04-004468 Communications Corporation Of Jacksonville vs. Department Of Highway Safety And Motor Vehicles Status: Closed Recommended Order on Tuesday, April 26, 2005.

Summary: Respondent is entitled to terminate the contract based upon the Termination for Convenience clause of the Invitation to Bid.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

COMMUNICATIONS CORPORATION )

OF JACKSONVILLE, )

)

Petitioner, )

)

vs. ) Case No. 04 - 4468

)

DEPARTMENT OF HIGHWAY )

SAFETY AND MOTOR VEHICLES )

)

Respondent. )

______________________________)

RECOMMENDED ORDER

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

on March 9, 2005, via video teleconference in Jacksonville and

Tallahassee, Florida, before the Division of Adminis trative

Hearings, by its designated Administrative Law Judge, Barbara J.

Staros.

APPEARANCES

For Petitioner: I. M. Rubin, Esquire

Rubin & Rubin, P.A.

Post Office Box 1975

Ponte Vedre, Florida 32004

For Respondent: Judson Cha pman, Esquire

Bryan Thomas Pugh, Esquire

Department of Highway Safety

a nd Motor Vehicles

Neil Kirkman Building, Room A - 432

Tallahassee, Florida 32399 - 0504

STATEMENT OF THE ISSUE

The issue in this proceeding is whether the Department of

Highway Safety and Motor Vehicles' cancellation of a contract

for radar maintenance and repair should be upheld.

PRELIMINARY STATEMENT

On September 28, 2004, Respondent, Department of Highway

Safety and Motor Vehicles (the Department) issued a Cancellatio n

of contract of Bid 015 - 02 for Radar Maintenance and Repair to

Mr. Richard W. White, President of Petitioner, Communications

Corporation of Jacksonville (CCJ). The cancellation letter

advised Petitioner that the Department relied on a provision of

the co ntract entitled, "termination in the Best Interest of the

State" and advised Petitioner that it had 30 days to take

corrective action. The cancellation letter relied upon Florida

Administrative Code Rule 60A - 1.006(3).

On November 5, 2004, the Department issued another letter

entitled Cancellation of contract of Bid 015 - 02 for Radar

Maintenance and Repair. This second letter referenced an

additional ground for cancellation from the contract entitled

"Termination for Convenience."

Petitioner challenged t he Department's intended action and

filed a petition for an administrative hearing. The Department

forwarded the case to the Division of Administrative Hearings on

or about December 15, 2004. A formal hearing was scheduled for

March 9, 2005.

On Marc h 3, 2005, the Department filed a Motion for Summary

Final Order. Oral Argument was heard on the motion at the

commencement of the hearing. The motion was denied.

At hearing, Petitioner presented the testimony Richard

White. Petitioner’s Exhibits numbe red 5A and 11 were admitted

into evidence. Petitioner's Exhibit numbered 5 was proffered.

Respondent presented the testimony of Jim Fink, Stacy Wofford,

and James Wells. Respondent's Exhibits A through G and I

through L were admitted into evidence.

A one - volume Transcript of the hearing was filed on

March 28, 2005. The parties requested more than 10 days in

which to file proposed recommended orders and that request was

granted. Petitioner and Respondent timely filed Proposed

Recommended Orders which have been considered in the preparation

of this Recommended Order. All citations are to the Florida

Statutes (2004) unless otherwise indicated.

FINDINGS OF FACT

1. In 2002, the Department issued an Invitation to Bid

015 - 02 (ITB) for the maintenance and r epair of Florida Highway

Patrol (FHP) radar units located throughout the state.

2. As a result of correspondence from Richard White, to

the Department, the ITB was amended to include the following:

The bidder must have the following minimum

qualificatio ns:

Be an authorized service center or have on

staff certified repair technicians for at

least two (2) of the following radar

manufacturers, and agree that he will have

on staff, within six (6) months, from start

of contract, a certified technician(s) for

all the following radar manufacturers:

a. Decatur Electronics

b. Kustom Signals

c. MPH

d. Applied Concepts

Failure to comply may result in termination

of this contract.

3. In response to ITB 015 - 02, Petitioner submitted a bid

and included documen ts showing that CCJ was included on a list

entitled "Stalker Service Centers Private , " which was "ACI

trained , " and that CCJ was an authorized service center for

Kustom Signals, Inc. Petitioner was the successful bidder and

entered into a contract with th e Department for radar

maintenance and repair services. The term of the contract was

for 36 months with the option to renew for two one - year terms.

4. Applied Concepts, d/b/a Stalker Radar, is a radar

manufacturer whose radar units are used by FHP and whose radar

units were specifically identified in the ITB. On August 18,

2004, Jim Fink, a sales administration manager for Applied

Concepts, wrote to Mr. White informing him that effective

September 20, 2004, Applied Concepts would no longer continue

the Factory Authorized Service Center agreement with CCJ. The

letter also informed Mr. White that all discounts would be

rescinded and all parts, drawings, manuals, and schematics must

be returned to Applied Concepts within 60 days of the letter.

5. As a re sult of this termination of agreement between

CCJ and Applied Concepts, any warranty repair work submitted by

FHP to CCJ would have to be forwarded to another factory

authorized repair center instead of being performed at CCJ.

Further, no one from CCJ wou ld be allowed to attend any factory

training for future or current factory support offered by

Applied Concepts.

6. Mr. White called FHP Lt. Jim Wells, a contract manager

for this contract, and informed Lt. Wells of the correspondence

from Applied Concepts .

7. On September 1, 2004, Lt. Jim Wells, FHP, received an

e - mail from Jim Fink of Applied Concepts confirming that CCJ

would no longer be an authorized service center for Applied

Concepts effective September 20, 2004. Lt. Wells became

concerned as to wh ether CCJ could continue to effectively stay

in compliance with the contract.

8. On September 28, 2004, the Department issued a

Cancellation of Award of Bid 015 - 02 for Radar Maintenance

and Repair. The explanation given in the letter signed by

Stacy Wafford, Chief of Purchasing and Contracts, reads in part

as follows:

Mr. White:

Recently it has been brought to our

attention that the business relationship

between Communications Corporation of

Jacksonville and Applied Concepts, Inc.,

manufacturer of K ustom Signals Radars 1/ has

been severed. The Florida Highway Patrol

utilizes and relies upon the functionality

of Stalker of speed detection radars

throughout the State of Florida and it is

critical that this equipment be certified

for accuracy and mainta ined to the proper

performance standards specified by the

manufacturer.

Whereas, having been informed by Applied

Concepts, Inc., that your certification has

been revoked effe ctive September 20, 2004.

[sic] This action removes you as an

authorized vendor to certify, maintain and

repair this brand of radar. The Department

of Highway Safety and Motor Vehicles, and

the Florida Highway Patrol has no choice but

terminate its relationship with

Communications Corporation of Jacksonville,

by the formal cancellati on of Award of Bid

015 - 02 for Radar Maintenance and Repair.

Therefore, in accordance with the

Mandatories of Bid 015 - 02 for Radar

Maintenance and Repair in general and

specifically the Section entitled

TERMINATION IN THE BEST INTEREST OF THE

STATE , the De partment is herein exercising

it(sic) right to terminate, upon 30 day

notice to the contractor.

Therefore in accordance with Rule 60A - 1.006

(3), FAC you are hereby notified that this

agency is canceling award of Bid 015 - 02 for

Radar Maintenance and Repair to

Communications Corporation of Jacksonville

for failure to maintain the certification

status to perform all the duties detailed in

bid document 015 - 02. In accordance with the

referenced rule, Communications Corporation

of Jacksonville is hereby notifie d that it

has 30 days after receipt of this letter to

correct such failure to adhere to all terms

and requirements of bid document 015 - 02.

In accordance with Rule 60A - 1.006(3), FAC if

the Contractor fails to provide written

proof that he has taken correct ive action to

reestablish his ability to adhere to all

terms and requirements of bid document 015 -

02 within this time period, the Department

shall find the contractor in default and

proceed with the reprocurement of services

required in bid document 015 - 02 . (emphasis

in original)

The cancellation letter also provided a point of entry into the

administrative hearing process.

9. On October 7, 2004, the Department posted an Invitation

to Bid 010 - 05 on the Internet for Radar Maintenance, Repair and

Laser Cal ibration.

10. On October 13, 2004, the attorney for Petitioner filed

a document entitled Proof of Compliance and Objection to Agency

Letter which reads in part as follows:

The agency has served CJJ with a

Cancellation of Award of Bid 015 - 02 for

Radar Main tenance and Repair letter, (Agency

Letter) dated September 28, 2004.

The Agency letter included the following

provisions:

1. Requirement that CCJ respond, within 30

days, with written proof that corrective

action has been taken to comply with Award

Bid 015 - 02, pursuant to Rule 60A - 1.006(3),

FAC.

2. Notice that the Award Bid 015 - 02 is

cancelled, effective 30 days from receipt of

the Agency Letter.

3. Notice that CCJ may elect for a Point of

Entry Proceeding for Administrative

Proceedings within 2 1 days from receipt of

the Agency Letter.

The Agency Letter has taken a three - step

process that is designed to provide due

process to vendors and merged it into one

action for its convenience and to expedite

the ultimate conclusion that it has

unilaterall y arrived at, i.e. termination of

CCJ. The agency's action has effectively

eliminated the Notice of Default and

Corrective Action portions of Rule 60A - 1.006

(3) FAC. By combining these three steps,

CCJ has been defaulted without due process

or an opportu nity to be heard. Had the

agency followed the provisions of the FAC,

CCJ would have been provided time in which

to respond with proof that it is not in

default of Award Bid 015 - 02.

The attorney's letter the n set forth disputed issues of material

fact.

11 . On October 22, 2004, a telephone conference call took

place between Mr. White, his attorney, Lt. Wells, and other

personnel of the Department, in an attempt to resolve this

matter. The matter was not resolved as a result of the

telephone conference.

12. A Notice of Intended Award was posted on November 17,

2004, awarding Bid 010 - 05 to Communications International, Inc. 2/

13. On November 28, 2004, the Department sent another

letter to Mr. White that read in pertinent part as follows:

On September 28, 2004 you were notified by

letter that our Agency was canceling the

award of Bid 015 - 02 for Radar Maintenance

and Repair to your company for failure to

maintain certification status to perform all

duties detailed in the bid document.

Specific reference wa s made to the September

20, 2004 notice by radar manufacturer

Applied Concepts, Inc. that your

certification was revoked. In addition, our

letter based cancellation on the bid terms

that permit termination in the best interest

of the state.

On October 15 , 2004, we received a Petition

for Evidentiary Proceeding and Proof of

Compliance and Objection to Agency Letter

from your attorney, Mark Rubin, that was

submitted in response to our letter.

On October 22, 2004 you, Mr. Rubin, and

representatives from our purchasing office,

FHP and legal conducted a telephone

conference in an effort to resolve your

Petition. We were not advised at that

conference or since then that you have cured

the loss of certification with Applied

Concepts, Inc. and are therefore stil l not

in compliance with bid terms requiring you

to be an authorized service center or have

staff certified technicians for Applied

Concepts radar units. The Department

declines to intervene on your behalf with

Applied Concepts in an effort to resolve the

loss of certification. Following the

conference, we sent you a copy of ITB 010 - 05

that was advertised on October 7 and is

intended to replace the contract cancelled

with your company.

At this point, we are adding an additional

ground for cancellation, which is the

TERMINATION FOR CONVENIENCE provision on

page 6 of the bid/contract and allows the

Department to terminate the contract at its

convenience. Because this is an added basis

for termination, you have an additional 21

day period within which to f ile an amended

petition and request an administrative

hearing, as explained below.

Therefore, in accordance with the

Mandatories of Bid 015 - 02 for Radar

Maintenance and Repair in general and

specifically the sections entitled

TERMINATION IN THE BEST INTER EST OF THE

STATE and TERMINATION FOR CONVENIENCE , the

Department intends to terminate the

contract. (emphasis in original)

14. The termination clauses referenced in ITB 015 - 02, read

as follows:

TERMINATION FOR CONVENIENCE

The Department reserves the ri ght to

terminate the Contract or any part of the

Contract at its convenience. The Department

shall incur no liability for materials or

services not yet ordered if it terminates

for convenience. If the Department

terminates for convenience after an order

for materials or services has been placed,

the Contractor shall be entitled to

compensation upon submission of invoices and

pr oper proof of claim, in that proportion

which its services and products were

satisfactorily rendered or provided, as well

as expen ses necessarily incurred in the

performance of work up to time of

termination.

TERMINATION IN THE BEST INTERESTS OF THE

STATE

The Department reserves the right to

terminate the Contract or any part of the

Contract in the best interests of the state,

upon 30 day notice to the contractor. The

Department shall incur no liability for

materials or services not yet ordered if it

terminates in the best interests of the

state. If the Department terminates in the

best interests of the state after an order

fo r materials or services has been placed,

the Contractor shall be entitled to

compensation upon submission of invoices and

proper proof of claim, in that proportion

which its services and products were

satisfactorily rendered or provided, as well

as expense s necessarily incurred in the

performance of work time of termination.

The Department reserves the right to cancel

this contract upon the Department of

Management Services issuing a State contract

for this type service for use by the

agencies. A 30 da y written cancellation

notice will be sent to the Vendor.

15. The ITB does not specifically mention warranty work

but appears to apply to all work necessary , i.e. , warranty and

non - warranty work, to conform to the requirements of the

contract.

16. Lt. Wells acknowledged that CCJ never failed to

perform contracted work on equipment presented for maintenance

or repair under the terms of the contract.

CONCLUSIONS OF LAW

17. The Division of Administrative Hearings has

jurisdiction over the parties to and subject matter of this

proceeding. §§ 120.569, and 120.57(1) , Fla . Stat .

18. Petitioner challenges the Department's proposed agency

action to cancel the award of the contract , which was the result

of ITB 015 - 02. As Petitioner is the party asserting the

affirmative of an issue, Petitioner has the burden of proof.

Young v. State, Department of Community Affairs , 567 So. 2d 2

(Fla. 3 rd DCA 1990); Balino v. Department of Health and

Rehabilitative Services , 348 So. 2d 349 (Fla. 1 st DCA 1977).

19. Flori da Administrative Code Rule 12 - 26.002(3) , reads

in pertinent part as follows:

(3) Default - If a vendor is in default on

any contract with an agency, the agency

shall follow the procedures contained

herein:

(a) The agency shall notify, in writing,

any v endor who fails to adhere to contract

terms and conditions. This notice shall

state the nature of the failure to perform

and provide a time certain for correcting

the failure (such reasonable time should not

generally be less than 10 days after receipt

of such notice). The notification will also

provide that, should it fail to perform

within the time provided, the vendor will be

found in default and removed from the

agency's approved vendor list.

(b) Unless the vendor corrects its failure

to perform within the time provided, or

unless the agency determines on its own

investigation that the vendor's failure is

legally excusable, the agency shall find the

vendor in default and shall issue a second

notice stating (i) the reasons the vendor is

considered in default, (ii) that the agency

will reprocure or has reprocured the

commodities or services, and (iii) and the

amount of the reprocurement if known.

* * *

(d) Pursuant to Section 120.57, F.S., the

defaulting vendor will be advi sed of the

right to petition for an administrative

hearing on the intended decision to remove

the vendor from the list and shall be given

a time certain within which to submit the

petition.

20. The September 28, 2004, notification letter sent by

the Depa rtment to Petitioner references Florida Administrative

Code Rule 60A - 1.006(3)(a) , which concerns defaults and requires

a written notification period of more than 10 days and the

Termination In the Best Interests of the State provision of the

ITB which refe rences a 30 - day notice period. The September 28,

2004, letter gave Petitioner 30 days to correct what the

Department perceived to be failure to adhere to all terms of ITB

015 - 02 and to provide written proof within that time period that

it corrective actio n had been taken.

21. Despite this language, merely nine days after the

September 28, 2004, notification letter was sent, the Department

advertised ITB 010 - 05 which the Department acknowledged in its

November 28, 2004, letter was intended to replace the c ontract

resulting from ITB 015 - 02 cancellation with CCJ.

22. While the Department did not give CCJ 30 days to cure

as represented in its September 28, 2004, notification letter,

it did give Petitioner two points of entry into the

administrative process, r esulting in the de novo hearing

conducted in this matter.

22. However, the Department's November 5, 2004,

notification letter invoked the Termination for Convenience

clause of the ITB. This clause does not provide for a period in

which the vendor may c ure any defect, or even that there need be

any just cause whatsoever in terminating the contract.

23. Petitioner argues that the Termination for Convenience

clause is ambiguous and should be interpreted against the

drafter, the Department. However, Pet itioner waived its right

to contest this provision by failing to formally challenge the

ITB language within 72 hours of the publication of the

specifications in a bid solicitation protest. See Capeletti

Brothers, Inc., v. Department of Transportation , 499 So. 2d 855,

877 (Fla. 1st DCA 1986); and Optiplan, Inc. v. School Board of

Broward County , 710 So. 2d 569 (Fla. 4th DCA 1998).

24. Accordingly, despite the procedural errors arising

from the September 28, 2004 , notification letter, the Department

was entitled, under the express terms of the ITB, to terminate

the contract at its convenience.

RECOMMENDATION

Based upon the Findings of Fact and Conclusions of Law, it

is

RECOMMENDED:

That the Department of Highway Safety and Motor Vehicles

enter a fin al order canceling the award of the contract arising

out of ITB 015 - 02 effective November 28, 2004, and to compensate

Petitioner for any materials or services which had been placed

prior to that date in accordance with the provisions of the

Termination for Convenience clause.

DONE AND ENTERED this 2 6 th day of April, 2005, in

Tallahassee, Leon County, Florida.

S

___________________________________

BARBARA J. STAROS

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 (850) 921 - 6847

www.doah.state.fl.us

F iled with the Clerk of the

Division of Administrative Hearings

this 2 6 th day of April , 2005.

ENDNOTES

1/ The reference to Kustom Signals Radar is apparently in

error, as the concern arose from Applied Concepts, d/b/a Stalker

R adar.

2/ CCJ did not respond to ITB 010 - 05.

COPIES FURNISHED:

I. M. Rubin, Esquire

Rubin & Rubin, P.A.

Post Office Box 1975

Ponte Vedre, Florida 32004

Judson Chapman, Esquire

Bryan Thomas Pugh, Esquire

Department of Highway Safety

and Motor Vehicles

Neil Kirkman Building, Room A - 432

2900 Apalachee Parkway

Tallahassee, Florida 32399 - 0504

Enoch J. Whitney, General Counsel

Department of Highway Safety

and Motor Vehicles

Neil Kirkman Building, Room A - 432

2900 Apalachee Parkway

Tallahassee, Florida 32399 - 0504

Sandra DeLopez, Director

Division of Administrative Services

Department of Highway Safety

and Motor Vehicles

Neil Kirkman Building

2900 Apalachee Parkway

Tallahassee, Flor ida 32399 - 0504

Fred O. Dickinson, III, Executive Di rector

Department of Highway Safety

and Motor Vehicles

Neil Kirkman Building

2900 Apalachee Parkway

Tallahassee, Florida 32399 - 050 0

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 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.