), of the Florida Statutes is being improperly interpreted by FDOT so that the State is being forced to purchase a highway safety product at a cost far in excess of prudent purchasing practices. Alleges that the Petitioner meets all the qualifications of laboratory and field testing required by the Florida Department of Transportation Materials Laboratory . . . The formal protest filed in this case by Pac-Tec does not provide such notice to the Department of Management Services. Therefore the Department of Management Services cannot prepare an adequate defense to the protest. The response does not cure the deficiencies in the formal protest.
Recommendation Based upon the findings of fact and the conclusions of law, it is, RECOMMENDED: That the Department of Management Services issue a Final Order dismissing the Formal Protest filed by Petitioner. DONE and ENTERED this 24th day of January, 1996, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER, 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 24th day of January, 1996. COPIES FURNISHED: Cindy Horne, Esquire Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 David H. Smith, Esquire Post Office Box 279 Astor, Florida 32101 Mary M. Piccard, Esquire Cummings, Lawrence & Vezina, P.A. Post Office Box 589 Tallahassee, Florida 32302-0589 William H. Linder, Secretary Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 Paul A. Rowell, Esquire Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950
The Issue The issues in these consolidated cases are: (1) whether the decision by Respondent, Department of Transportation, to reject all bids for the contract at issue was illegal, arbitrary, dishonest, or fraudulent; and (2) if so, whether Respondent's actions in cancelling the notice of intent to award the contract at issue to Cyriacks Environmental Consulting Services, Inc., ("CECOS") and requiring the submittal of new price proposals were clearly erroneous, contrary to competition, arbitrary, or capricious.2/
Findings Of Fact The Parties Respondent is the state agency that issued the RFP to procure the Contract for Respondent's District IV. CECOS is an environmental consulting and services firm that submitted a response to the RFP, seeking award of the Contract. DB is an environmental consulting and services firm that submitted a response to the RFP, seeking award of the Contract. DB was granted party status to DOAH Case No. 16-0769 by Order dated February 29, 2016, and by Order dated March 9, 2016, was determined to have standing in that case as a party whose substantial interests were affected by Respondent's decision to reject all proposals. Overview of the Procurement Process for the Contract Respondent issued the RFP on or about October 1, 2015. The RFP sought to obtain support services related to environmental impacts review for projects in Respondent's District IV work program; wetland mitigation design; construction, monitoring, and maintenance; permitting of mitigation sites; exotic vegetation control and removal in specified locations; relocation of threatened, endangered, or rare flora and fauna; permit compliance monitoring; and other services specified in the RFP. The RFP stated Respondent's intent to award the Contract to the responsive and responsible proposing vendor6/ whose proposal is determined to be most advantageous to Respondent. The responses to the RFP were scored on two components: a technical proposal, worth a total of 60 points, that addressed the proposing vendor's experience, qualifications, and capabilities to provide high-quality desired services; and a price proposal, worth a total of 40 points, that addressed the proposed price without evaluation of the separate cost components and proposed profit of the proposing vendor, compared with that proposed by other vendors. The price proposal evaluation was based on the following formula: (Low Price/Proposer's Price) X Price Points = Proposer's Awarded Points. The Special Conditions section of the Advertisement portion of the RFP, paragraph 3, stated in pertinent part: In accordance with section 287.057(23), Florida Statutes, respondents to this solicitation or persons acting on their behalf may not contact, between the release of the solicitation and the end of the 72- hour period following the agency posting the notice of intended award, . . . any employee or officer of the executive or legislative branch concerning any aspect of this solicitation, except in writing to the procurement officer or as provided in the solicitation documents. Violation of this provision may be grounds for rejecting a response. The period between the release of the solicitation and the 72-hour period after posting of the intended award is commonly referred to as the "cone of silence." The Special Conditions section of the Advertisement portion of the RFP, paragraph 19, informed vendors that Respondent reserved the right to reject any or all proposals it received. Exhibit B to the RFP, addressing compensation, limited compensation for all authorizations for work performed under the Contract to a total of $5,000,000. Exhibit B stated that the schedule of rates listed in the Price Proposal Form C (i.e., the rates submitted for the sections comprising Exhibit C to the RFP) would be used for establishing compensation. On October 7, 2015, Respondent issued Addendum 1 to the advertised RFP. Addendum 1 revised Exhibit A to the RFP, the Scope of Services; and also revised Exhibit C to the RFP, the Bid Sheet, to provide it in Excel format. As revised by Addendum 1, Exhibit C consists of an Excel spreadsheet comprised of six sections, each of which was to be used by the responding vendors to propose their rates for the specified services being procured in each section of the Bid Sheet. Section 6 of the Excel spreadsheet, titled "Trees, Schrubs [sic], and Ground Cover, consists of eight columns and 258 rows, each row constituting a plant item on which a price proposal was to be submitted. The columns are titled, from left to right: No.; Scientific Name; Common Name; Unit; Estimated of [sic] number of Unites [sic]; Rate; Extension (Unit X Rate); and Multiplier 2.5 (Price X 2.5). Each row of the spreadsheet in Section 6 identified, as a fixed requirement for this portion of the proposal, the specified type of plant, unit (i.e., plant size), and estimated number of units (i.e., number of plants). For each row of the Section 6 spreadsheet, only the cells under the "Rate" column could be manipulated. Vendors were to insert in the "Rate" cell, for each row, the proposed rate for each plant item. The cells under all other columns for each row were locked, and the RFP stated that any alteration of the locked cells would disqualify the vendor and render its proposal non-responsive. The instructions to Exhibit C, Section 67/ stated: Trees, Schrubs [sic], and Ground Cover Price of plants shall include project management, field supervision, invoicing, installation, mobilization of traffic, water throughout the warranty period, fertilizer and [sic] six (6) month and demobilization, minor maintenance guarantee. Installation of plant material shall be per the Scope of Services. All planting costs shall include the cost to restore area to pre-existing conditions (i.e., dirt, sod, etc.). On October 20, 2015, Respondent issued Addendum 2, and on October 29, 2015, Respondent issued Addendum 3. Both addenda changed Respondent's schedule for reading the technical proposal scores, opening the sealed price proposals, and posting the intended awards. Addenda 1, 2, and 3 were not challenged. However, a key dispute in these consolidated proceedings is whether the Addendum 1 Bid Sheet in Section 6 and the instructions for completing that Bid Sheet were ambiguous, or whether Respondent reasonably believed them to be ambiguous. The vendors were to submit their responses to the RFP, consisting of their technical proposals and price proposals, by October 16, 2015. CECOS, DB, and four other vendors timely submitted responses to the RFP. On November 2, 2015, the scores for the technical proposals submitted by the vendors were presented to the Selection Committee ("SC") at a noticed meeting. DB received the highest number of points on the technical proposal portion of the RFP. The SC met again on November 3, 2015. At that time, Respondent's Procurement Officer, Jessica Rubio, read the total awarded points for each vendor's price proposal, as well as each vendor's total combined points——i.e., total points for technical proposal and price proposal. CECOS received the highest number of points for the price proposal portion of the RFP, and also received the highest total combined points. Respondent recommended, and the SC concurred, that Respondent should award the Contract to CECOS. At 10:00 a.m. on November 3, 2015, Respondent posted the Proposal Tabulation, constituting its notice of intent that CECOS would be awarded the Contract.8/ CECOS submitted a price proposal of $4,237,603.70. DB submitted a price proposal of $9,083,042.50. The other four vendors' price proposals ranged between $4,540,512.90 and $5,237,598.55. The "cone of silence" commenced upon Respondent's posting of the Proposal Tabulation, and ended 72 hours later, on November 6, 2015, at 10:00 a.m. As discussed in greater detail below, after the Proposal Tabulation was posted, Respondent discovered an apparent ambiguity in Exhibit C, Section 6, regarding the instructions to that section and the inclusion of the "2.5 Multiplier" column on the Bid Sheet. After an internal investigation, Respondent decided to cancel its intent to award the Contract to CECOS. On November 5, 2015, Respondent posted a notice that it was cancelling the intent to award the Contract to CECOS. On November 5, 2015, DB filed a Notice of Protest, stating its intent to challenge the award of the Contract to CECOS. Thereafter, on November 9, 2015, DB contacted Respondent by electronic mail ("email") to withdraw its Notice of Protest.9/ Due to the apparent ambiguity in Exhibit C, Section 6, on November 9, 2015, Respondent issued Addendum 4 to the RFP. Addendum 4 required the responding vendors to submit new price proposals for all sections (i.e., sections 1 through 6) of Exhibit C to the RFP. Addendum 4 also established a new timeline for a mandatory pre-bid conference to be held on November 12, 2016; set a sealed price proposal due date of November 19, 2016; and identified new dates for opening the price proposals and posting the Notice of Intended Award of the Contract. On November 12, 2015, Respondent conducted a mandatory pre-bid conference to address Addendum 4. The participating vendors expressed confusion and posed numerous questions regarding the submittal of new price proposals and their technical proposals. Immediately following the pre-bid conference, Respondent issued Addendum 5, which consisted of a revised Exhibit A, Scope of Services; revised Exhibit C, Bid Sheet in Excel format for all six sections; and responses to the questions posed at the pre-bid conference.10/ The Addendum 5 Bid Sheet comprising Exhibit C, Section 6, was substantially amended from the version that was published in Addendum 1. Specifically, the column previously titled "Rate" was changed to "Rate Per Unit"; the "Extension (Unit X Rate)" and "Multiplier 2.5" columns were deleted; and a new column titled "Proposed Cost (Rate per Unit X Est. No. of Units)" was added. Additionally, the instructions for Section 6 were substantially amended to read: "'Rate Per Unit' must include all costs associated with the purchase, installation, watering, fertilization, project management, field supervision, travel, invoicing, labor, maintenance of traffic, mobilization and demobilization, staking and guying, maintenance of planting site throughout the 180[-]day plant warranty." These amendments were intended to clarify that the proposed rate for each plant unit was to include all overhead costs associated with performance of the Contract with respect to that particular unit. On November 13, 2015, CECOS filed a Notice of Protest to Respondent's issuance of Addendum 4, requiring the vendors to submit new price proposals. Thereafter, on November 23, 2015, CECOS filed the First Petition challenging Respondent's decision, announced in Addendum 4, to require the responding vendors to submit new proposals for the price proposal portion of the RFP, and its decision to cancel the notice of intent to award the Contract to CECOS.11/ Once CECOS filed its Notice of Protest on November 13, 2015, Respondent ceased all procurement activity directed toward awarding the Contract. On December 17, 2015, Respondent posted notice that it was rejecting all proposals and that the Contract would be re- advertised through issuance of a new RFP. On December 22, 2015, CECOS filed a Notice of Protest, and on January 4, 2016, filed its Second Petition challenging Respondent's decision to reject all proposals and re-advertise the Contract. Bases for Respondent's Actions Shortly after Respondent posted the Proposal Tabulation noticing its intent to award the Contract to CECOS, Christine Perretta, owner and president of DB, sent an email to Respondent, then called Rubio to inquire about Respondent's decision to award the Contract to CECOS. The evidence shows that these contacts occurred sometime on or around November 3, 2016.12/ In her telephone discussion with Rubio, Perretta inquired about how to file a notice of protest13/ and also asked whether Respondent had reviewed the vendors' price proposals for correctness or accuracy, or had simply chosen the lowest price proposal. In the course of the discussion, Perretta informed Rubio that DB had submitted a "loaded" rate for each plant unit ——meaning that DB's rate proposed for each plant item in the "Rate" column on the Section 6 Bid Sheet consisted not only of the cost of the plant item, but also the cost for all associated overhead services listed in the instructions to Section 6 and in the RFP Advertisement, paragraph 18(v), plus compensation.14/ Rubio could not clearly recall whether, in the course of their discussion, Perretta had inquired about the use of the 2.5 multiplier, and there is conflicting evidence as to whether Perretta related her view that CECOS may not be able to perform the Contract based on the price proposal it had submitted. In any event, as a result of Rubio's discussion with Perretta, Rubio determined that she needed to review Exhibit C, Section 6. In the course of her investigation, Rubio called Wendy Cyriaks, owner and president of CECOS.15/ Cyriaks confirmed that CECOS had submitted an "unloaded" rate for each plant item—— meaning that it had included only the cost of each plant item in the "Rate" column on the Section 6 Bid Sheet, and had not included, in the proposed rate for each plant item, the cost of the associated overhead services listed in the instructions to Section 6 or RFP Advertisement, paragraph 18(v), or compensation. Cyriaks told Rubio that CECOS expected that its overhead costs and compensation for each item would be covered through use of the 2.5 multiplier. Also in the course of her investigation, Rubio asked Bogardus whether he had intended the 2.5 multiplier to be used to cover all costs, including vendor compensation, associated with obtaining, installing, and maintaining the plant items listed in Section 6. Bogardus initially confirmed that his intent in including the 2.5 multiplier on the Section 6 Bid Sheet was to cover all of the overhead costs and compensation. However, the persuasive evidence establishes that Bogardus subsequently agreed with Rubio that the 2.5 multiplier should not have been included in Section 6. Pursuant to her discussions with Perretta and Cyriaks, Rubio realized that the wide discrepancy between DB's and CECOS' price proposals was due to their differing interpretations of the instructions in Section 6 regarding plant item rates and the inclusion of the "2.5 Multiplier" column in the Section 6 Bid Sheet. Rubio testified, persuasively, that the inclusion of the "2.5 Multiplier" column rendered Exhibit C, Section 6, of the RFP ambiguous. To that point, the RFP does not contain any instructions or discussion on the use of the 2.5 multiplier. Therefore, to the extent the multiplier was intended to be used by the vendors to build overhead costs and compensation into their price proposals, the RFP fails to explain that extremely important intended use——leaving the significance and use of the multiplier open to speculation and subject to assumption by the vendors in preparing their price proposals. Rubio reasonably viewed DB's and CECOS' divergent interpretations of the instructions and the inconsistent use of the 2.5 multiplier as further indication that Section 6 was ambiguous. She explained that in order for Respondent to ensure that it is procuring the most advantageous proposal for the State, it is vitally important that the RFP be clear so that responding vendors clearly understand the type of information the RFP is requesting, and where and how to provide that information in their price proposals. Rubio persuasively testified that in her view, the instructions in Section 6 had, in fact, called for a loaded rate, but that CECOS had erroneously assumed, based on the inclusion of the "2.5 Multiplier" column in the Section 6 Bid Sheet, that overhead and compensation for each plant item would be covered through use of the 2.5 multiplier, and that as a consequence, CECOS incorrectly proposed unloaded rates for the plant items. In Rubio's view, CECOS' error was due to the ambiguity created by the unexplained and unsupported inclusion of the 2.5 multiplier in Section 6. Rubio testified that CECOS had been awarded the Contract because it had submitted the lowest price proposal, but that its proposal was based on an unloaded rate for the plant items, contrary to the instructions for Section 6. In Rubio's view, CECOS' price proposal was unresponsive, and CECOS should not have been awarded the Contract. Rubio also testified, credibly and persuasively, that the use of the 2.5 multiplier in Section 6 for compensation purposes rendered the RFP arbitrary. Respondent's District IV historically has not used a 2.5 multiplier for compensation purposes for commodities contracts, and no data or analyses exist to support such use of a 2.5 multiplier.16/ This rendered the RFP both arbitrary and unverifiable with respect to whether it was structured to obtain the most advantageous proposal for the State. To this point, Rubio credibly explained that Respondent's existing environmental mitigation services contract with Stantec was procured through the "Invitation to Negotiate" ("ITN") process. In that procurement, Respondent negotiated to obtain the best value for the State. The ITN bid sheet contained a 2.5 multiplier that was used only for weighting purposes to evaluate and determine which firms would be "short- listed" for purposes of being invited to negotiate with Respondent for award of the contract. Importantly——and in contrast to the RFP at issue in this case——the multiplier in the ITN was not used to determine the final prices, including compensation, to install trees, shrubs, and ground cover under that contract. Rubio also testified, credibly, that the Bid Sheet was structurally flawed because it did not allow the vendor to clearly indicate the "unit price" inclusive of all overhead costs, and that this defect would result in Respondent being unable to issue letters of authorization to pay invoices for the cost of installing the plant items or compensating for work performed. For these reasons, Respondent determined that it needed to cancel the intent to award the Contract to CECOS. As noted above, Respondent posted the cancellation of the intent to award the Contract on November 5, 2015. At a meeting of the SC conducted on November 9, 2015, Respondent's procurement staff explained that the intent to award the Contract had been cancelled due to ambiguity in the instructions and the Bid Sheet for Exhibit C, Section 6. Ultimately, the SC concurred with Respondent's cancellation of the intent to award the Contract to CECOS and agreed that the vendors should be required to submit new price proposals. Thereafter, on November 9, 2015, Respondent issued Addendum 4, announcing its decision to solicit new price proposals from the responding vendors. Respondent conducted a pre-bid meeting with the vendors on November 12, 2015, and immediately thereafter, issued Addendum 5, consisting of a revised Scope of Services and a substantially revised Bid Sheet for all six sections of Exhibit C. As previously discussed, the Section 6 Bid Sheet issued in Addendum 5 was revised to, among other things, delete the "2.5 Multiplier" column and the column previously titled "Rate" was changed to "Rate Per Unit." Also as discussed above, the instructions to Section 6 were revised to clarify that the "Rate Per Unit" provided for each plant unit must contain all costs associated with the purchase, installation, watering, fertilization, project management, field supervision, invoicing, labor, maintenance of traffic, and other costs specified in the instructions——i.e, constitute a loaded rate. All of these changes were made in an effort to clarify, for the benefit of all vendors, the specific information that Respondent needed to be provided in the price proposals. Rubio testified, credibly, that in requiring the vendors to submit new price proposals pursuant to revised Exhibit C, Respondent did not give, or intend to give, any vendor a competitive advantage over any of the other vendors, nor did Respondent place, or intend to place, CECOS at a competitive disadvantage by requiring the vendors to submit new price proposals pursuant to revised Exhibit C. As noted above, once CECOS filed its Notice of Protest, Respondent ceased all procurement activity directed toward awarding the Contract. Consequently, the vendors did not submit new price proposals and the scheduled meetings at which the new price proposals would be opened and the intended awardee announced were cancelled. On December 17, 2015, Rubio briefed the SC regarding the problems with the RFP and described her concerns about proceeding with the procurement. She explained that Respondent's procurement staff was of the view that the instructions in Section 6, as previously published in Addendum 1, were ambiguous because they did not clearly provide direction on how to complete the Bid Sheet for that section. Additionally, the Section 6 Bid Sheet, as structured in Addendum 1, did not allow the vendors to provide a plant unit rate that was inclusive of all overhead costs. To this point, she noted that unless the vendors provided a loaded rate——i.e., one that included all overhead costs——Respondent would not be able to issue work orders for any plant items in Section 6.17/ She explained that these flaws constituted the bases for Respondent's decision, announced on November 9, 2015, to require the submittal of new price proposals. Rubio further explained that in Respondent's rush to issue a revised Scope of Services as part of Addendum 5, mistakes had been made18/ and Respondent's Environmental Office needed more time to carefully review the Scope of Services and Bid Sheet, to ensure the RFP was correctly drafted and structured so that the Contract could be accurately solicited and procured. Additionally, the vendors——including Mark Clark of CECOS——had expressed confusion regarding the revised Bid Sheet and submitting new price proposals, and some vendors had inquired about submitting new technical proposals. Further, under the revised procurement schedule issued as part of Addendum 4 on November 9, 2015, the vendors had a very compressed timeframe in which to prepare and submit their new price proposals, heightening the potential for mistakes to be made. Because of these substantial problems and concerns with the RFP, Rubio recommended that Addendum 5 be rescinded, that all vendor proposals (both technical and price) be rejected, and that the entire procurement process be re-started. The SC concurred with her recommendation. As noted above, on December 17, 2015, Respondent rejected all proposals and announced that the Contract would be re-solicited in the future through issuance of another RFP. CECOS' Position CECOS takes the position that the RFP and the Section 6 Bid Sheet published in Addendum 1 were not ambiguous. Specifically, CECOS contends that the use of the 2.5 multiplier in Section 6 clearly indicated that Respondent was seeking an unloaded rate for the plant items listed on the Section 6 Bid Sheet. In support of this position, CECOS notes that all of the vendors other than DB had submitted unloaded rates for the plant items in Section 6. CECOS contends that this shows that Section 6 was not ambiguous, and that DB simply did not follow the RFP instructions——of which it was fully aware——in preparing and submitting its price proposal.19/ CECOS also contends that Rubio's failure to contact the other vendors to determine if they found the instructions or use of the 2.5 multiplier in Section 6 ambiguous evidences that Rubio's conclusion that Section 6 was ambiguous lacked any factual basis, so was itself arbitrary. CECOS asserts that Bogardus' intent to use a 2.5 multiplier for compensation purposes was evidenced by its inclusion on the Section 6 Bid Sheet, that its use on the Section 6 Bid Sheet did not render the RFP flawed, and that Bogardus' intent to compensate using the multiplier should control the structure of compensation paid under Section 6.20/ CECOS also notes that the use of the 2.5 multiplier on the Section 6 Bid Sheet mirrors the 2.5 multiplier in the existing environmental mitigation support services contract with the current contractor.21/ CECOs further contends that there was no material difference, with respect to structuring compensation for the plant items, between the ITN process used for procuring the existing contract and the RFP process used to procure this Contract. As additional support for its argument that the use of the 2.5 multiplier in Section 6 was valid, CECOS points to a request for proposal for environmental mitigation services issued by Respondent's District VI. In that contract, a 2.5 multiplier was used for compensation purposes, albeit for specific plant items that were not contained in the original list of specific plant items for which rate proposals had been solicited in the request for proposal. CECOS further contends that Respondent——and, most particularly, Rubio——did not conduct a thorough investigation into the historic use of 2.5 multipliers in Respondent's commodities contracts. CECOS argues that as a consequence, Respondent's determination that the use of the 2.5 multiplier rendered the Section 6 Bid Sheet structurally flawed and arbitrary was unsupported by facts, so was itself arbitrary and capricious. CECOS asserts that cancelling the notice of intent to award the Contract to CECOS and requiring the vendors to submit new price proposals placed CECOS at a competitive disadvantage and was contrary to competition because once the Proposal Tabulation was posted, the other vendors were informed of the price that CECOS had bid, so knew the price they had to beat when the Contract was re-solicited. CECOS also points to what it contends are procedural irregularities with respect to Respondent's treatment of, and communication with, CECOS and DB once Respondent decided to cancel the notice of intent to award the Contract to CECOS. Specifically, CECOS contends that Respondent did not respond to its calls or email asking why the intent to award the Contract to CECOS had been cancelled. CECOS also contends that Respondent communicated with DB on substantive matters during the "cone of silence." CECOS further notes that Respondent did not convene a resolution meeting within the statutorily- established seven-day period after CECOS filed its First Petition, but instead held the meeting over 60 days later, on January 28, 2015, and that even then, Respondent did not engage in good faith negotiation to resolve the challenge. Finally, CECOS contends that Respondent's decision to reject all proposals and start the procurement process anew was predicated on a series of arbitrary and erroneous decisions (discussed above) that created confusion, so that Respondent's ultimate decision to reject all proposals was itself arbitrary and capricious. CECOS asserts that it followed the instructions in the RFP in preparing its price proposal, submitted the lowest price proposal, and is ready, willing, and able to perform the Contract at the rates it proposed in its response for Section 6. On that basis, CECOS contends that it is entitled to the award of the Contract. Findings of Ultimate Fact CECOS bears the burden in this proceeding to prove that Respondent's decision to reject all proposals was arbitrary, illegal, dishonest, or fraudulent.22/ Even if CECOS were to meet this burden, in order to prevail it also must demonstrate that Respondent's actions in cancelling the intent to award the Contract and requiring the submittal of new price proposals were clearly erroneous, arbitrary, capricious, or contrary to competition. For the reasons discussed herein, it is determined that CECOS did not meet either of these burdens. The Multiplier Rendered Section 6 Ambiguous, Arbitrary, and Structurally Flawed As discussed in detail above, Respondent decided to cancel the intent to award the Contract to CECOS and to require the submittal of new price proposals by the vendors only after it had conducted an extensive investigation that included a careful review of numerous provisions in the RFP and the instructions to Section 6 and had analyzed the structure of Section 6 in relation to other provisions in the RFP. That investigation showed that nowhere in the RFP was the use of the 2.5 multiplier in Exhibit C, Section 6, discussed or explained. Thus, to the extent the multiplier was to be used in determining reimbursement for overhead costs and compensation, the RFP failed to explain this extremely important point, leaving the multiplier's purpose, use, and significance open to speculation and assumption by the vendors in submitting their price proposals. This rendered the multiplier's use in Section 6 ambiguous. This ambiguity is further evidenced by DB's and CECOS's widely divergent price proposals for Section 6, and the credible testimony of Perretta and Cyriaks regarding their differing views of the purpose of the 2.5 multiplier. The credible, persuasive evidence establishes that the ambiguity in Section 6 caused the vendors to have differing interpretations of the manner in which they were to propose plant unit rates in Section 6; that the vendors submitted plant price proposals predicated on differing assumptions; and that this resulted in Respondent being unable to fairly compare the price proposals for purposes of obtaining the most advantageous proposal for the State. On these bases, Respondent reasonably concluded23/ that the inclusion of the 2.5 multiplier in Section 6, rendered that portion of the RFP ambiguous. As extensively discussed above, the credible, persuasive evidence also establishes that Respondent concluded, based on its investigation and review of Section 6, that inclusion of the 2.5 multiplier rendered Section 6 both arbitrary and structurally flawed.24/ The credible, persuasive evidence further establishes that Rubio investigated Respondent's use of multipliers in commodities procurements and contracts to the extent necessary and appropriate for her to reasonably conclude that the use of the 2.5 multiplier in Section 6 rendered this portion of the RFP ambiguous, arbitrary, and structurally flawed.25/ In sum, the credible, persuasive evidence establishes that Respondent engaged in a thorough and thoughtful investigation before concluding, reasonably, that the inclusion of the 2.5 multiplier in Exhibit C, Section 6 rendered that portion of the RFP ambiguous. Respondent's Actions Were Not Contrary to Competition Although the evidence shows that CECOS may suffer some competitive disadvantage because competing vendors were informed of the lowest "bottom line" price they would have to beat, it does not support a determination that Respondent's decisions to cancel the intent to award the Contract to CECOS and require the vendors to submit new price proposals were contrary to competition. To that point, in Addendum 5, Respondent substantially restructured the Section 6 Bid Sheet and also amended the Bid Sheet comprising the other price proposal sections in Exhibit C, so that CECOS' and the other vendors' price proposals submitted in response to Addendum 5 may have substantially changed from those submitted in response to Addendum 1. In any event, it cannot be concluded that Respondent's decisions to cancel the intent to award the Contract to CECOS and require submittal of new price proposals are contrary to competition such that they should be overturned in this proceeding. Procedural Irregularities CECOS also points to certain procedural irregularities in Respondent's treatment of, and communication with, CECOS once Respondent decided to cancel the notice of intent to award the Contract to CECOS and require submittal of new price proposals. CECOS apparently raises these issues in an effort to show that Respondent's actions were clearly erroneous, contrary to competition, arbitrary, or capricious. The undisputed evidence establishes that Rubio communicated with both DB and CECOS during the "cone of silence" following the posting of its intent to award the Contract to CECOS. The undersigned determines that the "cone of silence" applied to Rubio and her communications with DB and CECOS within the 72-hour period following Respondent's posting of the intent to award the Contract. Specifically, she is an employee of Respondent's District IV Office, so is an employee of the executive branch of the State of Florida. Further, the evidence shows that her communications with both DB and CECOS during the "cone of silence" period dealt specifically with substantive, rather than "administrative" issues regarding the RFP and the vendors' price proposals. Accordingly, it is determined that these communications did, in fact, violate the "cone of silence." However, this does not require that Respondent's decision to cancel the intent to award the Contract to CECOS be overturned. The credible, persuasive evidence shows that while DB's conversation with Rubio may have spurred Rubio to decide she should investigate the Section 6 instructions and use of the 2.5 multiplier, it was not the reason why Respondent ultimately determined that the intent to award the Contract should be cancelled. Rather, Respondent's discovery of the ambiguity and structural flaws in Section 6, through Rubio's investigation, was the reason that Respondent determined that the intent to award the Contract to CECOS should be cancelled. In sum, the credible, persuasive evidence shows that notwithstanding Rubio's communications on substantive matters during the "cone of silence" with both DB and CECOS, the integrity of the procurement process was not undermined such that Respondent's decision to cancel the intent to award the Contract to CECOS was clearly erroneous, contrary to competition, arbitrary, or capricious. CECOS failed to present persuasive evidence establishing that other procedural irregularities rendered Respondent's actions in cancelling the intent to award the Contract to CECOS and requiring the vendors to submit new price proposals were clearly erroneous, contrary to competition, arbitrary, or capricious. Respondent's Decisions to Cancel Intent to Award the Contract and Require Submittal of New Price Proposals Based on the foregoing, it is determined that CECOS did not meet its burden to show that Respondent's decisions in cancelling the intent to award the Contract to CECOS and requiring the vendors to submit new price proposals were clearly erroneous, contrary to competition, arbitrary, or capricious. Respondent's Decision to Reject All Proposals As noted above, CECOS contends that Respondent's decision to reject all proposals and start the procurement process anew was predicated on a series of arbitrary and erroneous decisions that created confusion, so that Respondent's ultimate decision to reject all proposals was itself arbitrary and capricious. However, the credible, persuasive evidence shows that Respondent's ultimate decision to reject all bids was factually supported and was reasonable. As discussed above, Respondent initially decided to cancel the intent to award the Contract to CECOS and to require the vendors to submit new price proposals after it discovered the ambiguity and structural flaws resulting from the use of the 2.5 multiplier in Section 6. At that point, rather than rejecting all proposals, which would require the vendors to go to the time and expense of preparing completely new proposals, it decided to instead only require the vendors to submit new price proposals. Due to the interrelated nature of the six sections of Exhibit C comprising the complete price proposal for the RFP, Respondent determined revision of Section 6 would also require revision of the other five sections of Exhibit C, in order to ensure that they were internally consistent with each other. At the mandatory pre-bid meeting preceding the issuance of Addendum 5, the participating vendors had numerous questions about the sweeping revisions to all six sections of Exhibit C, and they expressed confusion about the revisions and their effect on preparation of new price proposals. Some vendors also expressed concern that they may have to change their personnel in order to be able to accurately prepare new price proposals, raising the question whether the technical proposals needed to be revised. As a result of vendor confusion and concern, and also because Respondent's Environmental Office needed additional time to carefully review and revise the RFP as needed, Respondent decided to reject all proposals and to start the procurement process anew. Respondent's decision to reject all bids was made after fully considering all of the pertinent information regarding the ambiguity and structural flaws in Section 6, vendor confusion and concern caused by Respondent's revisions to Exhibit C needed to address the ambiguity and flaws in Section 6, and Respondent's need for additional time to ensure that its RFP accurately and clearly solicited the needed environmental mitigation support services. Accordingly, Respondent did not act arbitrarily in deciding to reject all bids. Further, no persuasive evidence was presented to show that Respondent's decision to reject all bids was illegal, dishonest, or fraudulent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Transportation: Issue a final order in Case No. 16-0769 finding that the rejection of all proposals in response to Request for Proposal RFP-DOT-15/16-4004PM was not illegal, arbitrary, dishonest, or fraudulent; and Issue a final order in Case No. 16-3530 finding that the decisions to cancel the award of the Contract for Request for Proposal RFP-DOT-15/16-4004PM to CECOS and to require the vendors to submit new price proposals for Request for Proposal RFP-DOT-15/16-4004PM were not clearly erroneous, contrary to competition, arbitrary, or capricious. DONE AND ENTERED this 30th day of December, 2016, in Tallahassee, Leon County, Florida. S CATHY M. SELLERS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of December, 2016.
Findings Of Fact The Department of General Services, Division of Purchasing, is the state agency responsible for establishing standards and specifications and term contracts for purchase by the State of commodities used in volume. Generically, term contracts are established for fixed periods of time, usually one year, with no predetermined quantities or guarantees of purchase. The current ITB contemplates $38,000,000 in annual expenditure. During the fixed period, vendors agree to sell commodities at the prices established through the competitive bidding process. Term contracts permit concentration of the State's entire purchasing power so as to obtain price advantages through anticipated large volume purchases, through reduced administrative costs, and through standardized terms and conditions of sales, warranties, and service. History of DGS and Department of Education collaboration in drafting of a term contract for microcomputers dates back at least to 1982. Purchases have, of course, been made under those contracts. Continuity in successive state microcomputer term contracts serves the significant purposes of supporting microcomputer equipment already in place with various governmental users (the "embedded State base") and supporting expansion of that embedded base by meeting users' emerging needs. On October 30, 1987, DGS issued Invitation to Bid 462-250-040B, microcomputers. Potential bidders (including among them both manufacturers and dealers) were notified of a bidders' conference to be held on November 16, 1987, and were asked to submit written questions concerning the ITB by November 9, 1987. At the November 16, 1987 conference, written answers to the pre-submitted questions were read aloud and distributed to all in attendance. Caber had submitted written questions, but no Caber representative attended the conference. On November 17, 1987, an Addendum to Invitation to Bid 462-250-040B was issued, incorporating selected suggested changes, thereby completing Invitation to Bid 462-250-040B (hereafter, "ITB-462"). A simultaneous bid submittal deadline and bid opening was scheduled for 2:00 p.m., December 3, 1987. Caber timely filed its Notice of Protest on November 23, 1987, within 72 hours (excluding weekends and holidays) of receipt of completed ITB-462. Following uneventful and unsuccessful informal procedures, Caber timely filed its Formal Written Protest on December 2, 1987. Pursuant to Section 120.53(5)(c), Florida Statutes, and Rule 13A-1.006(3)(d), Florida Administrative Code, DGS stopped the bid solicitation process at that point, one day prior to the bid submittal/bid opening deadline of December 3, 1987. At the time of Caber's filing its Formal Written Protest, Apple, along with approximately 72 other dealers and manufacturers had already submitted bids. IBM was en route to DGS with IBM's bid, but IBM's bid submittal was refused by DGS because of the statutory "freeze." MCA had filed no Notice of Protest, no bid, and no Formal Written Protest. The purpose of ITB-462 was to establish a 12 month term contract for the purchase of microcomputers, which term contract could be extended for each of two successive 12-month terms. As a term contract, all state agencies would be required to purchase microcomputers from the contract. The state university system, counties, municipalities, local school districts, and political subdivisions would have the option of doing so. The format of ITB-462 reflects major substantive changes in DGS' policies for the microcomputer term contract from what those policies had been previously. Last year, when intended awards by DGS under its last previous (1986) microcomputer bid solicitation (ITB-545) for the proposed 1987 term contract were protested by Caber, DGS had decided to reject all bids arising thereunder and to rewrite ITB-545 to correct certain flaws. The DGS' decision to reject all bids under ITB-545 was upheld over Caber's protest in consolidated cases Caber Systems, Inc. et al. v. DGS, et al., DOAH Case No. 87-0836BID and Microage Computer Stores, Inc. v. DGS, DOAH Case No. 87-0837BID. As a result of the flaws in ITB-545 revealed during that formal protest, DGS finally abandoned ITB-545 entirely, extended the 1985 microcomputer contract (hereafter, "contract 621" or "621") for one year to January 26, 1988, embarked on serious reevaluation of its users' needs, and commenced the drafting process that resulted in the ITB-462 format which is the subject of the instant specification protest. In order to assure that the new specifications would meet the needs of its embedded base, DGS consulted the Department of Education (DOE), other state agencies, the Information Resources Commission (IRC), user groups such as the Government and Education Microcomputer User Group (GEMUG), and various manufacturers of microcomputers. DOE operated partly as a conduit for user need information from school boards and the state university system. IRC acted partly as a conduit for user need information from other state agencies and partly as a consultant providing technical information and bid specification evaluation to DGS. The format of ITB-462 contains four tables. Table I identifies 353 microcomputers of 21 manufacturers arranged by brand and model and includes product descriptions supplied by the respective manufacturers. Table II consists of forms for bidders to list microcomputer options and accessories. Table III consists of forms for bidders to list microcomputer software. Table IV contains a set of separate generic specifications of IBM compatible clones. Tables I through IV were combined with DGS' General Conditions and Certain Special Conditions. The Special Conditions of ITB-462 provide that, in the case of Table I, brand name and models, "[n]o additional micro- computer brand names and models will be considered for this bid;" and that third party components (products of one manufacturer installed in the larger system or computer of another manufacturer) are not acceptable for Table I unless they are used by the manufacturer in normal production and supported by the manufacturer for warranty and maintenance service, and they further provide that: EVALUATION AND AWARD Any contract resulting from this bid shall be awarded for specific microcomputers listed in Table I by brand name and model number to the low qualified bidder. A single award shall be made for each IBM- compatible clone configuration listed in Table IV to the low qualified bidder for that configuration. Options, `Accessories and Operating System/Programing Language/Utility Software placed on any contract resulting from this bid shall be limited to those products applicable to microcomputer models awarded to each low qualified bidder. Technical Specification 3.2 of the Specifications Nos. 250-040 and 250-041 of the ITB identifies fourteen "acceptable" hardware options/accessories and provides that these "are the only peripherals or components that are acceptable for this bid and any award." Unlike prior microcomputer ITBs, there is no place in Table I of ITB- 462 for a vendor to bid systems that are equivalent to (meet or exceed) any brand system listed in Table I. The list of 353 systems in Table I is designated a Qualified Product List (QPL). DGS intends to make one award to the lowest responsive bidder for each system. Responsiveness of bids will be determined by ascertaining that a bid is in the proper form, properly executed, and correctly identifies the item bid. Award by low price will be faster than the evaluation process that had been employed with the 1986 ITB-545, which took far in excess of the time allotted. Improving the former evaluation process and attaining a speed factor were identified and evaluated as positive goals in the course of the ITB-545 bid protest and in the drafting process for ITB-462. DGS intended that there should be no technical evaluation (i.e. benchmarking) for Table I of ITB-462 because the QPL has eliminated that need. Microcomputer Models were selected for inclusion in the ITB-462 Table I QPL based on four criteria listed specifically in the ITB itself as "placement on the current microcomputer contract, review of contract exceptions, demand by State contract users, and experience of prior usage by the State." DGS formulated the four criteria as a means to achieve the objective of supporting the State's embedded base of microcomputers and applied a volume of usage measurement to all four criteria. Although Caber and MCA urged that meeting just one of these four criteria was insufficient to get on the QPL and that there was in place an unpromulgated "50 sales" threshold rule or policy with regard to volume of usage, the credible competent substantial evidence as a whole does not support their inference. Rather, the evidence shows that DGS personnel wanted to apply a "50 sales" policy but abandoned it in favor of merely requiring hard proof through sales reports or sales receipts, purchase orders, or similar documentation or by user requests that there was a current embedded base of more than one sale of one model by each potential supplier. This is reasonable for a term contract. Each of the four criteria has the same intent and purpose, that is, to determine the true current embedded base. Caber originally protested that DGS should be precluded from requiring any proof of volume sales by way of sales reports and similar documentation without first promulgating a formal rule or enunciating a clear policy. The agency has wide discretion in how it implements its statutory duties, and requiring proof of volume usage is a reasonable method of determining the true current embedded base and serving it. Requiring proof of the true current embedded base does not exceed DGS' statutory authority and is not arbitrary or capricious. It is reasonable for DGS to require potential suppliers to prove past sales instead of merely accepting, without further proof, self-serving letters from them alleging that they have made such sales. DGS cannot legitimately ignore that if potential suppliers' allegations of sales are taken at face value, some potential suppliers will be tempted to falsify their claim of sales in the hope of gaining an advantage. Also, as set out in Finding of Fact 19, infra, such proof has been anticipated and provided for in prior contracts. Neither Caber or MCA filed a Section 120.54 or 120.56, Florida Statutes, rule challenge, with regard to either a volume policy of "50 sales" or the policy above- described. In the course of formal hearing and in their posthearing proposals, however, Caber and MCA suggested unequal application of the policy of volume usage and the number needed to be proved. Although it was shown that an indefinite volume usage scale was applied, to various manufacturers, Caber and MCA were unable to show that any legitimate party to this instant protest was treated unequally. See, infra. Findings of Fact 22-26 and the Conclusions of Law. During the course of the 621 contract, DGS had, pursuant to General Condition 25, revised that contract on at least a quarterly basis, to reflect, among other things, deletions of discontinued products and additions of new products by actual sales to the state. 4/ Therefore, DGS did not question volume of current usage of recently added suppliers or require those suppliers which had been recently added to the 621 contract revisions to demonstrate anew a need for their products by State users so as to get on the ITB-462 QPL. Rather, DGS broadened the ITB-462 QPL by all models of any manufacturer listed on the 621 contract revisions up to the date of mailing ITB-462. If DGS already possessed proof of volume usage by the embedded base either by proof of sales or by user requests, it added any supplier listed on the basic 621 contract to the ITB-462 QPL, without further inquiry or proof requirements. However, if DGS had reason to question the volume of current usage by the State embedded base of products from suppliers listed on the basic 621 contract, DGS then required those particular suppliers to come forward with proof of current true volume usage of their products by the State embedded base, before DGS would add that particular supplier's products to the ITB-462 QPL. DGS only questioned volume of current State embedded base usage of the products or potential suppliers listed on the basic 621 contract if two situations converged. First, DOE, IRC, and the state contract users would have to have given no indication that a 621 listed supplier's products were still in demand and DGS would have to have had no independent record of sales above a single unit single sale. No potential supplier in this dual category is a legitimate party to this Section 120.53, 120.57, Florida Statutes, ITB-462 protest, and none submitted to DGS satisfactory proof of sales to an embedded state user base sufficiently in advance of the ITB-462 mailing to be placed on the ITB-462 Table I QPL. See, infra., Findings of Fact 22-26 and the Conclusions of Law. If a brand/model could not qualify under the first of the four ITB-462 QPL criteria, "listing on the revised 621 contract," DGS would still place it on the ITB-462 QPL if it met one of the other three criteria. Criterion one was not demonstrated to be arbitrary or capricious either in concept or in application to any party with standing in this proceeding. Together with the other three criteria, it is a reasonable component of a method of achieving the agency's statutory goal of competitive bidding, and does not exceed the agency's statutory authority. Criterion two, "review of contract exceptions", refers to DGS' role in approving or disapproving State agencies' requests to acquire microcomputers and equipment which is not on a state contract. See, Rule 13A-1.008(4), Florida Administrative Code. DGS personnel reviewed the 621 contract exceptions that had been granted previously, but did not consider a contract exception for a single unit sufficient to qualify a brand/model for the ITB-462 Table I QPL. However, Table IV, the IBM clone category, was drafted in response to DGS' review of contract exceptions. DGS demonstrated that this standard was reasonable. Caber and MCA did not affirmatively demonstrate any significant competitive bidding benefit or any substantial and compelling embedded user base that was overlooked in requiring more than a single unit exception, nor did they show that a multiple unit standard was unreasonable, arbitrary, capricious, exceeded statutory authority or showed favoritism. Criterion three, "demand by state users", refers to oral and written requests from State contract users for certain products. DGS reasonably added Datamaxx brand products to the 462 Table I QPL as a result of such a request from the Department of Health and Rehabilitative Services, and Caber and MCA failed to demonstrate any significant competitive bidding benefit or substantial and compelling embedded user base that was overlooked in this process or that Datamaxx should be deleted from Table I due to any overreaching of statutory authority, unreasonableness, arbitrariness, capriciousness, or favoritism employed by DGS. Criterion four, "experience of prior usage by the State" was a catchall category by which DGS sought to ultimately capture all potential suppliers needed by its embedded base. In practice, it overlapped criterion one and was not arbitrary or capricious and did not exceed the agency's statutory authority. DGS again would not accept a single unit sale as proof of a significant embedded users base. DGS' initial knowledge of volume sales can come from sales reports and purchase orders and from DGS personnel's oral and written contact with various state agencies. Also, suppliers on contract 621 are required to furnish to DGS quarterly sales reports and the contract notifies them in advance that furnishing these quarterly sales reports will be considered in awarding future contracts, but there has not been uniform supplier compliance with that 621 contract requirement, and DGS admits its figures in this regard are not entirely accurate. If no contract user had specifically requested a microcomputer product, rather than simply striking those suppliers which had not properly provided adequate sales documentation under contract 621, DGS allowed listed suppliers to submit proof of a current embedded base of state users of their products in the form of receipts, invoices, sales records, and similar documentation. DGS expected the supplier listed to make initial contact with DGS to supply this volume usage information, but where first contact had been initiated by such a potential supplier, DGS would actively continue to solicit such proof. DGS reasonably and logically required that the proof be submitted sufficiently in advance of the mailing of the ITB-462. If DGS already had proof or an embedded user base through proof of sales or had contract user requests for suppliers listed on contracts predating contract 621, DGS also added those potential suppliers to the ITB-462 QPL without requiring further proof. This broadening of the ITB-462 QPL could fall in either criterion three or four and demonstrates no offense against competitive bidding even if it does not precisely fit criterion one. In every application of the criteria, the intent of DGS' actions has been to responsibly broaden the QPL, not limit it. Caber's protest suggests adding specific name brands to the ITB-462 Table I QPL: Toshiba, Wyse, Tandon, NEC, and Convergent Technologies. DGS had not included these brands in the QPL because DGS had no requests and no independent proof of an embedded base, and because these brands submitted no documentation of volume usage prior to the ITB-462 mailing. At no time prior to the conclusion of formal hearing in this cause was Caber an authorized dealer for Tandon, NEC or Convergent Technologies, and therefore Caber could not have bid products of those brands by December 3, 1987, the bid submittal/opening date. Nor did Caber have any standing to represent these manufacturers during the crucial 72 hour "window" provided for filing notices of protest. Caber's connections with these manufacturers is "hopeful" at worst and speculative at best. Caber is an authorized dealer for Toshiba and Wyse. At formal hearing, Caber proved up a one unit sale of a Toshiba product under a contract exception, but Caber's principal witness stated that a similar single unit bid would not be in Caber's best interest. At formal hearing, Caber presented no proof through supporting sales receipts, invoices, or similar sales documentation of any Wyse sales to an embedded state user base. NEC does not sell directly, but only through third party dealers. Its products appear on the expired 621 contract but neither NEC nor its dealer, who is the supplier listed on the 621 contract, filed a protest or sought to intervene in this proceeding. NEC knew about the required proof of sales, but submitted no supporting documentation of sales to an embedded state user base when requested to do so by DGS prior to the ITB-462 mailing, and prior to that date there was no direct request for NEC products by contract users. Intervenor MCA is the sole authorized distributor of Convergent Technologies products in Florida. MCA sells such microcomputers to state contract users through an arrangement with Integrated Microsystems, Inc. Integrated Microsystems is listed on the 621 contract as providing Convergent Technologies equipment. MCA provided quarterly sales reports to Integrated Microsystems but neither MCA nor Integrated Microsystems filed them with DGS. Neither MCA nor Integrated Microsystems met DGS' deadline for submitting similar documentation of such sales prior to the mailing of ITB-462, although MCA had requested that Convergent Technologies be added to the ITB-462 QPL. Neither MCA, Integrated Microsystems, Inc., or Convergent Technologies timely filed a Notice of Protest or Formal Written Protest. MCA made a conscious decision not to do so. Neither Integrated Microsystems, Inc. nor Convergent Technologies sought to intervene. Caber and MCA proposed that if ITB-462 is not modified to allow addition by name brands or equivalent bids for Table I models, then it should be modified to allow potential suppliers reasonable notice and opportunity to submit proof of State user demand for any brands/models not currently listed on Table I. Implementing such a proposal would only be providing an additional chance for these potential suppliers to submit the proof DGS required prior to the ITB mailing and which was not supplied then. Pursuant to General Condition 25, DGS intends to add new brands to the new microcomputer contract resulting from ITB-462 by competitive bidding. DGS intends to develop criteria for addition to the Table I QPL to be published and mailed to potential vendors in the future. Once a microcomputer meets the criteria, there will be an ensuing bid and award. DGS then plans to continue to add replacement models without competitive bidding when they meet or exceed specifications at the lower prices. New brands will then be added by specific make and model only. If DGS is required to fulfill its intention, the protestants' goal will be achieved without sacrificing additional time in getting out ITB-462 and the goal of further expansion of the embedded base will be served quarterly within the contract's life. In drafting ITB-462, DGS worked closely with DOE and the Information Resources Commission (IRC) beginning approximately in June 1987 and provided each with a draft or "specimen" copy of the ITB at a conference held October 7, 1987 and requested their comments at a conference held October 16, 1987. The IRC is the centralized management authority for all information technology (computer) use within State agencies. With the exception of the Department of Community Affairs, no state agency suggested equivalency bidding, and the IRC did not recommend this substantial change in the specimen ITB-462 format when it presented its review of agencies' needs and its own recommendations to DGS. DOE expressed no need for an "all other" or "equivalent" category/goal because it was felt that Table I contained a broader range of models which would meet the majority of their users' needs and the Table IV clones would meet any state needs not met by Table I. DGS' position was that reopening Table I to "all other" or "equivalent" categories would be to return to the 1986 ITB-545 format that Caber previously protested and that DGS had abandoned because it was vague and because it was impractical to administer. Caber and MCA proposed that DGS develop specifications (an "all other" category) which bidders would attempt to meet by assembling their own systems of components. Specifically, Caber and MCA proposed deleting the provisions of the Special Conditions of ITB-462 which prohibit bidding of equivalents, and allowing potential vendors to bid models that are "equivalent" to (meet or exceed the specifications of) Table I models, either by creating a new Table V form on which vendors may bid a model equivalent to any specified model on Table I or by creating a set of "other low qualified bid" categories involving generic specifications based on Table I models. However, Caber and MCA did not affirmatively demonstrate any compelling competitive bid advantage to the State's embedded user base in doing so. Neither did they present any substitute specifications by which an "equivalent" goal/category could be successfully bid, evaluated, and awarded, whether it be added to existing Table I or placed in a "created" Table V. The 1986 ITB-545 bid protest resulted in part from a failed attempt to draft generic specifications and Caber and MCA only suggested in the present formal hearing that DGS should advertise for someone to come forward and write such specifications and other methods more reminiscent of a "request for proposal", (RFP) than of a firm specification for an ITB to meet a known embedded user base with definite parameters of need. Evaluation by benchmarking to establish functional equivalency would be necessary to implement Caber's and MCA's proposals even if generic specifications could be drafted, due to the myriad combinations possible. The alternatives to benchmarking proposed by the Caber and MCA witnesses are impractical and demonstrably not in the best interests of the State, based on time considerations associated with benchmarking literally hundreds of potential combinations, time considerations rendered even more compelling by the termination of the 621 contract on January 26, 1988. Moreover, Caber's and MCA's suggestions that the State rely solely on default provisions of the ensuing contract clearly would not be in the best interests of the State in that such a practice would inherently subvert all the price benefits sought through term contracting. Moreover, as it stands now, a degree of equivalent bidding is permitted in Table IV of ITB-462. Although third party components (products of one manufacturer installed in the larger system or computer of another manufacturer) may be bid in other tables, DGS has excluded them from Table I by the following language, Third party components are not acceptable within a system designated by a manufacturer's model number on Table I unless they are used by the manufacturer in normal production and supported by the manufacturer for warranty and maintenance service. The purposes behind this exclusion are to avoid the same problems inherent in bidding equivalents and the necessity for benchmarking of all possible variations, and because manufacturers will generally not provide maintenance contracts on altered equipment, because of the need for contract users to know exactly what they are getting, because of enunciated safety reasons, and because of the need for specificity in bid solicitations, administration, and award. By their prehearing stipulation, Caber, MCA, DGS, IBM, and Apple stipulated that the Manufacturer's Certificate called for in ITB-462 should be modified so as to delete the following language "AND IS OFFERING EQUIPMENT THAT IS IN COMPLETE COMPLIANCE WITH THE BID SPECIFICATIONS." No reason was shown why this stipulation should not be accepted and given effect, provided all the potential bidders have an opportunity to resubmit bids to comply with ITB-462 as reformed on this point. An IBM-compatible clone is a computer marketed by a manufacturer other than IBM, having an operating system that will run IBM programs and which has the capability to be expanded with IBM-compatible devices. DGS established such a category in Table IV to meet demonstrated needs of an embedded base of State microcomputers which perform the same functions as IBM equipment but which can be obtained at significantly lower prices. The clone category specifications are already at least "semi-generic" or "semi-equivalent" in that any combination of components which meets those specifications is acceptable to DGS, regardless of manufacturer or dealer. Third party components are acceptable in the IBM- compatible clone systems, provided that all such components are warranted by the bidder and maintenance subsequent to the warranty period is available from the bidder. There are hundreds of manufacturers of IBM compatible clones in the microcomputer marketplace today, and there are many third party components offered for use in IBM computers and/or IBM compatible clones of widely varying features and prices. There has never before been an IBM clone category awarded on a State contract, but a clone category involving two models was proposed in the ITB-545 abandoned last year, and the new ITB-462 contemplates that there will be a single award to the lowest bidder for each of the four IBM compatible clone configurations in its Table IV. There is nothing in the specifications which would prevent Caber from bidding many models on Table IV. Determining compliance of clones with the ITB-462 specifications as now drafted will involve DGS performing benchmark testing of at least two systems in each configuration, or at least 8 tests. DGS has allotted 10 days to perform these tests and it is estimated that it will take one person approximately one day to test each clone. The purpose of the benchmark test is to certify that the computers bid are IBM compatible and actually work as represented. Benchmarking is done by setting up the machines, formatting disks, and running the application's software to ensure that the machines can create, retrieve, update, and manipulate files, and can generally perform all the functions of IBM compatible machines. Caber and MCA propose that there be multiple awards for each configuration. The majority of state agencies do not favor multiple awards for the clone category because the four configurations on Table IV represent the basic equipment they need. DOE opposed multiple awards for itself and its constituency. IRC did not recommend multiple awards for clones. Multiple awards are the least desired method of contracting in State government and are reserved for situations where a specification cannot be written. DGS was able to draft specifications for the clone configurations that the State embedded base of users indicated were most needed. DGS' intent in the Table IV category was to capture the single lowest bid through competitive bidding, not to produce a catalogue of manufacturers/dealers willing to do business with State users, which latter goal seems to be the thrust of the ITB amendments proposed on this point by Caber and MCA, who demonstrated no cost advantage to the State in making multiple awards for clones. Multiple awards for clones would result in the benchmark testing criticized in the orders of consolidated cases Caber Systems Inc. et al. v. DGS, et al., DOAH Case No. 87-0836BID and Microage Computer Systems Stores, Inc. v. DGS, DOAH Case No. 87-0837B1D. Again, Caber and MCA witnesses proposed several alternatives to benchmarking the literally thousands of configurations possible under their proposal. All proposed alternatives were overwhelmingly discredited by credible testimony as impractical and subject to enormous time delays. Historically, DGS has not limited the number or type of related options/accessories that a winning bidder could have placed on the microcomputer term contract. ITB-462 limits the number and types of options/accessories to 14 acceptable items. The Special Conditions restrict the options to the models with which they function, require bidders to identify the options' list prices, percentage discounts, and net delivered prices in Table II. In developing the list of acceptable options, DGS drew on what it had learned from the last bid protest and considered the volume of State usage of the options, prices of the items, and the need to support equipment in place. Information supporting the usage of the options which were eventually listed included sales reports, purchase orders, sales summaries, and input from State users. The IRC, DOE, and GEMUG concurred in the limited list of options which finally resulted. DGS proved a reasonable need for these items by an embedded State user base. Caber and MCA did not demonstrate any need by an embedded State user base which was left unmet by DGS' procedure or which is not otherwise addressed by other existing State contracts or by the state contract exception provisions. In the case of certain accessories/option additions proposed by Caber and MCA, the cost of such proposed additions fell below the vanishing point for unit price savings through volume purchases.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended that DGS enter a Final Order providing: That MCA be dismissed as an intervenor in this cause. That Caber's Petition as it addresses products of Tandon, NEC, and Convergent Technologies be dismissed. That ITB-462 be amended to delete the following language in the Manufacturer's Certificate: "and is offering equipment that is in complete compliance with the bid specifications," and amended in no other way. That a date certain for completion of bid submittals (and resubmittals as necessary for those bidders who responded before the statutory freeze) be established, which date will allow sufficient time for all those eligible to submit bids that comport with the ITB-462 as amended pursuant to paragraph 3. That the Division of Purchasing develop procedures to be included in the contract resulting from ITB-462, providing for additions to the Table I QPL at every General Condition 25 revision and requiring that copies of these procedures be published and mailed to all potential vendors prior to the first revision of the ensuing contract. DONE and RECOMMENDED this 29th day of April, 1988, at Tallahassee, Florida. ELLA JANE P. DAVIS, 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 29th day of April, 1988.
Findings Of Fact Invitation to Bid (ITB) DOT Contract Number 7578 involves the mowing of various state roads in Citrus County, Florida. Citrus County is in District Seven of DOT. The ITB requires mowing, edging, sweeping and litter removal along state roads in Citrus County. The Petitioner, All Seasons is the current contractor performing the mowing services which are the subject of this protest. However, the ITB called for expansion of those services. The mowing contract had to be relet because All Seasons, opted not to renew its current contract because it felt that it was not making enough of a profit. The budget amount for the Contract Number 7578 protest was $180,000. The budget amount is the amount of money DOT has preapproved to spend for the contract. It is not the estimated amount DOT projects a contractor can perform the mowing contract for. The estimated amount is secret, but is generally close to the budgeted amount. Four bids were submitted for the mowing contract. The four bids were: Imperial Cabinets $ 70,201.05 Horticultural Industries $ 90,845.58 All Seasons $171,233.95 Mark Dunning Industries $181,119.61 In this instance, there was a large discrepancy among the bids on contract E-7578. The two lowest bidders were Imperial Cabinets and Horticultural Industries and were well below he budgeted amount. These two low bids were closer in proximity as to dollar amounts to each other and All Seasons and MDI's bids were closer in proximity to each other. The technical review committee (TRC) analyzed the bids and discussed whether or not the two lowest bidders were able to perform the contract. The TRC was concerned about whether the lowest bidder could perform the work required in the ITB at the price it bid. The TRC asked for information on the two lowest bidders from other districts. It did not receive any useful information. DOT did not inquire of the two low bidders. 1/ The TRC also consulted with DOT staff on the lowest bidder's prices. The staff thought the prices were low but could not state that the contract could not be performed the amounts which were bid. However, the TRC recommended rejection of all the bids to the awards committee. The TRC's recommendation was based on the speculation that the low bidders did not understand the scope of the mowing contract and that lack of understanding resulted in the bid prices of the two lowest bidders. However, there was nothing unique or confusing contained within the specifications of the ITB which would lead to the conclusion that a reasonable person could not understand. There is no way, just by looking at the bid proposal, to tell whether or not either firm could perform the contract at the prices. Additionally, there was no way to determine from the face of either firms bid if they did or did not understand the contract. In short, there was no factual basis for the TRC to find the low bids non-responsive and to recommend rejection of all the bids. The awards committee followed the recommendation and rejected all the bids. The awards committee utilized the same speculation the TRC had used its decision is as faulty. In this case, Petitioner relied on the same "evidence" as DOT regarding the inability of the two low bidders to perform the contract in order to demonstrate that the two low bidders were non-responsive. The evidence simply does not support a finding of non-responsiveness. Petitioner being the third place bidder has no substantive interest in this proceeding since it could not be awarded the mowing contract. Therefore, the bid protest should be dismissed.
Recommendation Based upon the findings of fact and the conclusions of law, it is, RECOMMENDED: That the contractors protest bid for Contract Number E-7578 be dismissed. DONE and ENTERED this 27th day of November, 1996, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 27th day of November, 1996.
Findings Of Fact On an undisclosed date, respondent, Department of Transportation (DOT), gave notice to qualified contractors that it would receive sealed bids on State Project Job No. 26000-3624. The job called for removing and replacing the roof on the DOT warehouse at Gainesville, Florida. Such bids were to be filed with the agency no later than January 23, 1985. As is pertinent here, the specifications called for the following type of flexible sheet roofing system: minimum Elastomeric sheet material, manufacturer's standard thickness but not less than 42 mils, 400 psi minimum tensil strength, 250 percent elongation (ASTM D 412), ultraviolet and ozone resistent, low temperature brittleness of -40 F (-40 C)(ASTM D 746), integral color white or aluminum. W. R. Grace and Company (Grace) is one of several companies who manufacture single-ply roof membranes that are generally compatible with DOT specifications. One of its factory representatives, John Cunningham, reviews all bid notices issued by DOT to determine what materials are required for a given project. The representative then calls DOT approved contractors in his service area who use Grace products and advises them of the requirements for the job. In this particular case, Cunningham read the specification for elastomeric sheet material and was initially confused as to whether DOT wanted a factory finish on the membrane or to have it coated in the field. This confusion arose since the specification called for an "integral color" on the material and a "manufacturer's standard thickness, but not less than 42 mils." Grace manufacturers two single-ply roof membranes, one having a 40 mil thickness with a factory applied coating (GRM-500), and one having a 50 mil thickness with a field applied coating (GRM-120). When DOT prepared the bid proposal, it was under the impression that the GRM-500 system would meet the specifications. However, if a factory applied coating on the membrane was desired, the GRM-500 system would not meet the specification as to thickness. Because of this, Cunningham contacted a DOT representative who advised that DOT wanted a factory applied coating, and that all bidders should base their bid using the GRM-500 product even though this appeared to be inconsistent with the specifications. The representative also told Cunningham it was too late to issue an addendum to clarify the matter. Based upon the above representation Cunningham telephoned each qualified contractor in his sales area who used Grace products, including petitioner Cheesbro Roofing, Inc. (Cheesbro), a roofing company located in Ormond Beach, Florida. He told them that DOT apparently wanted a factory applied coating, even though this was inconsistent with the specification as to thickness and that the GRM-500 system should be used. He also advised them that at least one bidder interpreted the specification differently, and was preparing its bid using the GRM-120 product so that the thickness specification as written could be met. Cheesbro had never bid a DOT project and was confused as to the type of product to use in preparing its bid. In an abundance of caution, Cheesbro submitted alternate bids, one with prices based on the GRM-500 system and the other using the GRM-120 system. This resulted in bids of $84,560 and $102,661, respectively. The alternate bid (using the GRM-120 product) was typed on the firm's letterhead and inserted in the bid proposal since the bid form did not contain a place to write an alternate bid. The $84,500 figure was the lowest dollar bid on the project out of twelve bids submitted. At about the same time, a second Grace sales representative, Richard Bray, contacted users of Grace products in his service area including Kent Construction Company, Inc. (Kent) of Chipley, Florida. Bray advised his customers to write their bids using the GRM-500 system. Kent had originally interpreted the specification as requiring the GRM-120 system, but, based upon Bray's representation, it submitted a bid of $86,800 using the GRM-500 system. This was the second lowest dollar bid on the project. By law DOT cannot design specifications with the object of soliciting products made by a specific manufacturer. Even so, there are only a few other manufactured roofing systems which have a factory applied coating and a thickness of at least 42 mils. However, most of the twelve bidders, including the two lowest, submitted bids using Grace products. After the bids were filed and reviewed, DOT noted that Cheesbro had submitted alternative bids. Because this is a ground for rejection, the bid was reviewed initially by a DOT technical awards committee which recommended the bid be rejected as being "irregular". That committee's decision was affirmed by the contract awards committee which reached the same conclusion. Accordingly, Cheesbro's bid, although the lowest, was rejected on February 11, 1985 and Kent's bid accepted on March 6, 1985 as being the lowest and most responsible bidder on the project. That prompted the instant proceeding. DOT bids are governed by the Standard Specifications for Road and Bridge Construction, 1982 Edition. Section 2 - 6 of that document provides as follows: A proposal will be subject to being consid- ered irregular and may be rejected if it shows omissions, alterations of form, addi- tions not called for, conditional or unau- thorized alternate bids, or irregularities of any kind; also if the unit prices are obvi- ously unbalanced, either in excess of or below the reasonable cost analysis values. DOT has relied upon this section as authority for rejecting Cheesbro's bid. Cheesbro did not read this document before submitting its bid. According to DOT, the purpose of the section is to obtain standard bids from all contractors, and to prevent one bidder from having an unfair advantage over others through the use of alternate bids.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that all bids on State Job Project No. 26000-3624 be rejected, and the project be relet for bids. DONE and ORDERED this 1st day of July, 1985, in Tallahassee, Florida. Hearings Hearings DONALD R. ALEXANDER Hearing Officer Division of Administrative The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative this 1st day of July, 1985. COPIES FURNISHED: David H. Burns, Esquire p. O. Box 1694 Tallahassee, Florida 32302 Larry D. Scott, Esquire Haydon Burns Bldg., M.S. 58 Tallahassee, Florida 32301
The Issue The issues in the case are whether the allegations of the Administrative Complaint are correct, and, if so, what penalty, if any, should be imposed.
Findings Of Fact At all times material to this case, the Respondent was a seller of business opportunities registered with the Petitioner, holding registration number 2000-054, and located at 3101 Twenty-Second Avenue South, St. Petersburg, Florida 33712. The Respondent was the successor in interest to American Cash Machine, Inc., and is responsible for fulfilling the obligations of the previous company. At all times material to this case, Gilbert B. Swarts was the president and chairman of the board of the Respondent. On July 8, 2005, the Respondent entered into a contract with Bonnie Campbell as trustee of the Campbell Family Trust (purchaser) under which the purchaser agreed to purchase 36 "CardPayment" machines from the Respondent, and the Respondent agreed to place the machines in appropriate business locations on behalf of the purchaser. As required by the contract, the purchaser paid a total of $135,000 by check to the Respondent. At the time of the sale, the Respondent provided a disclosure form to the purchaser which stated that 200 "CardPayment Business Opportunities" had been sold by the Respondent to other purchasers by the end of 2005 and that 25 "Internet Kiosk Business Opportunity [sic]" had been sold by the Respondent to other purchasers by the end of 2002. The disclosure form also stated that the Respondent would provide to the purchaser, the names, addresses, and telephone numbers of the ten purchasers located closest to the purchaser; however, the disclosure form did not include the information, and the Respondent did not otherwise provide the information to the purchaser. The Respondent stocked the 36 CardPayment machines, but failed to acquire business locations for all of the machines. The Respondent has asserted that after discussions with the purchaser, the parties agreed to "upgrade" the 36 CardPayment machines identified in the contract to 18 Internet Kiosk machines. The Respondent was subsequently unable to acquire business locations for all of the Internet Kiosk machines. The Respondent has asserted that after discussions with the purchaser, the parties agreed to "upgrade" the 18 Internet Kiosk machines to 18 "Smart Terminal" machines. The CardPayment machines, Internet Kiosk machines, and Smart Terminal machines are different types of machines, and each type has a usage different from the others. The terms of the contract executed between the parties did not provide for the substitution of various machines upon failure by the Respondent to place the machines into operation. The contract required the Respondent to rebate a portion of the sales price for each month during which each CardPayment machine was not placed for operation. No contract for the purchase of either the Internet Kiosk or the Smart Terminal machines was executed by the parties. The disclosure information provided by the Respondent to the purchaser related to the Internet Kiosk machines was insufficient to comply with the statutory requirements addressed herein. No disclosure information related to the Smart Terminal machines was provided by the Respondent to the purchaser.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order finding that the Respondent has violated Subsections 559.803(11)(a) and (b) and 559.809(11), Florida Statutes (2005); imposing an administrative fine of $10,000; and placing the Respondent on probation for a period of three years subject to such conditions as the Department deems appropriate. DONE AND ENTERED this 8th day of February, 2008, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of February, 2008. COPIES FURNISHED: Eric H. Miller, Esquire Department of Agriculture and Consumer Services 2005 Apalachee Parkway Tallahassee, Florida 32301 Gilbert B. Swarts American Cash Machine, LLC 535 Twenty-Second Street South St. Petersburg, Florida 33712 Richard D. Tritschler, General Counsel Department of Agriculture and Consumer Services 407 South Calhoun Street, Suite 520 Tallahassee, Florida 32399-0800 Honorable Charles H. Bronson Commissioner of Agriculture Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810
The Issue The issue in this case is whether Respondent's intended award of a contract to Intervenor pursuant to Invitation to Negotiate No. 2011-18 is contrary to Respondent's governing statutes, Respondent's rules and policies, and the specification of the solicitation.
Findings Of Fact The Department issued the ITN, Revised Standards Tutorial, on December 17, 2010. The purpose of the ITN was to contract with one or more vendors "to provide assistance with the state's need to support teachers in the implementation, and students in the mastery of the English Language Arts and Mathematics Common Core State Standards (CCSS) and the Next Generation Sunshine State Science and Civics Standards." The Department sought to purchase, among other things, the following: [T]he development of a new robust web-based system that includes but is not limited to interactive adaptive student practice lessons for each of the Common Core State Standards and Next Generation Sunshine State Science and Social Studies Standards (Science grades 5, 8, Biology 1 and Civics) to address individual student needs and provide a means of individual progress monitoring for students, parents, and teachers; secure mini-interim assessment checks for students; student performance reports for teachers on the mini-interim assessment checks; and programming for parent, student, and teacher log-ins that provide different levels of access to support materials. The ITN required that the system developed would be the property of the Department during and after the contract and stated: All equipment, software and licenses, programming code and language, documentation and content (both instructional and informative) that is developed as part of this project will be the property of the Department during and after the grant period. All such items must be completely transferred to the Department prior to the end of the contract period, including any licenses to the extent that they have not expired. Any proprietary products owned by the Contractor must provide for a perpetual royalty free and non-exclusive license for use by the Department. Vendors were given the opportunity to ask technical questions about the ITN, and the Department posted the questions and the Department's responses on the vendor bid system on December 29, 2010. One vendor submitted the following question: "Will the DOE require a perpetual license to continued use of any content (assessments or lessons) after the end of the four- year contract if those materials are the vendor's proprietary, pre-existing materials that are provided for use in the Standards Tutorial?" The Department gave the following written response, which was included in Addendum No. 1 to the ITN. "All content and applications developed will be the property of the Department. All content, application code and documentation must be turned over to the Department upon deliverable completion." It is clear from the ITN and the first addendum that the Department required the materials developed pursuant to the contract to be the property of the Department. One of the main goals of the Department in issuing the ITN was to have a product that could be sustained after the contract period. When the ITN was developed, the Department was not aware of the variety of arrangements that might be possible in order to meet all of the Department's goals. However, the Department made the choice to go with ownership of the products developed for the contract and a perpetual, royalty-free non- exclusive license for products that were owned by the contractor and provided pursuant to the contract, but were not developed as a result of the contract. The Department could have worded the ITN so that the vendors would provide a solution for the sustainability component of the contract, but it did not do so. The method chosen by the Department to meet its sustainability needs became a requirement of the ITN. Sustainability was a material aspect of the contract, and, because the Department had specified the method to achieve sustainability in the ITN with no leeway for the vendors to propose a different methodology, the ownership of products developed pursuant to the contract became a material requirement of the ITN. Nothing prevented the Department from negotiating different methods of sustainability during negotiation, but in order to determine whether a vendor was responsive, the Department was bound by the ITN, no matter whether it inadequately reflected what the Department was seeking. The remedy to the flawed ITN would have been to change the specifications prior to the replies being submitted. The Department argues in its Proposed Recommended Order that the ITN did not call for ownership of the content or the software. This argument is disingenuous in light of the testimony of the Department's representative that the ITN contemplated complete ownership of the products developed pursuant to the contract. Section 7.1 of the ITN required that the vendor include completion dates for deliverables in its Reply and provided a list of deliverables for each year of the contract. The ITN stated that the Deliverable Completion date contained in the ITN was for "informational purposes only." The actual completion dates were to be negotiated. Section 3 of the ITN provides: "Award will be made to the responsible and responsive vendor that the Department determines will provide the best value to the state." Section 3.3. of the ITN defines a responsive bid as "a Reply submitted by a responsive and responsible vendor which conforms in all material respects to the solicitation." The term "Reply" is defined by the ITN as "the complete response of the Respondent[1/] to the ITN, including properly completed forms and supporting documentation." Section 4.11 of the ITN provides: As in the best interest of the state, the right is reserved to award based on all or none thereof, to a responsive, responsible Respondent. As in the best interest of the state, the right is reserved to reject any and/or all Replies or to waive any minor irregularity in replies received. Conditions which may cause rejection of Replies include, without limitation, evidence of collusion among Respondents, obvious lack of experience or expertise to perform the required work, failure to perform, or meet financial obligations on previous contracts. Section 5.2.2 of the ITN is entitled Mandatory Submittal Documents and requires that the vendors submit, among other things, a transmittal with their replies which contains the following: a statement certifying that the person signing the Reply is authorized to represent the Respondent and bind the Respondent relative to all matters contained in the Respondent's Reply the company's federal tax identification number a statement certifying that the Respondent has read, understands, comply [sic] and agrees to all provision of this ITN a statement that the Respondent is authorized to conduct business in Florida in accordance with the provisions of Chapter 607, F.S. In lieu of such statement, the Respondent alternatively must certify that authorization to do business in Florida will be secured prior to the award of the contract a statement certifying that the Respondent is registered on the MyFloridaMarketPlace website in accordance with the provisions by the state of Florida. In lieu of such statement, the Respondent must alternatively certify that registration authorization will be completed prior to the award of the contract. Once the replies were submitted, the ITN required that the replies be reviewed to determine if they met the mandatory submittal requirements. If it was determined that a reply met the mandatory submittal requirements, the reply would be evaluated by an evaluation committee. Section 8 of the ITN sets out the evaluation and negotiation process and provides: 8.1 REPLY EVALUATION AND NEGOTIATION PROCESS Using the evaluation criteria specified below, in accordance with Section 287.057, F.S., the Department shall evaluate and rank responsive Replies and, at the Department's sole discretion, proceed to negotiate with one or more Respondent(s) . . . : Section 8.2 of the ITN provides: The ITN is designed to assess the most points to the Respondent presenting the best solution for the required services. The Evaluation Committee will consider only those Replies, which are determined to meet the mandatory requirement review (See SECTION 5.2.2) first completed by the Department's Bureau of Contracts, Grants and Procurement Management Services. Each member of the Evaluation Committee will be provided a copy of each Technical Reply. Replies will be evaluated on the criteria established in the section above entitled "Criteria for Evaluation" in order to assure that Replies are uniformly rated. The Evaluation Committee will assign points, utilizing the technical evaluation criteria identified herein and the Procurement Office will complete a technical summary. Oral presentations (or seeking clarification) will be evaluated by the committee based on the criteria established in SECTION 5.2.1 above. During this stage Respondents will be asked to provide any clarifications needed by the evaluation committee to assist in evaluating their Reply. Information received in this stage will be added to the Respondent's Reply and evaluated as a part of the appropriate section above. Section 8.1 of the ITN provides that the evaluation of the prices would be done through a comparison of the prices submitted in the replies: "The maximum points will be awarded to the lowest acceptable Price Reply. Replies with higher costs will receive the fraction of the maximum points proportional to the ratio of the lowest Price Reply to the higher Price Reply." Section 8.1(E) of the ITN provides: In submitting a Reply Respondent agrees to be bound to the terms of this ITN, however, the Department reserves the right to negotiate different terms and related price adjustments if the Department determines that it is in the state's best interest to do so. Four vendors, including Infinity and Microsoft, submitted replies to the ITN by the deadline of January 10, 2011. Microsoft's Reply stated: The information contained in this document [the reply] (a) represents Microsoft's current statement of the features, functions, and capabilities of the products and services described herein, which is subject to change at any time without notice to you, (b) is for your internal evaluation purposes only and should not be interpreted as a binding offer or commitment on the part of Microsoft to provide any product or service described herein; and (c) constitutes Microsoft trade secret information and may not be disclosed to any third party. Any procurement that may result from this information is subject to negotiation and execution of a definitive agreement between [sic] and its chosen authorized Microsoft reseller incorporating applicable Microsoft commercial terms. Microsoft does not guarantee the accuracy of any information presented and assumes no liability arising from your use of the information. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS DOCUMENT. The transmittal letter submitted by Microsoft stated: "[T]his letter certifies that Microsoft has read and understands the provisions of the ITN." The transmittal letter did not meet the requirements of the ITN that Microsoft certify that it complies and agrees with all provisions of the ITN. The reply submitted by Microsoft did not provide that all materials developed as a result of the contract would become the property of the Department. Microsoft intended to subcontract with Houghton-Mifflin-Harcourt (HMH) to develop the content, which includes the practice lesson plans for the students. Microsoft stated in its Reply: "The Department of Education will have a perpetual license to use these lessons; HMH will retain copyright and ownership of all lessons provided." Microsoft intentionally did not agree to provide complete ownership of the project deliverables to the Department when it submitted its reply. David Gallagher, Microsoft's representative and the person who submitted the reply on behalf of Microsoft, admitted at the final hearing that he did not have authorization to give the Department ownership of the project deliverables when he submitted Microsoft's reply. Section 5.2.3 of the ITN provided that prices were to be submitted on a form that was provided in the ITN. The price form contains the following language: We propose to provide the services being solicited within the specifications of ITN 2011-18. All work shall be performed in accordance with this ITN, which has been reviewed and understood. The below prices are all inclusive. There shall be no additional costs charged for work performed under this ITN. The price form submitted by Microsoft did not contain this language. Taking the evidence as a whole, it is clear that Microsoft did not intend to be bound by its reply and thought that anything that was contrary to the ITN would be worked out in negotiations. The Department appointed an evaluation team that met on January 18, 2011, to score each reply. Some of the evaluators made note in their evaluations that Microsoft's reply did not meet the requirements of the ITN relating to ownership of the project deliverables. The evaluation committee awarded the maximum number of points for price to Microsoft. The two top-scoring vendors, Infinity and Microsoft, were invited into negotiations. The Department submitted questions to both Infinity and Microsoft before the negotiations, and both vendors submitted written responses to those questions. The Department submitted the following question to Microsoft: Your proposal states "HMH will retain copyright and ownership of all lessons provided" (pp.3-25, 3-33). How does this meet the ITN requirement that "All equipment, software and licenses, programming code and language documentation and content (both instructional and informative) that is developed as part of this project will be the property of the Department during and after the grant period. All such items must be completely transferred to the Department prior to the end of the contract period, including any licenses to the extent they have not expired. Any proprietary products owned by the Contractor must provide for a perpetual royalty free and non-exclusive license for use by the Department." (p. 6)? Microsoft responded to the question of ownership, in part, as follows: Developments. Upon payment in full, we assign you joint ownership in all rights in any custom computer code or materials (other than products, fixes or pre-existing work) developed by us (or in collaboration with you) and provided to you in the course of performance of this contract ("developments"). "Joint ownership" means each party has the right to independently exercise any and all rights of ownership now known or hereafter created or recognized, including without limitation the rights to use, reproduce, modify and distribute the developments for any purpose whatsoever, without the need for further authorization to exercise any such rights or any obligation of accounting or payment of royalties, except you agree you will exercise your rights for your internal business operations only, and you will not resell or distribute the developments to any un-affiliated third party. These use restrictions shall survive termination or expiration of this contract. Each party shall be the sole owner of any modifications that it makes based upon the developments. * * * Educational-Digital Content & Assessments. We will grant a perpetual, royalty-free and non-exclusive license (except as set forth below) for all of the content and lesson instruction and assessments created as part of this project to the State of Florida. As such, we will retain copyright and ownership of this created material, while the State of Florida may leverage the material on an exclusive basis in the State of Florida anywhere within its offices, school facilities, and education programs, including use extended to staff, administration, teachers, students and parents. Much of the content, particularly in the Reading, Language Arts/Literature and Civics disciplines is integrated into the lessons from third-party sources. The ownership of material permissioned from outside our team is unavailable to be granted or transferred to the State of Florida. However as part of the sustainability plan for the Student Standards Tutorial, we will ensure that mechanisms are in place to allow for permission renewals as required by contract with third-party content owners for a period encompassing four years from the final delivery of the contract period. Although Microsoft was given an opportunity to clarify its position on ownership of the product deliverables developed for the contract, Microsoft's response was still not responsive to the requirements of the ITN. The Department appointed a negotiation team that met separately with Infinity and Microsoft on February 3, 2011. During the negotiation session, a Microsoft representative stated that it would be "impossible" for Microsoft to provide complete ownership of equipment and software, that there was no way that Microsoft could put in its best and final offer that the Department would have complete ownership, and that Microsoft did not want to be non-responsive but it did not know how to fix the problem. After the negotiation session with Microsoft, Regina Johnson (Ms. Johnson) and Mary Jane Tappen, who were members of the negotiation team, engaged in email communications regarding whether the Department could change the language of the ITN to allow the Department to accept the licensing proposal offered by Microsoft. Ms. Johnson noted that if the ITN language were not changed, Microsoft could be rejected for non-compliance. On February 7, 2011, after the negotiation sessions, Ms. Johnson sent an email to Infinity notifying Infinity that the Department would accept a license or co-ownership proposal, reflecting a change in the ITN specifications. Following negotiations, each vendor was given the opportunity to submit a Best and Final Offer (BAFO) by February 11, 2011. Both vendors submitted BAFOs. On February 16, 2011, the negotiators held an Intent to Award meeting. Following discussion, two negotiators voted for Microsoft, and one voted for Infinity. On March 1, 2011, Chancellor Frances Haithcock sent an Intent to Award memorandum to Commissioner Eric Smith (Commissioner Smith), explaining why Microsoft provides the best value to the state. Commissioner Smith signed that memorandum on March 4, 2011. On March 7, 2011, the Department posted the Intent to Award to Microsoft.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that the intended decision to award a contract to Microsoft pursuant to ITN 2011-18 is contrary to section 287.057 and the ITN. DONE AND ENTERED this 7th day of June, 2011, in Tallahassee, Leon County, Florida. S SUSAN B. HARRELL 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 7th day of June, 2011.
The Issue The issue for consideration herein is whether the Petitioners, MISSCO, GENERAL, AND INTERSTATE should be placed on the convicted vendor list pursuant to Section 287.133 Florida Statutes (1991).
Findings Of Fact The facts stated in the Joint Stipulations to the extent set forth below are hereby adopted as findings of fact: On April 9, 1993, DMS issued notices of intent pursuant to Section 187.133(3)(e)(1), Florida Statutes. Jt. Stips. Appen. at pp. 72-73. On April 13, 1993, MISSCO filed petitions with DMS for a formal hearing pursuant to Section 120.57(1), Florida Statutes, to determine whether it is in the public interest for MISSCO, GENERAL, or INTERSTATE to be placed on the Florida Convicted Vendor List pursuant to Section 287.133, Florida Statutes. Jt. Stips. Appen. at p. 74-77. Subparagraph 287.133(3)(e)e., Florida Statutes, establishes factors which, if applicable to a convicted vendor, will mitigate against placement of that vendor upon the convicted vendor list. On April 5, 1991, General Equipment Manufacturers, Inc., (hereinafter "General"), a Mississippi corporation, and wholly owned subsidiary of MISSCO Corporation, was convicted of the commission of a public entity crime as defined within subsection 287.133(1)(g), Florida Statutes. Jr. Stips. p. 1, Appen. at pp. 41-43. A criminal information was filed in the United States District Court for the Southern District of Mississippi against General Equipment Manufacturers, Inc., alleging a violation of Section 1001, Title 18, United States Code and applicable Federal Acquisition Regulations which occurred on or about December 2, 1988. Jt. Stips. p. 1, Appen. at p. 40. The criminal information filed in the United States District Court, Southern District of Mississippi charged General with falsely representing on or about December 2, 1988 that the equipment schedule and price list submitted to the General Services Administration (hereinafter GSA) was General's established commercial price list. (Jt. Stips. p. 2, Appen. at p. 40. Upon entry of a plea of guilty, the Court entered a judgement against General which was filed April 5, 1991. The judgement required payment of a special assessment of $200, a fine in the amount of $10,000, without interest, and restitution in the amount of $28,000. Jt. Stips. p. 2, Appen. at pp. 40-48. The GSA issued Solicitation No. FCGS-X8-38010-N for FSC Group 66 Part II, Section P, Laboratory/Pharmacy Furniture. General submitted an offer dated August 18, 1988, and signed by Charles H. Wright, General Manager of General's SystaModules Division. In connection with its offer, General submitted its purported commercial price list dated January 31, 1987. Mr. Wright certified in Section M-FSS-330, M.3, Basis for Price Negotiation, Item (c), Certificate of Established Catalog or Market Price, that: The price(s) quoted in General's proposal is based on established catalog or market prices of commercial items, as defined in FAR 15.804-3(c), in effect on the date of the offer or on the dates of revisions submitted during the course of negotiations. Substantial quantities of the items have been sold to the general public at such prices. All of the data, including sales data, submitted with General's offer are accurate, complete, and current representations of actual transactions to the date when price negotiations are concluded. By letter dated December 2, 1988, Mr. Wright, in his capacity as General Manager of General's SystaModules Division, certified on behalf of General that: . . . all data submitted with General's offer pursuant to the discount schedule ad marketing data sheets and any other data submitted as as part of General's offer on Solicitation FGS-X8-38010-N are current, accurate, and complete a of the conclusion of negotiations, which occurred on December 2, 1988. Jt. Stips. p. 2-3, Appen. at pp. 51-53. On the basis of General's offer on Solicitation No. FGS-X8-38010-N, the GSA awarded General Contract No. GS-00F-06709 on December 13, 1988. The contract was for the period February 1, 1989, through January 31, 1992. Jt. Stips. p. 3-4, Appen. at p. 53. An investigation by the Federal Bureau of Investigation determined that General provided the GSA with fabricated price lists in connection with FGS-X8-38010-N. Jt. Stips. p. 4, Appen. at pp. 53-54. The details of the criminal information against General are discussed in the findings and determination made by the GSA Office of Acquisition Policy, dated May 18, 1992, which are incorporated herein by reference. Jt. Stips. Appen. at pp. 49-71). Particular findings are as follows: Federal debarment was imposed on General and its corporate officials Messrs. Wright and Majure. Jt. Stips. Appen. at p. 50. The debarments were effective throughout the Federal Executive Branch. The debarment precluded the award, renewal, or extension of federal contracts. Jt. Stips. Appen. at p. 50. Debarment proceedings were initiated by separate notices dated November 1, 1990 based on a referral from the Federal General Services Administration (GSA), Office of Inspector General (OIG). Jt. Stips. Appen. at p. 51. General bid on GSA Solicitation No. FGS-X3-36426-N and in connection with its offer General submitted a "dealer retail price list," and certified that: its prices were based on established catalog or market prices, substantial quantities of the items had been sold to the general public at said prices: and that all of the data submitted with its offer was accurate, complete and current representations of actual transactions up to the date when price negotiations were concluded. Jt. Stips. Appen. at p. 51. General's offer on the solicitation was accepted and it was awarded contract number GS-00F-70316 on April 19, 1984. Jt. Stips. Appen. at p. 52. On June 28, 1985 General made the same representations as to GSA Solicitation No. FGS-X8-38000-N for laboratory and pharmacy furniture. The award was made to General on December 9, 1985. Jt. Stips. Appen. at p. 52. Identical representations were made by General in response to GSA Solicitation No. FCGS-X8-38010-N issued on July 7, 1988. The solicitation was for laboratory and pharmacy furniture. The award was made to General on December 13, 1988. Jt. Stips. Appen. at p. 53. Criminal Information Number J90-00080(B) was filed in the U.S. District Court for the Southern District of Mississippi on November 15, 1990. The information was based on the FBI investigation of General's submission of false commercial price lists to GSA. The criminal information charged General with violating Title 18, U.S.C. 1001 in connection with its offer on Solicitation No. FGS-X8-38010-N. It alleged that General knowingly, willfully, and falsely represented to GSA that the equipment schedule and price lists submitted with General's 1988 offer was General's established commercial price list. Jt. Stips. Appen. at p. 54. General pled guilty to Criminal Information No. J90-00080(B) on December 19, 1990 and was ordered to pay a fine of $10,000 and to make just restitution to the GSA in the amount of $28,000. The conviction was also used as the basis for the federal debarment of General. Jt. Stips. Appen. at p. 54. Mr. Wright and Mr. Majure were also debarred by virtue of their conduct in connection with the General conviction. Jt. Stips. Appen. at pp. 54- 59. General and MISSCO are affiliated companies. General is a wholly-owned subsidiary of MISSCO. MISSCO is directed and governed by its executive committee which acts in lieu of the board of directors. Mr. Majure was a director of MISSCO, a member of MISSCO'S executive committee, a senior vice president of MISSCO, and president, director, and general manager of General. Jt. Stips. Appen. at p. 59. Mr. Majure held a position of substantial responsibility in both MISSCO and General, and through MISSCO's control group is accountable for the circumstances of General's crime. Jt. Stips. Appen. at p. 60. A decision not to impose federal debarment on MISSCO was predicated on MISSCO management's decision to ensure that it did not supply the Federal government with the same goods and services formerly provided by General during the period of General's debarment: MISSCO management made a commitment to emphasize ethical business practices: the people responsible for General's crime were no longer employed by MISSCO: the GSA administrative record (with the exception of General) does not indicate a lack of business integrity or poor performance on federal contracts. Jt. Stips. Appen. at pp. 61-63. Federal debarment of General was predicated upon the following: conviction of the crime of making false statements posed a substantial risk to government business dealings: General submitted false information on solicitations over an extended period of time: General fabricated price lists and false certification son two prior solicitations: General's crime posed a substantial danger to the integrity of the Federal government's MAS program: the accountable individuals for the crime were high-ranking officials at General. Jt. Stips. Appen. at pp. 63-66. The federal debarment proceedings found mitigating factors in that: the parties pled guilty and cooperated with the Department of Justice throughout the investigation: the parties cooperated with GSA throughout the debarment proceedings: General was not charged with deliberate overcharges on its federal MAS contracts: General promptly paid its fine and restitution: General has made good faith efforts to undertake remedial action. Jt. Stips. Appen. at pp. 68-69. On April 9, 1993, Respondent issued Notices of Intent pursuant to Section 287.133(3)(e)1, Florida Statutes, which were received by the Petitioners. Jt. Stips. p. 5, Appen. at pp. 72-73. On April 13, 1993, Petitions filed petitions pursuant to Section 287.133(3)(e)2, Florida Statutes, and Section 120.57(1), Florida Statutes, requesting an order determining that it is not in the public interest for Petitioners to be placed on the State of Florida Convicted Vendor List. Jt. Stips. p. 5, Appen. at pp. 74-75. MISSCO is a holding company which has a number of operating divisions and two wholly-owned subsidiary corporations, General Equipment Manufacturers (General) and MISSCO Exports Corporation (Exports). Jt. Stips. p. 2, Appen. at pp. 35-36. Interstate of Florida is a Division of MISSCO and is a dealer (re- seller) of General's products. Jt. Stips. p. 2. General and MISSCO are commercially distinguishable and they do not occupy the same facilities. MISSCO's primary lines of business are distribution of school equipment and supplies, office equipment and supplies, and commercial printing. Jt. Stips. p. 4. MISSCO Exports is an entity formed solely for accounting and tax purposes, has no employees, and does not engage in substantive commercial operations. Jt. Stips. p. 4. MISSCO has extensive dealings with the federal government, as supplier of goods manufactured by other entities. General is the only MISSCO entity that contracts with the government under the Multiple Awards Schedule (MAS) program. General's primary line of business is manufacturing institutional furniture. Jt. Stips. pp. 4-5. In compliance with paragraphs 287.133(3)(a) and (B), Florida Statutes, MISSCO made timely notification to the DMS and provided details of the conviction of General, by letter dated March 24, 1992 and provided copies of the criminal information, judgement and related correspondence. Jt. Stips. p. 5, Appen. at pp. 37048. Payment of the fine in the amount of $10,000 and restitution in the amount of $28,000 imposed by the conviction and judgement entered April 5, 1991 were promptly paid by General on April 15, 1991. Jt. Stips. pp. 5-6, Appen. at pp. 47-48. Subsequent to the criminal information filed in the United States District court, Southern District of Mississippi in November of 1990, General entered a plea of guilty to the charge, thus eliminating the necessity for further investigation and trial. Jt. Stips. p. 6. The GSA in its findings and determination dated May 18, 1992, cited mitigating factors favorable to General and MISSCO. The factors included, cooperation with the Department of Justice throughout its investigation; cooperation with the GSA throughout the debarment proceeding; constructive dealings by counsel for MISSCO and General with the GSA Office of General Counsel on issues relating to the restrictions on MISSCO and General's business relationship with the government and government prime contractors. Jt. Stips. p. 6, Appen. at pp. 68-69. MISSCO fully cooperated with the DMS in connection with its investigation initiated pursuant to Section 287.133, Florida Statutes. Jt. Stips. p. 6. MISSCO formally filed its disclosure pursuant to Section 287.133(3)(b), Florida Statutes with the DMS by letter dated March 24, 1992, together with exhibits attached thereto. The letter specifically referred to the criminal information filed against General and the judgement entered by the Federal District Court. A copy of the criminal information and judgement were enclosed with the letter, together with a copy of correspondence between MISSCO and the GSA. Jt. Stips. pp. 8-9, Appen. at pp. 37-39. In response to a request dated April 15, 1992 from the DMS for additional information, MISSCO promptly furnished all such information. Jt. Stips. p. 9. At its meeting held December 17, 1992, the Board of Directors of MISSCO was convened and all of the offices then held by Mr. James T. Majure, former President of General, were declared vacant and other persons were elected to those positions. Jt. Stips. p. 7, Appen. at pp. 2, 67, 70. Mr. Charles Wright was retired from General under a medical disability prior to 1990. Jt. Stips. p. 7. MISSCO Corporation fully cooperated with the GSA by proposing and implementing remedial measures including the presentation of an Ethics Seminar by Mr. Norman Roberts, past chairman of the American Bar Association's section on government contracting. Jt. Stips. p. 7. MISSCO revised its corporate Code of Ethics, revised its Employee Handbook, installed an 800 hotline telephone number permitting employees to communicate any concerns regarding business ethics, designated a Corporate Vice President as the Ethics Compliance Officer, appointed a committee of three corporate executives to monitor corporate business activities, and revised its internal audit procedures to insure that no cash is unaccounted for which might be used for the purpose of kickbacks. Jt. Stips. pp. 7-8, Appen. at pp. 28-33, 62-63. MISSCO's management undertook prompt and verifiable action to comply with the restrictions imposed on MISSCO's business dealings with the government after notices of proposed debarment. General promptly and voluntarily withdrew from the GSA contract that was tainted by the submission of a fabricated commercial price list during negotiations. Jt. Stips. p. 8. MISSCO had a code of business ethics in place when the circumstances leading to General's conviction arose. The code was amended following the initiation of debarment proceedings to specifically address the importance of truthful certifications and providing accurate information in connection with business transactions with the government. Jt. Stips. p. 8. MISSCO substantially expanded its corporate ethics compliance program and undertook extensive training in business ethics. A detailed "ethics audit" was undertaken by MISSCO, and the results of this audit were provided to the GSA. Jt. Stips. p. 8, Appen. at pp. 10-22, 28-34. General sells its products through a dealer network and not through factory direct sales. General has a dealer agreement with Interstate of Florida for the sale of its products in Florida to private and public entities. Jt. Stips. p. 9. Interstate of Florida, a division of MISSCO Corporation of Jackson, is a dealer (re-seller) of General's products. There are other dealers throughout the United States which also market and sell General's products. Interstate of Florida had gross sales of approximately $6.8 million in fiscal year 1990-91. Approximately 99 percent of those sales were to public entities. Jt. Stips. p. 9. Interstate of Florida is primarily an educational sales company which sells educational contract furnishings such as laboratory casework, auditorium seating, and folding bleachers. It has conducted business with almost every school district in Florida. The largest transactions have been conducted with the school districts of Dade and Orange Counties in Florida. The largest municipal transactions have been conducted with the City of Tallahassee. Jt. Stips. p. 10.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is, RECOMMENDED: That the Department not place the names of the Petitioners on the Florida Convicted Vendor List. DONE and ENTERED this 29th day of July, 1993, in Tallahassee, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of July, 1993. COPIES FURNISHED: William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950 Susan B. Kirkland, Esquire Department of Management Services Knight Building, Suite 309 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950 C. Graham Carothers, Esquire Ausley, McMullen, McGehee Carothers & Proctor Post Office Box 391 Tallahassee, FL 32392 Terry A. Stepp, Esquire Department of Management Services Knight Building, Suite 309 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950
