Pub. Commc'ns Servs., Inc. v. Simmons

• Decision Date: 24 September 2013
• Docket Number: WD 74769.,Nos. WD 74740,s. WD 74740
• Parties: PUBLIC COMMUNICATIONS SERVICES, INC., et al., Appellants–Respondents, v. Kelvin L. SIMMONS, Commissioner of Administration, et al., Respondents–Appellants.
• Court: Missouri Court of Appeals

409 S.W.3d 538

PUBLIC COMMUNICATIONS SERVICES, INC., et al., Appellants–Respondents,

v.Kelvin L. SIMMONS, Commissioner of Administration, et al., Respondents–Appellants.

Nos. WD 74740, WD 74769.

Missouri Court of Appeals,

Western District.

Sept. 24, 2013.

James R. Layton, Jefferson City, MO, for appellant.

Heidi D. Vollett, Jefferson City and Lowell D. Pearson, Jefferson City, for respondent.

Before Division One: MARK D. PFEIFFER, P.J., VICTOR C. HOWARD and ALOK AHUJA, JJ.

ALOK AHUJA, Judge.

Public Communication Services, Inc. (“PCS”) filed suit in the Circuit Court of Cole County to challenge the lawfulness of the State's award of a contract to Securus Technologies, Inc., to provide telephone services to inmates in Missouri prisons. PCS was the incumbent contractor at the time of the award. PCS alleges that the award to Securus was unlawful because the State failed to solicit competitive bids with respect to certain optional services Securus offered to provide, at an additional cost. PCS also contends that, in selecting Securus as the lowest and best bidder for the offender telephone services contract, the State acted arbitrarily and capriciously by failing to consider Securus' proposed per-transaction fee for prepaid accounts.

Following a bench trial, the circuit court rejected PCS' claims, and entered judgment for the State and for Securus. PCS appeals.

Factual Background

From 2005 to 2011, PCS held the contract to provide telephone services for inmates housed in facilities run by the Missouri Department of Corrections (“DOC”). The contract serves more than 30,000 inmates; it also serves the friends and families of those inmates. PCS' contract was set to expire in May of 2011.

Prior to the expiration of PCS' contract, the Office of Administration's Division of Purchasing and Materials Management (the “Purchasing Division”) issued a request for proposals (“RFP”) for a new five-year contract, with two optional one-year extensions. The RFP required that biddershave the ability: to handle a large volume of inmate telephone calls; to accept various methods of payment; to integrate with DOC's system for handling inmate accounts; and to monitor and record inmate telephone calls. The RFP required that inmates be able to pay for telephone calls in three ways: by placing collect calls for which the recipient would agree to pay; by debit to an inmate account; or by debit to a prepaid account established by persons outside the prison.

The RFP specified the manner in which proposals would be evaluated. The RFP stated that “[a]fter determining that a proposal satisfies the mandatory requirements, the evaluator(s) shall use both objective analysis and subjective judgment in conducting a comparative assessment of the proposal in accordance with the evaluation criteria stated below.” The RFP then listed four evaluation criteria: Cost Evaluation (90 points); Experience/Reliability of Organization (20 points); Proposed Method of Performance, Solution Functionality and Expertise of Personnel (80 points) (the “Method of Performance” factor); and MBE/WBE Participation (10 points). The RFP also provided a preference of ten “bonus points” for bidders that were, or proposed to utilize, organizations for the blind and sheltered workshops. The RFP specified formulae for the Cost Evaluation, MBE/WBE Participation, and Organization for the Blind and Sheltered Workshop criteria; it also specified, however, that evaluation of the Experience/Reliability of Organization, and the Method of Performance factor, “shall be subjective based on fact.”

The formula for evaluating the cost criterion was based on an assumed number of calls and minutes, and an assumed number of collect calls, based on PCS' recent experience. The RFP specified that these volume measures would be multiplied by the per-minute cost for collect, prepaid, and debit calls proposed by the offeror, and by the offeror's proposed collect-call set-up charge. The RFP also required bidders to specify any one-time or per-transaction setup fees for prepaid accounts. Even though the volume of calls paid for with prepaid accounts had surpassed the number of collect calls and inmate-account debit calls in the preceding years, the cost-evaluation formula did not consider these prepaid account set-up fees. Instead, the RFP stated that, “[i]f the offeror provided pricing for the pre-paid account set-up fee, the state reserves the right to subjectively evaluate the proposed pre-paid account set-up fee as part of the proposed method of performance, solution functionality, and expertise of personnel since estimates of the number of pre-paid account transactions [are] unable to be determined.”

Under a heading titled “Optional Products and Services,” the RFP stated that “[t]he contractor should provide services for the detection and/or interruption of wireless communications devices, such as cellular telephones and data communications devices within the corrections facilities.” This request was based, at least in part, on DOC's concern about unauthorized cellular phones being smuggled into prison facilities. The RFP contained no specific requirements as to the “detection and/or interruption” services the offeror should propose. The RFP also stated that “[t]he offeror may also provide pricing for an increase in the firm, fixed per minute call rate ... for any other optional products and services proposed by the offeror.” The Purchasing Division made no commitment in the RFP that it would contract or pay for any of the optional services. Instead, the RFP stated that, “[i]f the offeror provided pricing for an[y] optional products and services, including but not limited to cell phone detection and/or interruption, the state reserves the right to subjectively evaluate availability and cost of the proposed optional products and services as part of the proposed method of performance, solution functionality, and expertise of personnel.”

Before responses to the RFP were due, PCS employees met with a Purchasing Division official to express their concerns about the RFP's open-ended invitation to bidders to propose “optional products and services.” PCS was concerned that bidders' potential inclusion of optional services in their proposals would make it difficult, if not impossible, for the Purchasing Division to fairly compare the bids it received. PCS' employees came away from the meeting with the understanding that, if the State found any of the proposed “optional” services sufficiently desirable to include in the final contract, the State would modify the RFP through the “best and final offer” (“BAFO”) process. See§ 34.042.3, RSMo. A BAFO request would amend the RFP to include additional mandatory items on which proposals were not initially solicited, to allow each offeror to amend its proposal to bid on any “optional” services the Purchasing Division desired to acquire.

Seven companies submitted bids that met the RFP's mandatory requirements, PCS and Securus among them. Securus' bid proposed a $.05 per-minute charge for collect, pre-paid and debit calls. It also offered to provide four optional services, each priced at an additional $.01 per minute: a biometric tool that could be used for voice recognition in call monitoring; an offender voicemail system to allow family members of inmates to leave messages; an enhanced investigative personnel package that would have increased the size of the staff tasked with monitoring inmate telephone calls; and Securus' proposal for cell phone detection and interruption, which was essentially a proposal to assist the State in finding a vendor capable of implementing such a program. PCS points out that it offered to provide DOC with voice biometrics and fully staffed monitoring at its base rate of $.07 per minute—services that Securus included as “optional.” It also points out that several other companies included services in their base rates that Securus offered as “optional.” The Purchasing Division did not use the BAFO process to solicit more specific proposals from the bidders with respect to these optional services.

Securus proposed a $6.95 per-transaction set-up fee for prepaid accounts, the highest of any bidder. Its proposal specified, however, that “[f]riends and family members who pay by check or money order will not be subject to a Set–Up Fee.” PCS proposed a $5.00 per-transaction set-up fee. PCS' proposal did not limit the prepaid account transactions to which its fee would apply.

The Purchasing Division evaluated the cost of each proposal using the formula outlined in the RFP: it multiplied each company's per-minute rate by the estimated annual call minutes, and multiplied each bidders' set-up charge for collect calls by the estimated annual volume of such calls. The lowest priced offer came from Talk Telio, at $.05 per minute, with no collect-call fees. Securus also offered $.05 per minute, but included a $1.00 fee for initiating each collect call. PCS' bid was for $.07 per minute and included a $.25 fee for each collect call. Based upon pricing alone, Talk Telio received 90 cost points, the maximum. Securus received 72 cost points, and PCS received 61 cost points.

All of the proposals received 10 points for MBE/WBE participation, and 10 points on the blind/sheltered workshop preference.

An evaluation committee composed of officials from DOC and from the Office of Administration also evaluated each proposal on a subjective basis. PCS and Securus scored much higher in the subjective evaluation than Talk Telio, and as a result, ended up surpassing Talk Telio in the final evaluation. Both PCS and Securus received the maximum number of points for reliability and experience (20 points). Securus and PCS also received almost identical scores on the Method of Performance factor (78 and 77 points respectively). Based upon the combination of subjective and objective evaluations, Securus was the winning bidder (PCS' bid was fourth).

Although...