Caber Systems, Inc. v. Department of General Services

• Citation: 530 So.2d 325,13 Fla. L. Weekly 1658
• Decision Date: 13 July 1988
• Docket Number: No. 87-909,87-909
• Parties: 13 Fla. L. Weekly 1658 CABER SYSTEMS, INC., Appellant, v. DEPARTMENT OF GENERAL SERVICES, Apple Computers, Inc., and International Business Machines, Appellees.
• Court: Court of Appeal of Florida (US)

Page 325

530 So.2d 325

13 Fla. L. Weekly 1658

CABER SYSTEMS, INC., Appellant, v. DEPARTMENT OF GENERAL SERVICES, Apple Computers, Inc., and International Business Machines, Appellees.

No. 87-909.

District Court of Appeal of Florida,

First District.

July 13, 1988.

Rehearing Denied Aug. 26, 1988.

Richard J. Dewitt, Jr. and John R. Hart of Squire, Sanders & Dempsey, Miami, and Philip L. O'Neill of Keck, Mahin & Cate, Washington, D.C., for appellant.

Susan B. Kirkland and Sandra E. Allen, Office of General Counsel, Tallahassee, for appellee Dept. of General Services.

Richard A. Lotspeich of Landers, Parsons & Uhlfelder, Tallahassee, and Thomas M. Beason of Moyle, Flanigan, Katz, Fitzgerald & Sheehan, Tallahassee, for appellee Apple Computers, Inc.

ZEHMER, Judge.

We review by appeal a final order of the Department of General Services (Department or DGS) dismissing two bid protests filed by Caber Systems, Inc. That order adopted the hearing officer's recommended order proposing approval of the Department's rejection of all bids for the 1987 State micro-computer term purchasing contracts and extending the previous year's contracts. The Department is subject to sharp criticism for failing to follow the time limits prescribed in section 120.53(5), Florida Statutes (1985), but we find no reversible error in the appealed order and affirm.

On December 15, 1986, Caber protested some of the awards the Department proposed to make pursuant to its invitations to bid on the micro-computer contract. After several meetings to discuss settlement of the protest, DGS determined that the invitation to bid was ambiguous and substantially flawed and, on January 21, 1987, gave notice of its intent to reject all bids. Caber immediately protested DGS's rejection of all bids. After another settlement meeting with Caber, both of Caber's protests were referred to a hearing officer on February 27, 1987. The protests went to hearing on March 13, 16, and 17, 1987, and, pursuant to the parties' request, proposed recommended orders were filed on or before April 13. The hearing officer entered his 25-page recommended order on May 13, 1987.

Caber presents two legal issues on appeal. The first questions whether the Department of General Services exceeded its statutory authority under section 120.53(5)(c), Florida Statutes (1985), by summarily rejecting all bids after Caber had filed its protest of the awards (first protest) and had later filed a protest of the decision to reject all bids (second protest). The second issue is whether the reasons underlying the Department's decision to reject all bids were arbitrary and capricious, and not supported by competent, substantial evidence.

The hearing officer's order, adopted by the Department's final order, found the following facts:

"1. The Department of General Services (DGS), through its Division of Purchasing (Division), is the State agency responsible for establishing term contracts under which the DGS requires state agencies to purchase the commodities on such contracts and under which a county, municipality or other local public agency may purchase. State agencies, political subdivisions and local agencies purchasing under the State contract are exempt from competitive bid requirements for such purchases.

"2. The DGS surveys the State's purchases of commodities and, if the volume of purchases of various commodities warrants, develops and bids term contacts [sic] for such commodities. The purpose of the term contracts is to obtain for the State the price advantages of large quantity purchases, to standardize the terms, conditions and technical specifications for commodities purchased by the State and to eliminate State agencies having to publish numerous individual invitations to bid. The Division's objective should be to write specifications which allow for the widest participation of interested vendors and to obtain the greatest competition on pricing.

"3. In recent years, the DGS has established annual term contracts to make micro-computers available to state agencies, political subdivisions, and the state university system. The first annual term contract for micro-computers was established in 1979 or 1980. The bid specifications for the micro-computer contract have remained essentially the same since inception. Based on history, it can be estimated that contract users will expend approximately $38,000,000 in 1987."

The hearing officer next found that "on August 29, 1986, DGS issued Invitation to Bid 545-250-040-B, Micro-computers (ITB) for purposes of establishing the 1987 term contract" and that the ITB classifies micro-computers in seven categories which are further broken down into some 55 subcategories based on specific makes and models of computers. The hearing officer's findings of fact then continued:

"5. The Special Conditions of the ITB include a requirement for submission of price tables as part of a bid:

To be considered responsive, bidder must submit properly completed Tables A, B, C and D.... A complete set of Tables A, B, C and D must be submitted for each sub-category bid.

TABLE A--MICRO-COMPUTER HARDWARE COMPONENTS:

All hardware bid, whether mandatory or optional, must be entered in Table A. The sub-category, district and vendor must be indicated in space provided.

Table A must reflect only items applicable to the sub-category. A separate Table A must be submitted for each sub-category bid.

TABLE B--MICRO-COMPUTER OPTIONS/ACCESSORIES

All options, upgrades, and accessories must be entered in Table B. Accessories must identify microcomputer model(s) to which they are applicable. If there are no options, upgrades or accessories, so indicate with N/A.

TABLE C--SYSTEM SOFTWARE:

All system software, such as the operating system, editors, loaders, generalized utilities, etc., must be entered on Table C--System Software. Unit price of additional copies of documentation, if any, must be listed.

A separate Table C must be submitted for each sub-category bid.

TABLE D--EVALUATION CONFIGURATION:

Seven basic configurations will be considered in making awards. The configurations are designated Category 1 through 7 and are shown in Table D1 through D7. Care should be taken in completion of Table D since incorrect information could result in disqualification. In case of errors in Table "D", prices in Tables A, C, shall prevail. State reserves the right to correct arithmetic errors in Table "D".

To qualify for award, any system must, as a minimum, satisfy the evaluation configuration specified in Table D.

Manufacturer Name and Model: Enter sub category (listed in Table I of specifications) being bid plus the name and model of the system.

If there is no charge for a component, so indicate with N/C.

Components and prices listed by vendors in Table D must agree with components and prices listed in Tables A and C.

Use separate Table D for each sub-category.

"The Special Conditions also state: 'Any contract resulting from this bid will be awarded by sub-category to the low bidder.'

"6. Historically, awards were made by make and model, using a format substantially like the current ITB format for the invitation to bid. Within each subcategory, DGS evaluated the various makes and models by price. Significantly, this was done even if the sub-category description was not 'Other Low Qualifying Bids' and did not include words like 'all models' or 'series.' If there were more than one bid on a particular model, the award would be to the lowest bidder. If only one bid was received on a particular model, the award would be made to that bidder. In order to be considered responsive, a bidder had only to submit one responsive Table D per subcategory. Once it was determined that the bidder had submitted a responsive Table D, the individual models listed on Table A would be evaluated and considered for award. As a result, the contract currently in place has approximately 200 to 250 microcomputers; the ITB last year listed only 48 subcategories.

"7. The past practice of DGS was to award accessories to each vendor who was awarded a model, thereby creating competition for acquistion of accessories within the contract. For example, if three different models were awarded to three different bidders in one subcategory in the 1986 contract, each bidder would also be awarded the accessories listed on its Table A. (In 1985, Table A incorporated both Table A and Table B of the ITB in issue in this case.) A state agency would purchase accessories from the vendor with the lowest price. Historically, state agencies have been required to purchase accessories awarded under the contract. The same scenario was true for the software. The bidders who were awarded a model in the 1986 contract would be awarded the software they had listed on Table B (Table C in the ITB in issue in this case), and state agencies who are required to purchase from the contract could choose the lowest prices.

"8. The ITB in issue in this case was sent to 258 vendors, of whom 67 responded.

"Some, mostly the manufacturers, including Apple and IBM, responded to the bid in accordance with past practice. They did not interpret the ITB to require a separate Table D for each model bid, just a separate Table D for each subcategory. They also structured their bids with the understanding that all models on Table A would be considered for award and that there would be more than one award per subcategory (even if the subcategory description was not 'Other Low Qualified Bid' or the new '100% IBM Compatible Clone' and did not include words like "all models" or 'series.')

"Other bidders, mostly dealers, including Caber and Mini Computer, who were not as familiar with the history of the microcomputer bidding process, interpreted the ITB to require a separate Table D for each bid, not just for each subcategory. Mini Computer strictly interpreted the ITB to provide for only one award per subcategory. Caber's interpretation was that...