Executone v. Hospital Serv. Dis. No. 1
| Decision Date | 11 May 2001 |
| Docket Number | No. 1999 CA 2819.,1999 CA 2819. |
| Citation | 798 So.2d 987 |
| Court | Court of Appeal of Louisiana — District of US |
| Parties | EXECUTONE OF CENTRAL LOUISIANA, INC. v. HOSPITAL SERVICE DISTRICT NO. 1 OF TANGIPAHOA PARISH d/b/a North Oaks Medical Center and Tangipahoa Parish Government. |
Michael D. Hebert, Lafayette, LA, for plaintiff—appellant, Executone of Central Louisiana, Inc.
Office of the District Attorney, Amite, LA, for defendant, Tangipahoa Parish Government.
Alton B. Lewis, Ashley Edwards-Sandage, Hammond, LA, for defendant—appellee, Hospital Service District No. 1 of Tangipahoa Parish d/b/a North Oaks Medical Center.
BEFORE: PARRO, FITZSIMMONS, and GUIDRY, JJ.
Plaintiff, Executone of Central Louisiana, Inc. (Executone), sued Hospital Service District No. 1 of Tangipahoa Parish d/b/a North Oaks Medical Center (hospital). In its suit, Executone asserted that the hospital improperly awarded a contract to Hill-Rom. The trial court found that the hospital did not violate the provisions of the Political Subdivisions Telecommunications and Data Processing Procurement Act, La.R.S. 38:2234, et seq., and dismissed Executone's suit. Executone appealed. We affirm.
Specifically, the hospital requested proposals for a nurse call/information system. In response to the requests, two companies, Executone and Hill-Rom, submitted proposals. Although Executone's quoted price was lower, the contract was awarded to Hill-Rom. On appeal, Executone maintains it should have been awarded the contract, and requests damages. In support, it makes the following arguments:
1. Executone met all specifications at the lowest price, except for a prohibited "closed specification."
2. The hospital improperly used a secret assessment of Executone's system and improperly evaluated the offered system.
3. The request for proposals (RFP) violated La.R.S. 38:2237A(7), which requires the RFP to "indicate the relative importance of price and other evaluation factors ...." On the issue of sufficient evaluation criteria, the trial court erred in excluding the testimony of plaintiff's witness.
4. Hill-Rom was not a licensed contractor, which prohibited the contract under La.R.S. 37:2150.1(4), 2160A(1), and 2163.
Interpretations of the provisions of the Political Subdivisions Telecommunications and Data Processing Procurement Act (Act), La.R.S. 38:2234, et seq., necessary to the resolution of this case, are issues of first impression. The Act has specific provisions that trump the general or similar provisions from our more familiar public bid law. Under the Act, the governing political authority is vested with sufficient discretion to maneuver the increasingly complex byways of multi-optioned, invasive, and expensive technology.
After a RFP is issued pursuant to the Act and proposals are received, the governing authority decides who is a "responsible offerer."1 The governing authority then makes its assessments of the proposals. To determine which proposal best fits its particular needs, the governing authority decides which proposal is not only advantageous to the governing authority, but which proposal is the "most advantageous." La.R.S. 38:2237A(8).
The selection decision could vary. The range is expansive: from some, few, or no "most advantageous" proposals for the specific needs of the governing authority. This range provides the governing authority with the ability to decline the selection of a system, even though that system might be suitable. Rejection of one or all of the proposals may be founded on a finding that the system proposed simply does not meet as many of the present needs, or perhaps more importantly, the future needs of the authority. In a hospital setting, once these sophisticated systems are incorporated, it is difficult to efficiently replace a standing technological system. Thus, the traditional concept under the bid process, that the "lowest responsible bidder," or "last man standing," receives the contract, is not embraced or incorporated by the Act. See Haughton Elevator Division v. State, Division of Administration, 367 So.2d 1161, 1165 (La. 1979). The question as to which proposal is the "most advantageous" does not depend on the number of remaining offerers from the proposal process, but rather on the reasonable perceptions of the governing authority. In deciding these cases, such realities must wield their influence.
Closed specifications require a specific brand or product be used "to the exclusion of all other products of apparent equal quality and utility." La.R.S. 38:2296A (emphasis added). A closed specification is prohibited by La.R.S. 38:2290. The statutory provisions on closed specifications were meant to prohibit specifications that excluded other viable choices of products. However, those statutory provisions do not bar the state from obtaining needed one-of-a-kind products or breakthrough technological systems. Whether Hill-Rom is improperly refusing to share its discoveries with other companies is not an issue before this court.
The feature objected to by Executone, the bedrail monitoring interface, is allegedly only offered by Hill-Rom. We found no evidence that a product of "apparent equal quality and utility" was available. La.R.S. 38:2296A. Thus, by definition, the Hill-Rom feature was not a closed specification. The request for the exclusive Hill-Rom feature does not foreclose any features or brands of equal value.
La.R.S. 38:2237A(7) provides that the "request for proposals will indicate the relative importance of price and other evaluation factors" as well as "the criteria to be used in evaluating the proposals.. . ." The hospital's RFP stated that "[b]oth price and features will be the determining factors," but "the vendor capable of supplying the desired attributes will receive more consideration."
Executone produced a witness learned in the method used by the State of Louisiana to present evaluation criteria for its RFPs. However, the witness did not profess to espouse a set method for political subdivisions. Nor did the trial court exclude the witness's testimony on the sufficiency of evaluation criteria issue. Rather, in its reasons for judgment, the trial court found that the testimony was irrelevant and not determinative of whether the hospital, a political subdivision, provided sufficient information in this particular case.
We disagree with the trial court on the finding of relevancy. The procedures adopted by the state to meet requirements of like statutes was relevant to the issue of what might qualify as sufficient criteria. However, the testimony did not exclude the method chosen by the hospital, or render it unreasonable or insufficient. The trial court did not err by choosing to reject the witness's opinion.
Contrary to the argument of Executone, La.R.S. 38:2237A(7) does not require the use of a formula, percentage chart, or specific form. Nor is it necessary for an outsider to be able to correctly choose the winner of the contract merely by reading the proposals. Based on the evaluation set out in the RFP, the hospital has the discretion to choose "the responsible offerer whose proposal is determined... to be the most advantageous" to the hospital. La.R.S. 38:2237A(8). It would be part of the hospital's discretion to decide which offered features best met the listed desired features. The hospital owes a duty to the public fisc and well-being to consider any differences revealed by comparison of the two proposals. This is the method by which the hospital chose the "most advantageous" proposal.
The hospital designated both price and listed features as the two evaluation factors to be used. However, the most consideration was to be given to a company best able to supply "the desired attributes...." We note that any offered feature, cluster of features, or specific attributes might outweigh any differences in a quoted price. However, this fact could not be known, even to the hospital, until the proposals were submitted and reviewed. Although the hospital's RFP did not provide percentages, a formula, or decision flow charts, the RFP's evaluation criteria was adequate.
Executone claims that a "secret assessment" of an Executone system and "secret use" of the "secret assessment" in the evaluation of its proposal violated its due process rights. The "secret assessment" consisted of formulated opinions of hospital personnel, primarily concerning maintenance and repair of the hospital's existing Executone system. Executone also argues that its offer was improperly assessed or evaluated based on observations by the hospital's nurses that predated and went beyond the RFP.
The hospital's nurses and other personnel based their opinions on observations of a system selected by Executone and demonstrated by Executone. Executone made a presentation in the hospital, and sanctioned a visit by the nurses to another hospital for further observation of an Executone system. As a party to service calls to the hospital, to maintain or repair the hospital's existing Executone system, Executone was aware of such calls. Thus, Executone knew, or should have known, that the nurses and other personnel would assess the systems and form opinions. For these reasons, we find no basis for Executone's claim of "secret assessments."
The nurses did not prepare the RFP or evaluate the offers. However, the input from the nurses was considered by the hospital, before it issued the RFP and before it awarded the contract. To exercise the proper discretion, the hospital must compare differences in the operation and quality of offered features. It would be a violation of public trust for the hospital to ignore available comparisons and opinions of the different attributes of the features offered by the two vendorofferers, even if the information pre-dated the...
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