13-004590BID Jacksonville Sound And Communications, Inc. vs. Department Of Management Services Status: Closed Recommended Order on Monday, February 24, 2014.

Summary: Petitioner failed to prove that agency's interpretation of bid specification regarding experience in installing, programming and maintaining fire alarm control panels was contrary to agency's governing statutes, rules or policies.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JACKSONVILLE SOUND AND

COMMUNICATIONS, INC.,

Petitioner,

vs. Case No. 13 - 4590BID

DEPARTMENT OF MANAGEMENT

SERVICES,

Respondent,

and

FUTURE COMPUTER SYSTEMS, LLC,

Intervenor.

/

RECOMMENDED ORDER

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

on December 17, 2013 , in Jacksonville , Florida, before Lawrence

P. Stevenson, a duly - designated Administrative Law Judge of the

Division of Administrative Hearings.

APPEARANCES

For Petitioner: Scott A. Padgett , Esquire

Rogers Towers, P.A.

1301 Riverplace Boulevard , Suite 1 5 00

Jacksonville , Florida 3 2207

For Respondent: Ronda L. Moore , Esquire

Matthew F. Minno , Esquire

Department of Management Services

405 0 Esplanade Way, Suite 160

Tallahassee , Florida 32399 - 0950

For Int ervenor: William Nussbaum , Esquire

Slott, Barker & Nussbaum

334 East Duval Street

Jacksonville, Florida 32202

STATEMENT OF THE ISSUE

At issue in this proceeding is w hether Respondent ,

De partment of Management Services ( ÐDMS ") , acted contrary to the

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

specifications in its proposed decision to award the contract

for Invitation to Bid No. MSFM - 13002020 (the "ITB") to

Intervenor Future Computer Systems, LLC (" FCS ") .

PRELIMINARY STATEMENT

On October 23, 2013 , DMS posted its intended award of the

contract pursuant to the ITB for the replacement of existing

Edwards Systems Technology (ÐE dwards Ñ) fire alarm main panels in

four of its buildi ngs located in the Mary L. Singleton Regional

Service Center in Jacksonville. The notice of intent to award

reflected that the winning bidder was FCS . Jacksonville Sound

and Communications, Inc. (ÐJacksonville SoundÑ) submitted the

second - low bid. There were only two bidders on the project.

Also on October 23, 2013, Jacksonville Sound filed a formal

written protest of the intended award to FCS. The protest was

confined to a single issue:

Within the provided scope a n d specification

relating to this bid located in the

Design/Build Criteria Documentation, Section

Technical Specifications, Item #7 states the

following:

7. Contractors provided with

Invitations to Bid have been chosen due

to their years in the industry and

having a partnered relationship w ith

Edwards Systems Technology.

Contractor, upon request, shall provide

evidence to support 5 years [sic]

experience with performing retrofits

with the specific product line as

mentioned in the ÒSummary . Ó [ 1 ]

Although FCS may have 5 years [sic]

experience in the fire alarm industry,

Jacksonville Sound and Communication, Inc.

is protesting the organizationÓs experience

with the specific product line as the

organization has only been approved as an

Edwards Systems Technology representative

for less than 2 ye ars that would be in non -

compliance with the specification.

The case was forwarded to the Division of Administrative

Hearings ("DOAH") on November 22, 2013 , for assignment of an

administrative law judge and the conduct of a formal hearing.

On November 27, 2013, FCS filed a Petition to Intervene, which

was granted by order dated December 3, 2013. T he hearing was

scheduled to be held on December 17, 2013, on which date it was

convened and completed.

At the final hearing, Jacksonville Sound presented the

testimony of Brian K. Lockwood, its Jacksonville branch manager;

Tom Milhon, its vice president of operations; and Jere Lahey,

the DMS procurement officer and contract manager who drafted the

nontechnical specifications of the ITB and oversaw the

procureme nt. Jacksonville SoundÓs Exhibits 1 through 3 and 5

through 8 were admitted into evidence. DMS called Mr. Lahey as

its own witness and also presented the testimony of Stuart

Piccolo, the DMS engineering specialist who drafted the

technical specifications for the ITB. DMS offered no exhibits.

FCS presented the testimony of its employees Jimmy Ray Garrard,

Jr., Randy Kight, and Dean Thomas Grey, and called Mr. Lahey as

its witness. FCS offered no exhibits.

A transcript of the proceeding was filed at DOAH on

January 15, 2014 . The parties timely filed their P roposed

R ecommended O rders on January 27, 2014 .

All references to the Florida Statutes are to the 20 13

edition, unless otherwise noted.

FINDINGS OF FACT

Based on the oral and documentary evidence prese nted at the

final hearing and on the entire record of the proceeding, the

following findings of fact are made:

1. Jere Lahey, the procurement officer and contract

manager for the Jacksonville office of DMSÓ Division of Real

Estate Development and Manageme nt, coordinated with Stuart

Piccolo, an engineering specialist in the same office, to

develop the ITB specifications for the replacement of four

existing E dwards fire alarm panels in four buildings at the Mary

L. Singleton Regional Service Center in Jackso nville. The

panels, which have been installed in the buildings since their

construction approximately 20 years ago, have become obsolete

for maintenance purposes. Lacking funding to replace the entire

fire alarm system, DMS decided to replace the main co ntrol panel

in each of the four buildings, retrofitting the systems to work

with the updated controls.

2. Mr. Lahey testified that he and Mr. Piccolo decided

that the specifications should be for a design - build project.

The General Scope of work identifi ed in the ITB was as follows:

Replace existing Edwards Systems Technology

IRC - 3 fire alarm panels in four different

campus buildings with Edwards Systems

Technology EST - 3 panels including minor

upgrades defined in Design Criteria

Documentation.

3. It is understood in the industry that the EST - 3 product

can only be installed, programmed and operated by a company that

is certified by the manufacturer , Edwards . Mr. Lahey identified

three E ST - certified companies in the Jacksonville area . He

testified that D MS relied on E dwards Ó certification process in

the belief that E dwards would not certify a company that lacked

the ability to install its products.

4. On September 4, 2013, DMS released the ITB to the three

EST certified companies in the Jacksonville area : Jacksonville

Sound, FCS, and Milton J. Wood Fire Protection, Inc. (ÐWoodÑ). 2 /

The ITB listed a construction estimate of $100,000.00.

5. Jacksonville Sound and FCS submitted bids on the

project. Wood withdrew from the solicitation prior to the bid

ope ning, citing a conflict. DMS opened the bids on October 23,

2013 , and found both bids responsive to the criteria set forth

in the ITB.

6. The ITB specified that DMS would make a single award to

the low bidder. FCS was the low bidder, with a bid of

$29,9 80.00. Jacksonville SoundÓs bid was $36,855.00.

7. The ITB provided that ÐBids must be submitted in full

in accordance with the requirements of the Contract Documents

consisting of Technical and Non Technical Design Criteria

Specifications.Ñ

8. The refe renced Design Criteria Specifications were

titled, ÐDesign/Build Bid Scope for Replacement of ÒLike Kind

EquipmentÓ -- Replace Fire Alarm Main Panels in Four Campus

Buildings.Ñ The specifications consisted of seven pages of

written technical and non - techni cal specifications, four pages

of schematic drawings of the buildings, and one page explaining

the criminal background checks required of contractors and their

employees.

9. The technical specifications contained 27 paragraphs,

of which only one, paragrap h 7, is directly at issue in this

proceeding. Paragraph 7 provided:

Contractors provided with Invitations to Bid

have been chosen due to their years in the

industry and having a partnered relationship

with Edwards Systems Technology.

Contractor, upon req uest, shall provide

evidence to support 5 years [sic] experience

with performing retrofits with the specific

product line as mentioned in the ÐSummary.Ñ

10. There was no section titled ÐSummaryÑ in the

specifications. However, there was no dispute that the

Ðspecific product lineÑ in question was the Edwards EST - 3 fire

alarm panels that were discussed in the General Scope of work.

See Finding of Fact 2, supra .

11. DMS did not request that the bidders provide evidence

regarding their experience with per forming retrofits with the

EST - 3 product line. Neither bidder submitted information

regarding its experience with performing retrofits with the EST -

3 product line.

12. The issue raised by Jacksonville Sound in its formal

written protest is whether the se cond sentence of paragraph 7

required the contracting entity to have been an EST - certified

company for five years at the time of bid submission, or whether

it was sufficient for the company to have been EST - certified for

fewer than five years provided that the company employees

actually performing the work on the project have five yearsÓ

experience with performing retrofits with the EST - 3 product

line.

13. EST is a controlled line, meaning that Edwards

contracts with specific companies to represent the pro duct as

Ðstrategic partnersÑ with Edwards. Strategic partners are fully

authorized by the manufacturer to sell, install, program and

maintain Edwards Ó products, including the EST - 3 product line.

An Edwards strategic partner must have its technicians trai ned

and certified in the different systems manufactured by Edwards .

To install an EST system, a technician must be certified in that

specific product line. Only certified technicians have the

ability, via EdwardsÓ proprietary software, to program the

ins talled EST - 3 control panel .

14. It is undisputed that Jacksonville Sound has been an

Edwards strategic partner for more than five years. It is also

undisputed that FCS was a strategic partner at the time it

submitted its bid, but that it had been certi fied for only three

and one - half years . It is further undisputed that FCS currently

employs individuals who have the requisite five yearsÓ

experience performing retrofits with the Edwards EST - 3 product

line. In fact, one of those employees, Randy Kight, gained the

bulk of his EST - 3 experience as an employee of Jacksonville

Sound before moving to FCS.

15. Jacksonville Sound contends that the second sentence

of paragraph 7 requires the company bidding on the project to

have five yearsÓ experience in retrof itting the EST - 3 product

line. In order to have such experience, the company would

necessarily have to have been an Edwards Ðstrategic partnerÑ for

those five years. Under this reading of the ITB, FCS would be

considered nonresponsive because it lacks th e requisite five

years as an Edwards strategic partner.

16. DMS and FCS contend that the second sentence of

paragraph 7 is directed at the employees who will actually be

working on the EST - 3 panels at the job site, and that the length

of time a bidder h as been a strategic partner is immaterial

provided the bidder will be a strategic partner during the life

of the contract.

17 . To support its contention, Jacksonville Sound observes

that paragraph 7 references only the Ðcontractor.Ñ Jacksonville

Sound po ints out that various other provisions of the ITB

distinguish between the contractor and Ðemployees,Ñ

Ðsubcontractor employees,Ñ Ðworkers,Ñ and Ðindividuals who will

be performing the work.Ñ Jacksonville Sound argues that h ad DMS

intended for the second s entence of paragraph 7 to apply to

employees rather than the company, it would have made the

distinction found in other provisions of the ITB.

18. Mr. Piccolo, the author of the non - technical

specifications, testified at the hearing. While conceding that

the second sentence of paragraph 7 might have been drafted more

clearly, he testified:

By that statement, I kind of wanted to

ensure that any individual that was working

on the job site had the confidence and the

knowledge to be able to perform these

retr ofits just because of Ï of the Duval

County Courthouse, you know. And I hate to

use that as an example because itÓs a sore

thumb for a lot of people.

But I wanted to make sure that the job went

smooth. And if there were any difficulties

or trials or tri bulations that we could, you

know, step back a second and see that the

individual that you placed on the property,

how much experience does he actually have

dealing with this type of work? He could

have come from the security systems side,

he could have come from the fire alarm

side . . . .

* * *

Like I say, if thereÓs an observation that

an individual doesnÓt portray himself as

being competent to perform the duties or the

expectations of delivery, then obviously you

would step back a second and say: W hat are

the qualifications of this individual? Was

he cutting the grass before he came over

here?

19. Supporting Mr. PiccoloÓs interpretation is the fact

that the disputed sentence contains the term, Ðupon request.Ñ

Before sending out the ITB, DMS was already aware of the status

of the three selected companies as Ðstrategic partnersÑ of

Edwards. This was the key piece of information that permitted a

company to submit a bid on the project at all. It was

immaterial to DMS whether a company had been a st rategic partner

for one year, three years, or ten years, because DMS was relying

on the certification provided by Edwards that its strategic

partners were qualified to install, program and maintain the

EST - 3 panels regardless of their seniority . ÐUpon req uestÑ

indicates that DMS was reserving the right to inquire into the

experience of the individuals performing the work on - site,

should the need arise. This provision informed the bidders that

any employee performing the work is required to have a minimum

of five years of experience in retrofitting the EST - 3 product

line.

20. Jacksonville Sound is unable to point to any material

benefit that would accrue to DMS by virtue of its selected

vendor having been an Edwards strategic partner for five years

or more , as opposed to three and one - half years. The record

evidence indicates that all strategic partners have the same

rights and duties under their agreements with Edwards, without

reference to how long they have been strategic partners .

21. The basis for aw ard of this bid was the lowest price.

DMS did not investigate the number of years a company had been a

strategic partner of Edwards or the qualifications of the

personnel who would perform the on - site work. The ITBÓs Ðupon

requestÑ provision anticipates that DMS will deal with any

personnel problems as they arise during the winning bidderÓs

performance of the contract.

22. By submitting their bids in response to the ITB,

Jacksonville Sound and FCS made firm commitment s to staffing the

project in accordan ce with DMSÓ requirements. Both bidders

represented that they currently employ technicians who meet the

standards set forth in the ITB. If that situation changes

during contract performance, the winning bidder will be

responsible for securing replacement personnel who satisfy the

terms of the contract. In any procurement, there is always a

remote potential that the winning vendor will breach or default.

DMS ' contract provides remedies for such defaults.

23 . In summary, it is found that the bids of bo th

Jacksonville Sound and FCS met the requirements of the ITB

generally , and of paragraph 7 of the ITBÓs technical

specifications in particular . The reading of paragraph 7 urged

by Jacksonville Sound was not unreasonable, but could not be

said to add any performance assurances to the contract beyond

the given fact that all of the bidders were required to be

Edwards - certified strategic partners. DMSÓ reading of paragraph

7 made practical sense and gave the agency additional assurance

that the personnel who work on the project will have at least

five yearsÓ experience in retrofitting the specified product

line.

CONCLUSIONS OF LAW

24 . The Division of Administrative Hearings has

jurisdiction over the parties to and subject matter of this

cause, pursuant to s ection 120.569 and s ubsection 120.57(3),

Florida Statutes .

25 . Subsection 120.57(3)(f), Florida Statutes, provides in

pertinent part:

Unless otherwise provided by statute, the

burden of proof shall rest with the party

protesting the proposed agency actio n. 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 sta tutes,

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 . . . .

26 . Pursua nt to s ubsection 120.57(3)(f), the burden of

proof rests with Jacksonville Sound as the party opposing the

proposed agency action to prove "a ground for invalidating the

award." See State Contracting and Eng Ó g Corp. v. Dep Ó t of

Transp . , 709 So. 2d 607, 60 9 (Fla. 1st DCA 1998). Jacksonville

Sound must prove by a preponderance of the evidence that DMSÓ

proposed award of the contract to FCS is arbitrary, capricious,

or beyond the scope of the agency 's discretion as a state

agency. Dep Ó t of Transp . v. Groves - Watkins Constructors , 530

So. 2d 912, 913 - 914 (Fla. 1988); Dep Ó t of Transp . v. J.W.C. Co. ,

396 So. 2d 778, 787 (Fla. 1st DCA 1981). See also

§ 120.57(1)(j), Fla. Stat.

27 . The First District Court of Appeal has interpreted the

process set forth in s ubs ection 120.5 7(3)(f), as follows:

A bid protest before a state agency is

governed by the Administrative Procedure

Act. Section 120.57(3), Florida Statutes

(Supp. 1996) [ 3 /] provides that if a bid

protest involves a disputed issue of

material fact, the agenc y shall refer the

matter to the Division of Administrative

Hearings. The administrative law judge must

then conduct a de novo hearing on the

protest. See § 120.57(3)(f), Fla. Stat.

(Supp. 1996). In this context, the phrase

" de novo hearing" is used to d escribe a form

of intra - agency review. The judge may

receive evidence, as with any formal hearing

under section 120.57(1), but the object of

the proceeding is to evaluate the action

taken by the agency. See Intercontinental

Properties, Inc. v. Dep Ó t of H RS , 606 So. 2d

380 (Fla. 3d DCA 1992) (interpreting the

phrase " de novo hearing" as it was used in

bid protest proceedings before the 1996

revision of the Administrative Procedure

Act).

State Contracting and Eng Ó g Corp. , 709 So. 2d at 609.

28 . As outline d in s ubsection 120.5 7(3)(f), the ultimate

issue in this proceeding is "whether the agency's proposed

action is contrary to the agency's governing statutes, the

agency's rules or policies, or the bid or proposal

specifications." In addition to proving tha t DMS breached this

statutory standard of conduct, Jacksonville Sound also must

establish that the agency 's violation was either clearly

erroneous, contrary to competition, arbitrary, or capricious.

§ 120.57(3)(f), Fla. Stat.

29 . The First District Court of Appeal has described the

"clearly erroneous" standard as meaning that an agency's

interpretation of law will be upheld "if the agency's

construction falls within the permissible range of

interpretations. If, however, the agency's interpretation

confli cts with the plain and ordinary intent of the law,

judicial deference need not be given to it." Colbert v. Dep Ó t

of Health , 890 So. 2d 1165, 1166 (Fla. 1st DCA 2004) ( c itations

omitted).

30 . An agency decision is "contrary to competition" when

it unreaso nably interferes with the objectives of competitive

bidding. Those objectives have been stated to be:

[T]o protect the public against collusive

contracts; to secure fa i r competition upon

equal terms to all bidders; to remove not

only collusion but temptat ion for collusion

and opportunity for gain at public expense;

to close all avenues to favoritism and fraud

in various forms; to secure the best values

for the [public] at the lowest possible

expense; and to afford an equal advantage to

all desiring to do b usiness with the

[government], by affording an opportunity

for an exact comparison of bids.

Harry Pepper & Ass oc . v. City of Cape Coral , 352 So. 2d 1190,

1192 (Fla. 2d DCA 1977), quoting Wester v. Belote , 138 So. 721,

723 - 724 (Fla. 1931).

31 . An agency a ction is capricious if the agency takes the

action without thought or reason or irrationally. An agency

action is arbitrary if is not supported by facts or logic. See

Agrico Chemical Co. v. Dep Ó t of Env tl. Reg . , 365 So. 2d 759, 763

(Fla. 1st DCA 1978).

3 2 . To determine whether an agency acted in an arbitrary

or capricious manner, it must be determined "whether the agency:

(1) has considered all relevant factors; (2) has given actual,

good faith consideration to those factors; and (3) has used

reason rath er than whim to progress from consideration of these

factors to its final decision." Adam Smith Enter . v. Dep Ó t of

Env tl. Reg . , 553 So. 2d 1260, 1273 (Fla. 1st DCA 1989).

33 . However, if a decision is justifiable under any

analysis that a reasonable pers on would use to reach a decision

of similar importance, the decision is neither arbitrary nor

capricious. Dravco Basic Materials Co. v. Dep Ó t of Transp . , 602

So. 2d 632, n. 3 (Fla. 2d DCA 1992).

34 . Jacksonville Sound failed to meet its burden of proof.

The evidence presented at the hearing did not establish that

DMS ' proposed award of the contract for Invitation to Bid No.

MSFM - 13002020 to FCS is contrary to the bid solicitation,

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

or that th e proposed award is clearly erroneous, contrary to

competition, arbitrary or capricious. The preponderance of the

evidence established that FCS 's proposal was responsive to the

requirements of the bid solicitation and that DMS acted well

within its govern ing statutes, rules and policies.

35 . The evidence at hearing established that DMS issued a

price - driven ITB to three companies, based on their years in the

industry and their having a partnered relationship with Edwards.

The successful bidder would be r esponsible for ensuring that its

employees have the education and certification required by

Edwards , and five yearsÓ experience with performing retrofits

with the EST - 3 product line.

36. Jacksonville Sound read the ITB as requiring the

responsive bidder to have been a strategic partner with Edwards

for five years at the time of the bid. DMS read the

specification in question as requiring the successful bidderÓs

on - site employees to have at least five yearsÓ experience in

performing retrofits with the ES T - 3 product line and requiring

the successful bidder to provide proof of this experience at

DMSÓ request . DMSÓ reading of the specification reasonably

advanced the agencyÓs interest in having the fire alarm control

panels installed and programmed by compe tent personnel.

37. Both Jacksonville Sound and FCS submitted responsive

bids. Both companies were certified strategic partners of

Edwards. Price was the only competitive item distinguishing the

two bidders. FCS submitted the lower price. DMSÓ decisio n to

award the contract to FCS was not contrary to the bid

specifications, and was n ot clearly erroneous, contrary to

competition, arbitrary, or capricious .

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions

of Law set forth herein, it is

RECOMMENDED that the Department of Management Services

enter a final order dismissing Jacksonville Sound and

Communications, Inc.Ós formal written protest and awarding the

contract for Invitation to Bid No. MSFM - 13002020 to Future

Computer Systems, LLC .

DONE AND ENTERED this 2 4th day of February , 201 4 , in

Tallahassee, Leon County, Florida.

S

LAWRENCE P. STEVENSON

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 2 4th day of February , 201 4 .

ENDNOTES

1 / The emphasis in the quote was provided by Jacksonville Sound

in its formal written protest, not by DMS in the Invitation to

Bid.

2 / Mr. Lahey testified that a general solicitation by public

advertisement was not required because the bidding thresh old was

below $200,000. No party contested this proposition.

3 / The meaning of the operative language has remained the same

since its adoption in 1996:

In a competitive - procurement protest, no

submissions made after the bid or proposal

opening amendin g or supplementing the bid or

proposal shall be considered. Unless

otherwise provided by statute, the burden of

proof shall rest with the party protesting

the proposed agency action. In a

competitive - procurement protest, other than

a rejection of all bid s, 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 bid or proposal specifications. The

standard of pro of for such proceedings shall

be whether the proposed agency action was

clearly erroneous, contrary to competition,

arbitrary, or capricious. . . .

§ 120.57(3)(f), Fla. Stat. (1997).

COPIES FURNISHED :

Ronda L. Moore, Esquire

Department of Management Se rvices

4050 Esplanade Way, Suite 160

Tallahassee, Florida 32399 - 0950

Robert J. Olson

Future Computer Systems, LLC

4494 Southside Boulevard, Suite 102

Jacksonville, Florida 32216

William Nussbaum, Esquire

Slott Barker and Nussbaum

334 East Duval Street

J acksonville, Florida 32202

Scott A. Padgett, Esquire

Rogers Towers, PA

1301 Riverplace Boulevard, Suite 1500

Jacksonville, Florida 32207 - 9000

Craig Nichols, Secretary

Department of Management Services

4050 Esplanade Way, Suite 160

Tallahassee, Florida 32399 - 0950

Josefina M. Tamayo, General Counsel

Office of the General Counsel

Department of Management Services

4050 Esplanade Way, Suite 160

Tallahassee, Florida 32399 - 0950

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit wr itten 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.