03-000322BID City Of Quincy, D/B/A Netquincy vs. Gadsden County School Board Status: Closed Recommended Order on Thursday, May 1, 2003.

Summary: School Board`s decision to reject all bids is supported by logic and the reasonable business goal of saving 13 or 14 percent of the cost of the services sought.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CITY OF QUINCY, d/b/a )

NETQUINCY, )

)

Petitioner, )

)

vs. ) Case No. 03 - 0322BID

)

GADSDEN COUNTY SCHOOL BOARD, )

)

Respondent, )

and )

)

TDS TELECOM, )

)

I ntervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case

on February 24 - 25, 2003, in Tallahassee, Florida, before J. D.

Parrish, a designated Administrative Law Judge of the Division

of Administrative Hea rings.

APPEARANCES

For Petitioner: Roosevelt Randolph, Esquire

Knowles, Marks & Randolph, P.A.

215 South Monroe Street, Suite 130

Tallahassee, Florida 32301

For Respondent: Stephen C. Emmanuel, Esquire

Ausley & McMullen

227 South Calhoun Street

Post Office Box 391

Tallahassee, Florida 32302

For Intervenor: William E. Williams, Esquire

Huey, Guilday, Tucker, Schwart z

& Williams, P.A.

1983 Centre Pointe Boulevard, Suite 200

Post Office Box 12500

Tallahassee, Florida 32317 - 2500

STATEMENT OF THE ISSUE

Whether the Respondent, the Gadsden County Schoo l Board

(Respondent or Board), acted illegally, arbitrarily,

fraudulently, or dishonestly in rejecting all proposals for

telecommunications services as set forth in its E - Rate

application for the school year 2003 - 2004 (the sixth year).

PRELIMINARY STATEME NT

On or about October 25, 2002, the Respondent issued a

revised notice that sought vendors for its E - Rate application

for the 2003 - 2004 school year. This Request for Proposal (RFP)

specified a deadline of noon, December 2, 2002, for proposals to

be submi tted. The Petitioner, City of Quincy, d/b/a NetQuincy

(Petitioner or City) and the Intervenor, TDS Telecom/Quincy

Telephone (Intervenor or TDS), timely filed responses to the

revised notice.

Subsequently, the Respondent issued a statement thanking

all tho se who had submitted proposals in response to the RFP but

rejecting all responses. The Petitioner timely filed a Notice

of Intent to Protest on December 12, 2002. The Petitioner also

filed a Formal Notice of Protest/Petition for Administrative

Hearing ex ecuted on December 23, 2002. The Petitioner

subsequently filed an Amended Formal Notice of Protest/Petition

for Administrative Hearing on February 18, 2003. As the amended

protest dates back to the initial filing, it has been deemed

timely filed.

The mat ter was forwarded to the Division of Administrative

Hearings on January 29, 2003. In accordance with Section

120.57(3), Florida Statutes, the matter was scheduled for

hearing. Additionally, the parties filed a Pre - Hearing

Stipulation on February 20, 2003 .

At the hearing the Petitioner presented testimony from

Claude Shipley; Randy Bryant; Peggy Sue Outlaw; Sterling Dupont;

Debra Kay Smith (without objection a portion of the witness'

deposition was read into the record), Jack Mclean, Jr.; Isaac

Simmons, Jr .; and Robert J. Washington. Petitioner's Exhibits

1 - 7, 9 - 14, 16, 18, 19, 21 - 24, and 26 were admitted into

evidence. The Board presented testimony from Kay Young.

Respondent's Exhibit 1 was admitted into evidence. The Parties'

Joint Exhibits 1 - 10 have also been received in evidence and

considered in this cause.

The transcript of the proceeding was filed with the

Division of Administrative Hearings on March 12, 2003.

Thereafter, the parties timely submitted Proposed Recommended

Orders that have been f ully considered.

FINDINGS OF FACT

1. The Petitioner is a municipal corporation operating

under authority of law. NetQuincy is the utility/entity through

which the City sought to provide "information technology

resources" as requested by the Board's RFP. NetQuincy is

capable of providing internet access and related

telecommunication services.

2. "T1" is a specific type of information technology that

identifies internet access. It is undisputed that the

Petitioner sought to provide such service in con nection with the

RFP at issue.

3. On October 9, 2002, the Respondent posted a Form 470

requesting various telecommunication services to be provided

during the 2003 - 2004 school year (the sixth year). T1 service

was among the requested technological servic es identified. Form

470 is required pursuant to E - rate guidelines.

4. In connection with the Form 470, the Board also posted

the RFP that is the subject of the instant dispute. The

original RFP was amended and reposted on October 25, 2002. T1

service for all eligible school sites was specifically noted on

the revised RFP.

5. A vendor's meeting regarding the revised RFP was

conducted on October 31, 2002. The Petitioner's representative

attended the vendor's meeting.

6. On December 2, 2002, three v endors timely submitted

responses to the RFP: the Petitioner, the Intervenor, and

Trillion (not a party herein). None of the submittals was

evaluated.

7. Instead, the Respondent posted a notice on December 6,

2002, that rejected all responses. More sp ecifically, the

notice provided in connection with the service in dispute in

this cause:

**We would like to thank all those who

submitted quotes for this section of our

RFP, however, during the 28 day period of

the bidding process, the School District

lear ned that the Florida Learning Alliance

will be providing this service for us.

Since this means zero costs for the School

District, we will NOT be filling [sic] for

E - rate discounts for this service for the

2003 - 2004 (Year Six) time period.

8. The reject ion notice did not contain the language set

forth in Section 120.57(3), Florida Statutes.

9. Nevertheless, the City filed a Notice of Intent to

Protest the decision to reject all responses. The timeliness of

the Notice of Intent to Protest or the Petitio n for

Administrative Hearing has not been challenged.

10. On December 16, 2002, the Florida Learning Alliance

(FLA) filed an RFP requesting vendors for the same services

identified in the Respondent's revised request. That is, T1

service for all elig ible school sites for E - rate (the sixth

year).

11. The deadline for submittals to FLA's RFP was

January 16, 2003. No decision on FLA's RFP was rendered as the

instant action was initiated on December 23, 2002. The parties

contend that by operation of la w the bid solicitation process

for both RFPs (the Board's and FLA's) was suspended. Thus it is

uncertain whether the Respondent will be able to participate in

the E - rate program for the sixth year.

12. The E - rate program has existed since the 1998 - 1999

s chool year. It provides funding to enable schools to obtain

internet access and services. The Schools and Libraries

Division (SLD) administers the program and offers funding to

eligible school districts computed as a "discount." The level

of discount is determined by the level of poverty within the

population to be served.

13. The Respondent has participated in the E - rate program

for several years. Depending on the school to be served, the

Respondent's discount is 86 or 87 percent. The remaining

amoun t, the "undiscounted portion" is not paid by the SLD.

14. Participants in the E - rate program are entitled to

apply in two ways: individually (as the Respondent has done) or

through a consortium. In this case, the FLA is an alliance

through which the Re spondent may receive E - rate services.

15. FLA is comprised of three educational consortia

covering 34 small rural school districts. The Panhandle Area

Educational Consortium (PAEC) encompasses the geographical area

within which the Respondent is located. As a member of PAEC,

the Respondent is entitled to participate with FLA.

16. By virtue of FLA's Technology Innovation Challenge

Grant rural schools may receive T1 lines such as requested

herein. More important, however, is FLA's ability to provide

th e undiscounted portion of the E - rate.

17. That means FLA will provide the 13 or 14 percent not

covered by the SLD. In order to benefit in this manner, the

Form 470 for the services requested must be filed through the

FLA.

18. In this case, the Respo ndent confirmed this potential

benefit of receiving the services at no cost only after its Form

470 and RFP had been posted. When they elected to withdraw

their own RFP (to allow FLA to pursue the matter in their

behalf) the instant protest followed. The Petitioner did file a

response to FLA's RFP in order to be considered for the sixth

year E - rate.

19. The issue related to the sixth year is complicated by

the fact that unbeknownst to the Respondent FLA acted on behalf

of the Board for Year 5 T1 connecti vity. As to Year 5, when no

vendor replied to the FLA's RFP for T1 service, the Intervenor

was selected as the "carrier of last resort." No contract was

required or signed in connection with Year 5.

20. The Intervenor was selected for Year 5 because T DS

provided service in the areas designated for T1 service E - rate

Year 5. That is how it was deemed "carrier of last resort."

Other vendors provided services in other areas where they were

similarly deemed the "carrier of last resort."

21. In fact it w as not until October 2002 that the Year 5

funding was made available. During the discussions over the

Year 5 services (and with the deadline for filing the

application for the sixth year fast approaching) Respondent

filed Form 470 without knowing how or i f FLA would participate

in the sixth year process. When it later confirmed FLA would be

available to administer the sixth year E - rate, the Respondent

elected to abandon its revised RFP related to T1 service

(thereby hoping to save the 13 or 14 percent not covered by the

SLD funding).

22. The revised RFP contained the following information:

For Year 6 (July 1, 2003 - June 30, 2004), the

school district is planning to seek the

services listed below. Any company that

desires to submit a proposal for these

ser vices must meet the following criteria:

* * *

3. Be willing to enter into an

agreement contingent upon E - Rate funding

award. In other words, if the District is

not successful in obtaining E - Rate funding

on the particular service, the agreement

will become invalid.

4. Be willing to accept payment of

only the non - discounted portion of the

service from the school district and bill

the SLD for the remaining portion. (this

averages to be 86%)

23. When a vendor is selected to provide E - rate services,

S LD requires Form 471 to identify the provider and to complete

the requisition started by the process (Form 470). The deadline

for filing a Form 471 pertinent to this case (the sixth year)

was February 6, 2003. Neither the Respondent nor FLA filed a

Form 471 for the T1 services at issue.

24. When the deadline for filing Form 471 passes, the

opportunity to receive E - rate funding closes. As of the time of

hearing in this cause the possibility of the Respondent

receiving E - rate funding was slim to none. No entity filed a

Form 471 for T1 services for the sixth year.

25. The Respondent has not selected any vendor to provide

E - rate services for the sixth year.

26. The Respondent did not direct FLA to submit the Form

471 with the Intervenor as the provide r for T1 during the E - rate

sixth year. FLA has not submitted such form.

27. The Respondent did not reject all bids for the purpose

of avoiding the procurement process.

28. The Respondent does not have a contract with the

Intervenor for T1 services for E - rate, Year 6.

29. The Respondent has not attempted to circumvent

policies, rules, laws or statutes governing competitive

procurement.

30. The T1 services for the sixth year E - rate are

"information technology resources" as defined in Section

282.303(13), Florida Statutes. As such they are not subject to

any provision requiring competitive procurement.

CONCLUSIONS OF LAW

31. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of these

proceedings. Sections 120.569 and 120.57, Florida Statutes.

32. Section 120.57(3)(f), provides:

(f) In a competitive - procurement protest,

no submissions made after the bid or

proposal opening amending or supplementing

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 administrative

law judge shall conduct a de novo proceeding

to determi ne 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

clear ly 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 administrative law

judge shall be whether the agency's intended

action is illegal, arbitrary, dishonest, or

fraudulent.

33. Based upon the foregoing, the Petitioner bears the

burden of proof in this cause to establish that the Respondent,

by its action to reject all proposals, acted illegally,

arbitrarily, dishonestly or fraudulently. It has failed to meet

that burden.

34. In this case the record demonstrates that the

Respondent chose to reject all bids in order to save the

undiscounted portion of the E - rate funding. That is, to save

the 13 or 14 percent amount, the Res pondent chose to allow FLA

to attempt procurement of the T1 service. The Petitioner

submitted a proposal to FLA in response to the RFP. Had the

instant action not ensued, the Petitioner, as well as any other

vendor submitting a timely proposal, would hav e been considered

for the T1 sixth year E - rate services. As it currently stands

the chances are remote that any E - rate funding for the sixth

year T1 services will be available to the Respondent.

35. The Petitioner's theory of the case rests with the

a ssumption that a series of e - mails document that the provider

for sixth year T1 services has already been designated. Such

assumption is not accurate and is not supported by the weight of

the credible evidence.

36. Additionally, the Petitioner alleged that the

Intervenor has somehow conspired to extend its Year 5 contract.

The Intervenor does not have a Year 5 contract. It has provided

services covered by Year 5 funding as the "carrier of last

resort." Whether it will continue in the sixth year unde r the

status of "carrier of last resort" is unknown.

37. The Petitioner has also suggested that the Respondent

is predisposed not to cooperate with the City. No credible

evidence supports such conclusion. To the contrary, the weight

of the credible ev idence could support the conclusion that the

Petitioner, finding it would have to be competitively reviewed

with other potential vendors, took measures to ensure that no

vendor could be named on a Form 471. The instant action

effectively took the Responde nt out of sixth year E - rate funding

participation.

38. Contrary to the Petitioner's assertions, the

Respondent's proposed action to reject all submittals and allow

the process to proceed via FLA is supported by fact and logic.

The opportunity to save 13 or 14 percent of the funding required

for T1 service is a legitimate and noteworthy goal. The

Respondent has limited resources and such savings could prove

important. That the Respondent's staff did not fully comprehend

the FLA system and the benefits to be derived through

participation in E - rate procurement through the alliance does

not demonstrate some devious or illegal plan to circumvent the

bidding process.

39. Further, if, as the Petitioner suggests, the

authorization provided to FLA from Year 5 also covers the sixth

year, the Respondent did not need to file the Form 470 and RFP

at issue. By effectively stopping the procurement process, the

Petitioner has essentially guaranteed that the Intervenor cannot

receive sixth year funding through the con ventional Form 471 (it

was not timely filed).

40. The Petitioner presented no credible evidence to

support the claims set forth in the Amended Formal Notice of

Protest/Petition for Administrative Hearing.

41. Finally, as to outstanding motions for sancti ons filed

by the Petitioner and Respondent, such motions are denied. It

is determined that neither party fully and completely complied

with all discovery requests. It is concluded, however, that

such failure was not willful or malicious. Neither party h as

demonstrated either prejudice or other damage due to incomplete

responses such that sanctions should be imposed. Sanctions are

not warranted under the circumstances of this case.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions o f

Law, it is RECOMMENDED that the Amended Formal Notice of

Protest/Petition for Administrative Hearing be dismissed.

DONE AND ENTERED this 1st day of May, 2003, in Tallahassee,

Leon County, Florida.

___________________________ ________

J. D. PARRISH

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

12 30 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 1st day of May, 2003.

COPIES FURNISHED:

Sterling Dupont, Superintendent

Gadsden County School B oard

35 Martin Luther King Boulevard

Quincy, Florida 32351 - 4400

Daniel J. Woodring, General Counsel

Department of Education

325 West Gaines Street

1244 Turlington Building

Tallahassee, Florida 32399 - 0400

Honorable Jim Horne

Commissioner of Education

De partment of Education

Turlington Building, Suite 1514

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

Stephen C. Emmanuel, Esquire

Ausley & McMullen

227 South Calhoun Street

Post Office Box 391

Tallahassee, Florida 32302 - 0391

Roosevelt Randolph , Esquire

Knowles, Marks & Randolph, P.A.

215 South Monroe Street, Suite 130

Tallahassee, Florida 32301

William E. Williams, Esquire

Huey, Guilday, Tucker, Schwartz,

& Williams, P. A.

1983 Centre Pointe Boulevard

Suite 200

Post Office Box 12500

Tallaha ssee, Florida 32308

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.