05-002176BID Systea Scientific, Llc vs. Department Of Health Status: Closed Settled and/or Dismissed prior to entry of RO/FO on Wednesday, August 10, 2005.

Summary: Petitioner failed to prove that the award of contract to another bidder was contrary to statute, rule, or Invitation to Bid, with omission of the "grand total" in the low bid a minor irregularity . The protest is dismissed under Section 120.574(2)(f).

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SYSTEA SCIENTIFIC, LLC, )

)

Petitioner, )

)

vs. ) Case No. 05 - 2176BID

)

DEPARTMENT OF HEALTH, )

)

Respondent. )

)

FINAL ORDER

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

on June 29 , 2005, in Tallahassee , Florida, before T. Kent

Wetherell, II, the designated Administrative Law Judge of the

Division of Administrative Hearings.

APPEARANCES

For Petitioner: John C. Oberholtzer, Esquire

Oberholtzer, Filous & Lesiak

39 Public Square, Suite 201

Post Office Box 220

Medina, Ohio 44258 - 0220

For Respondent: Janine B . Myrick, Esquire

Department of Health

4052 Bald Cypress Way, Bin A02

Tallahassee, Florida 32399 - 1703

STATEMENT OF THE ISSUE

The issue is whether the Department of Health’s proposed

award of Invitation to Bid No. DOH 04 - 191 to Lachat Instruments -

Hach Co. is contrary to the Department’s governing statutes,

rules, policies, or the specifications in th e Invitation to Bid

for the reasons alleged by Petitioner.

PRELIMINARY STATEMENT

On or about June 2, 2005, the Department of Health

(Department) posted notice of its intent to award Invitation to

Bid (ITB) No. DOH 04 - 191 to Lachat Instruments - Hach Co.

(Lac hat) . Thereafter, Systea Scientific, LLC (Systea) filed

with the Department a notice of protest and formal written

protest contesting the proposed award. On June 16, 2005, t he

Department referred the protest to the Division of

Administrative Hearings (DO AH). The case was initially assigned

to Admini strative Law Judge Harry Hooper, but it was

subsequently transferred to the undersigned.

O n June 16, 2005, the Department filed with DOAH a Motion

for Expedited Proceeding and Summary Hearing in which it

reque sted that this case be conducted pursuant to the summary

hearing procedures in Section 120.574, Florida Statutes (2004) . 1

Systea agreed to the summary hearing procedures at the

telephonic pre - hearing conference held by Judge Hooper and,

based upon the par ties’ agreement, the case was set for a “final

hearing pursuant to the provisions of Section 120.574, Florida

Statutes.” See Order Granting Continuance and Re - scheduling

Hearing, dated June 22, 2005.

By letters dated and faxed June 20, 2005, the Departmen t

provided notice of Systea’s protest to the other bidders who

responded to the ITB, Lachat and OI Corporation d/b/a OI

Analytical (OI). The letters advised those entities that their

substantial interests may be determined by this proceeding and

that they could seek to intervene as a party by filing an

appropriate petition with DOAH. No petitions to intervene were

filed.

At the hearing, Systea presented the testimony of Craig

Chinchilla . Systea’s Exhibits P - 1 and P - 2 were received into

evidence. The Dep artment presented the testimony of Tammie

Kuhn, Cheryl Robinson, and Terry Walters . The Department’s

Exhibits R - 1, R - 2, and R - 3 were received into evidence.

No Transcript of the hearing was filed. The parties waived

the filing of proposed final orders . T hey were given until

12:00 p.m. on June 29, 2005, to file post - hearing legal

memoranda , but n either did so. This Final Order is being issued

on an expedited basis at the Department’s request , with Systea's

concurrence .

FINDINGS OF FACT

1. The Department issued ITB No. DOH 04 - 191 to solicit

bids for the purchase of a Discrete Analyzer System (DAS) and a

three - year service/maintenance agreement for the DAS.

2. The DAS is a piece of laboratory equipment that is used

primarily to analyze the chemical compos ition and level of

nutrients in wastewater.

3. B ids were submitted in response to the ITB by Systea,

Lachat, and OI.

4. The bids were opened and reviewed by the Department ’s

staff . The Department’s purchasing office reviewed the pricing

information in t he bids , and its laboratory staff reviewed the

technical components of the bid s .

5. Lachat was determined , based upon that review , to be

the low bidder and, therefore, t he Department posted notice of

its intent to award the contract to Lachat.

6. Systea filed with the Department a notice of protest

and a formal written protest challenging the award of the

contract to Lachat. The sole basis of Systea’s protest is that

the “grand total” line in Lachat’s bid was left blank and that

the omission is not a mi nor irregularity that can be waived by

the Department. 2 The protest seeks to have Lachat’s bid

“disqualified ” based upon th at omission.

7. Special Condition 5.1 of t he ITB required bidders to

“submit all mandatory, technical, and pricing data in the

form ats specified in the Invitation to Bid . ”

8. Special Condition 6.16 stated that “[b]ids that do not

meet the requirements specified in this Invitation to Bid will

be considered non - responsive . ” Similarly, p aragraph 14 of the

General Instructions to Bidder s states that the “[f]ailure to

comply with terms and conditions, including those specifying

information that must be submitted with a response, shall be

grounds for rejecting a response .”

9. The pricing data referenced in Special Condition 5.1

was to be provided by the bidders on the Price Page, which is

Attachment II of the ITB.

10. The Price Page ha s space for the bidders to enter

their “unit price” and the “total amount” for the DAS as well as

space for the bidders to enter their annual price for the three -

year service/maintenance agreement required by the ITB.

11. The Price Page also ha s space for the bidders to enter

their “grand total ,” and it is undisputed that the “grand total”

was to reflect the sum of the in dividual prices referenced in

the pre ceding paragraph .

12. Inclusion of the “grand total” on the Price Page is a

mandatory requirement of the ITB because Special Condition 5.5

states that the Price Page “ must be filled out as indicated”

(emphasis supplied) , 3 and Special Condition 6.15 states that the

contract is to be awarded to the bidder offering “the lowest

grand total for the items being solicited.”

13. Thus, the omission of the “grand total” on the Price

Page of a bid renders the bid non - responsive unless the omission

is waived by the D epartment.

14. Special Condition 6.10 prohibits the Department from

waiving “material deviations” in the bids that relate to the

mandatory requirements of the ITB. That condition does not

similarly prohibit the Department from waiving non - material

devia tions.

15. Other provisions of the ITB expressly authorize the

Department to waive non - material deviations. For example,

Special Condition 6.16 reserves the Department’s right to waive

“ any minor irregularity or technicality in bids received,” and

p aragr aph 15 of the General Instructions to Bidders reserves the

Department’s right to waive “ any minor irregularity,

technicality, or omission .” (All emphas e s supplied).

16. The Price Page in Lachat’s bid listed prices for the

DAS and for each year of th e req uired service/maintenance

agreement, but the “grand total” line on the Price Page was left

blank. Thus, Lachat’s bid was technically non - responsive.

17. In addition to the Price Page, Lachat’s bid included a

document titled “Proforma [sic] Price Quotatio n.”

18. The Department staff did not consider the “Proforma”

document in determining the responsiveness of Lachat’s bid or in

tabulating the bid’s “grand total.” The document was ignored by

Department staff because it was not something that was

specifi cally required by the ITB.

19. The prices listed on the “Proforma” document

correspond to the prices itemized on the Price Page in Lachat’ s

bid . The document also makes reference to the one - year parts

and labor warranty that is included in the price of t he DAS (and

required by Special Condition 4.6) as well as the components

included in the annual price that Lachat bid on the Price Page

for the service/maintenance agreement, which is referred to in

the “Proforma” as a “field service partnership”.

20. The components of the “field service partnership”

listed in the “Proforma” -- i.e. , “onsite, priority service, two

preventative maintenance visits, and parts and labor” -- are

materially the same as the required components of the

service/maintenance agreement referenced in Special Condition

4.7 .

21. As part of its review of the bids, the Department

staff tabulated a “grand total” for Lachat’s bid by adding the

unit prices itemized on the Price Page of Lachat’s bid.

22. The result of that tabulation was $46,5 48, which was

lower than the “grand total” in the bids submitted by Systea and

OI.

23. The Department staff would have performed this

calculation even if Lachat had filled - in an amount on the “grand

total” line in order to verify the underlying calculatio ns.

Indeed, the Department staff also verified the calcula tions in

Systea’s and OI’s bids, which each included an amount on the

“grand total” line.

24. Department staff confirmed th e $46,548 figure with a

representative of Lachat, as it is authorized to do under

p aragraph 14 of the General Instructions to Bidders. That

paragraph provides that “[b]efore award, the [Department]

reserves the right to seek clarifications . . . deemed necessary

for proper evaluation of the submissions.”

25. The amount entere d on the “grand total” line on t he

Price Page of Systea’s bid i s $49,995. That figure equals the

sum of the unit prices itemized on the Price Page of Systea’s

bid.

26. The amount entered on the “grand total” line on the

Price Page of IO’s bid is $52,427. 50. That figure is

inexplicably higher than the sum of the unit prices itemized on

the Price Page of IO’s bid. The sum of th e itemized prices is

$49,747.50.

27. The Department staff did not contact OI to seek

clarificat ion regarding this discrepancy bec ause OI would not

have been the lowest bidder even if the unit prices in its bid

were correct.

28. In posting the contract award, the Department listed

OI as the third - lowest bidder based upon the “grand total” in

its bid, rather than the second - lowest bi dder based upon the

Department’s tabulation of the itemized costs in the bid.

29. The omission of the “grand total” on the Price Page of

Lachat’s bid is a minor irregularity because the bid contained

(on the Price Page) all of the figures necessary to ca lculate

the “grand total , ” and the tabulation of the “grand total” was a

simple mathematical calculation that the Department would have

made in any event to verify the accuracy of the "grand total"

based upon the unit prices itemized on the Price Page.

30. If Lachat’s bid w as rejected based upon the omission

of the “grand total” on the Price Page, there would be a

negative f iscal impact on the Department of more than $3,000

because the bids of Systea and OI (as tabulated by the

Department ) were that much h igher than Lachat’s bid.

31. The legislative appropriation for the Department’s

purchase of the DAS expires on June 30, 2005, and the Department

will lose the appropriated funds unless it expends or encumbers

the funds by 5:00 p.m. on that date. A purcha se order must be

issued to encumber the funds, and the purchase order must

identify the entity that the funds will be paid to.

CONCLUSIONS OF LAW

32. DOAH has jurisdiction over the parties to and subject

matter of this proceeding pursuant to Sections 120 .569,

120.57(1), 120. 57(3) and 120.574 , Florida Statutes .

33. T he administrative law judge’s decision arising out of

a summary hearing is final agency action subject to judicial

review, rather than a recommended order subject to review by the

Department. See § 120.574(2)(f), Fla. Stat.

34. The Department did not contest Systea’s standing to

challenge the award to Lachat even though Systea may not have

actually been the second - lowest bidder. As a result, and

because the evidence was insufficient to deter mine whether OI’s

bid was intended to be $52,427.50 (as stated in the bid) or

$49,747.50 (as tabulated by the Department), it is concluded

that Systea has the requisite standing in this proceeding. See

Preston Carroll Co. v. Florida Keys Aqueduct Authorit y , 400 So.

2d 524 (Fla. 3d DCA 1981) ( second - lowest bidder has standing to

protest contract award, but third - lowest bidder does not b ecause

it will not receive the contract even if it prevails in its

protest).

35. On the merits of the protest, Systea ha s the burden of

proof. See § 120.57(3)(f), Fla. Stat.

36. The scope of this proceeding and the nature of

Systea’ s burden of proof is defined as follows:

In a competitive - procurement protest, other

than a rejection of all bids, the

administrative law jud ge 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 proceedings shall be whether the

proposed agency action was clearly

erroneous, contrary to competition,

arbitrary, or capricious.

Id. See also State Contr acting & Engineering Corp. v. Dep t. of

Transportatio n , 709 So. 2d 607, 609 (Fla. 1st DCA 1998) (purpose

of a bid prot est proceeding is to “evaluate the action taken by

the agency" in relation to the standards in Section

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

37. As a general rule, b ids must strictly adhere to the

requirements of the ITB. H owever, it is well - established that

agencies have broad discretion to waive minor, non - material

irregularities in bids if doing so would save the public money.

See , e.g. , Liberty County v. Baxter’s Asphalt and Concrete,

Inc. , 421 So. 2d 505 (Fla. 1982) ; Robinson Electrical Co. v.

Dade Coun ty , 417 So. 2d 1032, 1034 (Fla. 3d DCA 198 2) ("[T]he

purpose of competitive bidding is to secure the lowest

responsible offer and . . . the County may waive minor

irregularities in effectuating that purpose.").

38. As stated in Intercontinental Propertie s, Inc. v.

Department of Health and Rehabilitative Services , 606 So. 2d

380, 387 (Fla. 3d DCA 1992) , “there is a strong public policy in

favor of awarding contracts to the low bidder, and an equally

strong public policy against disqualifying the low bidder for

technical deficiencies which do not confer an economic advantage

on one bidder over another.”

39. T he determination as to whether an irregularity in a

bid is material or not turns on “whether the variation affects

the amount of the bid by giving the bidder an advantage or

benefit not enjoyed by the other bidders.” Harry Pepper &

Associates, Inc. v. City of Cape Coral , 352 So. 2d 1190, 1193

(Fl a. 2d DCA 1978). See also Tropabest Foods, Inc. v. Dept. of

General Services , 493 So. 2d 50, 52 (Fla. 1st DCA 1986)

( "[A]lthough a bid containing a material variance is

unacceptable, not every deviation from the invitation to bid is

material. It is only material if it gives the bidder a

substantial advantage over the other bidders and thereby

restricts or sti fles competition." ).

40. The ITB incorporates this standard in Special

Condition 6.10, which provides in pertinent part :

A deviation is material if, in the state’s

sole discretion, the deficient response is

not in substantial accord with the [ITB]

requir ements, provides an advantage to one

bidder over other bidders, has a potentially

significant effect on the quantity or

quality of item bid, or on the cost to the

state.

41. Mathematical errors in the calculation of the bid

price have been considered in prior cases to be minor

irregularities that the agency may waive or correct as part of

its review of the bid . See , e.g. , Guiding Light Enterprise,

Inc. v. Dept. of Transportation , Case No. 04 - 2163BID, 2004 WL

1909270 (DOAH Aug. 25, 2004; DOT Sept. 15, 200 4) (rejecting

protest of award to bidder whose bid included monthly prices

rather than an annual price as required by the ITB based, in

part, on a prior version of Florida Administrative Code Rule

60A - 1.002(11), which stated that “[m] istakes in an arithmet ic

extension of pricing may be corrected by the agency ” ) ; Trinity

Services Group, Inc. v. Dept. of Corrections , Case No. 98 -

3670BID, 1998 WL 930101, *21 (DOAH Nov. 30, 1998) (concluding

that the agency was “duty - bound to correct” mathematical errors

in bid s and that such errors were minor irregularities that were

properly waived); Storage Technology Corp. v. Dept. of Health &

Rehab. Servs. , Case No. 92 - 0977BID, 1992 WL 881180 (DOAH Mar.

31, 1992; HRS Apr. 21, 1992) (rejecting protest of bidder whose

bid was no longer the lowest bid after the agency corrected

mathematical errors o n the bid’s pricing form).

42. Similarly, t he evidence in this case establishes that

the omission of the “grand total” on the Price P age of Lachat’s

bid is a minor irregularity that the Department had discretion

to waive based upon well - established ca se law and the express

terms of the ITB.

43. Systea failed to prove that the Department’s waiver of

th e omission in Lachat’s bid was clearly erroneous, contrary to

competition, arbitrar y, or capricious. Indeed, the evidence

establishes that the Department’s action was reasonable and

appropriate under the circumstances.

44. Accordingly, Systea failed to meet its burden of proof

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

ORDER

Based upon the foregoing findings of fact and conclusions

of law, it is

ORDERED that :

1. S ystea’s formal wri tten protest is dismissed , the award

to Lachat is affirmed, and this case is closed .

2. The Department shall return the bid protest bond or

alternate se curity provided by Systea unless this Final Order is

appealed or the Department files within 10 days after the

expiration of the appeal period a motion for an award of costs

(excluding attorney’s fees) against the bid protest bond or

alternate security. S ee § 287.042(2)(c), Fla. Stat; Fla. Admin.

Code R. 28 - 110.005(4). Jurisdiction is retained for the limited

purpose of considering such a motion for costs, if filed.

DONE AND ORDERED this 29th day of June , 2005, in

Tallahassee, Leon County, Florida.

S

T. KENT WETHERELL, II

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.d oah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 29th day of June, 2005.

ENDNOTES

1/ All statutory references in this Final Order are to the 2004

version of the Florida Statutes.

2/ At the hearing, Systea also argu ed that Lachat's bid w as not

responsive because it failed to include the required warranty

documentation a nd detailed information regarding the

service/maintenance agreement. Those arguments have not been

considered because they were not raised in the for mal written

protest.

3/ Pursuant to Special Condition 6.10, the use of “shall,”

“must,” or “will” in the ITB indicates mandatory conditions,

whereas the use of “should” or “may” indicate s desirable

attributes or conditions that are permissive rather than

mandatory.

COPIES FURNISHED :

R.S. Power, Agency Clerk

Department of Health

4052 Bald Cypress Way, Bin A02

Tallahassee, Florida 32399 - 1701

Timothy M. Cerio, General Counsel

Department of Health

4052 Bald Cypress Way, Bin A02

Tallahassee, Florida 3239 9 - 1701

Dr. John O. Agwunobi , Secretary

Department of Health

4052 Bald Cypress Way, Bin A00

Tallahassee, Florida 32399 - 1701

Janine B . Myrick, Esquire

Department of Health

4052 Bald Cypress Way, Bin A02

Tallahassee, Florida 32399 - 1703

John C. Oberholtze r, Esquire

Oberholtzer, Filous and Lesiak

39 Public Square, Suite 201

P. O. Box 220

Medina, Ohio 44258

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is

entitled to judicial review pursuant to Section 120.68, F lorida

Statutes. Review proceedings are governed by the Florida Rules

of Appellate Procedure. Such proceedings are commenced by

filing the original Notice of Appeal with the agency clerk of

the Division of Administrative Hearings and a copy, accompanied

by filing fees prescribed by law, with the District Court of

Appeal, First District, or with the District Court of Appeal in

the Appellate District where the party resides. The notice of

appeal must be filed within 30 days of rendition of the order to

be reviewed.