11-003136BID Promethean, Inc. vs. Orange County School Board Status: Closed Recommended Order on Friday, September 23, 2011.

Summary: Petitioner could not prove that Respondent's award of contract to Intervenor was arbitrary, capricious, erroneous or contrary to competition.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PROMETHEAN, INC., ) )

)

Petitioner, ) Case No. 11-3136BID

vs. )

)

ORANGE COUNTY SCHOOL BOARD, )

)

Respondent, )

)

and )

)

SMART TECHNOLOGIES CORPORATION, )

Intervenor. )

)

)

RECOMMENDED ORDER

Pursuant to notice to all parties, the final hearing was

conducted in this case on August 23, 2011, in Orlando, Florida,

before Administrative Law Judge R. Bruce McKibben of the

Division of Administrative Hearings.

APPEARANCES

For Petitioner: Paul H. Amundsen, Esquire

Susan L. St. John, Esquire

Ruden McClosky, P.A.

215 South Monroe Street, Suite 815

Tallahassee, Florida 32301

For Respondent: Diego Rodriguez, Esquire

Orange County School Board

445 West Amelia Street

Orlando, Florida 32801-1129

For Intervenor: Martha Harrell Chumbler, Esquire

Carlton Fields, P.A.

215 South Monroe Street, Suite 500

Post Office Box 190

Tallahassee, Florida 32302-0190

STATEMENT OF THE ISSUE

The issue in this case, a bid protest, is whether the

intended decision of Respondent, Orange County School Board (the

"School Board"), to award a contract for interactive devices and

associated equipment to Intervenor, SMART Technologies

Corporation ("Smart"), instead of to Promethean, Inc.

("Promethean"), is clearly erroneous, contrary to competition,

arbitrary, or capricious.

PRELIMINARY STATEMENT

Pursuant to an Invitation to Negotiate "("ITN"), the School

Board issued its Notice of Intent to award a contract to Smart

on May 24, 2011. Promethean timely filed a notice of its intent

to protest the award of the contract. Promethean's Petition and

Formal Written Bid Protest was filed at the Division of

Administrative Hearings ("DOAH") on June 21, 2011. On that same

date the School Board filed a motion to dismiss the petition.

On July 11, 2011, Smart filed a Petition to Intervene in

the proceeding. Smart's petition was granted by Order dated

July 18, 2011. On August 8, 2011, Paul H. Amundsen, Esquire,

filed a notice of appearance for Promethean. The School Board's

motion to dismiss was denied by Order dated August 9, 2011.

Thereafter, the parties each submitted unilateral pre-hearing

statements; no pre-hearing stipulations were reached.

Just prior to the final hearing in this matter, Smart filed

a motion seeking to strike various allegations from Promethean's

petition. At the final hearing, the only disputed allegation

had to do with Promethean's existing relationship with the

School Board. Based on the decision reached below, the motion

is moot.

At the final hearing Promethean called as a witness Scott

Willett, director of sales for Promethean's east region.

Promethean's Exhibits 1 through 3 and 5 through 12 were admitted

into evidence. The School Board called two witnesses: Marcel

Martinez, senior manager of Procurement Services; and George

Perreault, director of Instructional Technologies and Library

Media. The School Board Exhibits 2, 6, 7, 13 through 17, and 20

were admitted into evidence. Smart did not call any witnesses,

but offered Exhibit 1 into evidence.

A transcript of the final hearing was ordered by the

parties. The Transcript was filed at the DOAH on August 29,

2011. By rule, parties were allowed ten days to submit proposed

recommended orders. The School Board and Smart, jointly, and

Promethean each timely submitted a Proposed Recommended Order,

and each was duly considered in the preparation of this

Recommended Order.

FINDINGS OF FACT

1. Promethean is a Delaware corporation. Its parent

company, founded some 15 years ago in the United Kingdom, has

operations throughout North America, Europe and elsewhere. The

original reason for founding the company was to develop

interactive whiteboard technology. Promethean is now one of the

leaders in interactive technology and has prior experience with

the School Board, with as many as 1,900 interactive whiteboards

installed in Orange County schools.

2. The School Board is the public entity responsible for

investigating, purchasing, and implementing interactive

technology into the classrooms of the Orange County public

school system. The School Board is the tenth largest school

district in the nation and the fourth largest in Florida. It is

the second largest employer in Orange County, Florida, with over

21,000 full and part-time employees. The district consists of

over 180 schools and has over 179,000 students.

3. Smart is also a leader in the interactive technology

field. Smart, a Delaware corporation, has offices in Arlington,

Virginia and Calgary, Canada. Smart and Promethean, combined,

have 80 to 90 percent of the K-12 market for interactive

technology.

4. On or about August 17, 2010, the School Board issued

Request for Information No. 1008466RFI (the "RFI"), inviting

manufacturers and retailers to demonstrate interactive devices

to the School Board's Audio Visual Committee. Timely responses

to the RFI were made by several entities, including both

Promethean and Smart.

5. On or about February 16, 2011, based on its review of

information received, the School Board issued Interactive

Devices and Associated Equipment ITN No. 1102044ITN. The

submittal date for responses to the ITN was set for March 10,

2011.

6. An ITN goes through a process whereby the School Board

posts a solicitation and vendors submit their proposals. Then a

committee is formed to evaluate the proposals. Based upon their

review, a short list of responding firms is created, narrowing

the number of proposals that will be further considered. The

short list firms' proposals are then opened for further

negotiation and discussion. At that point, the School Board's

procurement experts take over the process for doing the

negotiations with each vendor. After completion of the

negotiations, a recommendation is made for approval of one

vendor.

7. The purpose of the ITN was to "request solicitations

from manufacturers who can provide the interactive device

solutions (with or without a board), portable stands or

permanent wall installation throughout the school year in

varying quantities from individual location sites within the

District. These purchases will be made through the Procurement

Services Department on an as requested basis. The purchases

will not be made on any schedule[d] purchase plan." The ITN

also stated that manufacturers must be able to provide a

complete classroom solution including the following components

and suggestions:

A board or board-mounted solution; A tablet or slate type device that allows remote

control;

A document camera that can be controlled via the

manufacturer's software;

Student response systems that interface with the

manufacturer's software;

Multi-touch capability (two or more people

interacting with the surface simultaneously) "would

be desirable"; and

Use of Bluetooth wireless connections is

"discouraged."

8. The ITN also describes the process that would be used

in evaluating responses. Pertinent portions of the ITN are set

forth below:

Proposal Evaluation Committee

A Proposal Evaluation Committee (PEC) consisting of

District Staff will convene, review, evaluate and rank

all valid responses submitted based on the evaluation

criteria developed by the Committee.

The Proposal Evaluation Committee reserves the right

to interview any, all or none of the Manufacturers

that responded to the ITN and to require formal

presentations with the key personnel who will

administer and be assigned to work on behalf of the

contract before recommendation of the award. This

interview is to be based upon the written proposal

received.

* * *

Evaluation Criteria

Only proposals that meet the minimum requirements will

be scored. Proposal that meet the minimum Technical

requirements will be evaluated based on the following

criteria:

Shortlist Evaluation Possible Maximum

Criteria

Points Weight Value

I. Experience,

Qualifications 150 30%

II. Equipment Solution 250 70%

Should the PEC members request presentation or

interview from shortlisted Manufacturers, the

following evaluation criteria will apply:

Presentation/Interview Possible Maximum

Evaluation Criteria

Points Weight Value

I. Education Impact &

Operational

Effectiveness 100 50%

II. Experience 100 20%

III. Price & Cost

Containment Strategies 100 30%

* * *

The Procurement Representative shall calculate all

scoring and determine a ranking of the short listed

firms based on the presentation/interview evaluation

criteria.

* * *

The District deserves the right to negotiate the price

and contract terms and conditions with the most

qualified firm(s) to provide the requested service.

If a mutually beneficial agreement with the first

selected Manufacturer [cannot be reached], the

Committee reserves the right to enter into contract

negotiations with the next highest ranked Manufacturer

and continue the process until agreement is reached.

* * *

The District reserves the right to negotiate, either

serially or concurrently, with any and all

Manufacturers at any point in the solicitation

process. The District reserves the right to finalize

the negotiations at any point and post an "Intent to

Award" notice. Manufacturers should recognize the

District's right to finalize the negotiation process

without the need to explicitly request an interim

revised response or a best and final offer. The

District reserves the right to award based on the

offer that is deemed the best value to the

State. . . .

9. Timely responses to the ITN were submitted by six

manufacturers: Promethean, Smart, Sanford Brands, QOMO Hite

Vision, PolyVision, and AVerMedia. The responses were reviewed

by the PEC which was composed of a diverse group of School Board

officials with varying backgrounds in finance, academia, and

school administration. The PEC ranked the proposals submitted

by each manufacturer based upon the first two general criteria:

I. Experience and qualifications; and II. Equipment solution.

Price and cost containment strategies were not considered at

that time.

Promethean and Its Proposal

10. Promethean initially began its business operations

with a product called the ActivBoard 78, or AB78, a 78-inch

(diagonally measured) board with certain desired functions. It

was the first active board furnished to the School Board. In

2009, Promethean developed the AB164 and AB178, the next series

in the development of active boards.

11. The next series of active boards it developed was the

300 series. That series included the AB378 and an upgraded

version, the AB378PRO. The latter version includes speakers and

sound capability built into the board and has dual pen

capability. That is, the AB378PRO allows the teacher to operate

the board with one pen, while the student operates at the same

time with a separate pen. The AB378 can have dual pen

capability, but it must be added as an option, rather than being

part of the board's basic functions. The two pens operate on

different frequencies so that the student's interaction can be

distinguished from the teacher's movements on the board. The

AB378 or AB378PRO is used in most of Promethean's demonstrations

to potential school customers.

12. Of the 1,900 whiteboards installed by Promethean for

the School Board, approximately 620 are AB378PROs, about 700 are

AB378s, and the rest are primarily the AB78s, predecessor to the

AB178s.

13. As part of its response to the ITN, Promethean also

included a slate, basically a small whiteboard held by students

at their desks. Promethean also offered the ActivExpression

device, referred to in the industry as a student response system

or learner response system. Using ActivExpression, a teacher

could pose questions to students who would respond on their

slate. The responses would then be tallied into the

ActivExpression device, telling the teacher whether the students

were keeping up or needed more instruction on a particular area

of instruction.

14. The Promethean proposal included an ActivHub, a device

which plugs into a USB port on the whiteboard or a computer and

allows wireless access to other products offered by Promethean,

such as the slate. The proposal also included a document camera

called an ActivView. Students use it to display copies of

documents on the whiteboard and then annotate the document using

the pens.

15. Software on the various versions of Promethean's

whiteboards can be different. The AB178, for example, includes

their ActivInspire basic edition. The AB378 and AB378PRO come

with ActivInspire Professional Edition. The ActivExpression

learner response systems come with ActivInspire Professional.

That software is available on the AB178, but it must be added.

With ActivInspire Professional Edition, Promethean makes the

site license available to the schools. The site license was

offered as part of Promethean's proposal to the School Board in

its ITN response.

16. Promethean also offered the School Board the right to

use AtivInspire Professional Edition on their existing

whiteboards provided by the competitor, Smart. However, that

offer was contingent upon Promethean being the sole provider of

whiteboards for future purchases.

Smart and Its Proposal

17. Smart proposed a whiteboard from its D680 series.

That whiteboard also had dual touch capability. Smart's boards

had a different design than Promethean's boards and provided a

touch screen that could be operated by the touch of a person's

finger, rather than using a pen. Smart uses a resistive

technology as opposed to Promethean's electromagnetic

technology.

18. Smart's product included a math package as part of the

offered software. That software was extremely attractive to the

School Board due to the manner in which it might assist

teachers.

19. Smart offered a volume discount for purchases if the

School Board would make Smart the sole provider for equipment

during the two-year contract period. There is no evidence that

the School Board accepted that offer.

20. Smart also proposed its SRP-XE-24 high-end learner

response system. A $30,000 credit was offered to the School

Board on this system, but only if the School Board purchased

60 of the units at a cost of $106,000. Again, there is no

evidence that the School Board availed itself of that credit

offer.

21. There was no testimony or evidence presented as to the

elements of any other entity involved in the negotiations. The

School Board appears to have given both Smart and Promethean's

proposals full consideration.

The School Board's Review

22. Upon receipt of the responses to the ITN, on March 15,

2011, the School Board issued an Evaluation Ranking based upon

the general review criteria. Promethean achieved the top rank

with a total of 220 points; Smart was second with 197.10 points,

and Sanford Brands was third with 142.50 points. Each of the

other applicants received less than 100 points. The PEC agreed

by consensus to invite the three top ranked firms for interviews

and presentations. Notice was posted on March 15, 2011,

identifying the three selected applicants.

23. The interviews and presentations were scheduled as

follows: Sanford Brands--March 21, 2011, at 11:00 a.m.;

Promethean--March 21, 2011, at 2:45 p.m.; and Smart--March 22,

2011, at 1:00 p.m. As directed by the ITN, the PEC scored each

manufacturer on the basis of the Educational Impact/Operational

Effectiveness criteria and the Experience criteria. It did not,

however, assign any scores for the Price and Cost Containment

criterion.

24. On March 31, 2011, the School Board issued another

evaluation ranking based on the PEC's scoring of the first two

evaluation criteria. This time, Smart was ranked first with

63 points; Promethean was second with 61.50 points; and Sanford

Brands was third with 42.50 points. The PEC agreed by consensus

to invite the top two firms to enter into negotiations with the

School Board.

25. Representatives of Promethean and Smart met with the

School Board's procurement staff in separate negotiation

sessions on May 4, 2011. Both Promethean and Smart then entered

into an exchange of documents and information with the School

Board, including final specifications for relevant models, final

pricing lists, and various other data.

26. Promethean initially asked for additional time to

submit its documentation and information, but that request was

denied by the School Board. Promethean then provided its first

updated data on the afternoon of May 5, 2011, the day after

meeting with the procurement staff. At that time, Promethean

provided the School Board with its "lowest and best offer" for

its proposal. The offer included "value added" items, such as

spare parts and software licensing, a rebate arrangement,

training, and professional development, all at no cost to the

School Board. Promethean, thereafter, provided corrections to

its pricing list and an updated equipment list to a procurement

representative via a telephone call on May 12, 2011, followed up

by an email.

27. Smart submitted its first updates just after midnight,

i.e., technically on May 6, 2011. Smart, thereafter, on May 10

and 12, 2011, submitted updates further reducing the prices for

its proposal. There is no evidence in the record as to why

Smart submitted further updates to the School Board, but there

is no direct prohibition in the ITN against doing so.

28. Based upon the information provided, the live

presentations, and a review of the School Board's needs, the

School Board posted its Notice of Intent awarding the contract

to Smart on May 24, 2011. The notice was based on a price

comparison between Smart's D680 model and Promethean's AB378PRO.

The School Board did not consider Promethean's AB178 model

because, although it can be upgraded to comply with the

requirements in the ITN, it was not an acceptable system without

the updates.

29. The cost comparisons forming the final decision by the

School Board are as follows:

Component Smart Promethean

Interactive Board $1,197.00 $1,259.57

Slate/Tablet $ 272.00 $ 351.02

Response System $1,088.00 $1,544.49

Document Camera $ 692.00 $ 486.62

TOTAL $3,249.00 $3,641.70

The comparison was based on prices submitted by Promethean on

May 5, 2011, and on prices submitted by Smart on May 5, 2011, as

revised on May 10 and 12, 2011. Promethean also made suggested

changes to its prices on May 24, 2011, but the School Board's

decision had already been made by that time.

30. It was later determined that one of the added costs

anticipated by the School Board for Promethean's proposal would

not be necessary if the AB378PRO model was considered. Also,

the price for Promethean's slate should have been $265.12,

rather than as stated. The combination of those two changes

could reduce Promethean's total price to $3,406.80, but that

would still be higher than Smart's price.

The Warranty Issue

31. The ITN called for a minimum 5-year replacement or

repair warranty, postage paid--advanced replacement or on-site

support, with a maximum 48-hour response time.

32. The standard warranty on Promethean's AB178 is one

year, plus one additional year at registration. On the AB378

and AB378PRO, the standard warranty is three years plus two

additional years at registration. Neither of the warranties is

an advanced replacement warranty; they are only standard

warranties.

33. None of the other components of Promethean's proposal

normally comes with a standard five-year warranty. In fact,

Promethean does not even offer those warranties for purchase for

the various components.

34. In order to obtain five-year warranties for the

whiteboard component, a customer would have to purchase them at

an additional cost. However, as part of its pricing component

for the ITN response, Promethean added in a five-year advanced

replacement warranty for both the whiteboard and the other

components of its proposal.

35. Smart's interactive boards have five-year warranties,

but they are not specifically advance replacement warranties.

They would constitute repair warranties, however.

The Final Decision

36. The School Board's review of the two proposals

considered Smart's D680 series to be most similar to

Promethean's AB378 or AB378PRO whiteboard. Its review of the

proposals presumed the inclusion of dual pen or dual touch

technology. The ability to add that technology to a whiteboard

not equipped with it as a standard feature was not acceptable to

the School Board.

37. If the School Board had compared Smart's D680 series

to Promethean's AB178, it is likely Promethean's proposal could

have come in at a lower overall cost. However, there is

insufficient evidence to suggest that Promethean intended its

AB178 to be considered or that the School Board would be

satisfied with the AB178 series interactive boards.

CONCLUSIONS OF LAW

38. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding pursuant to sections 120.569 and 120.57(3), Florida

Statutes (2011). Unless stated specifically herein, all

references to Florida Statutes shall be to the 2010

codification.

39. The burden of proof is on Promethean, as the

petitioner, to establish grounds for invalidating the proposed

procurement decision. State Contracting & Eng'g Corp. v. Dep't

of Trans. , 709 So. 2d 607, 609 (Fla. 1st DCA 1998). Section

120.57(3) describes that burden, stating:

[I]n 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.

40. It is a basic principle of administrative law in

Florida that formal proceedings conducted by the DOAH regarding

decisions which affect a party's substantial interest are

de novo. Dep't of Transp. v. J.W.C., Inc.

, 396 So. 2d 778 (Fla.

1st DCA 1981); McDonald v. Dep't of Banking and Fin. , 346 So. 2d

569, 584 (Fla. 1st DCA 1977).

41. In a bid case, however, the Administrative Law Judge

does not put himself in the role of the agency in determining if

bids are responsive, in scoring bids, or by performing similar

tasks. The purpose of the bid hearing is merely to review the

proposed agency action. State Contracting , 709 So. 2d at 609;

Intercontinental Properties, Inc. v. Dep't of HRS , 606 So. 2d

380, 386 (Fla. 1st DCA 1992). It is the ALJ's role to determine

whether the agency action was clearly erroneous, contrary to

competition, arbitrary, or capricious.

42. "A capricious action is one which is taken without

thought or reason or irrationally. An arbitrary decision is one

not supported by facts or logic." Agrico Chem. Co. v. Dep't of

Envtl. Reg. , 365 So. 2d 759, 763 (Fla. 1st DCA 1978). 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. U.S. v. U.S.

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

43. In Florida, "a public body has wide discretion in

soliciting and accepting bids for public improvements and its

decision, when based on an honest exercise of this discretion,

will not be overturned by a court even if it may appear

erroneous and even if reasonable persons may disagree." Liberty

Cnty. v. Baxter's Asphalt & Concrete, Inc. , 421 So. 2d 505, 507

(Fla. 1982).

44. The School Board did a thorough and comprehensive

review of all proposals sent in response to the ITN. Admitting

that it could not compare "apples to apples" due to the fact

that each manufacturer's equipment is somewhat unique, the

School Board nonetheless engaged in a reasonable and logical

approach in their review. Each proposal was given a complete

and honest appraisal. The School Board's decision was based

upon its understanding of the applicants' proposals as applied

to the needs of the Orange County public school system.

45. There is no evidence of capricious or arbitrary

behavior by the School Board as it relates to their review and

consideration of the proposals by Promethean and Smart. The

School Board did not do anything during its review that would be

anti-competitive as to one applicant versus another.

46. The decision to award the contract to Smart rather

than Promethean was reasonable and based upon the sound exercise

of the School Board's discretion. Nothing suggests that the

decision was inherently wrong.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that a final order be entered by Orange County

Public Schools upholding its Notice of Intent to award the

contract to Smart Technologies Corporation and denying the

Petition filed by Promethean, Inc.

DONE AND ENTERED this 23rd day of September, 2011, in

Tallahassee, Leon County, Florida.

R. BRUCE MCKIBBEN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone]

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 23rd day of September, 2011.

COPIES FURNISHED :

Ronald (Ron) Blocker, Superintendent

Orange County School Board

445 West Amelia Street

Orlando, Florida 32801-0271

Gerard Robinson, Commissioner

Department of Education

Turlington Building, Suite 1514

325 West Gaines Street

Tallahassee, Florida 32399-0400

Lois Tepper, Interim General Counsel

Department of Education

Turlington Building, Suite 1244

325 West Gaines Street

Tallahassee, Florida 32399-0400

Martha Harrell Chumbler, Esquire

Carlton Fields, P.A.

215 South Monroe Street, Suite 500

Post Office Drawer 190

Tallahassee, Florida 32302-0190

Diego Rodriguez, Esquire

Orange County School Board

445 West Amelia Street

Orlando, Florida 32801-1129

Susan L. St. John, Esquire

Ruden McClosky

215 South Monroe Street, Suite 815

Post Office Drawer 1759

Tallahassee, Florida 32301

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.