02-004439BID Growadot, Inc. vs. Escambia County Utilities Authority Status: Closed Recommended Order on Tuesday, December 17, 2002.

Summary: Respondent acted within its discretion and within the requirements of the Request for Proposals when it selected a vendor to provide credit card services who had the lowest convenience fee with no start-up costs to Respondent.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GROWADOT, INC., )

)

Petitioner, )

)

vs. ) Case No. 02 - 4439BID

)

ESCAMBIA COUNTY UTILITIES )

AUTHORITY, )

)

Respondent. )

)

RECOMMENDED ORDER

A for mal hearing was conducted in this case on December 2,

2002, in Pensacola, Florida, before Suzanne F. Hood,

Administrative Law Judge with the Division of Administrative

Hearings.

APPEARANCES

For Petitioner: Archibald Hovanesian, Jr., Esquire

21 East Garden Street, Suite 201

Pensacola, Florida 32501

For Respondent: Bradley S. Odom, Esquire

Stephen G. West, Esquire

Kievit, Kelly & Odom

15 West M ain Street

Pensacola, Florida 32501

STATEMENT OF THE ISSUE

The issue is whether Respondent properly awarded a contract

for automated payment options to E - Commerce Group, a non - party.

PRELIMINARY STATEMENT

On or about August 7, 2 002, Petitioner Growadot, Inc.

(Petitioner), filed a bid protest with Respondent Escambia

County Utilities Authority (ECUA/Respondent). The protest

challenged Respondent's award of a contract for services to

enable Respondent's customers to pay monthly ut ility bills using

credit cards to E - Commerce Group, a non - party. On November 18,

2002, Respondent referred the case to the Division of

Administrative Hearings.

A Notice of Hearing dated November 19, 2002, scheduled the

hearing for December 2, 2002.

Th e parties filed Pre - Hearing Statements and Stipulation on

December 2, 2002.

Before the hearing commenced, Petitioner filed a Trial

Memorandum and Statement of the Case. During the hearing,

Petitioner presented the testimony of one witness and offered

on e exhibit (P1), which was admitted into evidence.

After Petitioner presented its case - in - chief, Respondent

filed a Memorandum of Law in Opposition to Petitioner's Bid

Protest and in Support of Respondent's Motion for Directed

Verdict. The undersigned de nied the Motion for Directed

Verdict. Respondent then presented the testimony of three

witnesses and offered one composite exhibit, consisting of eight

sections (R1, A - H), which was admitted into evidence.

The parties did not file a transcript of the pro ceeding

with the Division of Administrative Hearings. The parties filed

their proposed findings of fact and conclusions of law on

December 11, 2002, and December 12, 2002, respectively.

FINDINGS OF FACT

1. Respondent is a local governmental body, corp orate and

politic, organized pursuant to Chapter 2001 - 324, Laws of

Florida. Respondent is responsible for providing certain water,

wastewater, and sanitation services in Escambia County, Florida.

2. Petitioner is a Florida for - profit corporation. It is

organized and authorized to do business under Florida Law.

3. Currently, Respondent offers its utility customers

several different types of payment options, including the

following: (a) over - the - counter payments; (b) drive - in payment;

(c) mail - in pay ments; (d) automatic bank drafts; and

(e) in - person payments.

4. In May 2002, Respondent released Request for Proposal

(RFP) 2002 - 36. Through the RFP, Respondent was seeking the

lowest and most responsible proposal for automated payment

optio ns for Respondent's utility customers. According to the

RFP, the vendors needed to be capable of providing Internet and

telephone payment options so that Respondent's customers could

use their credit cards to pay their utility bills. The RFP

stated that the sealed bids would be opened on June 27, 2002.

5. Section 1, the administrative section of the RFP,

provides the following information regarding Respondent's

operations as of September 30, 2001: (a) Respondent served

85,000 water customers; (b) Respo ndent served 55,800 sewage

collection and treatment system customers; (c) Respondent served

59,900 solid waste customers; (d) Respondent generates

approximately $64,000,000 in revenue per year; and

(e) Respondent's average residential bill is $ 60.

6. Section 2 of the RFP discusses Respondent's current

management information system. This section states that

Respondent needed to "know about and understand all the costs

and changes necessary to implement the solution proposed."

7. Section 3 of the RFP requests information about the

vendor. This section includes a vendor questionnaire and

request for information about the vendor's prior customers.

8. Section 4 of the RFP sets forth the project

requirements. Of particular note is the foll owing reference to

a convenience fee in Section 4.1:

Convenience Fee

Since the convenience fee is the method

the vendor will [use to] generate

compensation for this service, ECUA requires

the rate (fixed or sliding) to be fixed for

the duration of the c ontract. You may

propose a sliding scale for lowering or

raising the fee based upon use of the

solution once a preliminary period has

expired (the preliminary period to be set in

vendor's contract).

9. Section 4.3 of the RFP sets forth the project

cons iderations. A cost - effective and timely solution is listed

as one of six considerations.

10. Section 5 of the RFP sets forth the requirements for

vendor responses. Section 5.3 includes the following evaluation

criteria:

These criteria are to be util ized in the

evaluation of qualifications for development

of the shortlist of those vendors to be

considered by interviews and/or potential

negotiations. Individual criteria may in

all probability be assigned varying weights

at the ECUA's discretion to ref lect relative

importance. Vendors are required to address

each evaluation criteria in the order listed

and to be specific in presenting their

qualifications. (Emphasis added)

a) Experience/qualifications of Vendor.

Vendors (sic) proposed staff, expe rience

with contracts for services similar in

scope.

b) Capabilities, features, etc. of the

proposed services and the degree to which

the proposed services meet the needs of the

ECUA.

c) References of only similar contracts.

The Vendor must have a d emonstrative history

of professional, reliable and dependable

service.

d) Demonstrated quality assurance

procedures and schedule to insure a timely,

effective and professional provision of

services.

e) Costs.

11. Section 5.4 of the RFP discusses th e process for

scoring responses. It provides as follows in relevant part:

Selection Procedure

Selection shall be made of two or more

vendors deemed to be fully qualified and

best suited among those submitting

proposals. The selection will be made on

t he basis of the factors involved in the

Request for Proposal, including price if so

stated in the Request for Proposal.

Selected vendors will then conduct a

presentation to the selection committee.

After all presentations are made the

selection committee will select the vendor

which, in its opinion has made the best

proposal and make a recommendation to ECUA's

Board. ECUA's Board will award a contract

to that vendor. Should the ECUA determine

that only one vendor is fully qualified or

that one vendor is clearly more highly

qualified than the others under

consideration, the presentation phase may be

skipped. (Emphasis added)

* * *

Basis for Award

Information and/or factors gathered during

the interviews and any reference checks, in

addition to the evaluation criteria stated

in the RFP, and any other information or

factors deemed relevant by the ECUA, shall

be utilized in the final award.

12. Section 6 of the RFP sets forth the functional

requirements. This section is not at issue here.

13. S ection 7 of the RFP is entitled "Cost Summary."

Section 7.1 includes the proposal form, which states as follows

in relevant part:

ITEM A - Customer Convenience Fee: ___

_______________________________________

ITEM B - Set Up Cost: ________________

____ ___________________________________

ITEM C - Other (explain): ____________

_______________________________________

14. The RFP does not have a section for definitions. It

does not define the term "cost" other than as set forth above.

15. The followin g four vendors submitted timely proposals

to Respondent: (a) E - Commerce Group; (b) Petitioner;

(c) Link2Gov Corp.; and (d) BillMatrix.

16. The proposals were as follows:

Vendor Name Customer Setup Cost Other

Convenience Fee

E - Commerce $2.95* for $1 - $500 None N/A

Group pymt. Optional E

Bills fee $.35

per bill**

Petitioner $2.50* per I/O, $3,750 Development

IVR & Web Trans. hourly rate --

$75**

$125 per unit

swipe device

Link2Gov Corp. $2.49 None $95.00 hosting

Internet/$2.89 IVR fee per mont h

BillMatrix $3.95 Per Credit None N/A

Card Trans.

E - Commerce Group: *If average payment more than $60, or if

American Express payments to be accepted in addition to other

major credit card associations, the convenience fee would be

higher; no costs t o ECUA for software use. **No other costs for

using software, but if ECUA would like billing services, the fee

per bill presented would be $0.35.

Petitioner: *Will request review of convenience fee if average

payment is more than $60 for three consecuti ve months. **To be

charged only upon request from ECUA for specialized development

tasks or if implementation requirements exceed est. setup costs,

but only upon negotiation between parties.

17. The proposals were initially reviewed by Respondent's

fi nance department. In reviewing them, the director of finance

recognized that the number of users of the automated payment

option was unknown. However, Respondent's experience with other

alternate payment options had generated very limited customer

partic ipation. Therefore, the director of finance concluded

that it would be best if Respondent did not absorb a high set - up

cost for a service that might have very limited use.

Additionally, the director of finance believed it was in

Respondent's best interes t if the customers electing to use the

automated payment option bore the fees and costs associated with

those services, rather than having all ratepayers absorb this

expense regardless of whether they were using it. Accordingly,

the director of finance de cided to recommend that Respondent

select E - Commerce Group's proposal, as it was the lowest bid

with no cost to Respondent.

18. The director of finance's recommendation was presented

to Respondent's finance advisory committee on July 16, 2002.

The financ e advisory committee is composed of members who are

not Respondent's employees.

19. After receiving the director of finance's

recommendation, the committee members discussed which of the

proposals were best for Respondent. Respondent's finance

advisory committee decided to recommend that Respondent "select

E - Commerce Group, the lowest bidder when considering there is no

set - up cost to ECUA, as the vendor to provide these automated

payment solutions, and enter into a one - year contract with an

optional on e - year extension."

20. On July 25, 2002, Respondent considered the finance

advisory committee's recommendation. During the meeting,

Respondent's director of finance stated that approximately

13,000 people per year used credit card payment services to pay

the Escambia County tax collector. There is no evidence that

the director of finance had sufficient additional information to

calculate the percent of the tax collector's customers that used

credit cards.

21. One of Petitioner's employees, John Parkin , also spoke

at Respondent's July 25, 2002, meeting. He confirmed the number

of people that pay the Escambia County tax collector using a

credit card payment option provided pursuant to a contract

between the tax collector and Petitioner. However, Mr. Pa rkin

did not provide Respondent with any information about the

percentage of taxpayers who availed themselves of this service.

He provided no information to show how bills paid to Respondent

and the tax collector were similar or dissimilar.

22. During the meeting, Mr. Parkin stated that Petitioner

would waive its $3,750 set - up costs. He did not otherwise

attempt to explain how Petitioner's set - up costs could be

amortized or recaptured over the first year of operation.

23. Respondent did not allow Pe titioner to amend its

proposal to eliminate the $3,750 set - up costs. Instead,

Respondent accepted the finance advisory committee's

recommendation, awarding the contract to E - Commerce Group.

24. Petitioner filed a timely protest. The finance

advisory com mittee considered the protest in an informal

hearing. During this proceeding, Petitioner had an opportunity

to demonstrate why it should have been considered the lowest

bidder.

25. Respondent considered Petitioner's protest on

October 24, 2002, in a regularly scheduled meeting. During the

meeting, Respondent voted to refer the case to the Division of

Administrative Hearings.

26. Respondent acted within the requirements of the RFP

when it determined that E - Commerce Group was the lowest

responsible bi dder primarily because there was no cost to

Respondent to start the program. Respondent's RFP clearly

indicated that set - up costs would be considered as one of the

evaluation criteria. The RFP did not require Petitioner to

designate any part of its propo sed costs as set - up costs.

27. Petitioner's set - up cost amortized over the estimated

first year's transactions is approximately $2.63 per

transaction. Additionally, it would take Respondent

approximately 108 days (and over 8,000 transactions) to

recapt ure the set - up costs by passing them along to the

ratepayers. However, the RFP did not require Respondent to

recalculate Petitioner's proposed costs using projected customer

usage to amortize or recapture Petitioner's set - up costs before

making a decision . In fact, Petitioner's proposal on its face

did not indicate that Petitioner intended for Respondent to make

such recalculations.

CONCLUSIONS OF LAW

28. The Division of Administrative Hearing has

jurisdiction over the parties and the subject matter o f this

proceeding. Sections 120.569, 120.57(3), and 120.65(7), Florida

Statutes.

29. Petitioner has the burden of proving by a

preponderance of the evidence that Respondent's proposed action

is contrary to Florida law, Respondent's rules or policies, or

the RFP terms/specifications. Section 120.57(3)(f), Florida

Statutes.

30. Section 120.57(3), Florida Statutes, states as

follows:

(f) In a competitive - procurement protest,

no submissions made after the bid or

proposal opening amending or supplemen ting

the bid or proposal shall be considered.

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 administ rative

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 pro ceedings shall

be whether the proposed agency action was

clearly erroneous, contrary to competition,

arbitrary, or capricious. In any bid -

protest proceeding contesting an intended

agency action to reject all bids, the

standard of review by an administrati ve law

judge shall be whether the agency's intended

action is illegal, arbitrary, dishonest, or

fraudulent.

31. In this case, Petitioner has not met its burden of

proving that Respondent violated its governing statutes, rules

or policies, or the proposa l specifications. The RFP clearly

required vendors to itemize all costs, including set - up costs.

Therefore, Petitioner had notice that Respondent would consider

each vendor's set - up costs in evaluating the proposals. The RFP

also gave notice to all vend ors that Respondent retained the

discretion to weigh the various aspects of each proposal. There

was no "ex post facto" change to the RFP when Respondent chose

E - Commerce Group primarily because it had the lowest convenience

fee with no start - up costs to Respondent.

32. Respondent had no obligation to engage in the analysis

advocated by Petitioner. Rather, Respondent acted within its

discretion in deciding that customers who elected to pay by

credit card should bear all of the associated fees and cost s.

Respondent's decision to award the contract to E - Commerce Group

was not clearly erroneous, contrary to competition, arbitrary,

or capricious.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED:

That Resp ondent enter a final order awarding the contract

to E - Commerce Group.

DONE AND ENTERED this 17th day of December, 2002, in

Tallahassee, Leon County, Florida.

___________________________________

SUZANNE F. HOOD

Administrative Law Judge

Division of Administr ative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 17th day of Dec ember, 2002.

COPIES FURNISHED :

Archibald Hovanesian, Jr., Esquire

21 East Garden Street, Suite 201

Pensacola, Florida 32501

Bradley S. Odom, Esquire

Stephen G. West, Esquire

Kievet, Kelly & Odom

15 West Main Street

Pensacola, Florida 32501

Linda Iv erson, Board Secretary

Escambia County Utilities Authority

Post Office Box 15311

Pensacola, Florida 32514

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

10 days from the date of this Recommended Orde r. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the final order in this case.