00-002921BID Motorola, Inc. vs. Department Of Management Services Status: Closed Recommended Order on Tuesday, October 3, 2000.

Summary: Motorola challenged Department`s decision to negotiate, but failed to show that proposed action was contrary to law, rules, or policies governing the agency.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MOTOROLA, INC., )

)

Petitioner, )

)

vs. ) Case No. 00-2921BID

)

DEPARTMENT OF MANAGEMENT )

SERVICES, )

)

Respondent, )

)

and )

)

COM-NET ERICSSON CRITICAL )

RADIO SYSTEMS, INC., )

)

Intervenor. )

___________________________________)

RECOMMENDED ORDER

Pursuant to written notice, a formal hearing was held in the

above-styled case on August 17, 28, 29, and 30, 2000, by Don W.

Davis, an Administrative Law Judge of the Division of

Administrative Hearings, in Tallahassee, Florida.

APPEARANCES

For Petitioner Motorola, Inc. (Motorola):

C. Everett Boyd, Jr., Esquire

Melissa Fletcher Allaman, Esqui re

Ervin, Varn, Jacobs & Ervin

Post Office Drawer 1170

Tallahassee, Florida 32302

For Respondent Department of Management Services

(Department):

W. Robert Vezina, III, Esquire

Mary M. Piccard, Esquire

Vezina, Lawrence & P iscitelli, P.A.

318 North Calhoun Street

Tallahassee, Florida 32301

For Intervenor Com-Net Ericsson Critical Radio

Systems, Inc. (Com-net):

William E. Williams, Esquire

J. Andrew Bertron, Jr., Esquire

Huey, Guilday & Tucker, P.A.

106 East College Avenue, Suite 900

Tallahassee, Florida 32301

Alan C. Sundberg, Esquire

Mark K. Logan, Esquire

Smith, Ballard & Logan, P.A.

403 East Park Avenue

Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

The issue in this proceeding is whether the proposed action

of the Department with regard to procurement of the State of

Florida Statewide Law Enforcement Radio Communications System,

DMS Number 21-725-001-W, is contrary to the Department's

governing statutes, rules, policies, or any applicable bid or

proposal specification.

PRELIMINARY STATEMENT

This is a formal protest filed by Motorola pursuant to

Section 120.57(3), Florida Statutes, and Rule 60A-1.002, Florida

Administrative Code, challenging a June 23, 2000 posting of a

notice of intent by the Department to negotiate sequentially,

beginning with Com-Net, for a contract to provide the State of

Florida Statewide Law Enforcement Radio Communications System,

DMS Number 21-725-00100-W.

On or about January 31, 2000, th e Department issued a

request for proposals (RFP) for the contract. Com-net and

Motorola were the only two vendors submitting proposals in

response to the RFP.

On April 4, 2000, the Department posted a notice terminating

the RFP and declaring both proposals to be non-responsive.

By letters to both submitting vendors dated April 5, 2000,

the Department advised both parties that a determination had been

made to follow a negotiation process pursuant to Section

287.057(4), Florida Statutes. On April 10, 2000, the Department

advised both vendors by letter of procedures that would be

followed in that process and specifically reserved the right to

enter into concurrent or sequential negotiations with the two

vendors.

Following receipt of additional information from the vendors

and a series of meetings with each, the Department posted a

notice of intent on June 23, 2000, to negotiate sequentially with

the vendors and award the contract. In the letter, the

Department ranked Com-Net number 1 and Motorola number 2.

Motorola timely protested the notice of intent, declaring in

its protest that the Department was required to conduct

concurrent negotiations with both Com-Net and Motorola for DMS

No. 21-725-001-W and also rank Motorola number 1.

The matter was referre d to the Division of Administrative

Hearings on July 10, 2000. With consent of the parties, the

matter was set for commencement of formal hearing on August 17,

2000.

At the hearing, Motorola presented the testimony of nine

witnesses and nineteen exhibits. The Department presented five

exhibits. Com-Net presented no witnesses or exhibits. There

were 12 joint exhibits presented.

A Transcript of the hearing was filed with the Division of

Administrative Hearings on September 5, 2000. All parties filed

Proposed Recommended Orders which have been reviewed and utilized

in the preparation of this Recommended Order.

FINDINGS OF FACT

A. General Background

1. Pursuant to Section 282.1095, Florida Statutes, the

State of Florida established the State Agency Law Enforcement

Radio Trust Fund (Trust Fund) in the Department to fund the

construction, maintenance, or support of a statewide law

enforcement radio system.

2. On or about January 31, 2000, the Department issued RFP

No. 21-725-001-W entitled "Statewide Law Enforcement Radio

Communications System." The RFP sought proposals for providing

the statewide law enforcement radio communication system.

3. The purpose of the proposed radio system is to allow

various state law enforcement officers to communicate from one

end of the state to the other. Motorola was the vendor

responsible for the construction and operation of Phases I and II

of the radio system. In this procurement, the Department sought

proposals for continued maintenance and operation of Phases I and

II and completion of Phases III, IV, and V of the radio system.

4. The Department sought "innovative proposals from the

private sector that will result in a more economical and timely

completion of a statewide radio communications system." The

Department stated that it would "consider all approaches,

methods, alternative technologies . . . provided that the

proposal is reasonable, clearly achievable, and can be

accomplished with minimal or no cost to the State of Florida to

the extent permitted by law."

5. On March 7, 2000, Com-Net and Motorola submitted

proposals in response to the RFP. Com-Net and Motorola were the

only two vendors that submitted proposals.

6. On April 4, 2000, the Department posted a notice

terminating the RFP and declared both proposals non-compliant.

7. On April 5, 2000, the Department sent a letter to Com-

Net and a letter to Motorola, advising each vendor of the major

areas of the proposals deemed non-responsive. The letters also

informed the vendors that the Department had determined to follow

a negotiation process pursuant to Section 287.057(4), Florida

Statutes.

8. On April 10, 2000, the Department sent a letter to Com-

Net and a letter to Motorola, advising each vendor of the

procedures for the negotiation process. The letters included a

list of questions and vendor evaluation guidelines and advised

the vendors to bring their proposals into compliance with the

specifications and requirements of the terminated RFP document.

9. The April 10, 2000 letters also advi sed Com-Net and

Motorola that the Department reserved the right to negotiate

concurrently or sequentially with the vendors.

10. On April 19, 2000, Com-Net and Motorola each submitted

responses to the questions in the Department's April 10, 2000

letters, revisions to technical and financial proposals, and

other information.

11. After Motorola and Com-Net submitted their respective

modified proposals on April 19, 2000, the Department conducted an

initial meeting on May 12, 2000, with both vendors to provide

further direction on how the negotiation process would work and

to answer questions. At the May 12, 2000 meeting, the Department

introduced a five-member evaluation team. The Chairman of the

evaluation team, Roy Cales, explained to the proposers that there

would be an evaluation process followed by a negotiation process.

During that process, focus would initially be on the technical

proposals, while later consideration would focus on cost

proposals.

12. Each member of the evaluation team brought d ifferent

relative strengths and perspectives to the decision process.

Kourosh Bastani's primary expertise was technical. As the

coordinator of Phase I and II, field manager of the radio system,

and twenty years' experience in the Florida Highway Patrol,

Captain Keith Gaston brought the skills and perspective of a

system user and manager. Lisa Saliba has an extensive background

in state budgeting, planning, and coordination of projects with

agencies. Rick Blankenship is an investment banker and brought

considerable financial expertise to the process. As Chairman of

the evaluation committee and Chief Information Officer for the

State of Florida, Roy Cales possesses technical expertise and

experience with state procurement of technology products.

13. Th e evaluation team was assisted by a technical

advisory team composed of technical experts employed by the

state, Bruce Meyers and J.P. Saliba, and external technical

consultants, Jeff Ellis and Mike Thayer of the Gartner Group.

14. From May 12, 2000 to June 22, 2000, representatives of

the evaluation team and technical advisory team met on several

occasions with the proposers, both individually and together.

During these meetings, the parties engaged in discussions

regarding changes to both technical/financial aspects of the

proposals and potential contract.

15. After the series of meetings with one or both vendors

present, the evaluation team met in private on June 22, 2000, to

review the proposals one last time and to make certain all team

members understood the financial aspects of both proposals.

16. On June 23, 2000, the evaluation team met in public and

voted to rank Com-Net's proposal first and Motorola's proposal

second, and to negotiate sequentially beginning with Com-Net. On

that same day, the Department posted notice of its proposed

agency action which stated that if the negotiations with Com-Net

were successful, a contract would be awarded to Com-Net. If the

negotiations with Com-Net were not successful, the Department

would proceed to negotiate with Motorola and, if successful, a

contract would be awarded to Motorola.

17. On July 10, 2000, Motorola filed its Petition to

Formally Protest Decision to Negotiate Sequentially, and

Initially, with Com-Net Ericsson Critical Radio Systems, Inc.

The sole relief sought by Motorola in its Petition is a final

order "declaring that the Department is required to conduct

concurrent negotiations with both Com-Net and Motorola . . . and

that Motorola be ranked No. 1."

18. On or about July 19, 20 00, the Department referred

Motorola's protest to the Division of Administrative Hearings and

requested that an Administrative law Judge be assigned to conduct

a hearing.

19. On August 9, 2000, the Administrative Law Judge entered

an Order granting the Petition of Com-Net to intervene in this

proceeding.

B. The Evaluation Process

(1) Motorola's Allegations

20. The Department terminated the RFP with its April 4,

2000 posting, and any specific scoring or weighting stated in the

RFP. The Department's April 10, 2000 letter, explicitly advised

that the state would use the attached evaluation criteria only as

a "negotiation guideline" and that "these guidelines may not be

all-inclusive of the criteria to be considered. Further not all

of these criteria will necessarily be considered with the same

weighting."

21. Motorola, in its Petition acknowledges that it "was

directed [by the Department's April 10, 2000 letter] to forget

the RFP, think out of the box, and be creative." By Motorola's

own admission, the Department's clear direction to "forget the

RFP" and "think out of the box" put Motorola squarely on notice

that the RFP was at most a guideline in the Section 287.057(4),

Florida Statutes, negotiation process.

22. In internal e-mails, Motor ola personnel stated that the

Department had "given us the opportunity to change the assumption

of our models, get outside the bounds of the RFP and find ways to

reduce costs . . . ." Motorola understood that in addition to

its response to the April 10, 2000 letter, it had the opportunity

to submit technical and financial alternatives "outside the

boundaries of the RFP and current technical question submittals."

Motorola cited no provision which would prohibit the Department

from disregarding the RFP and negotiating in the best interests

of the state.

23. Motorola alleged that the Department impermissibly

permitted Com-Net to materially alter its proposal after the

April 19, 2000 deadline for re-submission of modified proposals

during "improper negotiations not in accordance with the

procedures set forth in the April 10, 2000 letter." Motorola,

however, presented no evidence at hearing as to what "improper

negotiations" occurred. The evidence presented does establish

that Motorola availed itself of an opportunity to significantly

change its April 19, 2000 cost proposal. A simple comparison of

Motorola's April 19, 2000 and June 22, 2000, cost proposals

reveals substantial differences.

24. Motorola did not establish at any time in this

proceeding an absence of Department authority to allow proposers

to change their proposals after April 19, 2000. Both proposers

were clearly on notice that the Department was seeking changes to

the proposals. Both proposers were informed of the process and

had an equal opportunity to respond. There was no advantage to

one proposer over another when the Department sought

modifications to proposals during the negotiation process under

Section 287.057(4), Florida Statutes.

(2) Evaluation Team Determination

25. Four out of five members of the evaluation committee

voted for sequential negotiations and ranked Com-Net first and

Motorola second.

26. The only member of the evaluation committee who did not

rank Com-Net first and vote for sequential negotiations was

Kourosh Bastani. Mr. Bastani ranked Motorola first and voted for

concurrent negotiations, although he acknowledged that the

rankings were meaningless in concurrent negotiations. He had

concerns about both proposals, describing Motorola's technical

proposal as "acceptable" and Com-Net's technical proposal as

"viable," yet believed that both vendors "provided good

proposals, and they were worthy of further consideration."

Despite being the only team member who did not rank Com-Net first

and vote for sequential negotiations, Mr. Bastani unequivocally

expressed his belief in the fairness of the evaluation process

and respect for the votes of the other members by stating:

I believe that the process provided me an

opportunity to objectively review both

proposals and provide an opportunity for both

vendors to provide clarifications and answer

questions. And I was able to, in a fair and

objective manner, arrive at my decision. So

I believe in the integrity of the process,

whether I agree with their vote or not, I

think they reached it in an informed manner.

27. Mr. Bastani could think of no basis or prejudice in the

process that would undermine the validity of the decision.

28. Captain Gaston voted to negotiate sequentially with

Com-Net first because he felt the cost difference between

Motorola and Com-Net was so great it was unlikely Motorola was

going to get within the "ballpark." His interest is in securing

a contract as quickly as possible and he believed concurrent

negotiations would delay the final outcome.

29. Ms. Saliba voted to negotiate sequentially with Com-Net

first because she wanted the opportunity to concentrate on

negotiations with a single vendor without the distraction of

lobbying and external communications from representatives of

competing vendors. In addition to the cost factor, she favored

Com-Net because Com-Net is attempting to gain a "foot-hold" in

the industry through this contract to establish itself as a

credible provider and therefore is committed to reaching an

agreement that will satisfy the state's needs. She did not have

that confidence in Motorola.

30. Mr. Cales voted to negotiate sequentially with Com-Net

first based on a determination of the overall best value for the

state. He informed the vendors from the beginning of the

evaluation process that if one stood out above the other, the

negotiations would be sequential. In that circumstance,

concurrent negotiations would have penalized the vendor that

stood out and Mr. Cales determined that Com-Net stood out.

Additionally, in Mr. Cales' view, concurrent negotiations (e.g.,

double sessions with a single DMS negotiation team) would take

twice as long and time is a critical factor.

31. Com-Net's proposal stood out because it guaranteed a

system that would do the job, guaranteed a cost within the trust

fund revenue stream and guaranteed the state would have the level

of service it would contract for without additional cost to the

state. Motorola's proposal did not provide those guarantees. In

fact, the only way the Motorola proposal would not cost the state

millions of dollars more than Com-Net would be if projected tower

lease revenue was realized, and those projections were

unreasonable and unsubstantiated in Mr. Cales' assessment.

32. Mr. Blankenship voted to ne gotiate sequentially with

Com-Net first based on a determination that doing so would be in

the best interests of the state because Motorola required the

state to assume risk while Com-Net did not; Motorola required the

state to borrow money which was not authorized; Motorola's

proposal entailed operating at a deficit for years three through

seventeen; Motorola's tower revenue projections were unreasonable

and unreliable; and Com-Net's proposal included technology

refreshers that Motorola did not.

C. Technical Proposals

33. After several meetings with both vendors to review

their technical proposals and after considering the input of the

technical committee, the evaluation team determined that the two

technical proposals were either equivalent or that, if not

equivalent, both vendors could do the job.

34. The responsiveness of both vendors' technical proposals

is not at issue in this proceeding. Both vendors met any

"threshold" requirements in the Department's April 10, 2000

letter, and were eligible to be considered for negotiation.

D. Cost Proposals

35. Motorola alleges that the Department "failed to

properly calculate the cost to the State of Motorola and Com-

Net's proposals," and the Department "improperly assigned a zero

revenue figure to the revenue sharing financial component of

Motorola's June 22, 2000 financial proposal."

36. Both Com-Net and Motorola submitted cost proposals on

April 19, 2000, and submitted revised cost proposals on June 22,

2000. Both Com-Net and Motorola outlined modifications to their

respective cost proposals during meetings with the Department

evaluation team on June 22, 2000.

37. The major components of both vendors' cost proposals

are similar, including up-front cash payments from the vendor to

the state, an initial first-year payment from the state to the

vendor of a portion of the current balance in the Trust Fund,

continuing payments from annual Trust Fund revenues to the

vendors, and sharing with the state of revenues that the vendors

expect to derive by renting excess tower space to third party

users of "tower tenants." While the major components in the two

proposals are similar, the dollar figures and guarantees differ

substantially. The proposals can be fairly summarized based on

the major components which most greatly affect the cost to the

state.

38. On April 19, 2000, Com-Net's proposal was for revenue

sharing to the state of 33 percent, an initial capital

contribution from Com-Net to the state for tower upgrade and

enhancement, an initial payment to Com-Net of $39 million from

the current Trust Fund balance, and annual payments to Com-Net of

all Trust Fund revenues, plus $2 million per year.

39. On June 22, 2000, Com-Net reduced the revenue sharing

component to 15 percent, eliminated the $2 million per year

payment, and proposed to charge the state the annual net revenues

from the Trust Fund. Com-Net represented to the evaluation team

that this proposal would give the state its "entire wish list

within the confines of the trust fund." Com-Net proposed to

build, operate, and maintain the radio system for no more than

the amount of the current balance and annual revenues in the

Trust Fund.

40. Steve Savor, Chief Executive Officer of Com-Net, told

the evaluation team on June 22, 2000:

We want you to be in a position where you do

not have to go back to the Legislature. We

are guaranteeing a position where we do not

come back to you.

Regardless of whether the state ever receives a single dollar of

revenue sharing, it can obtain the radio system from Com-Net

without exceeding the confines of the Trust Fund.

41. The total cost to the state of Com-Net's June 22, 2000

proposal as calculated by the evaluation team was approximately

$331 million. Com-Net's June 22, 2000 proposal included an

initial contribution from Com-Net to the state of $20 million, a

first-year payment to Com-Net from the Trust Fund of $39 million,

and annual payments from the state to Com-Net of all future Trust

Fund revenues over twenty years totaling $348 million. Com-Net

also proposed to include two features not included in Motorola's

June 22, 2000, proposal - a mobile data system valued between $25

million to $40 million and "technology refreshes" valued between

$10 million and $50 million.

42. Motorola's April 19, 2000 cost proposal included two

alternates. The cost of the primary proposal was approximately

$80 million more than the cost of the alternate. Motorola

acknowledges that its cost proposal as of April 19, 2000 was

"considered outrageous" by the Department.

43. At the June 22, 2000 evaluation team meeting, Motorola

presented a revised cost proposal which it explained to the team.

Motorola proposed a total cost of $418 million. This figure

exceeded the projected Trust Fund revenues of $348 million by $70

million. Because the proposed annual payments to Motorola would

exceed available monies to the state in the early years, Motorola

proposed to loan the state the funds to cover these shortfalls,

and charge the state an estimated total of $55 million in

interest. In that the interest cost is only an estimate and

funds available to the state could differ from that projected by

Motorola, the actual interest cost to the state could increase.

44. Motorola's witness, David Kliefoth, testified that

despite the cost of $418 million offered to the Department in

Motorola's June 22, 2000 proposal for the project, Motorola's

real or "net" price is actually $364 million. Even after making

adjustments to the costs of both proposals, Mr. Kliefoth admitted

that Motorola's "net price" was $34 million more than Com-Net's

price.

45. In order to pay for the radio system, Motorola proposed

three sources of funds: i) Trust Fund current balance and

projected annual revenues of $348 million, ii) revenue sharing

from third party tower rentals of $68 million, and iii) an

initial cash contribution from Motorola of $32 million, for a

total of $448 million. Although the annual Trust Fund revenues

are not sufficient to cover the annual payments to Motorola, the

company contends that its proposal provides the state with ample

revenue sharing that will allow the state to have a $30 million

positive balance in the Trust Fund at the end of twenty years.

Yet, despite repeated requests by the evaluation team, Motorola

failed to guarantee the projected amount of revenue sharing

required to "make the deal work" within the confines of the

"Trust Fund. As Motorola representatives told the evaluation

committee on June 22, 2000, if Motorola's projected third party

tower rental revenues or the projected Trust Fund revenues did

not materialize, the state would be expected to make up the

difference. The most Motorola was willing to do was to say they

"could talk about it."

46. As a basis for its third party tower rental revenue

projections, Motorola told the evaluation team on June 7, 2000,

that its tower company partner, Pinnacle Tower, had an average of

4.9 tenants per tower nationally and an average of 3.9 tenants

per tower in Florida. On June 22, 2000, just two weeks later,

Motorola doubled the estimate, claiming that Pinnacle Tower would

average 10 tenants per tower in Florida. Motorola raised its

estimate without any explanation and despite the fact that tower

industry financial research analysts, such as Lehman Brothers,

limit their estimates to a more conservative five tenants per

tower.

47. In contract to Motorola, Com-Net used a more

conservative figure of 1.1 to 2.4 tenants per tower when

estimating future third party tower rental revenues. As Com-Net

stated to the evaluation team at its June 22, 2000 meeting, third

party revenues are "speculative at best."

48. Because they considered both vendors' projections of

potential future revenues to be speculative and because neither

vendor could guarantee the projections, the evaluation team

decided to disregard both vendors' revenue sharing projections

and evaluate both proposals based on cost alone. On that basis,

the evaluation team determined that the Motorola proposal would

be significantly more expensive to the state. Depending on how

the proposals were viewed and the assumptions made, most of the

evaluation team members determined that the Com-Net proposal

would cost the state approximately $91 million less than the

Motorola proposal.

49. Each of the evaluation team members decided that the

two technical proposals were either equivalent or that, while not

equivalent, both vendors could do the job. Having determined

that both proposers could do the job, the paramount consideration

for most team members became cost. Motorola's internal e-mails

demonstrate that it fully understood the importance of cost to

the state. Motorola's June 9, 2000 internal e-mail states that

the evaluation committee "continues to place higher percentage

priority on cash flow of the trust fund and revenue sharing funds

versus technology, system performance and long-term maintenance"

and that "the State is trying to back into the completion of [the

radio system] by using funds available and doing the best they

can [to] reduce the scope of work and technology if that's what

it takes to finish the State buildout."

50. Motorola alleges that the Department impermissibly

altered Motorola's financial proposal such that Motorola's true

financial proposal was not fairly considered. Specifically,

Motorola argues that the evaluation team disregarded Motorola's

revenue-sharing projections by assigning a zero revenue figure.

Yet Motorola points to no statute, rule, or policy which would

prohibit the Department from such flexibility in evaluating the

proposals. Motorola refused to guarantee the revenue-sharing

projections and the Department was free to accept or reject such

projections. Motorola also complains that the evaluation

committee did not inform Motorola of its decision to disregard

revenue-sharing projections; yet again Motorola points to no

authority imposing an obligation on the committee to do so.

51. The evaluation team treated Motorola and Com-Net

equally in this regard by ignoring both vendors' revenue

projection and focusing instead on cost. The team recognized the

risks and speculation involved in predicting market conditions

and revenue streams twenty years into the future.

52. Motorola also alleges that it was told to provide a

stronger revenue-sharing model, and thus having been explicitly

solicited, its revenue-sharing projections should not be

disregarded. However, Mr. Cales established in his testimony

that what he asked for was not a higher percentage of revenue

sharing or for the state to bear more risk, but rather by

"stronger model" he meant he wanted to see the numbers and

assumptions behind the projections. Mr. Cales was especially

concerned that Motorola kept changing its projected tower revenue

figures and that except for changes in the sharing percentage,

the total revenue projections should not change.

53. At 6:51 p.m., on June 22, 2000, Motorola transmitted by

e-mail to a Department technical consultant additional

information from Pinnacle Tower relating to tower tenants. At

the time of the e-mail the evaluation team was in session and the

team did not know of the information that night. Some of the

team members saw it at some point, but the information would not

have affected their votes. Pinnacle Tower had a full opportunity

to state its case for tower revenues at the June 7, 2000, meeting

and at that time projected only five tenants per tower.

Moreover, Pinnacle Tower was present at the meeting site on

June 22, 2000, but Motorola elected not to have them present in

the meeting room even though Motorola understood the team had

serious concerns about the revenue projections. As Mr. Cales

made clear in his testimony, the last-minute information from

Pinnacle Tower concerning tenant projection did not resolve

concerns over the substantial increases in projections or their

speculative nature.

54. Further as to Motorola's tower revenue projections of

June 22, 2000, Mr. Bastani believed the projection of 10 tenants

per tower was unrealistic. The other team members likewise did

not accept Motorola's assumption that it would achieve 10 tenants

per tower.

Ultimate Findings of Fact

55. Motorola's June 22, 2000 proposal did not guarantee

that the cost of the contract would be within the revenue from

the Trust Fund.

56. Motorola's projections of reve nue from tower leases was

not reliable and was not guaranteed by Motorola.

57. Com-Net's cost proposal of June 22, 2000, was

substantially less costly than Motorola's proposal and provided a

guarantee that the cost of the contract would not exceed the

revenue from the Trust Fund.

58. The decision to negotiate sequentially beginning with

Com-Net was logical and reasonable.

CONCLUSIONS OF LAW

A. General Provisions

59. The Division of Administrative Hearings has

jurisdiction over this subject matter and the parties to this

action pursuant to Section 120.57(1), Florida Statutes.

60. Motorola has standing to challenge the proposed action

of the Department in this proceeding. Com-Net has standing to

intervene. Section 120.57(1) and (3), Florida Statutes (1999).

61. Chapter 287.054, Florida Statutes, provides in

pertinent part:

(1) Unless otherwise authorized by law, all

contracts for the purchase of commodities or

contractual services in excess of the

threshold amount provided in s. 287.017 for

CATEGORY TWO shall be awarded by competitive

sealed bidding.

* * *

(2) When an agency determines in writing

that the use of competitive sealed bidding is

not practicable, commodities or contractual

services shall be procured by competitive

sealed proposals.

62. Section 287.057(4), Florida Statutes, provides as

follows:

(4) If less than two responsive bids or

proposals for commodity or contractual

services purchases are received, the

department or the agency may negotiate on the

best terms and conditions. The agency shall

document the reasons that such action is in

the best interest of the state in lieu of

resoliciting competitive sealed bids or

proposals.

63. Procurement by negotiation authorized under this

section is permitted "in lieu of" the bidding or RFP methods

required by subsections (1) and (2). Thus, in this case once the

RFP was terminated by April 4, 2000 posting, and there was no

protest of the finding of non-responsiveness, the RFP no longer

was the governing document. There are no administrative rules

governing negotiations under Section 287.054(4), Florida

Statutes. Thus, upon termination of the RFP, the Department was

permitted to pursue negotiations on the "best terms and

conditions" for the state and was not subject to strict

procedural or technical requirements.

64. Section 120.57(3)(f), Florida Statutes, provides in

pertinent part:

Unless otherwise provided by statute, the

burden of proof shall rest with the party

protesting the proposed agency action. In a

competitive-procurement protest, other than a

rejection of all bids, the administrative law

judge shall conduct a de novo proceeding to

determine whether the agency's proposed

action is contrary to the agency's governing

statutes, the agency's rules or policies, or

the bid or proposal specifications. The

standard of proof for such proceedings shall

be whether the proposed agency action was

clearly erroneous, contrary to competition,

arbitrary, or capricious.

(emphasis added.)

65. Therefore, Motorola has the bu rden of proof in this

proceeding and must show that the Department's decision to rank

Com-Net's proposal first and negotiate sequentially is contrary

to the agency's governing statutes, the agency's rules or

policies, or the negotiation procedures.

66. The focus in a bid protest hearing is on the agency

action. "The judge may receive evidence, as with any formal

hearing under Section 120.57(1), Florida Statutes, but the object

of the proceeding is to evaluate the action taken by the agency."

State Contracting and Engineering Corp v. Department of

Transportation , 709 So. 2d 607, 609 (Fla. 1st DCA 1998).

67. The Florida Legislature has capped the amount which the

Department may spend on the radio system by specifically

instructing the Department that it may not obligate the State of

Florida for any amount in excess of the Trust Fund balance and

future revenues. Chapter 00-369, Laws of Florida, provides in

relevant part that:

The Department of Management Services

may . . . [e]xecute contracts between private

vendors and the Department of Management

Services which implement the proposal.

However, the contracts may not obligate the

state to expenditures beyond those which can

be met by the unexpended balance of funds

specifically appropriated for the law

enforcement radio system together with the

official projected future revenues of the

State Agency Law Enforcement Radio System

Trust Fund established by section 282.1095,

Florida Statutes.

68. Thus, Chapter 00-369, Laws of Florida, effectively

prohibited the Department from considering any vendor which

proposed a cost in excess of the Trust Fund balance and official

projected future revenues.

B. Motorola's Proffer of Evidence

69. Motorola has submitted a written proffer of testimony

that was excluded from evidence pursuant to an order granting the

Department's ore tenus motion in limine , in which Com-Net joined.

The motion in limine sought exclusion of evidence offered by

Motorola on the issues of whether Com-Net's proposal was

responsive to the terms and conditions of the failed RFP, met any

requirements in the Department's April 10, 2000 letter by the

April 19, 2000 deadline, was not financially responsible or

otherwise failed to pass any threshold requirements to be

considered for negotiations. Motorola's petition requests that

"a Recommended and Final order be entered granting Motorola's bid

protest and declaring that [the Department] is required to

conduct concurrent negotiations with both Com-Net and

Motorola . . . and that Motorola be ranked No. 1." (Emphasis

added). By asking for concurrent negotiations with both

proposers, Motorola necessarily concedes that Com-Net has met any

alleged or putative threshold requirements for negotiations. If

negotiations are to be concurrent, as Motorola requests, then the

relative rankings become meaningless.

70. Motorola protests that it has not conceded the

responsiveness of Com-Net's proposal. However, in the Pre-

Hearing Stipulation, Motorola contends that one of the issues of

fact which remain to be litigated is "[w]hether, in a negotiation

process, it is erroneous to eliminate a competitive vendor so

that true competition for the lowest price is eliminated." This

statement reaffirms Motorola's assertion first raised in its

Petition that the negotiations should be concurrent, rather than

sequential. Assuming that negotiations are to be concurrent as

Motorola requests, it necessarily follows that Com-Net is to be

included. Therefore, Motorola effectively concedes that Com-Net

is qualified to be at the negotiation table regardless of whether

it expressly makes that concession. The Motorola Petition

contains a clear and unambiguous statement of relief requested.

At no time did Motorola seek leave to amend the Petition.

71. Motorola's pr offer seeks to establish that Com-Net is

not qualified to be included in negotiations. For the reasons

stated above, that evidence is irrelevant and the proffer is

rejected.

C. Motorola has Not Met its Burden.

72. Given the nature of the relief reque sted by Motorola

(e.g., the opportunity to negotiate concurrently with Com-Net)

the sole issue to be decided is whether Motorola met its burden

of proving that the decision to negotiate sequentially with Com-

Net first is contrary to the agency's governing statutes, the

agency's rules or policies, or the bid or proposal specifications

and instructions to the extent that the Department's proposed

action is clearly erroneous, contrary to competition, arbitrary,

or capricious.

73. There are no rules, polici es, or proposal

specifications applicable to this procurement. The applicable

statute is Section 287.057(4), Florida Statutes. The

Department's charge under that statute is to negotiate a contract

under the best terms and conditions. There is nothing in the

statute limiting or controlling the process by which the

Department went about its negotiations and there is no

requirement that the Department justify its decision to negotiate

sequentially with Com-Net first. Therefore, Motorola has not and

cannot show that the decision to negotiate sequentially with Com-

Net first was contrary to the governing statute, rules, policies,

or specifications. Concomitantly, the Department's decision was

not clearly erroneous, contrary to competition, arbitrary, or

capricious.

74. The Department proceeded with the negotiations fairly

and objectively. Both vendors were given equal opportunities to

present the Department with information and clarifications about

what they were willing to propose and what it will cost. Both

vendors were technically and financially capable of delivering.

In order to be in the "ball park" in terms of cost, Motorola

depended on its assumption that revenues from leases would reach

an average of 10 tenants per tower when Motorola itself had

informed the Department that the industry average for such leases

was 1.89. The negotiation team members' refusal to accept

Motorola's assumption was more than reasonable.

75. Motorola's testimony to the effect that two of the

negotiation team members advised Motorola that the state was

willing to undertake the risk of financial shortfalls that

existed in Motorola's proposal was refuted by Mr. Cales and

Mr. Blankenship. Accordingly, Mr. Cales and Mr. Blankenship's

testimony on this subject is more credible and Motorola's

testimony that it was told the state was willing to assume

financial risk is not credited.

76. Even if the Department had encouraged Motorola to

present a plan that included risk sharing as well as revenue

sharing, it would not follow that the decision to negotiate

sequentially with Com-Net first was clearly erroneous, contrary

to competition, arbitrary, or capricious. Com-Net presented a

proposal that posed no risk that the state would ever pay out

more than the revenue stream from the Trust Fund. If the state

had been willing to accept financial risk (which it is not) it

would still have been reasonable to determine that the Com-Net

risk-free plan was sufficiently preferable to warrant sequential

negotiations.

RECOMMENDATION

Based upon the findings of fact and conclusions of law, it

is

RECOMMENDED:

That the Department of Management Services enter a final

order denying Motorola's protest.

DONE AND ENTERED this 3rd day of October, 2000, in

Tallahassee, Leon County, Florida.

___________________________________

DON W. DAVIS

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 3rd day of October , 2000.

COPIES FURNISHED:

C. Everett Boyd, Jr., Esquire

Melissa Fletcher Allaman, Esquire

Ervin, Varn, Jacobs & Ervin

Post Office Drawer 1170

Tallahassee, Florida 32302

W. Robert Vezina, III, Esquire

Mary M. Piccard, Esquire

Vezina, Lawrence & Piscitelli, P.A.

318 North Calhoun Street

Tallahassee, Florida 32301

William E. Williams, Esquire

J. Andrew Bertron, Jr., Esquire

Huey, Guilday & Tucker, P.A.

106 East College Avenue, Suite 900

Tallahassee, Florida 32301

Alan C. Sundberg, Esquire

Mark K. Logan, Esquire

Smith, Ballard & Logan, P.A.

403 East Park Avenue

Tallahassee, Florida 32301

Shari M. Goodstein, Esquire

Shipman & Goodwin, LLP

One Landmark Square

Stamford, Connecticut 06901

Pennington G. Kamm, Esquire

Terry A. Stepp, Esquire

Office of the General Counsel

Department of Management Services

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

Bruce Hoffmann, General Counsel

Department of Management Services

4050 Esplanade Way

Tallahassee, Florida 32399-0950

Cynthia Henderson, Secretary

Department of Management Services

4050 Esplanade Way

Tallahassee, Florida 32399-0950

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

10 days from 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.