05-003982BID Copyco, Inc., D/B/A Toshiba Enterprises Business Solutions vs. Palm Beach County School Board And Ikon Office Solutions, Inc. Status: Closed Recommended Order on Thursday, February 9, 2006.

Summary: The bidder should be rejected for failure to disclose debarment by another public entity.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

COPYCO, INC., d/b/a TOSHIBA )

BUSINESS SOLUTIONS FLORIDA, )

)

Petitioner, )

)

vs. ) Case No. 05 - 3982BID

)

SCHOOL BOARD OF PALM BEACH )

COUNTY, FLORIDA and IKON )

OFFICE SOLUTIONS, INC., )

)

Respondents. )

_______________ __________________)

RECOMMENDED ORDER

Pursuant to notice a formal hearing was held in this case

on December 19, 2005, in West Palm Beach, Florida, before J.

D. Parrish, a designated Administrative Law Judge of the

Division of Administrative Hearings.

AP PEARANCES

For Petitioner: Michael J. Glazer, Esquire

Ausley & McMullen

Post Office Box 391

227 South Calhoun Street

Tallahassee, Florida 32302

For Responde nt School Board of Palm Beach County:

Steven A. Stinson, Esquire

School Board of Palm Beach

County, Florida

Post Office Box 19239

West Palm Beac h, Florida 33416 - 9239

For Respondent Ikon Office Solutions, Inc.:

Michael E. Riley, Esquire

Gray Robinson, P. A.

301 South Bronough Street

Tallahassee, Florida 32302

STATEMENT OF THE ISSUE

Whether the Respondent, School Board of West Palm Beach

County, Florida, (School Board) should reject the bid of the

Petitioner, Copyco, Inc. d/b/a Toshiba Business Solutions

Florida (Copyco or Petitioner), and approve a con tract with

the Respondent, Ikon Office Solutions, Inc. (Ikon), should

reject the bid of Ikon and approve a contract with Copyco, or

should reject all bids and re - bid the contract.

PRELIMINARY STATEMENT

This is a challenge to the School Board’s decision to

award a “Term Contract for Copier on a Fixed Cost - Per Copy”

(Contract) to Ikon. In reaching its preliminary decision to

award the contract to Ikon, the School Board determined that

the Petitioner had failed to comply with requirements of the

bid and shou ld be disqualified from consideration.

Additionally, the School Board determined that Ikon’s failure

to disclose information regarding its debarment difficulties

with Hillsborough County was not sufficiently egregious to

disqualify Ikon from the contract.

The Petitioner maintains it is entitled to the contract

as the lowest qualified bidder. Copyco maintains that the

Ikon bid was at a higher cost to the School Board. Therefore,

since price was the determining criterion in the matter, the

Petitioner sh ould receive the award. Alternatively, the

Petitioner believes that if its bid is rejected as non -

responsive, then all bids should be similarly rejected and the

Contract should be re - bid.

The School Board and Ikon argue that the Petitioner’s bid

was reje cted as non - responsive to the bid and that, as the

sole responsive bidder, Ikon is entitled to the Contract. The

School Board has rejected as immaterial to the instant award

the difficulties Ikon has encountered with a debarment issued

by Hillsborough Cou nty. The Respondents do not agree that the

Contract should be re - bid.

The Petition for Formal Administrative Hearing and Formal

Written Protest was filed with the Division of Administrative

Hearings on October 21, 2005. By agreement of the Petitioner

an d the School Board, the case was scheduled for hearing on

December 19, 2005. The parties then proceeded with discovery

and submitted a Joint Pre - Hearing Stipulation that has been

utilized in the preparation of this Recommended Order.

At the hearing, the parties presented Joint Exhibits 1

through 10, which were admitted into evidence. Copyco

presented testimony from John Gans, Karen Brazier, and Sharon

Swan. Petitioner’s Exhibits 1 - 8 were admitted into evidence.

The School Board and Ikon presented testi mony from Karen

Brazier and Joseph Vazzana. The Respondents’ Exhibits 1 and 2

have also been received in evidence. Ikon’s Exhibits 17, 18,

and 19A were admitted into evidence.

As to the DVD attachment to the Petitioner’s Exhibit 8,

the objection to the admissibility of that item is sustained.

Further, the objection to the deposition testimony of Sharon

Swan is sustained. There is insufficient evidence to support

a conclusion that the deposition in lieu of the live testimony

was admissible in that the w itness was available, was not

identified as an expert witness, and was not the designated

agent of the Respondent for the purpose of discovery in the

matter. Additionally, based upon the record of this case, the

deposition cannot be considered an admissio n of a party.

At the conclusion of the hearing, the parties agreed that

Proposed Recommended Orders would filed no later than January

13, 2006. Such proposals have been considered in the

preparation of this Recommended Order. The three - volume

transcript of the proceeding was filed with the Division of

Administrative Hearings on January 3, 2006.

FINDINGS OF FACT

1. On August 5, 2005, the School Board issued an

Invitation to Bid (ITB) Number 06C - 10B entitled “Term Contract

for Copier on a Fixed Cost - Per - C opy. ” The School Board

sought to award the Contract to the lowest responsive bidder.

The School Board sought several different copiers with

different copying rates. All rates were for copies per

minute. The School Board did not guarantee any level of use

for the copiers.

2. Ikon is the current vendor for copiers provided to

the School Board. Ikon and the School Board have enjoyed an

amicable and successful working relationship.

3. The subject ITB was available to vendors in an

electronic format th rough a company known in this record as

“RFP Depot, LLC.” RFP Depot, LLC is a private company located

outside the State of Florida that posts invitations to bid,

receives responses from vendors, and transmits information to

entities seeking vendors. In t his case, they contracted with

the School Board to electronically present and respond to the

instant ITB.

4. No potential vendor timely protested the terms or

specifications of the ITB when it was posted. That is to say,

all of the terms of the ITB were accepted by the parties to

this action.

5. To prepare the ITB specifications, the School Board

utilized information submitted by Ikon for the copiers it

provides (manufactured by Canon) to draft the ITB. Karen

Brazier exchanged e - mails with Ikon to obtai n specifications

and used information available from Buyers Laboratory, Inc.

(BLI) to complete the ITB. Ms. Brazier did not ask any other

vendor or manufacturer to submit data regarding its copiers

before completing the ITB.

6. Vendors and manufacturer s other than Ikon and Cannon

do produce copiers that can meet or exceed the copier

requirements of the ITB.

7. Ikon did not draft the instant ITB. Ms. Brazier was

solely responsible for the terms of the ITB.

8. The original due date for responses to the ITB was

extended from August 29, 2005 to August 31, 2005, due to

Hurricane Katrina.

9. Vendors interested in the Contract submitted

questions regarding the ITB to RFP Depot, LLC, which then

transmitted the inquiries to the School Board.

10. All question s with the answers were posted by RFP

Depot, LLC so that all vendors were privy to the information

posted for this ITB.

11. Only three bidders timely submitted responses for

this ITB: Axsa Document Solutions, Inc. (Axsa); Copyco; and

Ikon.

12. The Axsa bid is not at issue in this proceeding.

Although it was the lowest bid received, it was disqualified

and was not considered for the award. Axsa did not protest

that finding.

13. Copyco was the second lowest bidder.

14. John Gans, a major account exec utive with Copyco,

was the primary author of the bid submitted by the Petitioner.

Mr. Gans had never used the RFP Depot, LLC system before but

personally completed the information for the ITB and submitted

it for consideration in a timely manner.

15. T he ITB included a chart entitled “Bid Summary

Document.” That chart required the vendors to list the

copiers proposed for each category by manufacturer and model

number. All of the “Group 1” copiers were required to meet

certain specifications.

16. The “Estimated Yearly Total” was derived by

multiplying the cost - per - copy for each of the Group 1 copiers

times 400,000,000 (the number of estimated copies per year).

For purposes of computing a cost the estimate for the number

of copies was fixed but not gua ranteed.

17. In an attached section to the ITB, vendors were

required to include additional information regarding the

copiers proposed in the Group 1 categories. That information

noted the copier proposed with a separate cost - per - copy rate

for each of th e three different Group 1 categories. Although

the price computed for the award was based on the aggregate

cost of the copiers, the ITB required that the individual

copier breakdown costs be disclosed in the addendum material.

18. When he submitted the b id proposal to RFP Depot,

LLC, Mr. Gans believed he had listed a Toshiba e600 copy

machine for the category 3 machine of Group 1. In fact, the

information attached in the separate information required by

the ITB identified the Toshiba e600 and noted its c ost per

copy in the individual copier breakdown. The Toshiba e600

meets or exceeds all specifications for Group 1, category 3 of

the ITB.

19. Group 1, category 3 of the ITB required a machine

capable of producing 55 copies per minute. The Toshiba e520

copier is rated at 52 copies per minute.

20. When Copyco’s proposal for this ITB was transmitted

by RFP Depot, LLC to the School Board, the proposal identified

the Toshiba e520 as the copier listed under the Group 1,

category 3 chart.

21. Without consi dering the attached information

provided in the addendum to the proposal, the School Board

determined that Copyco’s bid must be disqualified since the

Toshiba e520 is not rated to produce 55 copies per minute.

22. Accordingly, the Copyco bid was disqualif ied and

Ikon (the highest bidder of the three submitted) was deemed

the only responsive bidder to the ITB. All of the Ikon

copiers bid met the specifications of the ITB.

23. At the time the School Board determined to award the

bid to Ikon, it did not d eem material to the instant award

Ikon’s debarment by Hillsborough County, Florida.

24. In April 2005, Ikon was awarded a contract in

Hillsborough County to provide copiers and related services

based upon another bid solicitation. In that bid, Ikon faile d

or refused to execute an agreement for the copiers. As a

result, the Board of County Commissioners for Hillsborough

County, Florida decided to debar Ikon for a period of two

years. The debarment precludes Ikon from doing business with

Hillsborough Coun ty for a two - year term.

25. On August 31, 2005, the date the proposals were due

in this case, Ikon knew or should have known that Hillsborough

County had decided to debar it from doing business with

Hillsborough County.

26. The instant ITB required eve ry bidder to certify

that “neither it nor its principals is presently debarred,

suspended, proposed for debarment, declared ineligible, or

voluntarily excluded from participation in this transaction by

any State or Federal department/agency.” It is undisp uted

that Ikon did not notify the School Board that it was debarred

by Hillsborough County.

27. Ikon has challenged Hillsborough County and filed

suit against it for the debarment. As of the time of hearing

in this cause, that suit was unresolved and rem ained pending

in federal court.

28. The electronic listings for debarred companies

maintained for the State of Florida and the federal government

does not include any of the bidders for this ITB.

29. The School Board did not consider the erroneous

listin g of the Toshiba e520, instead of the Toshiba e600 as

the Group 1, category 3, listing to be a minor irregularity of

the bid submission.

30. The School Board did not consider the erroneous

omission of the debarment from Hillsborough County a

disqualifying offense for Ikon.

31. When compared to the Copyco submission, the award of

the ITB to Ikon will result in higher copier costs incurred by

the School Board.

32. Copyco did not refuse to execute an agreement with

the Toshiba e600 as the Group 1, categor y 3 copier. In fact,

Copyco has represented it will do so as that was the machine

clearly identified in the addendum materials.

33. In researching the debarment, the School Board made

a telephone call to Hillsborough County to ascertain facts

pertine nt to the debarment. Any negative information related

to Ikon was deemed irrelevant to the instant ITB.

34. The Copyco protest to the intended award to Ikon was

timely filed.

35. Copyco intended to bid the Toshiba e600 in Group 1,

category 3 of the inst ant ITB. The Toshiba e600 is identified

throughout the bid submittal including the proposed transition

plan. To have awarded the contract to Copyco with the Toshiba

e600 noted as the Group 1, category 3 copier would not have

afforded the Petitioner a com petitive advantage as that

machine was clearly denoted. The cost to the School Board

would not have changed but would have been less than the cost

proposed by Ikon.

36. Even before a final decision was reached on this

contract and before the posting of t he award, Ms. Brazier was

exchanging e - mails with Ikon regarding the transition under

the new contract.

37. Ms. Brazier did not make her supervisor fully aware

of the Copyco proposal (as supported by the addendum

materials) and did not believe the Ikon bi d should be rejected

for the failure to disclose the debarment.

38. The School Board’s purchasing manual provides, in

pertinent part:

The following are reasons a bidder may be

declared nonresponsible:

* * *

D. The bidder does not have a satisfactor y

record of integrity, or the bidder is

currently debarred or suspended by the

District or other State of Florida

jurisdiction...

39. Ms. Swan did not investigate Ikon’s debarment until

after the posting of the award.

40. The School Board has taken the position that the

Hillsborough County debarment does not preclude the award of

the contract to Ikon.

CONCLUSIONS OF LAW

41. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of

these proceedings. §§ 120. 569, and 120.57(1) and (3), Fla.

Stat. (2005).

42. Section 120.57(3)(f), Florida Statutes (2005),

provides, in pertinent part:

(f) . . . In a competitive - procurement

protest, other than a rejection of all

bids, proposals, or replies, the

administrative 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 solicitation

specifications. The standard of proof for

such proceedings shall be whether the

proposed agency action was clearly

erroneous, contrary to competition,

arbitrary, or capricious.

43. As the protesting party, the Petitioner bears the

burden of proof in this matter. Accordingly, Copyco must

establish that the propo sed award to Ikon was clearly

erroneous, contrary to competition, arbitrary, or capricious.

Thus, the purpose of a bid protest proceeding is to evaluate

the action taken by the agency (in this case the School Board)

in relation to the standards set forth in Section

120.57(3)(f), Florida Statutes. See State Contracting &

Engineering Corp. v. Department of Transportation , 709 So. 2d

607 (Fla. 1 st DCA 1998).

44. All parties have standing in this cause. See

Advocacy Center for Persons with Disabilities, Inc . v.

Department of Children and Family Services , 721 So. 2d 753

(Fla. 1 st DCA 1998).

45. Typically, an agency is to adhere to the

requirements of an ITB when evaluating submissions from

bidders. Nevertheless, it is acceptable, and 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).

46. Further, there is a strong pub lic interest in favor

of saving tax dollars in awarding public contracts. See

Intercontinental Properties, Inc. v. State Department of

Health and Rehabilitative Services , 606 So. 2d 380 (Fla. 3 rd

DCA 1992).

47. Accordingly, there is a “strong public po licy

against disqualifying the low bidder for technical

deficiencies which do not confer an economic advantage on one

bidder over another.” Intercontinental Properties at 387.

48. Whether an irregularity or technical deficiency is

material or not turns on whether the effect of accepting the

bid gives the bidder an advantage over the other bidders. See

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

2d 1190 (Fla. 2 nd DCA 1978). In this case, Copyco was

disqualified or deemed non - responsi ve for including the

erroneous model number on the Group 1, category 3 listing.

The supporting materials correctly identified the model bid as

the Toshiba e600. The cost calculations were computed with

the Toshiba e600 as the Group 1, category 3 machine. Copyco

received no benefit from having the Toshiba e600 machine

considered as the Group 1, category 3 copier, as the price

quoted already included that machine for the category. In

contrast, if Copyco is disqualified and the award is made to

Ikon, the S chool Board will incur a higher cost for its

copiers. It defies logic to award the contract to a higher

bidder when Copyco has represented (and the response to the

ITB in its totality supports) it will provide new copiers

(including the Toshiba e600 in Gr oup 1, category 3) for less

public expense.

49. If the School Board had uniformly held all bidders

in this matter to a strict interpretation of the ITB the

refusal to deem Copyco a qualified bidder would not seem

arbitrary. For example, had Ikon been de emed non - responsive

for its failure to disclose the Hillsborough County debarment

and all bids been rejected, the School Board’s strict approach

would have seemed logical and consistent. To the contrary,

the School Board determined that Ikon’s failure to disclose

the ITB was not material to its bid. The School Board’s

explanation that a county debarment does not disqualify Ikon

under its policy, the terms of the ITB, or state law is not

convincing or logical. Given the serious nature of the

matter, and t he strict application afforded the Copyco bid, a

similar response to the failure to disclose would seem

reasonable. Again, the failure to disclose was the underlying

disqualifying issue, not whether the debarment would be or

should be upheld by a court of law. This is particularly

critical since it a minor failure to note the correct model

number that disqualified the lower bidder. If both errors

were oversights the disparate treatment of them begs the

question of why Ikon would receive favored treatment ?

50. The public must have confidence in the process of

public procurement. By law procurement decisions cannot be

“arbitrary” and “capricious.” A capricious action is one

which is taken without thought or reason. Similarly, an

arbitrary decision is on e not supported by facts or logic.

See Agrico Chemical Company v. State Department of

Environmental Regulation , 365 So. 2d 759 (Fla. 1 st DCA 1978),

cert. denied 376 So. 2d 74 (Fla. 1979). In this case the

rejection of the lower bid for the acceptance of the higher

bid when both entities failed to comply with minor

technicalities of the ITB defies logic. Given the favored and

preferential treatment afforded the existing provider, it is

concluded the bidding process was tainted. The determination

to award the bid to the higher bidder was without logic and

merit. Given the contacts before the ITB was presented to

establish the specifications for the copiers, the waiver of

the non - disclosure of the debarment, and the preparations for

the post - award transiti on even before the posting of the

award, it is concluded that Ikon received this award by the

arbitrary decision of the School Board personnel.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions

of Law, it is RECOMMENDED that the Scho ol Board of Palm Beach

County enter a Final Order that rejects all bids for the

contract.

DONE AND ENTERED this 9th day of February, 2006, in

Tallahassee, Leon County, Florida.

S

J. D. PARRISH

Administrative Law Judge

Division of Adm inistrative 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 9th day o f February, 2006.

COPIES FURNISHED :

Dr. Rudolph F. Crew, Superintendent

Miami - Dade County School Board

1450 Northwest Second Avenue, No. 912

Miami, Florida 33132 - 1394

Daniel J. Woodring, General Counsel

Department of Education

1244 Turlington Building

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

Michael J. Glazer, Esquire

Ausley & McMullen

227 South Calhoun Street

Post Office Box 391

Tallahassee, Florida 32302

James F. Johnston

GrayRobinson, P. A.

301 East Pine Street, Suite 1400

Post Off ice Box 3068

Orlando, Florida 32802

Michael E. Riley, Esquire

Gray, Robinson, P.A.

Post Office Box 11189

Tallahassee, Florida 32302 - 3189

Steven A. Stinson, Esquire

School Board of Palm Beach County

Post Office Box 19239

West Palm Beach, Florida 33416

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 Ord er in this case.