02-001721BID Compaq Computer Corporation vs. Department Of Revenue Status: Closed Recommended Order on Monday, September 23, 2002.

Summary: Petitioner demonstrated that submitting only 2 of 3 required pages of form PUR7105, with vendor certification signature in wrong location, was not a material irregularity and which caused no competitive advantage to Petitioner.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

COMPAQ COMPUTER CORPORATION, )

)

Petitioner, )

)

vs. ) Case No. 02 - 1721BID

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant t o notice, this cause came on for administrative

proceeding and hearing before P. Michael Ruff, duly - designated

Administrative Law Judge of the Division of Administrative

Hearings, on June 24 and 26, 2002, in Tallahassee, Florida. The

appearances were as f ollows:

APPEARANCES

For Petitioner: David W. Moye, Esquire

Linda Loomis Shelley, Esquire

Fowler, White, Boggs, Banker, P.A.

Post Office Box 11240

Tallahassee, Florida 32302

For Respondent: O. Earl Black, Esquire

Cindy Horne, Esquire

Florida Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314 - 6668

STATEMENT OF THE ISSUE

The issue to be resolved in this proceeding concerns

whether the rejection of Petitioner Compaq Computer

Cor poration's (Compaq) submission in response to an invitation

to negotiate #01/02 - 31 for the Child Support Enforcement (CSE)

Automated Management Systems (CAMS) case management

informational technology system is "clearly erroneous, contrary

to competition, a rbitrary or capricious." Embodied within that

general issue are the considerations of whether the proposal by

Compaq was responsive and whether the submittal by Compaq of a

"Form 7105," with the absence of the vendor certification

purportedly required on the front, or first page of that form,

and the signature by the representative of Compaq in a signature

area designated for an agency representative is a material

irregularity.

PRELIMINARY STATEMENT

This cause arose upon the filing of a formal written

p rotest and Petition for Administrative Hearing by Compaq on

April 22, 2002. The Petition challenged the posting of the

initial review of proposals for the procurement at issue. The

protest petition was filed with the Department of Revenue (DOR)

and was t ransmitted to the Division of Administrative Hearings

and this proceeding ensued.

The cause came on for hearing as noticed on June 24 and 26,

2002. The Petitioner called witnesses Wayne Fountain, Michael

Angely, Kevin French, Debbie Stephens, and Barba ra Phillips at

hearing. The Petitioner's Exhibits 1 - 7, 9 - 13, 19 and 21, were

admitted into evidence. The DOR called two witnesses, Barbara

Philips and H. P. Barker, Jr., and had three exhibits admitted

into evidence.

Upon the conclusion of the hearing a transcript was ordered

and the parties all availed themselves of the opportunity to

submit Proposed Recommended Orders. Those Proposed Recommended

Orders have been considered in the rendition of this Recommended

Order.

FINDINGS OF FACT

1. The Petition er, Compaq, is a Texas Corporation. It is

authorized to do business in the State of Florida. The

Respondent, DOR is a state agency charged with the

responsibility of administering the Child Support Enforcement

Program for the State of Florida in accordan ce with Section

20.21(h), Florida Statutes. The DOR issued an Invitation to

Negotiate (ITN) for the CAMS compliance enforcement

implementation on February 1, 2002. This procurement is

designed to give the DOR a "state of the art system" that will

meet al l Federal and State regulations and policies for Child

Support Enforcement, improve effectiveness of collections of

child support and automate enforcement to the greatest extent

possible. It will automate data processing and other decision

support functio ns and allow rapid implementation of changes in

regulatory requirements resulting from updated Federal and State

regulation policies in Florida initiatives, including statutory

ones.

2. The ITN provided for a multi - phased process to be

followed by negot iations with the selected proposers. The first

phase of review consisted of a review of mandatory items. There

followed evaluations of key proposal topics, management and

technical and cost items. The top scoring proposers would then

be invited to make oral presentations which would also be scored

and which would then be followed by negotiations.

3. The Department of Management Services has promulgated

several forms with the designation "PUR" followed by a numerical

reference. The numerical reference c orresponds to the

procurement methodology being used for the particular

procurement at issue. For instance, the PUR 7105 is for

invitations to negotiate. The other PUR forms identified in

Rule 60A - 1.002(7), Florida Administrative Code, are PUR 7028 for

i nvitations to bid for commodities, PUR 7031 for invitations to

bid for contractual services, PUR 7051 for requests for

proposals for commodities, and PUR 7033 for requests for

proposals for contractual services.

4. Section 7.2.1.3 of the ITN advises propo sers that the

State of Florida invitation to negotiate acknowledgement form,

PUR 7105 must be signed and included with the original of a

proposer's package. It also notified the proposers that this

form would be provided with the ITN on the DMS Vendor Bid System

(the internet).

5. "DMS" refers to the State of Florida Department of

Management Services which maintains the Vendor Bid System

referred to by the ITN. Form PUR 7105 is a purchasing form

developed and produced by the Department of Management Se rvices.

6. When downloading the form PUR 7105 from the Vendor Bid

System (VBS) on the internet, the first page containing the

vendor information, certification and signature space, is not

identified as being the first portion of form PUR 7105. The

seco nd and third pages, with the title "General Conditions" are

the only ones denoted as being part of form PUR 7105.

7. Compaq became aware that the procurement was going to

proceed and began assembling a staff in order to be prepared to

respond to the pro curement and submit a proposal. Michael

Angeley was designated project manager of the Global Services

Division of Compaq to head the evaluation of the ITN for Compaq

and to be in charge of preparation of Compaq's response to the

ITN.

8. As indicated ab ove, the availability of the ITN was

posted on the internet and made available on the VBS of the DMS.

9. When accessing the ITN by computer, the applicable

computer screen, which first becomes available, advises the

viewer to "click here to view the bid specifications." If the

viewer clicks "here," the first document which comes up on the

screen is an unnumbered form, identified by its Universal

Resource Locator (URL) line as follows:

http://fen.state.fl.us.owa_vbs/owa/vbs_www.boiler_plate.show?

boiler _plate_key_str=1129.

10. At the bottom of the unidentified form, is the

direction to "click here for additional required files." If the

viewer clicks for additional required files at the bottom of the

unidentified form, a document identified as "Downlo adable Files

for ITN - CAMS Compliance Enforcement Implementation" appears on

the screen.

11. The "Downloadable Files" screen provides a list of

filed documents, and an indication of their type, with a check

mark beside each file and a notation at the bot tom of the page

which states that a check mark "indicates required file."

12. The first file document on the "Downloadable Files"

screen is described as "General Conditions," with the "Type"

indicated as PUR 7105, and a check mark indicating that it was a

required file.

13. If the viewer clicks to download the file designated

as PUR 7105, a two - paged document entitled "General Conditions"

appears in the Adobe Acrobat format with the statement at the

bottom of each page that it is "PUR7105Rev.6/1/98."

14. Michael Angeley, as Project Manager for Compaq,

journeyed to Tallahassee to a pre - proposers conference. In

response to statements by DOR representatives at the pre -

proposers conference, Mr. Angeley went directly to Compaq's

office in Tallahassee an d downloaded the PUR 7105 form which was

identified as such on the list of required files. In doing so,

Mr. Angeley followed the procedure set forth in paragraphs 9 - 13

above.

15. The Petitioner's Exhibit three, which the Respondent

asserts is the first page of form PUR 7105, is not part of the

"Downloadable Files for ITN - CAMS" which is listed as "required"

on the VBS screen.

16. Compaq did not download the first page or include it

in its proposal response. Compaq perceived the downloaded

document en titled "General Conditions" as the correct form based

on its designation as such on the form and from the URL which

reads: "http://fcn.state.fl.us/fcn/centers/purchase/vbs/

pur7105.pdf."

17. After downloading the files indicated as required on

the VBS, Mr. Angeley placed the entire document in a separate

system file on his local network, and thereafter did not have to

access the documents through the original process.

18. Mr. Angeley, along with four other Compaq

representatives, attended the mandator y pre - proposers conference

that was held in Tallahassee on February 13, 2002.

19. At the pre - proposers conference, which was attended by

over 100 persons, questions which had been previously asked of

DOR in writing, were answered in writing and a hand - o ut

containing the answers was provided to each attendee. No

additional questions were permitted at the pre - proposers

conference.

20. At that conference a DOR representative (Ms. Phillips)

held up a document in front of the audience and advised the

attend ees that the form, identified by her as PUR 7105, needed

to be included in the proposal. The document held up to the

audience was not handed out, nor was it clearly visible to all

attendees at the pre - proposers conference. Compaq

representatives in atten dance at the pre - proposers conference

understood that form PUR 7105 was required to be included in the

proposal package and, therefore, made no further inquiry

regarding the form.

21. Compaq's belief was that it was following the

directions provided by DO R with regard to form PUR 7105,

including those received at the pre - proposers conference and as

contained in the ITN and the other computer accessible

documents. That belief has been shown to reasonable under the

circumstances.

22. Compaq Vice Presiden t Kevin French signed the

signature line on the only signature line available on the

downloaded portion of form PUR 7105 in Compaq's possession.

Mr. French had the authority to bind Compaq to the terms and

conditions listed on the form.

23. The signat ure of Mr. French on form PUR 7105 and in

three other places in the submittal, including the transmittal

letter, was intended by Compaq to and did bind it to the terms

and conditions of the ITN. No unfair or competitive advantage

was obtained by Compaq by signing the last page of form PUR 7105

by mistake, instead of the first page which it had not

downloaded, consisting of the "Acknowledgement Form."

The Evaluation Process

24. The evaluation of proposals submitted in response to

the ITN was designed to be a multi - stepped process. The

evaluation was conducted by a review committee comprised of

representatives from DOR's Purchasing Division and from the CSE

Division as well as from DMS.

25. The relevant portions of the evaluation process

consist of t he following steps:

8.1 Evaluation Process

Proposers are responsible for thoroughly

reviewing all ITN requirements to ensure

that the proposal and the proposed approach

are fully compliant with ITN requirements

and approach are fully compliant with ITN

re quires and thereby avoid the possibility

of being ruled non - compliant.

FDOR will evaluate and score proposals with

the following methodology that is more fully

described in the following subsections.

FDOR will:

1) Perform Mandatory Items Compliance

Eva luation to validate proposals against the

mandatory items listed in Table 8 - 1.

Proposals that do not respond to all

mandatory items will be rejected and not

considered further.

2) Score Key Proposal Topics to ensure a

proposal achieves the minimum acc eptable

score for these key topics before the effort

is expended to fully evaluate it. Proposals

that fail to achieve a minimally acceptable

score for these key topics will be rejected

and not considered further. (Emphasis

supplied)

26. The minimum sc ore for the second step of the

evaluation process was 150 points out of a possible 230.

27. Section 8.1.1. of the ITN, "Table 8 - 1 (Selected

Mandatory Items) lists 24 separate items in question format,

with a reference to the ITN setting forth the locat ion of the

requirement.

28. The Steering Committee selected the 24 items listed as

mandatory but did not rank the items as to importance because

all were considered mandatory.

29. Section 2.3.8 of the ITN states as follows:

2.3.8 Rejection of Proposa ls

FDOR will reject a proposal that FDOR deems

to have a material defect. A material

defect is any part of the proposed solution

that violates a mandatory requirement and

results in an unacceptable system or

unacceptable risk.

FDOR will reject proposals that fail to pass

the Mandatory Items Compliance Evaluation

(see Section 8.1.1). FDOR will reject

proposals that include, in proposal Volume 3

(Contract), contract wording identified as

mandatory by the proposer that is

unacceptable to FDOR (see Section 7.4.1.2).

FDOR will reject proposals that fail to

achieve the minimum acceptable score for Key

Proposal Topics (see Section 8.1.2).

FDOR reserves the right to reject any and

all proposals received if FDOR determines

such action is in the best interest of the

State of Florida or FDOR.

30. Item 12 on Table 8 - 1 queries, "Did the proposer submit

a PUR 7105 form signed by an authorized representative?", with a

reference to ITN 7.2.1.3.

31. Section 7.2.1.3 of the ITN states as follows:

7.2.1.3 State of F lorida Invitation to

Negotiate Acknowledgement Form, PUR 7105

The proposal shall include a form PUR 7105,

completed and signed. The form will be

provided with the ITN and the DMS Vendor Bid

System. The original form PUR 7105 must be

included with the Or iginal/Master Copy (copy

one) of Volume 1 of the proposal.

32. Ms. Barbara Phillips, a purchasing specialist with DOR

who was assigned to duties as an initial evaluator of the

proposals, created a check list for the initial screening

process and selecte d items 1, 2, 6, 8, 11, and 12, from the list

of 24 "Mandatory Items" on Table 8 - 1.

33. If a proposal received a negative ranking, indicated

by an "N" as to one of the items on the check list, no further

evaluation was done on the proposal.

34. Seven p roposals were submitted to DOR in response to

the ITN. Compaq's proposal was the only proposal rejected as

not responsive by DOR.

35. Compaq's proposal was rejected on the basis of

Compaq's failure to include a complete form PUR 7105 as part of

its pro posal and for signing the last page of form PUR 7105 on

the line marked for the "Authorized Agency Signature" instead of

on the first page.

36. The confusing manner in which the information

regarding form PUR 7105 was presented in the VBS substantially

contributed to Compaq's inclusion of only two of the three pages

of form PUR 7105 in its proposal.

37. Once the decision was made to reject Compaq's proposal

on the basis of form PUR 7105, evaluation of the proposal was

stopped.

38. Compaq's proposa l was not scored in the second step of

the evaluation process relating to Key Proposal Topics,

therefore, it is not known whether it would have received the

minimum score of 150 in order to proceed further in the process.

39. Covansys Corporation submitt ed a proposal which was

deemed responsive by DOR even though only the first unnumbered

page of what DOR refers to as an "Acknowledgement Form" was

included in its proposal and not the "General Conditions" which

are listed as "Required" in the VBS system.

4 0. Accenture, LLP submitted a proposal which was deemed

responsive by DOR even though it made a notation on the

Acknowledgement Form: "Subject to Accenture's Exceptions and

Reservations in Volume 3, Section 1."

41. The only difference between signing at the end of the

two page "General Conditions" document listed in the VBS system

as: "PUR FORM 7105" and not signing the "Acknowledgement Form"

is that the vendor does not make a representation of non -

collusion. However, the agency's representative made it clear

that this provision is subject to negotiation and that the

signature did not actually bind the vendor to that

certification.

42. When Accenture was deemed responsive and moved to the

next stage of the evaluation process, the DOR reviewers did no t

check and did not know how many of the General Conditions were

subject to Accenture's exceptions and reservations, nor the

extent of the exceptions and reservations. In fact, they did

not know whether or not Accenture agreed to any or all of the

terms a nd conditions provided on form PUR 7105.

43. Unisys submitted a proposal which was deemed

responsive by DOR even though several Mandatory Items including

Volumes 1 and 2 of the electronic copy (CD) of its proposal, as

well as the Microsoft Project Plan, were not submitted.

44. TIER submitted a proposal which was deemed responsive

by DOR even though the reviewers found that Mandatory Items were

not submitted in accordance with the directions in the ITN and

despite the reviewers' determination that the documentation

submitted from the Secretary of State's Office regarding its

corporate status had expired. KPMG submitted a proposal which

was deemed responsive by DOR even though the reviewers stated on

the evaluation form that KPMG did not comply with cer tain

Mandatory Items listed on Table 8 - 1.

CONCLUSIONS OF LAW

45. The Division of Administrative Hearings has

jurisdiction of the subject matter of and the parties to this

proceeding. Sections 120.569 and 120.57(1), Florida Statutes

(2001).

46. The fin al hearing in this case was de novo for the

purpose of evaluating the action by the agency. State

Contracting and Engineering Corp. v. Department of

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

47. The burden is on Compaq to establish grounds for

invalidating the decision of Respondent to reject Compaq's

proposal. GTech Corp. V. Florida Department of Lottery , 737

So. 2d 615 (Fla. 1st DCA 1999).

48. The burden of proof in these proceedings is whether

the proposed agency action is "clearly erroneo us, contrary to

competition, arbitrary or capricious." Section 120.57(3)(f),

Florida Statutes. Compaq must meet that standard by a

preponderance of the evidence. Section 120.57(1)(j), Florida

Statutes.

49. A capricious action is one taken without thoug ht or

reason or irrationally. An arbitrary decision is one not

supported by facts or logic. Agrico Chemical Co., v. Department

of Environmental Regulation , 365 So. 2d 759, 763 (Fla. 1st DCA

1978). A decision is clearly erroneous when unsupported by

subs tantial evidence or contrary to the clear weight of the

evidence or induced by an erroneous view of the law. Black's

Law Dictionary, Revised Fourth Edition (1968).

50. An act is contrary to competition when it offends the

purpose of competitive bidding. That purpose has been stated as

follows:

To protect the public against collusive

contracts; to secure fair competition upon

equal terms to all bidders; to remove not

only collusion but temptation for collusion

and opportunity for gain at public expense;

t o close all avenues to favoritism and fraud

in various forms; to secure the best values

for the [public] at the lowest possible

expense; and to afford an equal advantage to

all desiring to do business with the

[government], by affording an opportunity

for exact comparison of bids . (Emphasis

supplied).

Wester v. Belote , 103 Fla. 976, 138 So. 721, 723 - 24 (Fla. 1931);

Harry Pepper and Associates, Inc. v. City of Cape Coral , 352 So.

2d 1190, 1192 (Fla. 2nd DCA 1977).

51. In this case, the action of DOR, if c arried out, would

hamper the competitive process. Clearly, the subject ITN

involves an enormous financial and technological undertaking to

which relatively few firms are capable of responding. Removal

of Compaq from the negotiations so early in the proce ss cannot

be justified on these facts.

52. A "responsive bid" or "responsive proposal," is a bid

or proposal submitted by a responsive, and responsible or

qualified bidder, or offeror, which conforms in all material

respects to the invitation to bid or r equest for proposals.

Section 287.012(16), Florida Statutes.

53. Not every deviation from a request for proposal or an

invitation to negotiate will invalidate a response. Minor

irregularities may be waived by an agency if the proposal is

otherwise vali d. See Rule 60A - 1.002(10), Florida Administrative

Code.

54. The test for measuring whether a deviation in a bid is

sufficiently material to destroy its competitive character is

whether the variation affects the amount of the bid by giving

the bidder an advantage or benefit not enjoyed by the other

bidders. Tropabest Foods, Inc. v. State of Florida, Department

of General Services , 493 So. 2d 50 (Fla. 1st DCA 1986).

55. A variation in a bid is only material if it gives the

bidder a substantial advantage over the other bidders and

thereby restricts or stifles competition. Tropabest Foods,

Inc. , supra .

56. In light of the rather lenient treatment enjoyed by

the majority of other vendors whose proposals contained

irregularities which were no less substan tial in either kind or

degree from those of Compaq, it cannot be concluded that

Compaq's continued participation is competitively unfair.

57. Given that the present case involves an ITN in its

earliest stages, one could hardly argue that there is any

adv erse impact on the agency by permitting Compaq to remain

involved in the negotiations; in fact, the opposite is true.

58. There is a strong public interest in favor of saving

tax dollars in awarding public contracts. There is no public

interest in disqu alifying the proposal for technical

deficiencies in form, if the proposer did not derive any unfair

competitive advantage by reason of the technical omission. See

Overstreet Paving Co. v. Department of Transportation , 608 So.

2d 851 (Fla. 2nd DCA 1992); R obinson Electrical Co. v. Dade

County , 417 So. 2d 1032 (Fla. 3rd DCA 1982); Intercontinental

Properties , supra , at 386.

59. An improperly executed signature on a required form is

not a material irregularity, particularly where the intent of

the bidder to be bound is evident. Ranger Construction

Industries, Inc. v. Department of Transportation , DOAH Case No.

92 - 1538BID (April 20, 1992). Compaq evidenced its intent to be

bound to the General Conditions by its authorized signature

appearing on the last pag e of form PUR 7105, as well as its

authorized signature appearing on the cover letter.

60. Compaq's failure to include all three pages of form

PUR 7105 and the fact that its signature appeared on the last

page instead of the first page is, at worst, a mi nor technical

irregularity, and not a material deviation from the requirements

of the ITN.

61. The disparate treatment by DOR of similar types of

minor technical irregularities in the proposals of other vendors

would be arbitrary and not based on any sig nificant factual or

legal difference in the nature and extent of the technical

deficiencies. Where similar omissions were waived in other

proposals that were not disqualified, it would be arbitrary and

capricious to disqualify Compaq's proposal. See Palm Beach

County Youth Coalition v. Palm Beach County Workforce

Development Board, Inc. , DOAH Case No. 00 - 1527BID (October 20,

2000); J. Ruiz School Bus Service, Inc. v. Dade County School

Board , DOAH Case No. 99 - 4021BID (March 24, 2000), adopted in

toto in F inal Order (May 18, 2000).

62. The effect of rejecting Compaq's proposal on the basis

of a minor technical irregularity would be to deprive DOR of the

potential for increased competition in contravention of the

public policy which favors competition.

63 . Compaq has established by preponderant persuasive

evidence that a decision by DOR to reject Compaq's proposal was

arbitrary and contrary to competition.

RECOMMENDATION

RECOMMENDED that a final order be entered by the State of

Florida Department of Reven ue deeming Compaq's proposal to be

responsive to the Invitation to Negotiate and entitled to

proceed to the next step in the evaluation process.

DONE AND ENTERED this 23rd day of September, 2002, in

Tallahassee, Leon County, Florida.

__________________ _________________

P. MICHAEL RUFF

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 (8 50) 921 - 6847

www.doah.state.fl.us

Filed with Clerk of the

Division of Administrative Hearings

this 23rd day of September, 2002.

COPIES FURNISHED :

O. Earl Black, Esquire

Department of Revenue

Post Office Box 6668

Tallahassee, Florid a 32399 - 0100

David W. Moye, Esquire

Fowler, White, Gillen, Boggs,

Villareal, and Banker, P.A.

Post Office Box 11240

Tallahassee, Florida 32302

Bruce Hoffman, General Counsel

Department of Revenue

204 Carlton Building

Tallahassee, Florida 32399 - 0100

James Zingale, Executive Director

Department of Revenue

104 Carlton Building

Tallahassee, Florida 32399 - 0100

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommen ded Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.