TFT, Inc. v. WARNING SYSTEMS, INC.,

• Decision Date: 24 November 1999
• Citation: 751 So.2d 1238
• Parties: TFT, INC. v. WARNING SYSTEMS, INC., et al. Warning Systems, Inc. v. TFT, Inc.
• Court: Alabama Supreme Court

751 So.2d 1238

TFT, INC. v. WARNING SYSTEMS, INC., et al.

Warning Systems, Inc. v. TFT, Inc.

1905.

Supreme Court of Alabama.

November 24, 1999.

Madeline H. Haikala, Jackson R. Sharman III, and Lisa J. Wathey of Lightfoot, Franklin & White, L.L.C., Birmingham, for appellant/cross appellee.

J. Fairley McDonald III of Maynard, Cooper & Gale, P.C., Montgomery, for appellee/cross appellant Warning Systems, Inc.

Dennis M. Wright, asst. atty. gen., for appellee/cross appellant Alabama Emergency Management Agency.

A. Lee Miller, general counsel, for appellee/cross appellant Alabama Finance Department.

HOOPER, Chief Justice.

This case arises out of a competitive bid on a Tone Alert Radio ("TAR") System intended for use in connection with the destruction of chemical weapons. TFT, Inc., filed a complaint seeking declaratory and injunctive relief. It alleged that the Purchasing Division of the State Finance Department had awarded the contract for the TAR system to Warning Systems, Inc. ("WSI"), in violation of §§ 41-16-20 through -32, Ala.Code 1975. Those Code sections require the State to award certain contracts to the lowest responsible bidder. The trial court denied injunctive relief as to that portion of the contract relating to the TAR receivers; however, it enjoined the execution of the contract as it related to the central-control equipment and the operating-support system, concluding that a bid for this equipment must be resolicited. TFT appealed from the order denying an injunction in regard to the TAR receivers, and WSI cross-appealed from the injunction relating to the central-control equipment and the operating-support system. We affirm in part and reverse in part.

Facts

The Alabama Emergency Management Agency ("AEMA"), acting through the State Finance Department's Purchasing Division, solicited bids on Project 98-R-2071, which involved TAR receivers to be used in connection with the destruction of chemical weapons or chemical agents stockpiled at a United States Army facility in Anniston. As part of its obligations under the Chemical Stockpile Emergency Preparedness Program, the State was required to purchase and install a system to alert persons at nearby homes, businesses, and other facilities in the event of an emergency. TFT, WSI, and another company, Federal Signal, submitted bids. AEMA and the Purchasing Division awarded the contract to WSI. TFT claims that those agencies, in awarding the contract to WSI, violated the State's obligation under Ala. Code 1975, § 41-16-20, to award the contract to the "lowest responsible bidder."

The dispute concerns whether the State's Invitation to Bid ("ITB") was a solicitation for bids as to only one component of the system or was a solicitation for bids as to the entire system. The ITB described the TAR System as involving three major items: The central-control equipment, the indoor-warning device (TAR receiver), and the operating-support system. The ITB also stated that the seller would be required to deliver 12,000 indoor alerting devices and 2 control-point-equipment sets by September 1, 1998.

WSI submitted questions regarding the pricing format for the bid responses. In an Addendum to the ITB, which was provided to all of the interested bidders, AEMA responded:

"P2A. The initial procurement will be for approximately 12,000 Ea., 800 MHz. TAR receivers only. The bidder should provide a quotation for the support services, the VHF TAR receiver, and the accessory devices as outlined in the Technical Specifications. The bidder's price for these additional items will be considered in the selection of the successful bidder for the 12,000 UHF TAR receivers. The bidders should provide pricing information for the support activities for a period of five years from date of award. A base price with annual increases would be acceptable to the State.

"P2B. The State is purchasing the TAR equipment and the long term support activities for the public warning obligations of the CSEPP program. There are several aspects of the overall program that have not been defined because of the lack of demographic information on the affected portions of the population. The support functions to be provided and the accessory equipment are described in the Technical Specifications in sufficient detail to permit the bidder to provide a quotation for these items. The State would ask that the bidder present the pricing information in the form of a price matrix that would allow the State to determine the pricing for these activities and equipment on an item-by-item basis. After the State determines the extent of the support requirements and the number of accessory devices needed, a subsequent purchase order will be issued based on the prices offered with this bid response."

(Emphasis added.) In reliance on these answers, WSI understood the ITB as requesting a bid on the receivers only, with an additional price matrix regarding the central-control equipment and the operating-support system, as well as the optional accessory devices. WSI submitted a bid of $175 per receiver unit and included a price matrix regarding the other components. One of the other bidding vendors, Federal Signal, also submitted a question regarding the pricing format:

"The Price Sheet for this Bid does not include separate line items for 800 MHZ and VHF receivers, or for the two (2) control point equipment sets required for this bid. Should pricing for one of the receiver models and the Control point equipment be submitted on a separate quote sheet with the options for installation, external antennas, and service support operations or will an addendum be issued for the Price Sheet?"

AEMA responded:

"The state has already replied to an earlier question on this subject. A price submittal in the form of a `matrix' would be reasonable. This `price matrix' should permit the state to determine the pricing on an item-by-item basis. An addendum is not needed.

(Emphasis added.) Federal Signal included the total-system price within its unit price of $215.0833. (R.T. 58-59.) However, Federal Signal also included a price matrix listing the price of each component separately.

TFT understood the ITB to be requesting bids on the entire TAR system, including all three components, and calculated its bid by including the entire-system cost within the unit price. TFT calculated its bid as follows: 12,000 receivers at a price of $165 each, for a total of $1,980,000; plus $13,118 for the control equipment, $141,750 for installation, and $505,252 as the cost of the first year's support, for a total system price of $2,640,000. TFT then divided the total by 12,000 to get an installed receiver unit price of $220.¹ TFT did not include a price matrix regarding the receivers, central-control equipment, or operating-support system, but did list the separate prices of the optional equipment and the support services for years two through five. The trial court found that, because TFT combined the prices of the TAR receivers, the central-control equipment, and the operating-support system, its bid was nonresponsive.

The Price Sheet provided in the ITB contained a line item price blank with a description of "radio receiver, tone alert (TAR) in accordance with provided specifications." According to the vendors' bids on the price sheet, WSI bid $165 per unit; TFT bid $220 per unit; and Federal Signal bid $215.0833 per unit. The State awarded the contract to WSI as the lowest responsible bidder. Both TFT and Federal Signal protested the award of the contract to WSI. TFT claimed in its protest that an examination of the bid responses makes it clear that WSI is in fact the high bidder. TFT stated that if the State considered the price of the central-control equipment and the first-year operating support in making its award, then WSI was the highest bidder. In its protest, TFT did not illustrate the manner in which its bid was calculated and did not list item-by-item prices. The Legal Division of the Finance Department responded to TFT's protest, stating that AEMA had reviewed the bids and had confirmed that WSI was the lowest responsible bidder complying with the instructions of the ITB and whose products met all mandatory technical specifications.

Discussion

I. Standard of Review

The applicable standard of review depends on whether the trial court entered a preliminary injunction or a permanent injunction. A preliminary injunction is reviewed under an abuse-ofdiscretion standard, whereas a permanent injunction is reviewed de novo. Smith v. Madison County Comm'n, 658 So.2d 422, 423 n. 1 (Ala.1995)

. The trial court used the term "preliminary injunction" throughout its order. The language of the order denies a "preliminary injunction" as to the TAR receivers, but grants a "preliminary injunction" as to the central-control equipment and the operating-support system; the injunction requires that the bids on those components be resolicited. However, TFT argues that the court and the parties had agreed during the hearing that the requests for both preliminary and final relief could be combined. (Appellee's brief, at 1.) (R.T. 54-55.) Combining those requests is provided for in Rule 65(a)(2), Ala. R. Civ. P., although normally, when the court orders that the hearing on the merits be consolidated with a hearing on the request for a preliminary injunction, the parties are given notice of that before the hearing, in order to afford them the opportunity to fully present their respective cases. University of Texas v. Camenisch, 451 U.S. 390, 395, 101 S.Ct. 1830, 68 L.Ed.2d 175 (1981). In this case, the trial court asked the parties during the hearing, "Are we going to combine this hearing with any subsequent hearing, for the record?" and to that question counsel for each of the parties responded, "Yes, sir." (R.T. 54-55.)

WSI admits in its reply brief that its counsel intended to consolidate the hearing on the request for a preliminary injunction with...