11-001662BID Infinity Software Development, Inc. vs. Department Of Education Status: Closed Recommended Order on Tuesday, June 7, 2011.

Summary: Vendor did not submit a responsive reply to invitiation to negotiate; therefore, vendor was not eligible to enter into negotiations.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

INFINITY SOFTWARE DEVELOPMENT, )

INC. , )

)

Petitioner , )

)

vs. ) Case No. 11 - 1662BID

)

DEPARTMENT OF EDUCATION , )

)

Respondent, )

)

and )

)

MICROSOFT CORPORATION, )

)

Intervenor . )

)

RECOMMENDED ORDER

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

on April 19 and 20, 2011, in Tallahassee, Florida, before

Susan B. Harrell, a designated Administrative Law Judge of the

Division of Administrative Hearings.

APPEARANCES

For Petitioner: Daniel J. Woodring, Esquire

Woodring Law Firm

203 North Gadsden Street, Suite 1 - C

Tallahassee, Florida 32301

Daniel Elden Nordby, Esquire

Ausley & McM ullen, P.A.

123 South Calhoun Street

Tallahassee, Florida 32301

For Respondent: Steven Scott Ferst, Esquire

Robert C. Large, Esquire

Department of Education

325 W est Gaines Street, Suite 1244

Tallahassee, Florida 32399

For Intervenor: Donna E. Blanton, Esquire

Jeffrey L. Frehn , Esquire

Radey, Thomas, Yon & Clark, P.A.

301 S outh Bronough Street, Suite 200

Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent's intended

award of a contract to Intervenor pursuant to Invitation to

Negotiate No. 2011 - 18 is contrary to Respondent's governing

statutes, Respondent's rules and policies, and the specification

of the solicita tion.

PRELIMINARY STATEMENT

On December 17, 2010, Respondent, Department of Education

(Department), issued an invitation to negotiate, entitled

"Revised Standards Tutorial." The invitation to negotiate was

numbered ITN 2011 - 18 and shall be referred to her einafter as

"the ITN." On March 7, 2011, the Department posted its intent

to award the contract to Intervenor, Microsoft Corporation

(Microsoft). On March 18, 2011, Petitioner, Infinity Software

Development, Inc. (Infinity), protested the intended award to

Microsoft.

The Department forwarded Infinity's Formal Written Protest

and Petition for Formal Administrative Hearing to the Division

of Administrative Hearings on April 1, 2011, for assignment of

an A dministrative L aw J udge to conduct the final hearing. On

April 4, 2011, Microsoft filed a Petition for Leave to

Intervene, which was granted by Order dated April 6, 2011.

The parties submitted a j oint p re - h earing s tipulation in

which they stipulated to certain facts contained in Section E,

pages 5 through 7 of the j oint p re - h earing s tipulation. Those

facts have been incorporated in this Recommended Order to the

extent that they are relevant.

At the final hearing, the parties submitted Joint

Exhibits 1 through 16, which were admitted in evidence.

Petitioner called Regina Johnson and Martha Asbury as its

witnesses. Petitioner's Exhibits 1 through 4, 6, 7, 9

through 15, and 17 were admitted in evidence. The Department

called Mary Jane Tappen and Ron Lauver as its witnesses.

Respondent's Exhibits 7, 9, 11, 1 2, 14, and 15 were admitted in

evidence. Respondent's Exhibits 3 and 4 were proffered.

Respondent's Exhibit 6 was not admitted in evidence. Microsoft

called David Gallagher as its witness, and Intervenor's

Exhibits 1 and 2 were admitted in evidence.

The three - volume Transcript was filed on May 5, 2011. The

parties agreed to file their proposed recommended orders within

ten days of the filing of the Transcript. The parties timely

filed their Proposed Recommended Orders, which have been

considered in th e preparation of this Recommended Order.

FINDINGS OF FACT

1. The Department issued the ITN, Revised Standards

Tutorial, on December 17, 2010. The purpose of the ITN was to

contract with one or more vendors "to provide assistance with

the state's need to support teachers in the implementation, and

students in the mastery of the English Language Arts and

Mathematics Common Core State Standards (CCSS) and the Next

Generation Sunshine State Science and Civics Standards." The

Department sought to purchase, am ong other things, the

following:

[T]he development of a new robust web - based

system that includes but is not limited to

interactive adaptive student practice

lessons for each of the Common Core State

Standards and Next Generation Sunshine State

Science and Social Studies Standards

(Science grades 5, 8, Biology 1 and Civics)

to address individual student needs and

provide a means of individual progress

monitoring for students, parents, and

teachers; secure mini - interim assessment

checks for students; student performance

reports for teachers on the mini - interim

assessment checks; and programming for

parent, student, and teacher log - ins that

provide different levels of access to

support materials.

2. The ITN required that the system developed would be the

pro perty of the Department during and after the contract and

stated:

All equipment, software and licenses,

programming code and language, documentation

and content (both instructional and

informative) that is developed as part of

this project will be the prop erty of the

Department during and after the grant

period. All such items must be completely

transferred to the Department prior to the

end of the contract period, including any

licenses to the extent that they have not

expired. Any proprietary products o wned by

the Contractor must provide for a perpetual

royalty free and non - exclusive license for

use by the Department.

3. Vendors were given the opportunity to ask technical

questions about the ITN, and the Department posted the questions

and the Department's responses on the vendor bid system on

December 29, 2010. One vendor submitted the following question:

"Will the DOE require a perpetual license to continue d use of

any content (assessments or lessons) after the end of the four -

year contract if those materials are the vendor's proprietary,

pre - existing materials that are provided for use in the

Standards Tutorial?" The Department gave the following written

response, which was included in Addendum No. 1 to the ITN. "All

content and applicatio ns developed will be the property of the

Department. All content, application code and documentation

must be turned over to the Department upon deliverable

completion." It is clear from the IT N and the first addendum

that the Department required the mate rials developed pursuant to

the contract to be the property of the Department.

4. One of the main goals of the Department in issuing the

ITN was to have a product that could be sustained after the

contract period. When the ITN was developed, the Departme nt was

not aware of the variety of arrangements that might be possible

in order to meet all of the Department's goals. However, the

Department made the choice to go with ownership of the products

developed for the contract and a perpetual, royalty - free no n -

exclusive license for products that were owned by the contractor

and provided pursuant to the contract, but were not developed as

a result of the contract. The Department could have worded the

ITN so that the vendors would provide a solution for the

sus tainability component of the contract, but it did not do so.

The method chosen by the Department to meet its sustainability

needs became a requirement of the ITN. Sustainability was a

material aspect of the contract , and , because the Department had

speci fied the method to achieve sustainability in the ITN with

no leeway for the vendors to propose a different methodology,

the ownership of products developed pursuant to the contract

became a material requirement of the ITN. Nothing prevented the

Department from negotiating different methods of sustainability

during negotiation, but in order to determine whether a vendor

was responsive, the Department was bound by the ITN, no matter

whether it inadequately reflected what the Department was

seeking. The reme dy to the flawed ITN would have been to change

the specifications prior to the replies being su bmitted.

5. The Department argues in its Proposed Recommended Order

that the ITN did not call for ownership of the content or the

software. This argument is disingenuous in light of the

testimony of the Department's representative that the ITN

contemplated complete ownership of the products developed

pursuant to the contract.

6. Section 7.1 of the ITN required that the vendor include

completion dates for deli verables in its Reply and provided a

list of deliverables for each year of the contract. The ITN

stated that the Deliverable Completion date contained in the ITN

was for "informational purposes only." The actual completion

dates were to be negotiated.

7. Section 3 of the ITN provides: "Award will be made to

the responsible and responsive vendor that the Department

determines will provide the best value to the state."

Section 3.3. of the ITN defines a responsive bid as "a Reply

submitted by a responsiv e and responsible vendor which conforms

in all material respects to the solicitation." The term "Reply"

is defined by the ITN as "the complete response of the

Respondent [ 1 /] to the ITN, including properly completed forms and

supporting documentation."

8. Section 4. 11 of the ITN provides:

As in the best interest of the state, the

right is reserved to award based on all or

none thereof, to a responsive, responsible

Respondent. As in the best interest of the

state, the right is reserved to reject any

and/or all Replies or to waive any minor

irregularity in replies received.

Conditions which may cause rejection of

Replies includ e, without limitation,

evidence of collusion among Respondents,

obvious lack of experience or expertise to

perform the required work, failure to

perform, or meet financial obligations on

previous contracts.

9. Section 5.2.2 of the ITN is entitled Mandato ry

Submittal Documents and requires that the vendors submit, among

other things, a transmittal with their replies which contains

the following:

· a statement certifying that the person

signing the Reply is authorized to represent

the Respondent and bind t he Respondent

relative to all mat t ers contained in the

Respondent's Reply

· the company's federal tax identification

number

· a statement certifying that the

Respondent has read, understands,

comply [sic] and agrees to all provision

of this ITN

· a s tatement that the Respondent is

authorized to conduct business in Florida in

accordance with the provisions of Chapter

607, F.S. In lieu of such statement, the

Respondent alternatively must certify that

authorization to do business in Florida will

be secu red prior to the award of the

contract

· a statement certifying that the

Respondent is registered on the

MyFloridaMarketPlace website in accordance

with the provisions by the state of Florida.

In lieu of such statement, the Respondent

must alternatively certify that registration

authorization will be completed prior to the

award of the contract.

10. Once the replies were submitted, the ITN required that

the replies be reviewed to determine if they met the mandatory

submittal requirements. If it was de termined that a reply met

the mandatory submittal requirements, the reply would be

evaluated by an evaluation committee.

11. Section 8 of the ITN sets out the evaluation and

negotiation process and provides:

8.1 REPLY EVALUATION AND NEGOTIATION

PROCESS

U sing the evaluation criteria specified

below, in accordance with Section 287.057,

F.S., the Department shall evaluate and rank

responsive Replies and, at the Department's

sole discretion, proceed to negotiate with

one or more Respondent(s) . . . :

12. Se ction 8.2 of the ITN provides:

The ITN is designed to assess the most

points to the Respondent presenting the best

solution for the required services. The

Evaluation Committee will consider only

those Replies, which are determined to meet

the mandatory re quirement review (See

SECTION 5.2.2) first completed by the

Department's Bureau of Contracts, Grants and

Procurement Management Services .

Each member of the Evaluation Committee will

be provided a copy of each Technical Reply.

Replies will be evaluated on the criteria

established in th e section above entitled

"Criteria for Evaluation" in order to assure

that Replies are uniformly rated. Th e

Evaluation Committee will assign points,

utilizing the technical evaluation criteria

identified herein and the Procurement Office

will complete a technical summary.

Oral presentations (or seeking

clarification) will be evaluated by the

committee based on the criteria established

in SECTION 5.2.1 above. During this stage

Respondents will be asked to provide any

clarifications needed by the evaluation

committee to assist in evaluating their

Reply. Information received in this stage

will be added to the Respondent's Reply and

evaluated as a part of the appropriate

section above.

13. Section 8.1 of the ITN provides that the evaluation of

the prices would be done through a comparison of the prices

submitted in the replies : "The maximum points will be awa rded

to the lowest acceptable Price Reply. Replies with higher costs

will receive the fraction of the maximum points proportional to

the ratio of the lowest Price Reply to the higher Price Reply. "

14. Section 8.1 ( E ) of the ITN provides:

In submitting a R eply Respondent agrees to

be bound to the terms of th is ITN, however,

the Department reserves the right to

negotiate different terms and related price

adjustments i f the Department determines

that it is in the state's best interest to

do so.

15. Four ven dors, including Infinity and Microsoft,

submitted replies to the ITN by the deadline of January 10,

2011.

16. Microsoft's Reply stated:

The information contained in this document

[the reply] (a) represents Microsoft's

current statement of the features,

functions , and capabilities of the products

and services described herein, which is

subject to change at any time without notice

to you, (b) is for your internal evaluation

purposes only and should not be interpreted

as a binding offer or commitment on the part

of Microsoft to provide any product or

service described herein; and (c)

constitutes Microsoft trade secret

information and may not be disclosed to any

third party. Any procurement that may

result from this information is subject to

negotiation and execution of a definitive

agreement between [sic] and its chosen

authorized Microsoft reseller incorporating

applicable Microsoft commercial terms.

Microsoft does not guarantee the accuracy of

any information presented and assumes no

liability arising fro m your use of the

information. MICROSOFT MAKES NO WARRANTIES ,

EXPRESS OR IMPLIE D , IN THIS DOCUMENT.

17. The transmittal letter submitted by Microsoft stated:

"[T]his letter certifies that Microsoft has read and understands

the provisions of the ITN. " The transmittal letter did not meet

the requirements of the ITN that Microsoft certify that it

complies and agree s with all provisions of the ITN.

18. The reply submitted by Microsoft did not provide that

all materials developed as a result of the contr act would become

the property of the Department. Microsoft intended to

subcontract with Houghton - Mifflin - Harcourt (HMH) to develop the

content, which includes the practice lesson plans for the

students. Microsoft stated in its Reply: "The Department of

Education will have a perpetual license to use these lessons;

HMH will retain copyright and ownership of all lessons

provided . "

19. Microsoft intentionally did not agree to provide

complete ownership o f the project deliverables to the Department

when it s ubmitted its reply. David Gallagher, Microsoft's

representative and the person who submitted the reply on behalf

of Microsoft , admitted at the final hearing that he did not have

authorization to give the Department ownership of the project

deliverables wh en he submitted Microsoft's reply.

20. Section 5.2.3 of the ITN provided that prices were to

be submitted on a form that was provided in the ITN. The price

form contains the following language:

We propose to provide the services being

solicited within th e specifications of

ITN 2011 - 18. All work shall be performed in

accordance with this ITN, which has been

reviewed and understood. The below prices

are all inclusive. There shall be no

additional costs charged for work performed

under this ITN.

The pri ce form submitted by Microsoft did not contain this

language.

21. Taking the evidence as a whole , it is clear that

Microsoft did not intend to be bound by its reply and thought

that anything that was contrary to the ITN would be worked out

in negotiations .

22. The Department appointed an evaluation team that met

on January 18, 2011, to score each reply. Some of the

evaluators made note in their evaluations that Microsoft's r eply

did not meet the requirements of the ITN relating to ownersh ip

of the projec t deliverables.

23. The evaluation committee awarded the maximum number of

points for price to Microsoft. The t wo to p - scoring vendors,

Infinity and Microsoft, were invited into negotiations. The

Department submitted questions to both Infinity and Micros oft

before the negotiations, and both vendors submitted written

responses to those questions. The Department submitted the

following question to Microsoft:

Your proposal states "HMH will retain

copyright and ownership of all lessons

provided " (pp.3 - 25, 3 - 33). How does this

meet the ITN requirement that "All

equipment, software and licenses,

programming code and language documentation

and content (both instructional and

informative) that is developed as part of

this project will be the property of the

Depa rtment during and after the grant

period. All such items must be completely

transferred to the Department prior to the

end of the contract period, including any

licenses to the extent they have not

expired. Any proprietary products owned by

the Contracto r must provide for a perpetual

royalty free and non - exclusive license for

use by the Department." (p. 6)?

24. Microsoft responded to the question of ownership, in

part, as follows:

Developments. Upon payment in full, we

assign you joint ownership in all rights in

any custom computer code or materials (other

than products, fixes or pre - existing work)

developed by us (or in collaboration with

you) and provided to you in the course of

performance of this contract

("developments"). "Joint ownership" means

e ach party has the right to independently

exercise any and all rights of ownership now

known or hereafter created or recognized,

including without limitation the rights to

use, reproduce, modify and distribute the

developments for any purpose whatsoever,

wi thout the need for further authorization

to exercise any such rights or any

obligation of accounting or payment of

royalties, except you agree you will

exercise your rights for your internal

business operations only, and you will not

resell or distribute t he developments to any

un - affiliated third party. These use

restrictions sha ll survive termination or

expiration of this contract. Each party

shall be the sole owner of any modifications

that it makes based upon the developments.

* * *

Educatio nal - Digital Content & Assessments.

We will grant a perpetual, royalty - free and

non - exclusive license (except as set forth

below) for all of the content and lesson

instruction and assessments created as part

of this project to the State of Florida. As

suc h, we will retain copyright and ownership

of this created material, while the State of

Florida may leverage the material on an

exclusive basis in the State of Florida

anywhere within its offices, school

facilities, and education programs,

including use ext ended to staff,

administration, teachers, students and

parents. Much of the content, particularly

in the Reading, Language Arts/Literature and

Civics disciplines is integrated into the

lessons from third - party sources. The

ownership of material permissio ned from

outside our team is unavailable to be

granted or transferred to the State of

Florida. However as part of the

sustainability plan for the Student

Standards Tutorial, we will ensure that

mechanisms are in place to allow for

permission renewals as r equired by contract

with third - party content owners for a period

encompassing four years from the final

delivery of the contract period.

Although Microsoft was given an opportunity to clarify its

position on ownership of the product deliverables developed for

the contract, Microsoft's response was still not responsive to

the requirements of the ITN.

25. The Department appointed a negotiation team that met

separately with Infinity and Microsoft on February 3, 2011.

During the negotiation session, a Micros oft representative

stated that it would be "impossible" for Microsoft to provide

complete ownership of equipment and software, that there was no

way that Microsoft could put in its best and final offer that

the Department would have complete ownership, and that Microsoft

did not want to be non - responsive but it did not know how to fix

the problem.

26. After the negotiation session with Microsoft, Regina

Johnson (Ms. Johnson) and Mary Jane Tappen, who were members of

the negotiation team , engaged in email communications regarding

whether the Department could change the language of the ITN to

allow the Department to accept the licensing proposal offered by

Microsoft. Ms. Johnson noted that if the ITN language were not

changed, Microsoft could be rejected fo r non - compliance.

27. On February 7, 2011, after the negotiation sessions,

Ms. Johnson sent an email to Infinity notifying Infinity that

the Department would accept a license or co - ownership proposal,

reflecting a change in the ITN specifications.

28. Fo llowing negotiations, each vendor was given the

opportunity to submit a Best and Final Offer (BAFO) by

February 11, 2011. Both vendors submitted BAFOs.

29. On February 16, 2011, the negotiators held an Intent

to Award meeting. Following discussion, two negotiators voted

for Microsoft , and one voted for Infinity.

30. On March 1, 2011, Chancellor Frances Haithcock sent an

Intent to Award memorandum to Commissioner Eric Smith

(Commissioner Smith), explaining why Microsoft provides the best

value to the sta te. Commissioner Smith signed th at memorandum

on March 4, 2011.

31. On March 7, 2011, the Department posted the Intent to

Award to Microsoft.

CONCLUSIONS OF LAW

32. The Division of Administrative Hearings has

jurisdiction over the parties to and the su bject matter of this

proceeding. See §§ 120.569 and 120.57, Fla. Stat. (2010). 2 /

33. Section 120.57(3) (f) provides that the burden of proof

rests with the party protesting the agency's intended decision,

and further provides :

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 agencyÓs proposed action is

contrary to the agencyÓs governing statutes,

the agencyÓs rules or pol icies, 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.

34. Infinity contends in its Proposed Recommended O r der

that Microsoft was not responsive to the ITN for the following

reasons:

1) The Microsoft Reply was not responsive

because the reply did not include the

mandatory submittal documents required by

Section 5.2.2 of the ITN;

2) The Microsoft Reply was not responsive

because the reply was not "binding" as

required by Section 8.1(E) of the ITN; and

3) The Microsoft Reply was not responsive

because it did not provide DOE with complete

ownership of the non - proprietary contract

deliverables as required b y Section 3.1 of

the ITN and the ITN Addendum.

Infinity has the burden to establish that Microsoft's reply was

non - responsive for these reasons and that the Department's

decision to determine that Microsoft was responsive was clearly

erroneous, contrary to competition, arbitrary, or capricious.

35. An agency action will be found to be "clearly

erroneous" if the agency's interpretation conflicts with the

plain and ordinary intent of the law. See Colbert v. Dep ' t of

Health , 890 So. 2d 1165, 1166 (Fla. 1st DCA 2004). In such a

case, "judicial deference need not be given" to the agency's

interpretation. Id. An agency action will be found to be

"clearly erroneous" if it is without rational support , and,

consequently, the tr ier - of - fact has a "definite and firm

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

U.S. Gypsum Co. , 333 U.S. 364, 395 (1948).

36. An act is "contrary to competition" if it

unreasonably interferes with the objectives of competitive

bidd ing, which are:

[T]o protect the public against collusive

contracts; to secure fair competition upon

equal terms to all bidders; to remove not

only collusion but temptation for collusion

and opportunity for gain at public expense;

to close all avenues to f avoritism and fraud

in its various forms; to secure the best

values for the county at the lowest possible

expense; and to afford equal advantage to

all desiring to do business with the

county, by affording an opportunity for an

exact comparison of bids.

Wester v. Belote , 138 So. 721, 723 - 24 (Fla. 1931).

37. The Administrative Law Judge in SYSLOGIC Tech nology

Serv ices, Inc. v. S outh Fl orida Water M anagement Dist rict , Case

No. 01 - 4385BID ( Fla. D OAH Jan. 18, 2002 ; SFWMD Mar. 6, 2002 ),

stated:

Thus, from Se ction 287.001 can be derived an

articulable standard of review. Actions

that are contrary to competition include

those which:

(a) create the appearance of and

opportunity for favoritism ;

(b) erode public confidence that contracts

are awarded equitably and economically;

(c) cause the procurement process to be

genuinely unfair or unreasonably exclusive;

or

(d) are unethical, dishonest, illegal, or

fraudulent. (emphasis added).

38. "An action is 'arbitrary if it is not supported by

logic or the nec essary facts,' and 'capricious if it is adopted

without thought or reason or is irrational.'" Hadi v. Liberty

Behavioral Health Corp. , 927 So. 2d 34, 38 - 39 (Fla. 1st DCA

2006).

39. Chapter 287, Florida Statutes, deals with the

procurement of commodities and services by state agencies. The

Department utilized an invitation to negotiat e as the method for

procurement of the contract at issue. Section 287.057(1)(c)

describes how a procurement by invitation to negotiate is

conducted and provides:

(c) Invita tion to negotiate. -- The

invitation to negotiate is a solicitation

used by an agency which is intended to

determine the best method for achieving a

specific goal or solving a particular

problem and identifies one or more

responsive vendors with which the ag ency may

negotiate in order to receive the best

value.

1. Before issuing an invitation to

negotiate, the head of an agency must

determine and specify in writing the reasons

that procurement by an invitation to bid or

a request for proposal is not practi cable.

2. The invitation to negotiate must

describe the questions being explored, the

facts being sought, and the specific goals

or problems that are the subject of the

solicitation.

3. The criteria that will be used for

determining the acceptability o f the reply

and guiding the selection of the vendors

with which the agency will negotiate must be

specified.

4. The agency shall evaluate replies

against all evaluation criteria set forth in

the invitation to negotiate in order to

establish a competitive range of replies

reasonably susceptible of award. The agency

may select one or more vendors within the

competitive range with which to commence

negotiations. After negotiations are

conducted, the agency shall award the

contract to the responsible and resp onsive

vendor that the agency determines will

provide the best value to the state, based

on the selection criteria.

5. T he contract file for a vendor selected

through an invitation to negotiate must

contain a short plain statement that

explains the basis for the selection of the

vendor and that sets forth the vendorÓs

deliverables and price, pursuant to the

contract, along with an explanation of how

these deliverables and price provide the

best value to the state. ( e mphasis added) .

40. Section 2 8 7.012( 25) defines a responsive submission to

a solicitation as follows: ÐResponsive bid,Ñ Ðresponsive

proposal,Ñ or Ðresponsive replyÑ means a bid, or proposal, or

reply submitted by a responsive and responsible vendor that

conforms in all material respects to the solicitation. A

responsive vendor is defined by section 287.012(26) as " a vendor

that has submitted a bid, proposal, or reply that conforms in

all material respects to the solicitation ." Section 287.012(24)

defines a r esponsible vendor as " a vendor w ho has the capability

in all respects to fully perform the contract requirements and

the integrity and reliability that will assure good faith

performance. " The statutory definition o f a responsive vendor

does not change whether the procurement method is an invitation

to bid, a request for proposals, or an invitation to negotiate.

41. The evidence clearly demonstrates that Microsoft's

r eply deviated from the ITN. However, every deviation from the

ITN does not make a reply non - responsive to the ITN. The

D epartment reserved the right to waive minor irregularities.

The court in Robinson Electric al Co . v. Dade County , 417 So. 2d

1032, 1034 (Fla. 3d DCA 1982) , discussed the criteria for

determining whether a variance is a material de viation or a

minor irregularity and stated:

Although a bid containing a material

variance is unacceptable, Glatstein v. City

of Miami , 399 So. 2d 1005 (Fla. 3d DCA),

rev. denied , 407 So. 2d 1102 (Fla. 1981),

not every deviation from the invitation is

material.

In determin in g whether a specific

noncompliance constitutes a sub s tantial and

hence non - waivable irregularity, the courts

have applied two criteria - first, whether the

effect of a waiver would be to deprive the

[government agency] of its assurance that

the contract will be entered into, performed

and guaranteed according to its specified

requirements, and second, whether it is of

such a nature that its waiver would

adversely affect competitive bidding by

placing a bidder in a position of advantage

over other bidders or b y otherwise

undermining the necessary common standard of

competition.

In application of the general principles

above discussed, sometimes it is s aid that a

bid may be rejected or disregarded if there

is a material variance between the bid and

the advert isement. A minor variance,

however, will not invalidate the bid. In

this context a variance is material if it

gives the bidder a substantial advantage

over the other bidders, and thereby

restricts or stifles competition. 10

McQuillan, Municipal Corporat ions § 29.65

(3d Ed. Rev. 1981) (footnotes omitted); see

Harry Pepper & Associates, Inc. v. City of

Cape Coral , (Fla. 3d DCA 1982) .

42. The l e itmotif of both Microsoft's and the Department's

arguments is that , because the procurement is by an invitation

to negotiate , if there is a variance in the vendors' replies and

the ITN, it is of no moment because there will be negotiations

before a contract is awarded. This argument is without merit.

A procurement made by an invitation to negotiate is a

competitiv e procurement. Section 287.057 requires that the

Department determine that a reply is responsive prior to

entering into negotiations with the vendor. In the instant

case, Microsoft was not responsive to the ITN prior to the

negotiation. The Department r ecognized that Microsoft was not

responsive when it posed the question to Microsoft prior to the

negotiations to explain how the licensing method for the content

that Microsoft submitted in its reply was not contrary to the

requirement of ownership set for th in the ITN. Instead of

rejecting Microsoft's reply for being non - responsive, the

Department essentially changed the requirements of the ITN to

make Microsoft responsive, which is contrary to competition.

43. It is clear that Microsoft was not submitti ng a

binding reply and that it did not agree to comply or be bound by

the terms of the ITN. It intentionally omitted the

certification in its transmittal letter that it complies and

agrees with the terms of the ITN. It placed disclaimers in both

its tech nical and price replies that the reply was for

"evaluation purposes only and should not be interpreted as a

binding offer or commitment on the part of Microsoft to provide

any product or service described herein." It omitted language

in its price reply th at all work was to be performed in

accordance with the ITN , that the prices submitted were all

inclusive , and that there would be no additional charges for the

work performed under the ITN. Although Microsoft argues that

Microsoft knew that it was bound by the terms of the ITN, this

argument is without merit based on the testimony of the

representative of Microsoft w ho submitted Microsoft's reply that

he did not have authorization to give ownership of the content

developed to the Department. Again, during negotiations,

Microsoft made it clear that it was impossible for Microsoft to

give complete ownership to the Depa rtment.

44. Determining that a vendor who will not agree to be

bound by the terms and conditions of the ITN is responsive

defeats the purpose of the requirement that the reply must be

responsive in order to be qualified to negotiate and goes to the

heart of the competitive nature of a procurement by invitation

to negotiate.

45. Additionally, the vendors were evaluated on the prices

that they submitted in their replies. The lowest price

submitted garnered the most points. If a vendor does not submit

bi nding prices, then the evaluation becomes meaningless because

a true comparison of the prices submitted by all vendors cannot

be made if prices are only estimates. No testimony was provided

that the other vendors were allowed to submit prices that were

no t binding or that were only estimates.

46. Microsoft argues that the Department could negotiate

with a qualified vendor if the vendor's reply was not responsive

to the ITN. The term "qualified vendor" is not defined in the

ITN, and section 287.057 provid es that the vendor must be

responsive , not qualified. Thus, to negotiate with a vendor who

was not responsive but was qualified is contrary to the statute

governing the Department's use of an invitation to negotiate.

47. The Department's decision to dete rmine Microsoft's

reply responsive to the ITN and proceed to negotiations was

contrary to the ITN and contrary to section 287.057. The

determination that Microsoft's reply was responsive is clearly

erroneous and contrary to competition. Thus, to award a

contract to a vendor who should not have been determined

responsive to the ITN is clearly erroneous and contrary to

competition. To award the contract to Microsoft would be

contrary to the ITN and to section 287.057 .

48. Because the award to Microsoft is contrary to

section 287.057 and the ITN, the Department is left with the

decision to either reject all replies and issue a new ITN which

clearly reflects what the Department wants or to enter into

negotiations with Infinity.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that a f inal o rder be entered finding

that the intended decision to award a contract to Microsoft

pursuant to ITN 2011 - 18 is contrary to section 287.057 and the

ITN.

DONE AND ENTERED this 7th day of June , 2011 , in

Tallahassee, Leon County, Florida.

S

SUSAN B. HARRELL

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 7 th day of June , 2011 .

ENDNOTES

1/ Respondent is defined by the ITN to mean "a potential

Contractor acting on its own behalf and on behalf of those

individuals, partnerships, firms, or corporations comprising the

Respondent's team."

2/ Unless otherwise indicated, all references to the F lorida

Statutes are to the 2010 version.

COPIES FURNISHED :

Daniel J. Woodring, Esquire

Woodring Law Firm

203 North Gadsden Street, Suite 1 - C

Tallahassee, Florida 32301

Daniel Elden Nordby, Esquire

Ausley & McMullen, P.A.

123 South Calhoun Street

Tallahassee, Florida 32301

Donna E. Blanton, Esquire

Jeffrey L. Frehn, Esquire

Radey, Thomas, Yon & Clark , P.A.

301 South Bronough Street, Suite 200

Tallahassee, Florida 32301

Steven Scott Ferst, Esquire

Robert C. Large, Esquire

Department of Education

325 West Gaines Street, Suite 1244

Tallahassee, Florida 32399

Lynn Abbott, Agency Clerk

Department of Education

Turlington Building, Suite 1514

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

Dr. Eric J. Smith, Commissioner of Education

Departm ent of Education

Turlington Building, Suite 1514

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

Lois Tepper, Acting General Counsel

Department of Education

Turlington Building, Suite 1244

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

1 0 d ays 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.