96-003138BID Mary A. Barber, D/B/A Data Phone vs. Volusia County School Board Status: Closed Recommended Order on Friday, October 11, 1996.

Summary: Respondent entitled to reject all bids when it becomes apparent that bid specifications were ambigous.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MARY A. BARBER, d/b/a DATA PHONE, )

)

Petitioner, )

)

vs. ) CASE NO. 96-3138BID

)

SCHOOL BOARD OF VOLUSIA COUNTY, )

)

Respondent. )

_____________________________________)

RECOMMENDED ORDER

Pursuant to notice, this cause came on for formal hearing on July 17, 1996

in Tallahassee, Florida, and on July 31 through August 1, 1996 in Deland,

Florida, before Suzanne F. Hood, Administrative Law Judge with the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: James R. Tanner, Esquire

339 South Ridgewood Avenue

Daytona Beach, Florida 32114

For Respondent: C. Allen Watts, Esquire

Cobb, Cole and Bell, P.A.

Post Office Box 2491

Daytona Beach, Florida 32115-2491

STATEMENT OF THE ISSUE

The issue is whether Respondent acted fraudulently, arbitrarily, illegally

or dishonestly in rejecting all bids.

PRELIMINARY STATEMENT

On May 10, 1996, Respondent Volusia County School Board (Respondent) issued

Bid Request No. 2E-625 for telephone cabling equipment and services, returnable

June 4, 1996. Petitioner Mary A. Barber d/b/a/ Data Phone and four other

vendors submitted bids. After an initial tabulation, Respondent's staff decided

to recommend that Respondent accept American Phone Wire and Repair as the lowest

acceptable bidder. Respondent's staff posted the tabulation with its

recommended action on June 5, 1996.

Petitioner filed a Notice of Protest of the proposed award on June 7, 1996.

On June 11, 1996, Respondent's staff withdrew its recommendation and posted a

recommendation that Respondent reject all bids and issue a new Invitation to

Bid. Petitioner filed a second Notice of Protest on June 12, 1996 and formal

protests on June 21, 1996 (pro se) and June 24, 1996 (by counsel).

On July 3, 1996, Respondent referred this matter to the Division of

Administrative Hearings in accordance with Section 120.53(5), Florida Statutes.

The undersigned issued a Notice of Hearing scheduling the case for formal

hearing on July 17, 1996.

This matter came on for hearing as scheduled in Tallahassee, Florida. At

the conclusion of the first day of hearing, the parties needed additional time

to complete the presentation of testimony and exhibits. On July 18, 1996, the

undersigned entered an Order Providing Notice of Hearing for Additional

Proceedings in Deland, Florida on July 31 and August 1, 1996.

During the hearing, Petitioner testified on her own behalf. She presented

testimony from Thomas W. Sims, Linda Romine, Robert McDonald, Diane Rehm, Olga

Buckley, and Chester Rodriguez, and offered 14 exhibits which were accepted into

evidence. Respondent presented testimony from Thomas Sims. Respondent

introduced an exhibit binder containing 23 tabbed sections of documents which

were admitted into evidence. Respondent introduced one additional exhibit.

The final portion of the transcript was filed with the Division of

Administrative Hearings on August 12, 1996. Thereafter, Respondent filed

proposed findings of fact and conclusions of law on August 22, 1996. Petitioner

did not file a proposed recommended order.

FINDINGS OF FACT

1. Petitioner is Mary A. Barber doing business as Data Phone, a sole

proprietorship.

2. Respondent is the School Board of Volusia County, a collegial public

body which governs the School District of Volusia County, a constitutional

district existing under Article IX, Section 4, of the Constitution of Florida.

3. Prior to 1994, Respondent did not obtain telephone cabling services

through the competitive bidding process. Instead, Respondent secured these

services through a letter agreement with J. P. McCarthy doing business as

American Phone Wire and Repair (American Phone), a sole proprietorship.

Pursuant to that agreement, American Phone charged a minimum service charge of

45 dollars for the first hour of each service call.

4. In 1993, Respondent's purchasing department noticed that the volume of

telephone cabling services warranted competitive bidding. Respondent's

telecommunications division and purchasing department initially developed

specifications for the award of a contract based on a set of specifications from

Pinellas County, Florida. They also consulted with the existing vendor, J. P.

McCarthy. The early drafts of the specifications provided for a minimum charge

per service call. However, the final specifications did not reference a minimum

charge.

5. On September 30, 1994, Respondent issued its Bid Request E-540 for

telephone cabling equipment and services. In due course, Respondent awarded a

contract to American Phone, with an initial expiration date of June 30, 1996.

Section 3.11 of the bid specifications provided that the contract was subject to

extension for two additional one-year periods, by mutual agreement of the

parties.

6. American Phone fulfilled its contractual obligations to Respondent

through the services of J. P. McCarthy and the subcontractors that he engaged

including Petitioner. Mr. McCarthy died in December 1995.

7. In January 1996, Petitioner inquired as to Respondent's intentions

regarding the extension of the contract, or the invitation of new bids, at the

initial expiration of American Phone's contract on June 30, 1996. Respondent

informed Petitioner that it would rebid the contract at the end of the initial

term of the existing contract.

8. J. P. McCarthy's widow gave Petitioner the first opportunity to

purchase American Phone after Mr. McCarthy's death. Petitioner believed that

American Phone was not transferable because it was a sole proprietorship.

Therefore, she elected not to purchase it.

9. In March 1996, Troy Masters, a former employee of Respondent, purchased

the business of American Phone. The question whether American Phone was a sole

proprietorship which died with its proprietor and therefore was not subject to

purchase is collateral to these proceedings. There is no evidence indicating

that American Phone is not currently a viable business entity.

10. On May 10, 1996, Chester Rodriguez terminated his employment with

Respondent as a computer technician. That same day he became a partner in

American Phone, consummating prior negotiations with Troy Masters.

11. Also on May 10, 1996, Respondent issued its Bid Request 2E-625 for

telephone cabling equipment and services. Respondent sent Invitations to Bid to

approximately 47 potential vendors including Petitioner. The general conditions

of the bid specifications provided that "the Board may accept or reject any or

all bids or parts of bids and may waive formalities, technicalities or

irregularities. The judgment of the Board on such matters shall be final."

Inter alia, the specifications provided:

2.0 CONTRACTOR QUALIFICATIONS

Contractor shall have a minimum of four

(4) qualified technicians available to

handle the Board's needs.

2.1 Contractor must have someone on staff

who is an active member of Building Industry

Consulting Service International, Inc.

(BICSI). This staff member must be available

for implementation in the design and

installation of cabling as required by the

Board. Membership and registration

certificate must accompany the bid.

Contractor must have a minimum of five (5)

years Bell System or equivalent experience.

12. On June 4, 1996, at the appointed hour of 2 p.m., Olga Buckley

publicly opened the sealed bids. Ms. Buckley is a buyer in Respondent's

purchasing department. She opened the bids in alphabetical order according to

the identity of the bidder as disclosed on the outside of the sealed bid

envelope. Sealed bids with no identification were placed at the end of the

stack.

13. Twenty-two of the sealed bids contained statements of "no bid." Ms.

Buckley checked the other five bids for conformity to a bid checklist which

Respondent had included in the specifications. Three of the five submitted bids

did not contain all of the required items on the bid checklist. The two

remaining complete bids belonged to Petitioner and American Phone. Each of

these bids contained the names and resumes of at least four technicians which

the bidder would employ or subcontract in order to perform the Respondent's

assigned work.

14. American Phone's bid quoted twenty-five dollars ($25) per hour of

technician time and a twenty (20) percent discount off the supply list. Data

Phone's bid quoted twenty-eight dollars ($28) per hour of technician time.

15. After opening the bids, Ms. Buckley conferred with Robert McDonald,

manager of Respondent's telecommunications division. They determined that

American Phone had submitted the lowest acceptable bid. Support staff prepared

the bid tabulation and recommended action in accordance with Ms. Buckley's and

Mr. MacDonald's evaluation.

16. Next Linda Romine, Respondent's senior buyer, reviewed the bid

responses and the bid tabulation for correctness. After Ms. Romine completed

her review, the tabulation was posted on June 5, 1996 at approximately 3:56 p.m.

17. On June 7, 1996, Petitioner submitted a Notice of Protest. That same

day Petitioner discussed the substance of her protest with Tom Sims,

Respondent's Purchasing Director.

18. First, Petitioner claimed that the apparent low bidder, American

Phone, had previously engaged in the practice of charging an initial forty-five

dollar ($45) service charge for each service call, in addition to the hourly

rate for technician time. As a result of this service charge, Petitioner

claimed that the computation of the apparent low bid, based solely on the hourly

rate, was inaccurate because American Phone intended to continue invoicing the

service charge.

19. Second, Petitioner indicated her belief that the bid specification

language in Section 2.0, pertaining to contractor qualifications, required the

contractor personally to have a minimum of five (5) years Bell System or

equivalent experience. She voiced her opinion that neither American Phone, as

the contractor, nor its principals had the requisite experience.

20. Third, Petitioner expressed her view that the requirement for a

contractor to belong to the BICSI was meaningless. She thought Respondent

included this requirement to exclude all venders except J. P. McCarthy.

21. Mr. Sims was unaware that American Phone had ever charged a forty-five

dollar ($45) service charge. Between June 7, 1996 and June 10, 1996, Mr. Sims

and his staff examined approximately 1000 invoices that American Phone submitted

to Respondent under its previous 1994 contract. The purpose of this examination

was to ascertain whether American Phone had charged a minimum service charge of

forty-five dollars ($45) for each service call under the contract. The

examination confirmed that American Phone had charged a minimum service charge

under its 1994 contract, consistent with its practice under the previous letter

agreement, even though the 1994 contract did not authorize a minimum service

charge.

22. Mr. Sims then contacted Chester Rodriguez of American to inquire

whether American Phone intended to charge forty-five dollars ($45) for each

service call in addition to the hourly rate shown in its 1996 bid. As a result

of his investigation, Mr. Sims determined that American Phone never intended its

1996 bid to include any minimum charge for service calls.

23. Mr. Sims determined further that, if the average number and length of

service calls under the proposed 1996 contract was distributed similarly to the

average number and length of calls under the existing contract, American Phone's

bid, with a forty-five dollar ($45) service charge for the first hour of

technician time, would still be approximately 8,000 dollars lower than the bid

of Petitioner.

24. The greater weight of the evidence indicates that the forty-five

dollar ($45) service charge formerly billed by American Phone was not in

addition to the hourly rate for the first hour of technician time. Examination

of American Phone's invoices from the preceding years reveals that approximately

12 percent of the invoices showed a minimum service charge but no hourly charges

for the first hour. Eighty-eight percent of the service calls were more than

one hour.

25. If vendors base their bid on a minimum service charge for the first

hour of technician time, they will in all likelihood charge a lower rate for

each subsequent hour of the service call. Revision of the bid specifications in

this case to allow such bids would be to Respondent's advantage. It also would

lead to a greater number of bidders.

26. Mr. McDonald had never seen the 1994 contract. He did not know that

the 1994 contract did not authorize the minimum service charge. After his

investigation, Mr. Sims advised Mr. McDonald that American Phone's 1994 contract

did not authorize any minimum charge for service calls. Mr. Sims also informed

Mr. Rodriguez that Respondent would not approve further invoices for such

minimum charges under the existing contract. Any action that Respondent may

take to correct the overpayment of invoices that American Phone submitted under

the existing contract is not at issue here.

27. When Respondent developed the bid specifications concerning contractor

qualifications, it construed the requirement of five years' Bell System or

equivalent experience as applicable to the subcontractors or employees of the

named contractor. During his investigation of issues raised in Petitioner's

protest, Mr. Sims contacted several vendors by telephone seeking their

interpretation of the language. Every vendor other than Petitioner construed

the language similarly to Respondent.

28. During these conversations, Mr. Sims inquired whether the vendors

thought the requirement for a contractor to be a member of BICSI was meaningful.

The answers to this question were mixed. Mr. Sims got mixed answers when he

asked the vendors how they would apply a minimum service charge and handle

overtime hours.

29. Respondent's staff posted a revised "tabulation" on June 11, 1996

showing the same computations as the initial tabulation but with the notation

that there was "no recommendation" among the vendors. The revised tabulation

also stated that "[d]ue to clarification of specifications a re-bid will be

submitted."

30. On June 12, 1996 Petitioner (through counsel) filed a Notice of

Protest of the revised tabulation.

31. On June 13, 1996 Respondent held a pre-bid workshop with prospective

vendors, including Petitioner, for the purpose of discussing revisions to the

specifications following the decision to reject all bids under Bid Request 2E-

625B.

32. On June 21, Petitioner filed, pro se, a formal protest asserting that

(1) if American Phone bid included an undisclosed service charge of 45 ($45)

dollars per call, her bid was actually the lowest; (2) American Phone did not

have five years' Bell System or equivalent experience; (3) the principals of

American Phone failed to show a minimum of three accounts serviced within the

previous three years because they had only been in business since March 1996;

and (4) the principals of American Phone were barred from any contractual

relationship with Respondent by virtue of Section 112.3185(4), Florida Statutes.

33. On June 24, 1996, Petitioner filed, through counsel, a second formal

protest. The second formal protest challenged the initial tabulation showing

that American Phone was apparent low bidder, and the requisite experience of

American Phone under the specifications, but omitted the remaining complaints of

Petitioner's pro se formal protest of June 21, 1996.

34. On June 25, 1996 Respondent approved the recommendation of its staff

to reject all bids with respect to Bid Request 2E-625, and to invite new bids

under Bid Request 2E-625B, after revising the specifications.

35. Mr. Rodriguez served in the United States Air Force from 1982 to 1988.

While he was in the armed services, Mr. Rodriguez obtained telephone

communications skills and training in equipment repair. From 1988 to May 1996,

he worked for Respondent as a computer technician. Mr. Rodriguez also worked on

weekends, moonlighting, for American Phone for approximately a year and a half.

He had five years of Bell System equivalent experience.

36. Although Mr. Rodriguez previously worked for Respondent, he was never

employed in the Telecommunications Division which was the procuring division for

the subject bid. He was never the supervisor nor under the supervision of

Robert McDonald. Mr. McDonald never made a promise to Mr. Rodriguez or gave him

any reason to expect that American Phone would receive a new or renewal contract

from Respondent. Mr. Rodriguez had no expectation that Mr. McDonald would

advocate the renewal of the existing contract with American Phone.

37. Before Mr. Rodriguez resigned his position with Respondent, he

informed his superiors that he intended to acquire an interest in American

Phone. He also told them that American Phone would bid on a contract with

Respondent. Mr. Rodriguez's superiors informed him that he could not

simultaneously be an employee of the Respondent and a vendor of services to the

Respondent.

oy Masters and Chester Rodriguez were employees of the Respondent

until March and May, respectively, of 1996. They worked in the data processing

under the supervision of the Manager of Technical Services in the Management of

Information Services Division, Department of Central Services. Robert McDonald

worked in the Telecommunications Division of the Department of Central Services.

Petitioner presented no evidence that American Phone participated in competitive

bidding for contractual services which were within the responsibility of Masters

or Rodriguez while they were employees of Respondent.

CONCLUSIONS OF LAW

39. The Division of Administrative Hearings has jurisdiction over the

subject matter and the parties pursuant to Section 120.53(5)(e), Florida

Statutes.

40. Section 237.02(1)(a), Florida Statutes, states that "[e]ach district

school board shall develop and adopt policies establishing the plan to be

followed in making purchases as may be prescribed by the state board."

41. The state board of education adopted Rule 6A-1.012, Florida

Administrative Code, which provides in pertinent part:

(5). Except as authorized by law or rule,

bids shall be requested [by a district

school board] from three (3) or more sources

for any authorized purchase or contract for

services exceeding ten thousand (10,000)

dollars. School boards, by rule, shall set

this amount or a lesser amount and shall

establish purchasing policy relative to

purchases of a dollar value less than this

formal bid threshold. The school board

shall have the authority to reject any or

all bids and request new bids.

42. Respondent adopted Policy 702 which provides that the School Board

retains the ultimate approval of all contracts, and has "the authority to reject

any or all bids and request new bids."

43. Respondent is a constitutional body existing under Article IX, Section

4, of the Constitution of Florida. It is not an "agency" of the executive

branch of state government as defined in Section 287.012(1), Florida Statutes.

44. A public body has wide discretion in soliciting and accepting bids,

and its decision, when based on an honest exercise of this discretion, will not

be overturned even if it may appear erroneous and even if reasonable persons may

disagree. Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So. 2d 505

(Fla. 1982); D.O.T. v. Groves-Watkins Construction, 530 So. 2d 912 (Fla. 1988).

45. Where an agency is authorized to reject all bids, judicial

intervention to prevent the rejection of a bid should occur only when the

purpose or effect of the rejection is to defeat the object and integrity of

competitive bidding. Groves-Watkins, supra at 913.

46. Nonspecific bids inhibit competition. Board of County Commissioners

v. Melson, 89 So. 495 (Fla. 1921). Where the invitation to bid is so ambiguous

that it may deter competition, the appropriate action for a public agency to

take is to reject all bids, clarify the specifications and invite new bids.

Caber Systems v. Department of General Services, 530 So. 2d 325 (Fla. 1st DCA

1988).

47. In this case, the bid specifications concerning contractor

qualifications were ambiguous and needed to be clarified. In revising the bid

specifications, Respondent needed to address other issues, including but not

limited to, a minimum service charge, overtime hours, and the necessity of

requiring a contractor to belong to BICSI.

48. The sole question presented here is whether the Respondent acted

fraudulently, arbitrarily, illegally or dishonestly. Groves-Watkins, supra at

914. The evidence fails to show such conduct by Respondent in this case.

RECOMMENDATION

Based upon the foregoing findings and conclusions, it is recommended that

the protest of Petitioner in this matter be dismissed.

DONE and ENTERED this 11th day of October, 1996, in Tallahassee, Leon

County, Florida.

___________________________________

SUZANNE F. HOOD

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone] SUNCOM 278-9675

Fax Filing [phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 11th day of October, 1996.

COPIES FURNISHED:

C. Allen Watts, Esquire

Cobb, Cole and Bell, P.A.

Post Office Box 2491

Daytona Beach, Florida 32115-2491

James R. Tanner, Esquire

339 South Ridgewood Avenue

Daytona Beach, Florida 32114

Joan Koval, Superintendent

School Board of Volusia County

Post Office Box 2118

Deland, Florida 32721-2118

Frank T. Brogan, Commissioner

Department of Education

The Capitol, Plaza Level 08

Tallahassee, Florida 32399-0400

Michael Olenick, Esquire

Department of Education

The Capitol, Plaza Level 08

Tallahassee, Florida 32399-0400

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days form the

date of this recommended order. Any exceptions to this recommended order should

be filed with the agency that will issue the final order in this case.