01-000189BID Sprint Payphone Services, Inc. vs. Department Of Corrections Status: Closed Recommended Order on Friday, April 6, 2001.

Summary: Proposal submitted by Petitioner in response to Request for Proposals was non-responsive. Petitioner does not have standing to further pursue its protest of the agency`s proposed action. Petitioner`s bid protest should be dismissed.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SPRINT PAYPHONE SERVICES, INC. , )

)

Petitioner , )

)

vs. ) Case No. 01-0189BID

)

DEPARTMENT OF CORRECTIONS , )

)

Respondent , )

)

and )

)

MCI WORLDCOM COMMUNICATIONS, INC. , )

)

Intervenor. )

___________________________________)

RECOMMENDED ORDER

A formal hearing was held pursuant to notice, on

February 15, 2001, in Tallahassee, Florida, before Barbara J.

Staros, assigned Administrative Law Judge of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner : Jonathan Sjostrom, Esquire

Rex Ware, Esquire

Steel, Hector & Davis

215 South Monroe Street, Suite 601

Tallahassee, Florida 32301-1804

For Respondent : Obed Dorceus, Esquire

Veronica McCrackin, Esquire

Department of Corrections

2601 Blairstone Road

Tallahassee, Florida 32314

For Intervenor : Carolyn S. Raepple, Esquire

Shannon L. Novey, Esquire

Hopping, Green, Sams & Smith, P.A.

Post Office Box 6526

Tallahassee, Florida 32314

STATEMENT OF THE ISSUE

Whether the proposal Petitioner submitted in response to

Respondent's Request for Proposal No. 00-DC-7295 was non-

responsive.

PRELIMINARY STATEMENT

On December 5, 2000, the Florida Department of

Corrections (Department) posted its intended award of the

contract for RFP No. 00-DC-7295 for an inmate telephone system

to MCI Worldcom Communications, Inc. ( Worldcom). Petitioner

Sprint Payphone Services, Inc. (Sprint) timely filed a protest

to this intended award. Petitioner T-Netix, Inc. (T-NETIX)

also timely filed a protest to this intended award. The cases

were forwarded to the Division of Administrative Hearings on

or about January 16, 2001. The protest filed by Sprint was

assigned Case No. 01-0189BID, and the protest filed by T-Netix

was assigned Case No. 01-0190BID.

Case Nos. 01-0189BID and 01-0190BID were consolidated by

an Order issued January 18, 2001. WorldCom petitioned to

intervene in both cases. Sprint moved to intervene in Case

No. 01-0190BID. T-NETIX moved to intervene in Case No. 01-

0189. All motions to intervene were granted.

In its Formal Written Protest and Petition for Formal

Administrative Hearing, Sprint asserted that the Department

incorrectly and arbitrarily rejected Sprint's proposal as non-

responsive. Sprint also asserted that the intended award of

the contract to Worldcom is contrary to the Department's

governing statutes, rules, or policies or the proposal

specifications. Sprint requested that its proposal be deemed

responsive and the most advantageous to the state, that

Worldcom's and T-NETIX's proposals be disqualified and, in the

alternative, that all bids be rejected and the Respondent

rebid the contract.

The Department filed a Motion to Dismiss or in the

Alternative Motion for Summary Recommended Order. The

Department argued in its Motion that Sprint was a non-

responsive bidder and, therefore, lacked standing to bring

this protest. On February 7, 2001, an Order was issued

denying the motion without prejudice to raise the issue of

standing at hearing and in Proposed Recommended Orders.

On February 14, 2001, Petitioner T-NETIX filed a Notice

of Voluntary Dismissal resulting in the dismissal of Case

No. 01-0190BID. Therefore, only Case No. 01-0189BID was

considered at the final hearing.

The parties filed a Prehearing Stipulation. At hearing,

Petitioner presented the testimony of Mike Jewell and Genanne

Wilson. Petitioner's E xhibit 35 was admitted into evidence.

Petitioner's Exhibit 39 was not admitted into evidence and was

proffered. Respondent did not present any witnesses.

Respondent's Exhibits 23 and 38 were admitted into evidence.

Intervenor Worldcom did not present any witnesses. Joint

Exhibits 1, 2, 4-9, 11, 12, 15, and 16 were also admitted into

evidence.

A Transcript, consisting of two volumes, was filed on

March 8, 2001. On March 19, 2001, the parties timely filed

Proposed Recommended Orders which have been considered in the

preparation of this Recommended Order.

FINDINGS OF FACT

Stipulated Facts

1. On or about August 14, 2000, the Department issued

RFP No. 00-DC-7295 for an Inmate Telephone System.

2. Generally, RFP No. 00-DC-7295 requests proposers to

submit proposals to provide local, intralata, interlata, and

international telephone services for inmates in the

Department's facilities identified in the RFP and coin-

operated telephones at each site for staff and visitors. The

proposer awarded the contract under RFP No. 00-DC-7295 (the

Contractor) must provide and install all telephone instruments

and all wiring. The Contractor must also provide system

administrators and site technicians who will implement and

manage pin numbers and calling lists for inmates, and must

provide various specified reports and data to the Department

3. All services, equipment, etc ., addressed in RFP

No. 00-DC-7295 must be provided to the Department at no cost.

Instead, the Contractor must pay the Department a commission

calculated as a percentage of gross revenues. Consequently,

the contract to be awarded under RFP No. 00-DC-7295 is a

revenue-generating contract for the Department.

4. Sprint, T-NETIX, WorldCom at AT&T timely submitted

proposals to the RFP.

5. On November 6, 2000, the assigned Department

Purchasing Staff member, Genanne Wilson, determined the AT&T

and Sprint proposals to be non-responsive for failing 1 to meet

the mandatory requirements of the RFP.

6. Sprint's proposal was also determined to contain a

material deviation 2 from the RFP.

7. The determination that the Sprint proposal failed 3 to

meet the mandatory requirements of the RFP and contained a

material deviation was based on Sprint's inclusion of the

following underlined language on the Supplemental Proposal

Sheets wherein the proposers were instructed to appropriately

initial in understanding and agreement each paragraph of the

RFP:

Liquidated Damages

With the express understanding the total

liquidated damages are limited to

$100,000.00 by the Limitation of Remedies

in Section 7.32.

8. Following the determination that the Sprint proposal

failed 4 to meet the mandatory requirements of the RFP and

contained a material deviation, Sprint's proposal was not

further evaluated by the Department.

9. The T-NETIX 5 and WorldCom proposals were individually

evaluated by each member of an Evaluation Team pursuant to the

criteria specified in the RFP.

10. On Tuesday, December 5, 2000, the Department posted

its intended award of the contract for RFP No. 00-DC-7295 to

WorldCom.

11. Sprint and T-NETIX each timely filed a protest to

this intended award.

Findings of Fact Based on the Evidence of the Record

12. On or about October 13, 2000, the Department issued

Addendum No. 1 to RFP No. 00-DC-7295 which reprinted the

original RFP in its entirety and included 67 revisions.

13. Section 4.3.6 of the RFP specifies that, "[t ]he

Department shall reject any and all proposals not meeting

mandatory responsiveness requirements."

14. Section 5.1 of the RFP, reads in pertinent part as

follows:

5.1 Tab 1 - Mandatory Responsiveness

Requirements

The following terms, conditions, or

requirements must be met by the proposer to

be responsive to this RFP. These

responsiveness requirements are mandatory.

Failure to meet these responsiveness

requirements will cause rejection of a

proposal. Any proposal rejected for

failure to meet responsiveness requirements

will not be evaluated.

5.1.1 It is mandatory that the proposer

supply one (1) original and ten (10) copies

of both the Project and the Cost Proposals.

Project and Cost Proposals shall be in

separately sealed packages each clearly

marked "Project Proposal - RFP-00-DC- 7295 "

or "Cost Proposal - RFP-00-DC-7295 "

respectively. Inclusion of any commission

rates or pricing data in the Project

Proposal shall result in rejection of the

entire proposal.

5.1.2 It is mandatory the proposer return,

under Tab 1, the Supplemental Proposal

Sheets (Attachment 1) of this RFP document,

appropriately initialed in understanding

and agreement of each paragraph of the RFP

and signed by the person with authority to

properly bind the proposer.

5.1.3 It is mandatory the proposer

complete, sign and return, under Tab 1, the

PUR Form 7033, State of Florida Request for

Proposal/Contractual Services

Acknowledgment which is the front cover of

this RFP document. A copy of the document

that includes both front and back sides is

acceptable. ( emphasis in original)

15. Section 6.1 of the RFP further provides:

6.1 Review of Mandatory Responsiveness

Requirements

Proposals will be reviewed by Department

staff to determine if they comply with the

mandatory requirements listed in Section 5

of the RFP. This will be a yes/no review

to determine if all requirements have been

met. Failure to meet any of these

mandatory requirements will render proposal

non-responsive and result in rejection of

the proposal. Further evaluation will not

be performed.

No points will be awarded for passing the

mandatory requirements. ( emphasis in

original)

16. RFP Section 7.30, entitled, "Liquidated Damages,"

addresses liquidated damages for various requirements and

services to be provided by the successful proposer under the

contract for an inmate telephone system. Section 7.30 does

not contain a cap or limitation on liquidated damages.

17. RFP Section 7.32, entitled "Limitation of Remedies,"

addresses the limitation of remedies for the performance or

non-performance of machines and programming. There is no cap

or limitation on liquidated damages established by RFP Section

7.32.

18. Sprint altered the Supplemental Proposal Sheets by

limiting liquidated damages under Section 7.30 to $100,000

based upon its understanding of the relationship between

Sections 7.30 and 7.32 of the RFP. Specifically, Sprint read

Sections 7.30 and 7.32 in para materia and concluded that

total liquidated damages would be "limited to $100,000 by the

limitation of remedies in Section 7.32."

19. Mike Jewell, who at the time the RFP was issued, was

Sprint's Vice President of Sprint Payphone Services, Inc., was

responsible for "oversight over the responses that Sprint

submitted and to make sure that they were in keeping with the

corporation's business interests." Mr. Jewell testified that

the purpose of inserting this language in the proposal was to,

"point out to the Department of Corrections that our agreement

to 7.30 had to be read in conjunction with the language in the

agreement in [sic] 2.7.3.2." Mr. Jewell acknowledged that

vendors had the opportunity to ask questions prior to the

submittal of their proposals to the Department and that Sprint

did not ask any questions regarding the relationship between

Sections 7.30 and 7.32 of the RFP.

20. A letter written by Paul Eide, Customer Care Manager

for Sprint, and faxed to the Department on November 21, 2000,

after the opening of the proposals, stated in pertinent part:

In response to the RFP, we found the

liquidated damages section to [sic] vague

and confusing to the exact dollar amount of

a penalty situation. Our intentions were

to point out the ambiguity and merely cap

the amount so the winning vendor was not

liable for an infinite amount of money.

21. Although Sprint requested permission from

the Department to remove the $100,000 cap on

liquidated damages after the opening of the

proposals , the Department did not permit Sprint to

do so.

22. Genanne Wilson, a purchasing analyst in the

Department's bureau of purchasing, was the person charged with

reviewing the proposals for responsiveness. Ms. Wilson

determined that Sprint did not meet the requirement of Section

5.1.2 and, therefore, failed to meet the mandatory

responsiveness requirements of the RFP. That determination

was confirmed by her bureau chief. As specified in Section

6.1 of the RFP, further evaluation was not performed on

Sprint's proposal.

23. The evidence submitted by Sprint is not sufficient

to establish that Sprint's proposal was responsive. Rather,

the evidence establishes that Sprint chose to alter or modify

the Supplemental Proposal Sheets even though those who

submitted proposals were advised in Sections 5.1 and 6.1 that

failure to meet any of the mandatory responsiveness

requirements would render a proposal non-responsive and result

in rejection of the proposal and that further evaluation would

not be performed.

24. Sprint's failure to signify its understanding and

agreement to Section 7.30 by initialing the supplemental

proposal sheets without more resulted in a failure to meet the

mandatory requirement in Section 5.1.2.

25. Sprint's failure to meet the mandatory requirement

constitutes a material deviation from the RFP.

26. The Department's determination that Sprint's

proposal was non-responsive was consistent with the clear,

express language of the RFP which informed proposers of

mandatory requirements and that proposals found to be non-

responsive would not be further evaluated. Sprint's proposal

was not responsive to the RFP because it failed to meet a

mandatory requirement and it contained a material deviation.

Both defects arise from Sprint's attempt to limit its exposure

to liquidated damages.

CONCLUSIONS OF LAW

27. The Division of Administrative Hearings has

jurisdiction over the parties and subject matter in this case

pursuant to Sections 120.569, 120.57(1), and 120.57(3),

Florida Statutes.

28. Petitioner has challenged the Department's proposed

agency action of determining that Sprint's proposal is non-

responsive and the Department's intention to award the

contract for inmate telephone services to Worldcom.

29. The burden of proof resides with the Petitioner.

See Section 120.57(3)(f), Florida Statutes.

30. The underlying findings of fact in this case are

based on a preponderance of the evidence. Section

120.57(1)(j), Florida Statutes.

31. The threshold burden which Petitioner Sprint must

meet is that their submission was responsive to the RFP and,

therefore, that Sprint has standing to bring this protest.

Petitioner has failed to meet this burden.

32. The language of Sections 5.1 and 6.1 of the RFP is

clear and unambiguous. Section 5.1 clearly states that the

responsiveness requirements are mandatory. Section 6.1

clearly states that failure to meet any of the mandatory

requirements will render a proposal non-responsive resulting

in rejection of the proposal and that further evaluation would

not be performed.

33. A variance is material when it gives the bidder or

offeror a substantial advantage over other bidders and

restricts or stifles competition. See Tropabest Foods, Inc.

v. State of Florida , 493 So. 2d 50 (Fla. 1st DCA 1986).

Whether an irregularity in a bid is material or immaterial

turns on "whether the variation affects the amount of the bid

by giving the bidder an unfair advantage or benefit not

enjoyed by the other bidders." Harry Pepper & Associates,

Inc. v. City of Cape Coral , 352 So. 2d 1190,1193 (Fla. 2d DCA

1977).

34. A "responsive offeror" means a person who has

submitted a . . . proposal which conforms in all material

respects to the . . . request for proposals." Section

287.012(17), Florida Statutes.

35. Sprint's unauthorized limitation of the Liquidated

Damages part of the Supplemental Proposal Sheet constitutes a

material deviation. Such a deviation would give Sprint an

unfair advantage or benefit not enjoyed by the other bidders.

36. By failing to establish its standing, Sprint is

without the ability to further pursue its protest of the

Department's intended action. To establish entitlement to a

Section 120.57 hearing, a party must show that its substantial

interests will be affected by the proposed agency action. See

Agrico Chemical Co, v. Department of Environmental Protection ,

406 So. 2d 478 (Fla. 2d DCA 1981). When a proposer would not

be in a position to be awarded the contract based upon its

material deviation from the expectations of the RFP, it does

not have a substantial interest to support the protest. Only

responsive bidders have standing to protest agency contract

awards. Cf. Intercontinental Properties, Inc. v. Department

of Health & Rehabilitative Services , 606 So. 2d 381, 384 (Fla.

3d DCA 1992.)(Party protesting award of government contract to

low bidder must be prepared to show not only that low bid was

deficient but also that protestor's own bid does not suffer

from the same deficiency).

37. Because Sprint's proposal is non-responsive as a

matter of law, it is not necessary to address the question of

whether the Department's award of the contract to Worldcom is

contrary to the agency's governing statutes, rules or

policies, or the bid or proposal specifications. Section

120.57(3)(f), Florida Statutes.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions

of Law set forth herein, it is

RECOMMENDED:

That the Department of Corrections enter a final order

dismissing the bid protest filed by Sprint.

DONE AND ENTERED this 6th day of April, 2001, in

Tallahassee, Leon County, Florida.

BARBARA J. STAROS

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Ap alachee Parkway

Tallahassee, Florida 32399-3060

(850) 488- 9675 SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 6th day of April, 2001.

ENDNOTES

1/ The Pre-hearing Stipulation contained the word

"allegedly" here.

2/ See Endnote 1.

3/ See Endnote 1.

4/ See Endnote 1.

5/ While the Department's purchasing staff determined that

the proposal submitted by T-NETIX was responsive, at hearing,

the remaining parties stipulated that T-NETIX's proposal was

non-responsive.

COPIES FURNISHED:

Jonathan Sjostrom, Esquire

Rex Ware, Esquire

Steel, Hector & Davis

215 South Monroe Street, Suite 601

Tallahassee, Florida 32301-1804

Carolyn S. Raepple, Esquire

Shannon L. Novey, Esquire

Hopping, Green, Sams & Smith, P.A.

Post Office Box 6526

Tallahassee, Florida 32314

Obed Dorceus, Esquire

Veronica McCrackin, Esquire

Department of Corrections

2601 Blairstone Road

Tallahassee, Florida 32399-2500

Louis A. Vargas, General Counsel

Department of Corrections

2601 Blair Stone Road

Tallahassee, Florida 32399-6563

Michael W. Moore, Secretary

Department of Corrections

2601 Blair Stone Road

Tallahassee, Florida 32399-2500

INFORMATIONAL COPY:

William E. Williams, Esquire

J. Andrew Berton, Jr., Esquire

Huey, Guilday & Tucker, P.A.

1983 Centre Point Boulevard, Suite 200

Post Office Box 12500

Tallahassee, Florida 32317-2500

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.