07-000488BID Vertex Standard vs. Department Of Transportation Status: Closed Recommended Order on Monday, April 30, 2007.

Summary: Petitioner, whose bid was unresponsive, did not demonstrate that Respondent`s acceptance of exceptions in Intervenor`s response were material deviations from the bid specifications so as to require the rejection of all bids.

Case No. 07-0488BID

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

VERTEX STANDARD, ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Petitioner, RECOMMENDED ORDER

vs.

DEPARTMENT OF TRANSPORTATION,

Respondent,

and

MIDLAND RADIO CORPORATION,

Intervenor.

On March 16, 2007, a hearing was held in Tallahassee,

Florida, pursuant to the authority set forth in Sections 120.569

and 120.57(1), Florida Statutes. The case was considered by Lisa

Shearer Nelson, Administrative Law Judge.

APPEARANCES

For Petitioner: Michael Donaldson, Esquire

Daniel Hernandez, Esquire

Carlton, Fields, P.A.

Post Office Drawer 120

Tallahassee, Florida 32302

For Respondent: C. Denise Johnson, Esquire

Florida Department of Transportation

Haydon Burns Building

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399

For Intervenor: Stacy M. Schwartz, Esquire

Isicoff, Ragatz & Koenigsberg

1200 Brickell Avenue, Suite 1900

Miami, Florida 33131

STATEMENT OF THE ISSUE

Whether the Department of Transportation's decision to award

the contract contemplated in its Invitation to Bid ITB-DOT-06/07-

9025-GB (Purchase of Radio Equipment) is contrary to the agency's

governing statutes, the agency's rules or policies, or the

proposal specifications.

PRELIMINARY STATEMENT

On January 29, 2007, a Petition was forwarded to the

Division of Administrative Hearings challenging the Department of

Transportation's (DOT's or Department's) Notice of Intent to

award a contract pursuant to its Invitation to Bid ITB-DOT-06/07-

9025-GB (Purchase of Radio Equipment). On February 1, 2007, the

parties filed a Stipulation to Waive Thirty-Day Requirement, and

indicated that the parties were available for hearing March 16

and 18, 2007. On that same day, a Notice of Hearing was issued

setting the case for hearing March 18, 2007. On February 8,

2007, an Amended Notice of Hearing was issued, scheduling the

matter for both days, i.e., March 16 and 18, 2007.

Petitioner moved to amend the Petition without objection,

and the Motion was granted February 14, 2007. On February 22,

2007, Midland Radio Corporation (Midland) petitioned to intervene

in the proceedings, and was granted intervenor status March 5,

2007. On March 9, 2007, the parties advised that, in view of

discovery conducted by the parties, only one day would be

necessary for the hearing and requested that the matter be re-

noticed for March 18, 2007, alone. Accordingly, an Amended

Notice of Hearing was issued March 12, 2007, for March 18, 2007.

The parties filed a Joint Pre-Hearing Statement which

included stipulated findings of fact that have been incorporated

into the Findings of Fact found below. At hearing, Joint

Exhibits numbered 1 through 10 were admitted. Petitioner

presented the testimony of four witnesses and submitted

Petitioner's Exhibit 1, which was a demonstrative exhibit.

Respondent presented the testimony of one witness, and

Respondent's Exhibits numbered 1 through 4 were admitted without

objection. The Intervenor presented no witnesses or exhibits.

At hearing, it was anticipated that the transcript would be

filed with the Division April 6, 2007. However, the transcript

was actually filed March 29, 2007, and an Order was issued

advising the parties accordingly. Petitioner moved without

objection for an extension of time for the filing of proposed

recommended orders until April 16, 2007. All parties Proposed

Recommended Orders are accepted as timely filed. These

submissions have been carefully considered in the preparation of

this Recommended Order.

FINDINGS OF FACT

1. On September 28, 2006, the Department issued the

Invitation to Bid, ITB-DOT 06/07-9025-GB (ITB) for the purchase

of radio equipment.

2. The ITB contemplated that one five-year contract would

be awarded.

3. The ITB reserved to the Department the right to accept

or reject any and all bids, and reserved the right to make an

award without further discussion of the bids submitted.

4. The ITB reserved to the Department the right to reject

any response not in compliance with the requirements of the ITB.

The Bid Sheet of the ITB stated:

NOTE: In submitting a response, the bidder

acknowledges they have read and agree to the

solicitation terms and conditions and their

submission is made in conformance with those

terms and conditions.

ACKNOWLEDGMENT: I certify that I read and

agree to abide by all terms and conditions of

this solicitation and that I am authorized to

sign for the bidder. I certify that the

response submitted is made in conformance

with all requirements of the solicitation.

5. Likewise, the Special Conditions of the ITB provided in

pertinent part:

11) ADDITIONAL TERMS AND CONDITIONS

No conditions may be applied to any respect

of the ITB by the prospective bidder. Any

conditions placed on any aspect of the

prospective bidder may result in the bid

being rejected as a conditional bid (see

"RESPONSIVENESS OF BIDS"). DO NOT WRITE IN

CHANGES ON ANY ITB SHEET. The only

recognized changes to the ITB prior to bid

opening will be a written addenda issued by

the Department.

12) RESPONSIVENESS OF BIDS

Bids will not be considered if not received

by the Department on or before the date and

time specified as the due date for

submission. All bids must be typed or

printed in ink. A responsive bid is an offer

to provide the items specified in this

Invitation to Bid in accordance with all

requirements of this Invitation to Bid. Bids

found to be non-responsive will not be

considered. Bids may be rejected if found to

be irregular or not in conformance with the

specifications and instructions herein

contained. A bid may be found to be

irregular or non-responsive by reasons that

include, but are not limited to, failure to

utilize or complete prescribed forms,

modifying the bid specifications, submitting

conditional bids or incomplete bids,

submitting indefinite or ambiguous bids, or

executing forms or the bid sheet with

improper and/or undated signatures. Other

conditions which may cause rejection of bids

include evidence of collusion among bidders,

obvious lack of experience or expertise to

provide the required items, and failure to

perform or meet financial obligations on

previous contracts.

* * *

23) PRODUCT REQUIREMENTS/SPECIFICATIONS

Items furnished shall be standard products of

the manufacturer or their suppliers, shall be

new, unused, clean, and free from any defects

or features affecting appearance,

serviceability, or the safety of the user in

normal intended use.

Any deviation from specifications indicated

herein must be clearly pointed out;

otherwise, it will be considered that items

offered are in strict compliance with these

specifications, and successful bidder will be

held responsible therefore. Deviations must

be explained in detail on separate attached

sheet(s).

* * *

32) WARRANTY

A warranty is required on all items purchased

against defective materials, workmanship, and

failure to perform in accordance with

required industry performance criteria, for a

period of not less than two (2) years from

the date of acceptance by the purchaser. Any

deviation from the criteria must be

documented in the bid response or the above

statement shall prevail.

6. The State of Florida PUR 1001 (General Instructions to

Respondents) was also included in the ITB. The General

Instructions to Respondents specified that all responses to the

ITB are subject to the following sections of the ITB, which, in

case of conflict, shall have the following order of precedence:

1) Technical Specifications; 2) Special Conditions;

3) Instructions to Respondents (PUR 1001); 4) General Conditions

(PUR 1001), and 5) Introductory Materials. Section 9 of the

General Instructions provides in pertinent part:

Respondent's Representation and

Authorization . In submitting a response,

each respondent understands, represents, and

acknowledges the following (if the respondent

cannot so certify to any of the following,

the respondent shall submit with its response

a written explanation of why it cannot do

so).

* * *

• The product offered by the respondent will

conform to the specifications without

exception.

 The respondent has read and understands

the Contract terms and conditions, and the

submission is made in conformance with those

terms and conditions.

7. The ITB specifications also included information about

what must be included in the bid to be considered responsive:

3.1 This specification includes required

equipment that the vendor shall provide

to be compliant with the bid. This

specification also includes non-required

equipment that FDOT considers important

but not critical to obtaining a

successful bid. Vendors can elect to

bid on any or all of these non-required

equipment items. Bidding on non-

required items does not affect the bid

evaluation process however the Vendor

will be held to the contract

requirements and technical

specifications for all bid products.

3.2 All required and non-required equipment

items are identified in the

specification compliance matrix at the

end of this technical specification.

3.3 Required Equipment. The vendor shall

supply all of the required types of

equipment. There is also optional

equipment that is required though it may

not be procured with each order. An

example of such a required, optional

piece of equipment is the mobile radio

dual control head.

3.4 Non-Required Equipment. To ensure a

successful bidding process FDOT has

identified radio equipment that they

consider important but not critical to

the success of this contract. This

equipment is fully specified in this

document and if a vendor elects to bid

any non-required equipment item, they

must comply with the associated

specifications. An example of such a

non-required piece of equipment is the

low-band VHF portable radio.

8. Specifications 4.2.1.22.1 (with respect to portable

radios) and 4.3.1.22.1 (with respect to mobile radios) both

included the requirement that "[t]he last channel selected shall

appear as the selected channel after the radio is turned back on.

The last selected scan mode shall also reinitiate after the radio

is turned back on."

9. With respect to warranties, the specifications

provided:

8. VENDOR WARRANTY

8.1 Parts and Labor Warranty. The vendor

shall warranty all parts and accessories

against defects in materials and

workmanship while under normal use and

service by FDOT personnel. Parts shall

include but not be limited to all

products, all product subsystem LLRUs

disassembled by trained FDOT maintenance

personnel, and all product accessories.

The vendor labor necessary to diagnose

and repair a defect shall be provided by

the vendor at no cost to FDOT.

Defective parts may be repaired by the

vendor or replaced with new parts. The

vendor shall also be responsible for

return shipping costs to FDOT of a

repaired or replaced part.

2.2 Warranty Period.

8.2.1 Parts and Labor. With the

exception of portable battery power

ratings, the vendor shall warranty all

parts and labor for 5 years.

8.2.2 Portable Radio Battery Power

Rating. The vendor shall warranty parts

and labor associated with the portable

radio power rating for 18 months. If

during this 18 month period the battery

power rating falls below 80% of the

specified battery power rating the

battery shall be replaced with a new

battery.

10. No bidder challenged the specifications contained in

the ITB.

11. On November 8, 2006, Vertex Standard submitted its

response to the ITB. Four other vendors submitted proposals,

including Midland.

12. Four of the responding bidders, including Vertex

Standard, were found to be non-responsive in part because they

did not bid on all of the required items identified in the RFP.

13. Midland's proposal contained a signed copy of the Bid

Sheet referenced in paragraph 4, acknowledging the solicitation

terms and certifying that its proposal is made in conformance

with all requirements of the solicitation.

14. However, Midland's proposal also contained a page

entitled "Midland Radio Corporation Exceptions to Technical

Requirements for Florida Department of Transportation Purchase of

Radio Equipment ITB-DOT-06/07-9025-GB." On this page, Midland

indicated that it "takes exceptions to the following Technical

Requirements" of the ITB:

Exception to 4.2.1.22.1

Midland Radio Corporation Model 80-

125/425 Portable Radios return to the

programmed scan mode after On/Off/On Cycle.

Exception to 4.2.4.5

Midland Corporation Model 81-391 Smart

Rapid Charger meets Technical requirements

for 4.2.4.5.1, 4.2.4.5.2, 4.2.4.5.3, and

4.2.4.5.4. Analyzer Functions is under

review for a possible future function.

Exception to 4.3.1.22.1

Midland Radio Corporation Titan Series

Mobile Radios return to programmed scan mode

after On/Off/On cycle.

Exception to 8.2

Midland Radio Corporation warrants our

Base Tech Base/Repeater stations for a period

of five (5) years from date of purchase

against defects in material and workmanship.

Midland Radio Corporation warrants or

[sic] Titan mobile radio, and our Midland

portable radio products for a period of three

years from date of purchase against defects

in material workmanship.

15. On the page following the "Exceptions," was a Warranty

Certificate for Midland's equipment. The Warranty Certificate

stated that all mobiles, portables and Titan Vehicular Repeaters

were warranted for a period of three years. Base-Tech II

Base/Repeater Stations were warranted for five years. With

respect to accessories, Midland's Warranty Certificate stated

that rechargeable batteries would be warrantied for 18 months;

battery chargers for 1 year; and all other accessories for 120

days.

16. Vertex Standard did not take exception to the five-year

warranty requirement. Representatives from Vertex Standard were

required to check with officials at their headquarters overseas

in order to bid on a project requiring a five-year warranty.

While Vertex Standard's representative indicated that there was

additional cost to the company in providing a five-year warranty,

the company decided to absorb the cost of the additional two

years. No specific dollar amount attributable to the additional

warranty period was identified.

17. The responses to the ITB were reviewed by an evaluation

committee comprised of Randy Pierce, Roger Madden and Brian Kopp.

These three gentleman were also instrumental in developing the

ITB in the first place. The evaluation committee members

independently reviewed the responses submitted by the vendors and

met collectively to compare the individual scores.

18. Randy Pierce, who was the primary author of the ITB,

determined that the five-year warranty specification was an error

on his part that should have been addressed before the ITB was

finalized. The committee members looked at the industry standard

for warranties and determined that most failures occur in the

first year and that the industry standard for warranties was two

to three years.

19. Similarly the requirement that radios return to the

last channel selected had been included in the specifications

because a prior vendor had included this option on equipment the

Department now owned. The committee members determined that this

requirement was a minor issue that would not affect the overall

function and performance of the radio equipment, but could be

addressed through training.

20. On November 20, 2006, a Radio Bid Evaluation Response

Justification Attachment (Justification Attachment) was prepared

by Randy Pierce, Roger Madden and Brian Kopp. In this document,

the evaluation team members reported that four vendors, including

Vertex Standard, failed to comply with Specification Section 3.3

requiring the vendor to bid all required types of equipment.

Based on this failure, all four were disqualified. The

Justification Attachment also indicated that these four vendors

were also non-compliant with several technical specifications in

the ITB.

21. The Committee determined that Midland Radio was the

only vendor that bid on all required products. The Justification

Statement stated in pertinent part:

2) Midland, the fifth and remaining vendor

bid all required products. Midland took

exception to the following:

a. Midland took exception to Specification

Sections 4.2.1.22.1 and 4.3.1.22.1 regarding

the start-up configuration of Portable and

Mobile Radios. FDOT has reviewed the

exceptions and agree [sic] to them.

b. Midland took exception to Specification

Sections 4.2.4.5 regarding the portable radio

smart charger. This charger is not a

required product and FDOT will therefore not

award this item.

c. Midland took exception to Specification

Section 8.2 regarding the Warranty Period for

Portable and Mobile Radios. The specified

warranty period is five years, however

Midland has bid a 3 year warranty period for

Portable and Mobile Radios. FDOT has

determined that the 3 year warranty period

offered by Midland meets or exceeds the

current industry standards. Therefore, FDOT

agrees to the exception.

3) With the agreed to exceptions Midland is

the only compliant bidder and therefore they

are selected.

22. On November 27, 2006, the Department posted its notice

of intent to award the contract to Midland.

23. On November 30, 2006, Vertex Standard filed its Notice

of Intent to Protest the intended award.

24. On December 11, 2006, Vertex filed its Petition

requesting a hearing pursuant to Section 120.57(1), Florida

Statutes.

CONCLUSIONS OF LAW

25. The Division of Administrative Hearings has

jurisdiction over the subject matter and the parties to this

action in accordance with Sections 120.569 and 120.57(1), Florida

Statutes.

26. Vertex submitted a bid proposal that did not conform to

the requirements of the ITB. Because the relief sought by Vertex

Standard is the rejection of all other nonresponsive proposals,

Vertex Standard has standing to bring this protest. Capelletti

Brothers, Inc. v. Department of General Services , 432 So. 2d 1359

(Fla. 1st DCA 1983); NTI Group, Inc. v. Department of Education ,

DOAH Case No. 06-4449BID (Recommended Order January 9, 2007;

Final Order January 31, 2007).

27. Petitioner, as the party challenging the proposed

agency action, has the burden of proof in this proceeding and

must show that the agency's proposed action is contrary to the

agency's governing statutes, rules or policies, or the bid or

proposal specifications. A de novo hearing was conducted to

evaluate the action taken by the agency. Section 120.57(3)(f),

Florida Statutes; State Contracting and Engineering Corp. v.

Department of Transportation , 709 So. 2d 607 (Fla. 1st DCA 1998).

The administrative law judge may receive evidence, as with any

hearing held pursuant to Section 120.57(1), but the purpose of

the proceeding is to evaluate the action taken by the agency

based on the information available to the agency at the time it

took the action. Id.

28. In this case, Midland is the only vendor that bid on

all required products specified in the ITB. Its bid, however, is

contrary to proposal specifications with respect to the "last

channel" feature and the length of the warranties for products

subject to the ITB. The crux of the case is whether the

exceptions to the specifications submitted by Midland constituted

material deviations from these specifications.

29. The test for determining whether a deviation from

specifications is material is whether the variance gives the

bidder a substantial advantage over the other bidders and thereby

restricts or stifles competitionopabest Foods, Inc. v.

Department of General Services , 493 So. 2d 50, 52 (Fla. 1st DCA

1986); Harry Pepper & Associates, Inc. v. City of Cape Coral , 352

So. 2d 1190 (Fla. 2d DCA 1977). Put another way, "a minor

irregularity is a variation from the bid invitation or proposal

terms and conditions which does not affect the price of the bid,

or give the bidder an advantage or benefit not enjoyed by other

bidders, or does not adversely impact the interests of the

Department." Intercontinental Properties, Inc. v. Department of

Health and Rehabilitative Services , 606 So. 2d 380, 386 (Fla. 3d

DCA 1992).

30. It is concluded, based on the totality of the evidence

presented, that the exceptions reflect minor deviations from the

specifications and their acceptance by the Department does not

give Midland a substantial advantage over the other bidders who

submitted proposals. Section 23 of the Special Conditions

allowed a vendor to submit a bid with deviations, as long as

those deviations were clearly identified and explained in detail.

A similar provision allowing some deviation was included in

Section 32 regarding warranties. Midland complied with these

directives.

31. While there may be a cost factor involved in extending

the warranty over five years in conformance with the

specifications, there was no credible evidence as to that cost

factor would be. Indeed, Petitioner indicated that it had

decided to absorb the cost. Likewise, there was no indication at

hearing that not furnishing the last channel feature had any

material significance in providing a proposal. On the other

hand, the Department and its consultants all indicated that

neither issue was particularly significant in their view.

32. Agencies enjoy wide discretion when it comes to

soliciting and accepting proposals, and an agency's decision,

when based upon an honest exercise of such discretion, will not

be set aside even where it may appear erroneous or if reasonable

persons may disagree. Baxter's Asphalt and Concrete, Inc. v.

Department of Transportation , 475 So. 2d 1284, 1287 (Fla. 1st DCA

1985); Capeletti Brothers, Inc. v. State, Department of General

Services , 432 So. 2d 1359, 1363 (Fla. 1st DCA 1983). Section

120.57(3)(f) establishes the standard of proof as to whether the

proposed action was clearly erroneous, contrary to competition,

arbitrary or capricious.

33. A decision is considered to be clearly erroneous when

although there is evidence to support it, after review of the

entire record the tribunal is left with the definite and firm

conviction that a mistake has been committed. United States v.

U.S. Gypsum Co. , 333 U.S. 354, 395 (1948). An agency action is

capricious if the agency takes the action without thought or

reason or irrationally. Agency action is arbitrary if is not

supported by facts or logic. See Agrico Chemical Co. v. State

Department of Environmental Regulation , 365 So. 2d 759, 763 (Fla.

1st DCA 1978). An agency decision is contrary to competition if

it unreasonably interferes with the objectives of competitive

bidding. See Wester v. Belote , 103 Fla. 976, 138 So. 721, 723-24

(1931).

34. Here, the Department was faced with either rejecting

all bids or acceding to minor modifications requested by the only

vendor who bid on all required products. It determined that the

accepting Midland's bid was in the best interest of the agency.

Compare Intercontinental Properties . Under these circumstances,

it is concluded that Petitioner has not met its burden under

Section 120.57(3)(f), Florida Statutes, of showing that the

decision to award the contract at issue to Midland is clearly

erroneous, contrary to competition, arbitrary or capricious.

RECOMMENDATION

Upon consideration of the facts found and conclusions of law

reached, it is

RECOMMENDED:

That a final order be entered dismissing Vertex Standard's

petition.

DONE AND ENTERED this 30th day of April, 2007, in

Tallahassee, Leon County, Florida.

S

LISA SHEARER NELSON

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 30th day of April, 2007.

COPIES FURNISHED :

C. Denise Johnson, Esquire

Department of Transportation

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0450

Michael P. Donaldson, Esquire

Daniel Hernandez, Esquire

Carlton Fields, P.A.

215 South Monroe Street, Suite 500

Post Office Drawer 190

Tallahassee, Florida 32302-0190

Stacy M. Schwartz, Esquire

Eric D. Isicoff, Esquire

Isicoff, Ragatz & Koenigsberg

1200 Brickell Avenue, Suite 1900

Miami, Florida 33131

Alexis M. Yarbrough, Esquire

Department of Transportation

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0450

Stephanie Kopelousos, Interim Secretary

Department of Transportation

Haydon Burns Building

605 Suwannee Street, Mail Station 57

Tallahassee, Florida 32399-0450

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.