Konica Business Machines U. Inc. v. Regents of University of California

• Decision Date: 23 November 1988
• Docket Number: No. D006857,D006857
• Court: California Court of Appeals Court of Appeals
• Parties: , 50 Ed. Law Rep. 504 KONICA BUSINESS MACHINES U.S.A., INC., Petitioner and Appellant, v. The REGENTS of The UNIVERSITY OF CALIFORNIA et al., Respondents; Copy-Line Corporation, Real Party in Interest and Respondent.

Page 591

253 Cal.Rptr. 591

206 Cal.App.3d 449, 50 Ed. Law Rep. 504

KONICA BUSINESS MACHINES U.S.A., INC., Petitioner and Appellant, v. The REGENTS of The UNIVERSITY OF CALIFORNIA et al., Respondents Copy-Line Corporation, Real Party in Interest and Respondent.

No. D006857.

Court of Appeal, Fourth District, Division 1, California.

Nov. 23, 1988.

Cutler and Cutler and Paul R. Salerno, Los Angeles, for petitioner and appellant.

James E. Holst, Gary Morrison, Susan Amateau and David A. Dorinson, Berkeley, for respondents.

Shenas, Shaw & Spievak, Peter Shenas and Douglas S. Waggaman, San Diego, for intervenor and respondent.

WORK, Associate Justice.

After Konica Business Machines U.S.A., Inc., unsuccessfully bid for a contract to provide copier services to the University of California, it sought a writ of mandate (CODE CIV.PROC., § 1085)¹ challenging the award of the contract to Copy-Line Corporation. Appealing from the denial of its petition, Konica contends (1) Copy-Line's bid did not comply with the requirements in the University's request for bids, and thus, the University should have either accepted Konica's conforming bid or rejected all bids and recommenced the bidding process; (2) alternatively, the request for bids was too ambiguous to result in fair competitive bidding; and (3) Copy-Line was given illegal preferential treatment over other bidders. We conclude Copy-Line's bid did not meet the specifications and gave it a prohibited competitive advantage, and the University's request for bids did not clearly notify bidders they could deviate from the specifications.

I

Konica had provided photocopy machines and service to the University for several years. When the University advertised a "Request for Quotation" (RFQ) for a new contract on a charge per copy basis, Konica submitted a bid of 2.7cents per copy for the first three years, and 1.6cents per copy for the fourth and fifth years of the contract. Copy-Line, the successful bidder, submitted a bid of 1.5cents per copy for the five-year period.

The University's RFQ specified the bid should include new or reconditioned copiers, all equipment bids must be at the same charge per copy regardless of model and features, and reconditioned equipment must carry new equipment warranty. Preceding a list of machine performance specifications was the following introductory paragraph:

"Approximate volumes shown for each category are for the purpose of clarification of intent only. The University Copier Program will work with the vendor to establish machine features to respond to the local needs. It should be recognized that the machine accessories must be flexible to allow for specific requirements in some departments. In all cases, equipment offered with features additional to those required will be preferred if the cost per copy is equal."

Finally, following the list of performance specifications was a list of bid evaluation factors including (1) overall cost per copy, (2) compliance with machine performance specifications in RFQ, (3) plant visit to determine bidder's capability to provide maintenance and repair, (4) financial resources, (5) compatibility of equipment with University card control system and existing equipment, and (6) responses obtained from users list.

The RFQ requested categories of copiers (i.e., tabletop, small copiers, three types of intermediary copiers, and high volume copiers). Performance specifications for each category were listed. ² Copy-Line's bid deviated from the specifications in the following instances.

Category 5 requested intermediary copiers, and included the following specifications: "Produce at least 40 copies per minute," and "Zoom magnification and reduction." For this category, Copy-Line bid two machines, (1) one which had the zoom magnification and reduction feature, but only made 35 copies per minute (Ricoh Model 5070), and (2) another which did not have the zoom magnification and reduction feature but which made 50 copies per minute (Ricoh Model 6085). Thus, neither machine fully met the bid specifications.

Category 6 requested high volume copiers, with the specifications stating, inter alia: "Produce at least 55 copies per minutes"; "Zoom magnification and reduction"; and "Capable of AUTOMATICALLY copying onto both sides of paper." Copy-Line bid a machine which had enlargement and reduction features, but did not have the zoom feature; made only 50 copies per minute; and semi-automatically, rather than fully automatically, copied on both sides of the paper (Ricoh Model 6085). Regarding the semi-automatic feature, after the first side of the paper was copied, the operator had to turn the original document over to copy the second side of the paper, but did not need to manually reinsert the copy into the machine. ³

In contrast, Konica's bid met, or surpassed, all the performance specifications listed in the RFQ.

II

The test on appeal from a writ of mandate action under section 1085, is whether there is substantial evidence to support the agency's findings, and it is appellant's burden to show there is no substantial evidence. (Taylor Bus Service, Inc. v. San Diego Bd. of Education (1987) 195 Cal.App.3d 1331, 1340-1341, 241 Cal.Rptr. 379.) Under Public Contract Code section 10507, the University must award contracts for goods, materials, and services requiring an annual expenditure of $50,000 "to the lowest responsible bidder meeting specifications, or else reject all bids." (Italics added.)

The issue here is whether there is substantial evidence to support a finding that Copy-Line's bid met the specifications within the meaning of Public Contract Code section 10507. An opinion by the Attorney General summarizes relevant principles:

"A basic rule of competitive bidding is that bids must conform to specifications, and that if a bid does not so conform, it may not be accepted. [Citations.] However, it is further well established that a bid which substantially conforms to a call for bids may, though it is not strictly responsive, be accepted if the variance cannot have affected the amount of the bid or given a bidder an advantage or benefit not allowed other bidders or, in other words, if the variance is inconsequential. [Citations.].... 'It is inconceivable that inconsequential departures will not appear.... But if the unit in toto, proposed to be erected, generally conforms to the city's needs and will substantially perform the service which the city requires, non-conformity between plan and bid does not exist.' " (47 Ops.Cal.Atty.Gen. 129, 130-131 (1966), quoting Dougherty v. Folk (1941) 70 Ohio App. 304, 46 N.E.2d 307, 311, italics added.)

Dougherty v. Folk, supra, 46 N.E.2d 307 does not address the issue of whether the public entity's acceptance of a deviating bid unfairly disadvantaged an unsuccessful bidder whose bid conformed to the advertised specifications. Dougherty only holds the public entity has the power to accept a bid which substantially conforms to the advertised requirements. There was no evidence that any strictly conforming bid was rejected. This also is the limited factual scenario addressed by the Attorney General's opinion which quotes from Dougherty.

A deviating bid might be acceptable as substantially complying with the University's RFQ had no bids met the advertised requirements. This was not the situation here, and there is no hint in the RFQ that "substantial" compliance would be the standard when reviewing bids, some which meet the specifications fully and some which do not.

But, more significantly, the Attorney General concludes a deviation is substantial unless it is so inconsequential that it could not affect the amount of the bid. We presume Copy-Line equipment will substantially perform the service actually required by the University even though it does not meet the performance and production specified in every category. We then limit our analysis to whether the deviations gave Copy-Line an unfair competitive advantage by allowing it to make a lower bid than it would have been able to make without the deviations. (See L. Pucillo & Sons v. Mayor and Council, Etc. (1977) 73 N.J. 349, 375 A.2d 602, 605-606 [factors to determine whether deviation is minor irregularity or substantial departure include whether deviation could be vehicle for favoritism, affect amount of bid, influence potential bidders to refrain from bidding, or affect ability to make bid comparisons]; Harry Pepper & Assoc. v. City of Cape Coral (Fla.App.1977) 352 So.2d 1190, 1193.)

Konica argues the equipment requirements listed in the University's RFQ in categories 5 and 6 involved the highest volume of copies, and thus, were the most important in determining the price to bid per copy. Based on Konica's figures, the price of one machine bid in category 5 was $7,625 (Ricoh Model 5070--zoom capability but only 35 copies/minute), and the price of the other machine bid in category 5 as well as in category 6, was $11,525 (Ricoh Model 6085--50 copies/minute but no zoom capability); whereas the price of the machine which should have been bid in categories 5 and 6 to meet the express bid requirements was $14,075 (Ricoh Model 7060--zoom capability and 62 copies/minute).

The record does not indicate the formula used by Copy-Line to determine price per copy. An examination of Copy-Line's bid reveals that (as required by the RFQ) it set the price per copy at 1.5cents for all the models, even though the models covered a wide price range; i.e., approximately $1,700, $2,100, $3,300, $3,500, $4,100, $4,700, $5,100, $5,700, $7,100, $8,200, $10,500, and $14,200. Nevertheless, logically the price per copy bid by Copy-Line must increase if Copy-Line were to factor in its bid the more expensive copiers required to meet its advertised specifications. Although this record is inadequate to state with mathematical precision the price advantage generated by Copy-Line's providing the less-expensive, less-capable machines,...