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HomeMy WebLinkAboutSubmittal-Albert Dotson-Documents re-RFP12-14-077Submitted into the pu is (� record f r ite (s) on City Clerk July 19, 2016 Bilzin Sumberg Albert E. Dotson, Jr., Esq. Tel 305-350-2411 Fax 305-351-2217 adotsoCOilzin. com Re: Request for Proposals for Lease of Virginia Key Marina, City -owned Waterfront Propertyfor Marinas/RestaurantlShip's Store Uses RFP #12-14-077 Dear Mr. Hannon: I am sending the attached documents to you so that they can become a part of the official record in the above -referenced matter. Thank you. Sincerel , Albert E. Dotson, Jr. AED/eo Enclosures Q- oo %51q MIAI 508233.1 8579/4818 N\AA - I� Ct1n+C � F :en P1 ice A\( h d i 1 1' I 1 1 )0 111 is l.ell .�� 1111(e', 231-d [ ]O()I, NI inti, { to, I bilim.(oni C -- Via Hand Delivery -- c• Todd Hannon, City Clerk City of Miami-` 3500 Pan American Drive ... C') .. Miami, FL 33133 Re: Request for Proposals for Lease of Virginia Key Marina, City -owned Waterfront Propertyfor Marinas/RestaurantlShip's Store Uses RFP #12-14-077 Dear Mr. Hannon: I am sending the attached documents to you so that they can become a part of the official record in the above -referenced matter. Thank you. Sincerel , Albert E. Dotson, Jr. AED/eo Enclosures Q- oo %51q MIAI 508233.1 8579/4818 N\AA - I� Ct1n+C � F :en P1 ice A\( h d i 1 1' I 1 1 )0 111 is l.ell .�� 1111(e', 231-d [ ]O()I, NI inti, { to, I bilim.(oni Submitted into the pu lic (J record ficr ite (s) S �r on `7 City Clerk CITY OF MIAMI Request for Proposals for Lease of Virginia Key. Marina, City -owned Waterfront Property for Marinas/Restaurant/Ship's Store Uses RFP NO: 12-14-077 1 The Law is clear, not ambiguous, that the Basin Property may be excluded from the developable property before award because negotiated changes within the scope of the solicitation not only do not run afoul of competitive -procurement requirements, but, so long as they provide a better deal for the government, should "be applauded and validated, not condemned." City of Lakeland v. Union Oil Co. of California, 352 F. Supp. 758, 763 (M.D. Fla. 1973) (emphasis supplied). Case, after case, after case in Florida and around the country confirm that the City Commission CAN exclude the Basin Property as a part of the negotiations before the award of the lease. 0 1 Submitted into the pu is record fir it sy 1, �Bilzin Somber R on City Clerk g iu MEMORANDUM DATE: July 14, 2016 ' RE: RFP No. 12-14-077 — Whether the City may award a lease agreement that precludes development in the Marine Stadium Basin QUESTION PRESENTED 1 1 F, 6 May the City of Miami (the "City") enter into a lease agreement pursuant to Request for Proposals No. 12-14-077 (the "RFP") with the City's recommended awardee, Virginia Key, LLC, also known as RCI ("RCI"), that excludes RCI's proposed wet -slip development in the historic Marine Stadium basin ("Basin Property"), a portion of the lease area contemplated by the RFP? SHORT ANSWERS 1. Any changes consistent with the scope of the RFP and that benefit the government are permissible. a. Is the exclusion of the basin outside the scope of the RFP? NO. The RFP did not require the use of the basin. b. Does the exclusion of the basin benefit RCI? . RCI loses revenue -generating assets, yet pays the same in rent to the City. Florida law, therefore, permits the exclusion of the basin. 2. Even if excluding the basin was inconsistent with the RFP, changes that do not undermine the competitive process (Le., are not "material") are permissible. a. Had the exclusion of the basin been known, would additional firms have �. participated? The basin was not made available until midway through the RFP process, and the interested firms did not change. ' b. Does the exclusion of the basin undermine a determinative evaluation factor? NO. RCI placed a much smaller portion of its operations within the basin than did its competitors. c. Does the exclusion of the basin alter the essential purpose of the contract? . The amended contract meets all of the goals of the RFP. Florida law, therefore, permits the exclusion of the basin. MIAMI 505096 4 74183/4689 1 zin urn Baena rice & Axelrod LLP 11450 Brickell Avenue, 23rd Floor, Miami, Florida 33131-3456 Tel 305.374.7580 1 Fax 305.374.7593 1 bilzin.com Submitted into the pis Memorandum record f r ite s) 11 ' S, on City Clerk SUMMARY C. Bilzin Sumberg Negotiated changes within the scope of the solicitation not only do not run afoul of competitive -procurement requirements, but, so long as they provide a better deal for the government, should "be applauded and validated, not condemned." City of Lakeland v. Union Oil Co. of California, 352 F. Supp. 758, 763 (M.D. Fla. 1973) (emphasis supplied). Yes, the City has the authority to enter into a lease with RCI that precludes any new development on the Basin Property. The City may accomplish this outcome using one of two methods. First, the City could leave the RFP's lease area unchanged and amend the lease to prohibit RCI from submitting any development applications for the Basin Property. Alternatively, the City could amend the lease to exclude the Basin Property from the lease area. In either case, the rent provisions could either be left unchanged from RCI's proposal or negotiated to require that RCI pay the City the additional $200,210 in annual rent that RCI estimated could be generated by its originally proposed development in the Basin Property—a concession that RCI has already offered. As an initial matter, either of these changes is wholly consistent with the RFP. The RFP ' does not require that any slips be placed in the Basin Property. A lease that includes the Basin Property but precludes development thereon is thus within the confines of the RFP. The RFP also expressly contemplates that development in the Basin Property may be denied by the City, j� in which case the lease area and rent provisions may be amended. The removal of the Basin I■ Property from the lease area is thus also within the confines of the RFP. Florida law permits the City and RCI to negotiate changes to RCI's proposal that are contemplated by the RFP and do ' not unfairly improve RCI's position. The removal of revenue -generating development in the Basin Property obviously places RCI in a worse, not better, position, particularly in light of RCI's offer to pay the City the exact same rent as if its proposed development in the Basin Property were included. Furthermore, even if the RFP did not contemplate the removal of the Basin Property or development thereon from the resulting lease, the City has the authority to deviate from the terms of the RFP in order to exclude the Basin Property. Changes not contemplated by the original RFP are permissible so long as they do not place RCI in an unfair position or radically change the nature of what is being procured such that, had the changes been known, other firms would have likely submitted proposals. Again, the proposed amendments place RCI in a worse position. They also do not change the nature of the underlying contract, which is still for a marina and related development on Virginia Key. And in any case, the City can be certain that no additional firms would have proposed had the changes been known: the changes were known, as the Basin Property was not within the original RFP. The Basin Property was added by an addendum issued after the last pre -proposal meeting, in which only the same three firms that ultimately submitted bids participated. MIAMI 5055096.4 74183/46889 Page 2 ijbmitted into thepu lic record f r itern(s) 1,1 _& Memorandum on � City C-1, C. Bilzin Sumberg FACTS The City issued the RFP on June 15, 2015, seeking proposals for the lease of waterfront property at Virginia Key to create a "vibrant recreational marina and restaurant destination with an ancillary ship's store facility." RFP at 3. The RFP sought a proposer to "plan, redesign, renovate or redevelop, lease, manage and operate a mixed-use waterfront facility including, but not limited to, two marinas, a boatyard, dock master's office, ship's store, dry storage, wet slip docks, and at least one restaurant." RFP at 6. The RFP required proposers to provide for certain required uses: "Marina/boat yard with dry rack storage, new dock master's office, ship's store, fuel stations; and wetslip dockage facilities and a restaurant." Id. For the required marina use, the RFP further required a minimum of 648 dry storage racks and that the existing 190 wet slips be maintained. Id. The RFP requested, but did not require, that proposers build approximately 300 additional wet slips. Id.; Addendum XVIII at 4. The City held pre -proposal conferences on July 8, 2015 and October 2, 2015. Transcripts of the pre -proposal meetings were issued as addenda and posted on the City's website. At the October 2nd pre -proposal meeting, the City gave verbal confirmation, for the first time, that it would be adding additional submerged land within the Marine Stadium Basin that proposers may use in their plans for their proposed developments. The City explained that this submerged land was historically designated. Addendum XVII at 25. Representatives from RCI, Virginia Key SMI, LLC ("Suntex"), and New Rickenbacker Marina, LLC ("Tifon") participated in the October 2 meeting. Addendum XVII at 25-27, 31, 41-42. No other potential proposers participated in the October 2 meeting. Id. On November 25, 2015, the City issued Addenda XXI, XXII, and XXIII, which consisted of a statement regarding the addition of submerged lands to the RFP lease area and a survey, sketch, and legal description of the Basin Property. The Basin Property had not been a part of the RFP lease area until it was added via the addenda issued on November 25th. Regarding the development of new wet slips, the use of the Basin Property, and the design and approval of the project, the RFP states the following: "The size and number of any and all additional wetslips shall be subject to all applicable rules and regulations, including, but not limited to, zoning, permitting, aquatic preserve limitations, and other regulatory requirements." (RFP pg. 6) "The design of the Project shall be subject to review and approval by appropriate City departments and/or agencies, including but not limited to certain County agencies such as Shoreline Review Committee and the Shoreline Review Manual as set forth in the Miami -Dade County Code." RFP at 15. MIAMI 5055096.4 74183/46889 Page 3 Submitted into the puJ�lic Memorandum record f r ite (s) % I � �k J.t on ' City Clert Bilzin Sumberg • "Depending on the scope of renovation or redevelopment, architectural components may be subject to approval by the City's Planning and Zoning Department, the PZAB and the City Commission." RFP at 22. • "Construct and install approximately 300 additional wetslips and renovate the bulkhead alongside these wetslips, subject to all applicable rules and regulations." RFP at 30. • "Unless the City Manager specifically authorizes it, Proposers may not make any additions or modifications to the proposal responses, nor the Project or Development Team, subsequent to the RFP submission deadline." RFP at 35. • "There is no anticipated location for the additional boat slips as this will be determined at the Selected Proposer's discretion, subject to the restrictions set forth in the RFP, the Virginia Key Master Plan (included as Exhibit E), and all other applicable restrictions, rules, and regulations." Addendum II at 2. • "The Selected Proposer shall have the discretion to design the area subject to the restrictions set forth in the RFP, the Virginia Key Master Plan (included as Exhibit E), and all other applicable restrictions, rules, and regulations." Addendum II at 2. • "The additional number of slips is an approximation intended to maximize the number of slips, which will vary and will be subject to restrictions imposed by the RFP, building, zoning, and any and all other City, County, State, and Federal limitations and regulations, as applicable." Addendum VIII at 8. • "The selected proposer shall be required to comply with all applicable restrictions and stipulations, and must obtain all required permits and approvals, including, if necessary, approval from the Historic and Environmental Preservation Board." Addendum XV at 2. • "In the event the applicable regulatory agencies do not approve the inclusion of some or all of the submerged lands, the minimum base rent shall be revised accordingly based on the reduced square footage available." Addendum XV at 3. RCI, Suntex, and Tifon submitted proposals by the February 1, 2016, due date. RCI proposed 151 wet slips in the Basin Property and $200,210 in annual rent to the City attributable to the Basin Property. Suntex proposed 353 wet slips in the Basin Property and $429,258 in annual rent to the City attributable to the Basin Property. Tifon proposed 310 wet slips in the Basin Property and $253,421 in annual rent to the City attributable to the Basin Property. RCI was the top-ranked proposal in the RFP evaluation process and was recommended for award of the lease. After reviewing the award recommendation, the Virginia Key Advisory Board on May 24, 2016, recommended that the City Commission "remove the wet slips" from the Basin Property. At its June 22, 2016, meeting, the City Commission indicated its intent to prohibit the development of any wet slips on the Basin Property. MIAMI 5055096.4 74183/46889 Page 4 Submitted into the public record f r ite Memorandum on City Clerk Bilzin Sumberg DISCUSSION I. The Proposed Changes Are Contemplated by the RFP and Permitted By Law. A. Applicable Law Where a competitive solicitation contemplates the possibility of certain contract modifications, then the government is permitted to modify the contract in such a manner. A contractual change that is contemplated by the solicitation itself cannot be deemed a change to the solicitation, let alone a "material" change, particularly because proposers could have reasonably anticipated the change. After the government has selected the winning proposer, Florida law without exception permits the government to negotiate a better deal for itself in a manner that increases the proposer's costs, so long as the resulting contract is consistent with the underlying solicitation. The seminal case in Florida on changes to a public contract is Robert G. Lassiter & Co. V. Taylor, 128 So. 14 (Fla. 1930), which sets forth the limitations on deviations between the scope of the awarded contract and that of the bid or proposal submitted. In Lassiter, the City of Sebring solicited bids for concrete pavement, but entered into a contract with the lowest bidder that substituted a less expensive paving material, Densite, for the concrete called for in the bid documents. Id. at 16. The resulting contract was less expensive for the City, but also more profitable for the winning bidder. Id. The Florida Supreme Court explained that the resulting contract was outside of the scope of the solicitation because the solicitation put "prospective bidders of experience" on notice that bids for Densite would not be accepted, and that had a bidder proposed Densite, it would not have been in compliance with the specifications. Id. at 16-17. The threshold inquiry, then, is whether a negotiated change to the winning proposal could have been accepted had it been submitted in response to the solicitation, and whether a particular change is contemplated by the solicitation is determined with reference to an experienced, reasonable proposer. See Morphotrust USA v. Dept of Highway Safety, Case No. 12-2917BID (Fla. DOAH Dec. 7, 2012) (explaining that a reasonable proposer would have understood that changes to the scope of a contract were contemplated by the underlying RFP, and the protestor's failure to understand the RFP's breadth was due to its own lack of sophistication). I In City of Lakeland v. Union Oil Co. of California, the U.S. District Court for the Middle District of Florida, applying Florida procurement law, explained that negotiated changes within the scope of the solicitation not only do not run afoul of competitive -procurement requirements, but, so long as they provide a better deal for the government, should "be applauded and validated, not condemned." 352 F. Supp. 758, 763 (M.D. Fla. 1973) (emphasis supplied). In that case, the city solicited bids for oil as an alternate to natural gas, the dominant fuel used at the time of the solicitation. Union Oil was the lowest bidder, and prior to awarding the contract, the city negotiated an even lower price with Union Oil. The court approved of this change to the price both because "the City got the best of the bargain" and because "the post bid negotiations did not involve any departure from the original specifications" and were conducted MIAMI 5055096.4 74183/46889 1 Page 5 Submitted into the pu is p record f9r ite ) G Memorandum on I I City Clerk CDO Bilzin Sumberg with the lowest bidder, not the highest bidder "to the exclusion and prejudice of a lower bidder." Id. In other words, the city properly negotiated a better deal for the city with the winning firm. In Union Oil, the city also subsequently decided to make oil, not natural gas, its primary fuel and increased the amount of oil purchased by more than five times what was estimated in the original specifications. Id. at 761. The court explained that although the solicitation explained that natural gas was the city's base fuel, with oil "to be used only when natural gas is unavailable," the solicitation also stated that oil could potentially become the primary fuel in the event of future supply or price changes, and that the City retained the option to increase the quantity purchased at any time and by any amount. Id. at 766. The court thus concluded that, although there was "no doubt that the contract specifications . .. had the object of securing ... a source of ... oil as an alternate or standby fuel," the solicitation also manifested that "the City took care ... to provide for the possible future use of oil as a primary or even exclusive fuel." Id. Accordingly, the City's subsequent switch from natural gas to oil as its primary fuel, and resulting increase in the quantity of oil purchased under the contract, "can hardly be described as beyond the contemplation of the parties or the purview of the contract specifications" and was therefore upheld as proper. Id. The principle that the government may negotiate a better deal for itself and make changes contemplated by the RFP is further illustrated by Fla. Dept of Lottery v. Gtech Corp., 816 So. 2d 648 (Fla. 1 st DCA 2001), the case relied upon by the protestors at the City's June 22 hearing. In that case, the Lottery ranked firms based on their proposals and then negotiated a contract with the top-ranked firm that was financially more favorable to the proposer, not more favorable to the government, and that contained provisions "never contemplated by the RFP." Id. at 650, 652 ("[T]he contract negotiated by the Lottery and AWI was financially more favorable to AWI than was the proposal which earned AWI most preferred provider status in the first place."). The changes in Gtech were thus exactly what the Union Oil court explained could not be made, and the First District therefore concluded that the Lottery could not use the RFP process "for ranking purposes only" and then "negotiate a contract without limitation" that "may in the final analysis bear little resemblance to the proposal that earned [the proposer] preferred provider status in the first instance." Id. at 653. The distinction between negotiated changes that improve the government's position and those that improve the proposer's position is engrained in procurement law throughout the country. For example, in Fischbach v. N.Y.C. Transit Authority, 79 A.D. 2d 14 (N.Y. App. Ct. 1981), the court rejected a losing bidder's challenge to contractual modifications negotiated with the top-ranked firm where the challenged modifications benefited the government, did not depart from the contract's original specifications, and "no concessions whatsoever" were made to the winning firm. Id. at 22. Similarly, in Palamar Construction, Inc. v. Twp. of Pennsauken, 482 A.2d 174 (N.J. App. Ct. 1983), the court held that post -bid contractual amendments that increase the bidder's costs to perform are permissible, and that the principle that a contract may not be awarded upon terms different from those contained in the solicitation is premised upon the opposite situation, where a bidder negotiates itself to a better position. Id. at 179. In Palamar, rather, the contract was amended prior to award to require the contractor to provide full-time supervision of its workers and to provide personal performance guarantees. The court explained MIAMI 5055096.4 74183/46889 Page 6 Submitted into the I.. ic rr record or it s) 4 , Memorandum on "I� � City Clerk C> Bilzin Sumberg that "the imposition of the post -bid conditions in the present case on defendant Taylor places him in a less favorable, and possibly more expensive, position than his fellow bidders" and were, therefore, permissible under the law, and noted that all other courts to have decided the issue ruled the same way. These same principles of procurement law apply to leases, and other jurisdictions have expressly permitted pre -award lease amendments that are consistent with the RFP and do not place the proposer in a better position financially. For example, the U.S. Government Accountability Office permitted the top ranked firm to modify its offer to include a specified lease term of 14 -years, less than its initial proposal of 15 years. In re: The New Jersey & H Street Ltd. P`ship, B-288026 (GAO Jul 17, 2001). The GAO explained that the relevant inquiry is whether the 1 -year change "is so substantial as to exceed what offerors reasonably could have anticipated," and because the RFP permitted firms to propose lease terms between 10 and 20 years, what was ultimately requested by the government in negotiations was not outside the realm of what could have been reasonably anticipated. The GAO further explained that a negotiated change must cause "competitive prejudice" in order to be deemed improper, and the 1 -year shorter lease term could not possibly benefit the selected firm to the detriment of its competitors. In Greenberg v. Fornicola, 178 A.2d 339 (N.J. 1962), the New Jersey Supreme Court upheld a negotiated amendment to a lease for retail premises that prohibited a use included in the proposal and permitted by the RFP. The underlying solicitation requested that bidders "submit an offer for ... [any] business suggested by the bidder, and subject to the approval of the City Council." The winning bidder proposed the sale of frozen desserts along with various other food items, but the lease was subsequently negotiated and amended to expressly exclude the sale of frozen desserts. The court found that the city in Greenberg made a policy decision after the bidding process had concluded—that it did not want the sale of frozen desserts at that particular location—and therefore sought the amendment. The court explained that "[t]he goal of the bidding statute is not impaired when the public body in its own interest seeks an amendment to meet an unanticipated development in circumstances in which new bidding would be inappropriate or impractical[, and i]t would be unreasonable to construe the act to deny to the municipality an opportunity to bargain for a needed change." The court upheld the amendment, explaining that the solicitation contemplated and permitted an interested party to propose all of the goods contained in the amended lease, and that the new restriction against the sale of frozen desserts thus did not change the basis upon which bids were evaluated or otherwise run afoul of the underlying solicitation. Rather, "the restriction was simply a restraint imposed by the city to protect its continuing interest as owner. The city accordingly could relax the restriction to serve its own ends without generating an issue under the bidding law." Id. at 344; accord 64 Am. Jur. 2d § 97 (2016) (distinguishing between the winning bidder's efforts "to negotiate a more favorable agreement for itself," which is prohibited, and changes made "when a public body, in its own interest, seeks an amendment" to the contract, which is permissible). MIAMI 5055096.4 74183/46889 Page 7 Submitted into thep lic Memorandum record r it s) p 11— on City Clerk C> Bilzin Sumberg B. A Lease Amendment Prohibiting Development on the Basin Property is Permissible. An amendment to the proposed lease that prohibits development on the Basin Property would plainly be within the scope of the RFP and legally permissible. The required inquiry is two -fold. First, had it been proposed by RCI initially, would the amended development plan have been responsive to the RFP? Lassiter, 128 So. at 16-17. Second, is the amendment a better deal for the public or for the awardee? Union Oil, 352 F. Supp. at 763. Because a proposal that omitted wet slips from the basin would have been responsive to the RFP, and because the omission of the wet slips is to the public's benefit and RCI's detriment, the change is a permissible one. A lease amendment prohibiting any development on the Basin Property is certainly within the scope of the underlying RFP. The RFP did not require a specific number of additional slips to be provided throughout the entire lease area, and did not require any particular use of the Basin Property. To the contrary, the RFP made clear that the use of the Basin Property, if any, was left to the discretion of each proposer. RFP Addendum II, p. 2 ("There is no anticipated location for the additional boat slips as this will be determined at the Selected Proposer's discretion, subject to the restrictions set forth in the RFP, the Virginia Key Master Plan (included as Exhibit E), and all other applicable restrictions, rules, and regulations."); id. ("The Selected Proposer shall have the discretion to design the area subject to the restrictions set forth in the RFP, the Virginia Key Master Plan (included as Exhibit E), and all other applicable restrictions, rules, and regulations."); Addendum XVII at 23 ("We're going to include 800 feet out here [into the basin], and the proposers are going to tell us where they're going to start and stop."). The text of the RFP therefore makes clear that, had RCI, or any other proposer, proposed a development plan without any use of the Basin Property, that proposal would have been fully responsive to the RFP, which required no particular number of additional wet slips, or any use whatsoever, of the Basin Property. Furthermore, RCI's proposal, amended to remove the proposed wet slips, meets all of the minimum requirements of the RFP, and easily exceeds the minimum capital investment. See RFP at p. 6 (listing minimum requirements, with no reference to any particular number of required wet slips in the Basin or any use of the Basin Property); RFP at p. 33 (the minimum capital investment is $25,000,000). Indeed, RCI's proposal contemplates all of the required uses and more than $90,000,000 in capital improvements, even excluding the estimated capital costs for developing the Basin Property. It is equally clear that the proposed amendment is in the public's interest and to RCI's detriment. This is absolutely not a situation where the winning proposer negotiates a better deal for itself, as in the typical case in which a court must evaluate a proposed contractual change, such as in Gtech. Gtech, 816 So. 2d at 652; Palamar, 482 A.2d at 179 ("[T]he typical case an award is voided as against the policies behind competitive bidding because it places one bidder in a more favorable position than his competitors. Conversely, the imposition of the post -bid conditions in the present case on defendant Taylor places him in a less favorable, and possibly more expensive, position than his fellow bidders."). To the contrary, the City's proposed lease 1 Notably, RCI's capital investment without the Basin Property is greater than that of each of its ' competitors with the Basin Property. MIAMI 5055096.4 74183/46889 Page 8 11 F] Submitted into the p 1ic record ft r ite s) III Memorandum on I City C Bilzin Sumberg amendment removes 151 revenue -generating wet slips and thus makes the lease less valuable for RCI, which estimated in its proposal that $4,004,208 in annual revenue would be generated by the wet slips. Courts have consistently held that contractual amendments that impose costs, versus benefits, on the contractor do not run afoul of public -procurement requirements. Id. at 179 ("We have discovered only two reported decisions on the propriety of attaching post -bidding conditions to a public contract where the newly -negotiated conditions are more favorable to the public agency and more onerous to the agreeable successful bidder than the original specifications had been. In both instances the courts upheld the award of the contract."). Not only is the proposed amendment to RCI's detriment, but it is, at the same time, to the City's and public's benefit: it preserves the historic Marine Stadium Basin and, in fact, was recommended to the City by the Virginia Key Advisory Board. The law makes a clear distinction between changes initiated by the contractor and those initiated by the government to protect its own interest, categorically permitting the latter. 64 Am. Jur. 2d § 97 (2016). The proposed use restriction on wet slips in the Basin Property is directly analogous to the use restriction placed on the lease at issue in Greenberg, which was also initiated by the City "to protect its continuing interest as owner" and was therefore approved by the court. 178 A.2d at 344. And more to the point, not only does the proposed amendment make the lease less valuable to RCI, and not only was the proposed amendment initiated by the City in the City's own interest, but the proposed amendment makes the lease no less valuable to the City. RCI has already committed itself to paying the City the additional annual rent ($200,210) attributable to RCI's proposed wet slips. The proposed amendment is thus without question to the City's benefit and RCTs detriment and, accordingly, is the precise type of negotiated amendment that Florida law "applaud[s] and validate[s], not ... condemn[s]." Union Oil, 352 F. Supp, at 763. At 1 bottom, the proposed amendment gives the City what it wants, requires that the City give up nothing, is to RCI's economic disadvantage, and is within the scope of the RFP. It is therefore fundamentally permissible, and even encouraged, under the law. Id. C. A Lease Amendment Removing the Basin Property from the Lease Area is Permissible. An alternative to amending the lease to restrict any development on the Basin Property would be to amend the lease area to exclude the Basin Property. This amendment is also permissible under Florida law. The analysis of whether such an amendment would in the City's interest or RCI's interest is identical to that for the use restriction: removing the Basin Property 2 Of course, the removal of the wet slips from the Basin Property would deprive RCI of $4 -plus million in annual revenues, not annual profits. In order to realize those revenues, RCI would need to incur an initial capital cost of approximately $9.45 million to construct the wet slips, plus ongoing operation and maintenance costs. Accounting for both sides of the equation—costs and revenues—RCI estimated a nearly 13% return on its investments in its proposal. In other words, RCI would stand to profit from the ability to build and operate wet slips in the Basin Property, and the removal of those wet slips is thus very clearly to RCI's economic detriment. That conclusion is punctuated here, where RCI has offered to pay the City its share of the revenues that would be generated by the wet slips in the Basin Property, even if those wet slips are not permitted. MIAMI 5055096.4 74183/46889 1 Page 9 Submitted into the p lic record fr ite ) I Memorandum on City C: C> Bilzin Sumberg reduces the value of the contract for RCI, is in the City's interest, and does not reduce the value of the contract for the City. The analysis of whether such an amendment is within the scope of the RFP is dictated by whether a reasonable, experienced proposer could have anticipated the removal of the Basin Property from the lease area. There can be no question that, based on the language of the RFP and addenda, a reasonable proposer could have anticipated the change. The alternative amendment is therefore within the scope of the RFP and, because it is to the City's benefit, is permitted under Florida law. The RFP and Addenda gave ample warning that the Basin Property might be removed from the lease area. When the Basin Property was first suggested, at the October 2 pre -proposal conference, the City made clear that the entire Basin Property was historically designated. See Addendum XVII (transcript at p. 25). That statement alone was sufficient to put a reasonable, experienced proposer on notice that the Basin Property may not be approved for any development. The RFP made very clear that all development was subject to regulatory review and approval, and all three proposers were represented by experienced local land -use counsel and spoke in detail at the October 2 pre -proposal conference about various local development regulations, manifesting that all three proposers not only reasonably should have appreciated the significance of a historic designation, but in all likelihood did in fact appreciate that the Basin Property's historic designation called into question whether any development would be permitted on the Basin Property. See RFP at 15, 22; Addendum XVII at p. 25-27, 31, 41-42. But the RFP went much further than that statement and explicitly warned proposers in Addendum V that any proposed development in the Basin Property "shall be required to comply with all applicable restrictions and stipulations, and must obtain all required permits and approvals, including, if necessary, approval from the Historic and Environmental Preservation Board," and that "[i]n the event the applicable regulatory agencies do not approve the inclusion of some or all of the submerged lands, the minimum base rent shall be revised accordingly based on the reduced square footage available." Addendum XV at p. 2-3. The RFP therefore made abundantly clear that: (a) the Basin Property was historically designated; (b) development on the Basin Property must be approved by the City and a myriad of agencies and may not be approved; and (c) the Basin Property may not be included in the lease, in which case the rent provisions would be adjusted. Any claim by a proposer that it could not have anticipated the removal of the Basin Property from the lease area simply defies the language of the RFP and the facts of the matter, as would have been understood by a reasonable, experienced proposer. At the June 22 meeting of the City Commission, counsel for the losing proposers attempted to argue that, because Addendum XV referenced "permits and approvals" and "applicable regulatory agencies," the City could not exclude the Basin Property without formally acting on a permit application. That argument falls completely flat upon any level of scrutiny. First, it cherry -picks phrases from Addendum XV to form an asserted RFP requirement that is contrary to the actual language of the RFP. Addendum XV refers broadly to "all applicable restrictions and stipulations," and "all required permits and approvals, including, if necessary, approval from the Historic and Environmental Preservation Board." (Emphasis added.) Addendum XV in no way limits the City's right to approve or deny development on the Basin Property to the actions of its Historic and Environmental Preservation Board. The language of MIAMI 5055096.4 74183/46889 Page 10 Submitted into the p is Memorandum record fp r it (s} , on I City Clerk C Bilzin Sumberg Addendum XV, taken as a whole, clearly includes "restrictions and stipulations" of any kind. An argument that a policy decision made by the City Commission itself, upon the recommendation of the Virginia Key Advisory Board, is somehow not an "applicable restriction[] and stipulation[]" comports with neither the language of the RFP nor common sense. Second, even if the RFP could be read to refer only to the ability of a regulatory board to deny a permit application, that limitation has absolutely nothing to do with the applicable legal standard, which asks whether a reasonable, experienced proposer could have anticipated the change. Union Oil, 352 F. Supp. at 766. The standard does not demand that a reasonable, experienced proposer could have anticipated the change and the precise reason given for the change. The law requires that proposers be reasonable; it does not require that the City be clairvoyant. In Union Oil, the court held that the solicitation's reference to potential price or supply shocks put proposers on notice that the city might ultimately switch from natural gas to oil as its primary fuel—the court did not require that those reasons in the solicitation be the actual reasons for the switch when it occurred. 352 F. Supp. at 766. Similarly here, that the RFP directly contemplated one possible reason for the change put all proposers on notice that the change could, in fact, occur, and that is all that the law requires to conclude that the change is within the contemplated scope of the RFP. Accordingly, the proposed amendment, which benefits the City, not RCI, is fully compliant with Florida law. II. The Proposed Changes are Permitted by Law Even if Not Contemplated by the RFP. A. Applicable Law As explained above, a contract with RCI that either prohibits development on the Basin Property or carves out the Basin Property from the lease area is both consistent with the RFP and to RCI's detriment, not its benefit, and thus permissible under Florida law. However, even if the proposed amendments are somehow deemed to be inconsistent with the RFP, that does not end the inquiry. Changes to the scope of the RFP are permitted so long as they are not "material." The law is clear that a deviation from the scope of a solicitation is material only if it creates an unfair competitive advantage for a proposer or is so substantial that, had it been known, additional firms would have likely responded to the solicitation. Florida courts have repeatedly clarified that, although a "material variance" from the terms of a solicitation is prohibited, "not every deviation from the [solicitation] is material." E.g, Robinson Elec. Co., Inc. v. Dade Cnty., 417 So. 2d 1032, 1034 (Fla. 3d DCA 1982). A deviation is material only if it "gives the bidder a substantial advantage over the other bidders, and thereby restricts or stifles competition." Id. (citing 10 McQuillan, Muncipal Corps. § 29.65 (3d Ed. 1981). For example, in Tropabest Foods, Inc. v. Department of General Services, 493 So. 2d 50 (Fla. 1 st DCA 1986), the court upheld the award of a contract that deviated from the terms of the solicitation because the deviation did not restrict or stifle competition. In that case, the solicitation called for dried beverage mix that yielded one gallon of beverage per one pound of mix. Id. The winning bidder proposed a product, which the government accepted, that would yield 3.5 gallons per pound of mix. Id. The court held that the solicitation could not be read to MIAMI 5055096.4 74183/46889 1 Page 11 Submitted into the pu lic o record f r ite (s) SO Z Memorandum on � � City Clerk C Bilzin Sumberg permit a product that yield 3.5 gallons per pound, but that the deviation was nonetheless acceptable because it did not restrict competition. Id. at 52. Specifically, the losing bidder did not establish that, had it known that a 3.5 -gallons -per -pound mix would be acceptable, it would have offered a different product or a lower price, and therefore the competitiveness of the process was unaltered. Id. Federal law on deviations from a solicitation's requirements is consistent with Florida law, and federal cases, which are far more numerous, are therefore instructive. As is the case in Florida, federal law requires competitive procurement procedures, and the federal courts have held that "[m]odifying the contract so that it materially departs from the scope of the original procurement violates [federal procurement law] by preventing potential bidders from participating or competing for what should be a new procurement." CESC Plaza Ltd. P'ship v. United States, 52 Fed. Cl. 91, 93 (2002) (collecting cases). Importantly, and consistent with Florida law, the federal courts have also made clear that not all modifications are prohibited. Id. For example, in CESC Plaza, the GSA amended a contract to deviate from the specifications of the solicitation in several ways. The amendments increased rent by 1.7%, changing the fixed -rent start date in the contractor's favor, and changed the parking requirements, and the Court of Federal Claims found that these provisions were not contemplated by the solicitation. Id. at 100. However, the court explained that changes are permissible so long as they do not "substantially change[] the type of work, performance period, and costs" and held that the contract modifications were permissible because they did not "change the cash flow in any significant amount," and that even viewing the changes as a whole, would not have affected the competitive process if they had been known. See id. at 93, 100. Federal courts alternatively also phrased the inquiry as whether the proposed deviation from the solicitation and the amended contract "calls for essentially the same performance" as the solicitation. American Apparel, Inc. v. United States, 108 Fed. Cl. 11, 29 (2012) (quoting Cardinal Maint. Serv., Inc. v. United States, 63 Fed. Cl. at 106). Significantly, the federal courts have permitted contract modifications that alter the contract price, even as much as 120%, so long as "the nature and purpose of the contract ha[s] not changed." Id. at 38 (quoting Def. Sys. Grp., B240295 (Comp. Gen. 1990)). This principle is codified in the Federal Acquisition Regulation (FAR), which provides: If, in the judgment of the contracting officer, based on market research or otherwise, an amendment proposed for issuance after offers have been received is so substantial as to exceed what prospective offerors reasonably could have anticipated, so that additional sources likely would have submitted offers had the substance of the amendment been known to them, the contracting officer shall cancel the original solicitation and issue a new one, regardless of the stage of the acquisition. 48 C.F.R. § 15.206(e); see also Golden Mfg. Co., Inc. v. United States, 107 Fed. Cl. 264, 275 (2012). MIAMI 5055096.4 74183/46889 Page 12 Submitted into the pu�,� recoa. L rd fppr ite n(s) Memorandum on 7 l Z l l 6 City Clerk C> Bilzin Sumberg Consistent with this focus on the impact of a change on competition, federal courts, consistent with Florida courts, have also considered whether a proposed change has altered a requirement that was determinative as to the evaluation and selection of proposers, in which case it is deemed impermissible. Golden Mfg., 107 Fed. Cl. at 276 (collecting cases). For example, in Matter of Avtron Manufacturing, B229972 (GAO May 16, 1988), the Navy issued a solicitation that expressly prohibited a particular technology, and the winning proposer was selected based upon its proposal that conformed to the solicitation's technical requirements. However, the Navy then amended the resulting contract to specify the very technology that had originally been prohibited. The GAO held that this modification amounted to a material change in scope, explaining that the drastic reversal could not been anticipated, and had proposers known of the change in advance, the record demonstrated that proposals "would be significantly lower in price, and different in design and delivery schedule, from those submitted under the original [solicitation]." In a similar case, the government specified that furniture be made from a particular wood, and then modified the resulting contract to permit the use of a type of wood that is 40% cheaper. Matter of- Marvin J. Perry & Assocs., B277684 (GAO Nov. 4, 1997). In that case, the losing bidder explaining that, had it known of the change, it would have been able to reduce its bid price to lower than that of the winning bidder, and the GAO concluded that, because the change undermined the result of the competitive process, it was not permitted. Id. Conversely, where the record does not reflect that the change would have impacted the outcome of the competitive process, the change is deemed non -material. See Tropabest, 493 So. 2d at 52. B. A Lease Amendment Prohibiting Development on the Basin Property or Excluding the Basin Property from the Lease Area is Permissible. Even assuming, for the sake of argument, that an amendment prohibiting any new development on the Basin Property or removing the Basin Property from the lease area somehow deviates from the scope of the RFP, such a deviation cannot be considered material. In fact, none of the hallmarks of a material change in scope are present. The core principle animating the legal constraints on changes to the scope of an RFP is whether the changes affect competition. Are the changes so great that additional firms would have likely participated in the process? Are the changes so great that they would have likely changed the outcome of the evaluation? Are the changes so great that the government is contracting for an item that is fundamentally different from that requested? In the case of the Virginia Key RFP, the answer to all of these questions is an emphatic "no." The proposed amendment would not have likely resulted in additional proposers had it been announced before submittal, does not relate to a requirement that was determinative as to the outcome of the evaluation process, and does not change the essential nature and purpose of the contract. Accordingly, the proposed amendment— even if it is deemed to be outside the scope of the RFP—is a non -material, permissible change. In the ordinary case, a government agency must speculate as to whether a proposed change in scope is so significant that, had it been known, additional firms likely would have participated in the process. See F.A.R. § 15.206(e). Here, the City need not speculate: the facts of this case manifest, with exceptional certainty, that additional firms would not have participated in the process had development on the Basin Property not been permitted by the MIAMI 5055096.4 74183/46889 Page 13 Submitted into (j pu �ic d Memorandum recorf r it m s on PZn 6 City Clerk C.:> Bilzin Sumberg RFP. The RFP was initially issued without the Basin Property being a part of the lease area. The Basin Property was not formally added to the RFP by until the issuance of Addenda XXI, XXII, and XXIII on November 25, 2015, more than five months after the issuance of the original RFP. Significantly, the mere concept of including the Basin Property—or any property within the Marine Stadium basin—was not suggested prior to the final pre -proposal meeting, which was held on October 2, 2016. At that meeting, only the three firms that ultimately submitted proposals attended and participated in the discussion. See Addendum XVII (transcript of meeting). It is thus abundantly clear that the inclusion or exclusion of the Basin Property had zero effect on the participants in the process. Three firms were interested in participating before the Basin Property was added, and those same three firms submitted proposals after the Basin Property was added. With arithmetic certainty, the change in scope is not so substantial as to result in additional participants in the process had it been known in advance. The facts of this case also manifest that the alleged change in scope does not undermine or in any way impact any determinative evaluation factors or the outcome of the competitive process. As an initial matter, the proposers were not required to provide any particular number of wet slips—or any slips at all—in the Basin Property. RFP at p. 6 ("The size and number of any and all additional wetslips shall be subject to all applicable rules and regulations, including, but not limited to, zoning, permitting, aquatic preserve limitations, and other regulatory requirements."); Addendum II at p. 2 ("There is no anticipated location for the additional boat slips as this will be determined at the Selected Proposer's discretion, subject to the restrictions set forth in the RFP, the Virginia Key Master Plan (included as Exhibit E), and all other applicable restrictions, rules, and regulations."); Addendum XVII at p. 23 ("We're going to include 800 feet out here [into the basin], and the proposers are going to tell us where they're going to start and stop."). This situation is thus on all fours with CESC Plaza, where the court explained that the challenged lease amendments deviated from the solicitation in a way that permitted the awardee to achieve cheaper financing, but that proposers were not required by the solicitation to use debt financing, and the change could therefore not be viewed as a material change. CESC Plaza Ltd., 52 Fed. Cl. at 100 & n. 6 ("The financing behind the construction of the building is not what the government procured. Although the financing was of interest to GSA, it was not the purpose of the solicitation. The solicitation did not require a specific type of financing."). The fact that the removal of the wet slips from the Basin Property might impact proposals that included such slips is therefore immaterial because, although such slips were permitted by the RFP, they were not the purpose of the RFP or otherwise required by the RFP. Furthermore, even if wet slips in the Basin Property were required by the RFP, the removal of those wet slips does not in any respect undermine the result of the competitive process. Significantly, RCI proposed by far the fewest number of wet slips in the Basin Property: 151 slips, compared to 353 for Suntex and 310 for Tifon. Accordingly, RCI's proposal provided much less rent to the City attributable to the Basin Property than the competing proposals—$200,210, compared to $429,258 for Suntex and $253,421 for Tifon. The evaluation process included the proposed use of the Basin Property, and therefore RCI was at a competitive disadvantage when compared to its competitors. In other words, RCI won the RFP process not because of its utilization of the Basin Property, but despite its utilization of the Basin Property. Any subsequent removal of the Basin Property therefore does not in any way call into question MIAMI 5055096.4 74183/46889 Page 14 Submitted into the p c record Ir ite (,�%L Memorandum on - City Clerk' C�► Bilzln Sumberg the outcome of the evaluation process or confer an unfair competitive advantage to RCI and is therefore plainly permissible. See Tropabest, 493 So. 2d at 52 (permitting a deviation from the solicitation requirements where the change, had it been known, would not have improved the competitor's bid relative to the awardee's). The final consideration for whether an out -of -scope change to the requirements of a solicitation may be deemed a material change is whether the amended contract "calls for essentially the same purpose" as the solicitation. American Apparel, 108 Fed. Cl. at 29. Plainly, that is the case here. The RFP provided that its purpose was broad: "to create a vibrant recreational marina and restaurant destination with an ancillary ship's store facility for City residents and tourists alike." RFP at 3. To effectuate this purpose, the RFP required a marina/boat yard with dry rack storage, a new dock master's office, a ship's store, fuel stations, wet slip dockage facilities, and at least one restaurant. RFP at 6. The proposed amendment in no way changes the uses required by the RFP and certainly does not change the essential purpose of the RFP. The precise location or number of the wet slips on the site is not dictated by the RFP and in no way changes the core purpose and scope of the RFP. The City is still getting what it solicited. Importantly, courts have approved deviations in scope that drastically change the value of a contract so long as the essential purpose has not changed—including changes in value of greater than 100%. American Apparel, 108 Fed. Cl. at 38. Because the essential purpose of the RFP is not affected by the proposed amendment, any changes in revenue attributable to the removal of the wet slips from the Basin Property are irrelevant. Nonetheless, the impact on revenue underscores just how insignificant the proposed amendment really is—the Basin Property has only a marginal impact on RCI's bottom line for this development, or on the rent payable to the City. RCI estimated in its proposal that the Basin Property would generate $200,210 in annual rent to the City—only 6% of RCI's projected annual lease payments to the City, and less than one percent of the $21,873,296 in total estimated annual project revenues. At the June 22 City Commission meeting, counsel for a losing proposer misleadingly asserted that the Basin Property accounted for 18% of RCI's total revenues. Of course, gross revenues do not equal RCI's profits, and removing the Basin Property means removing not only the revenue - generating assets, but also the debt and equity required to build those assets (the Basin Property would need to be built out from its existing state of nothing), and the resources required to operate and maintain those assets. The costs and revenues do not perfectly balance—RCI estimated in its proposal that it would earn nearly 13% profits on its investments.3 But removing the Basin Property is ultimately of little consequence to RCI and of no consequence to the City— RCI has already proposed to eat the additional $200,210 in annual rent and pay that to the City as though the proposed wet slips in Basin Property were still included. The bottom line is that not every change to the scope of an RFP is material. In order for a change to be deemed material, the City must be able to articulate a reasonable explanation for how that change undermines the competitive process. The facts simply do not support such a conclusion. Based on the timing of the addenda that added the Basin Property to the RFP lease 3 See footnote 1, above. MIAMI 5055096.4 74183/46889 Page 15 Submitted into the pub 1 1 C Z record f r ite J Memorandum on City Clerk C,, Bilzin Sumberg area, there can be no doubt that the proposed amendment would have no effect whatsoever on the firms that participated in the process. Based on the fact that the RFP did not require any particular use of the Basin Property and, in the alternative, that RCT made by far the least use of the Basin Property in its proposal, the removal of the Basin Property does not impact any determinative evaluation factors. And any assertion that the provision of a "vibrant recreational marina and restaurant destination with an ancillary ship's store facility" that incorporates additional wet slips is fundamentally different in purpose than the provision of a "vibrant recreational marina and restaurant destination with an ancillary ship's store facility" that doesn't is pure fantasy.4 Although the City is afforded wide discretion in deciding to reject all bids, any such decision premised on the removal of the wet slips from the Basin Property constituting a material change to the RFP would exceed that discretion. See Wood Hopkins Contracting Co. V. Roger J. Au & Son, Inc., 354 So. 2d 446 (Fla. 1st DCA 1978) (rejecting the government's assertion that it "has unbridled discretion to reject any and all bids 'with or without' cause, and explaining that "[]such action ... is subject to the requirement its exercise be not arbitrary, unreasonable or capricious"); Double E Constructors, Inc. v. Sch. Bd. of Palm Beach Cnty., Case No. 91-1017BID (Fla. Div. Admin. Hrgs. 1991) (overturning the government's decision to reject all bids, premised upon an unfair competitive advantage, where there was no such advantage). CONCLUSION The City of Miami has the authority to enter into a lease with RCI that prohibits the development of any wet slips in the Basin Property or, alternatively, removes the Basin Property from the lease area. Both of these changes are consistent with the RFP and thus require no deviation from the RFP's requirements, let alone a "material" deviation. Furthermore, because the proposed changes are in the City's interest, and to RCI's economic detriment, they are permissible and encouraged by Florida law. Even assuming, for the sake of argument, that the proposed amendments are not contemplated by the RFP, they are still permissible as non -material deviations from the RFP's requirements. Florida law is clear that not all deviations are material, and in order to be deemed material, a change must be shown to undermine the competitive process. Because the facts manifest the opposite—that the removal of the Basin Property had zero impact on the competitive process—any determination that the proposed amendments are material deviations from the RFP would be arbitrary and capricious and prohibited by law. 4 Of note, RCI proposed 325 more dry slips than the 648 required by the RFP. Thus, even if the purpose of the RFP were to be defined in terms of the number of requested slips, RCI's proposal still meets that number, even with the removal of the 151 wet slips proposed in the Basin Property. MIAMI 5055096.4 74183/46889 Page 16 INDEX TO MEMORANDUM Submitted into the p lie record fho ite (s) rj-i7 on City Clerk A. CASES 1. American Apparel, Inc. v. United States, 108 Fed. Cl. 11 (2012) 2. Avtron Manufacturing, B229972 (GAO May 16, 1988 3. CESC Plaza Ltd. P'ship v. United States, 52 Fed. Cl. 91 (2002) 4. City of Lakeland v. Union Oil Co. of California, 352 F. Supp. 758 (M.D. Fla. 1973) 5. Double E Constructors, Inc. v. Sch. Bd. of Palm Beach Cnty., Case No. 91- 1017BID (Fla. Div. Admin. Hrgs. 1991) 6. Fischbach v. N. Y. C. Transit Authority, 79 A.D. 2d 14 (N.Y. App. Ct. 198 1) 7. Fla. Dept of Lottery v. Gtech Corp., 816 So. 2d 648 (Fla. 1st DCA 200 1) 8. Golden Mfg. Co., Inc. v. United States, 107 Fed. Cl. 264 (2012) 9. Greenberg v. Fornicola, 178 A.2d 339 (N.J. 1962) 10. Matter of: Marvin J. Perry & Assocs., B277684 (GAO Nov. 4, 1997) 11. Morphotrust USA v. Dept of Highway Safety, Case No. 12-2917BID (Fla. DOAH Dec. 7, 2012) 12. In re: The New Jersey & H Street Ltd. P'ship, B-288026 (GAO Jul 17, 2001) 13. Palamar Construction, Inc. v. Twp. of Pennsauken, 482 A.2d 174 (N.J. App. Ct. 1983) 14. Robert G. Lassiter & Co. v. Taylor, 128 So. 14 (Fla. 1930) 15. Robinson Elec. Co., Inc. v. Dade Cnty., 417 So. 2d 1032 (Fla. 3d DCA 1982) 16. Tropabest Foods, Inc. v. Department of General Services, 493 So. 2d 50 (Fla. 1 st DCA 1986) 17. Wood -Hopkins Contracting Co. v. Roger J. Au & Son, Inc., 354 So. 2d 446 (Fla. 1 st DCA 1978) Submitted into the pubic record fqr ite (s)�1�� CD on ( City Clerk B. TREATISE 64 Am. Jur. 2d § 97 (2016) C. REGULATION 48 C.F.R. § 15.206(e) D. RFP PAGES RFP, Pages 3; 6; 15; 22; 30; 33; 35 E. ADDENDA: 1. Addendum II 2. Addendum VIII 3. Addendum XV 4. Addendum XVII 5. Addendum XVIII American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) 1o8 Fed.Cl. 11' United States Court of Federal Claims. AMERICAN APPAREL, INC., Plaintiff, V. UNITED STATES, Defendant, V. Bluewater Defense, Inc., Defendant—Intervenor. No. 12-293C Filed: November 30, 2012 Redacted Version Issued for Publication: December 14, 2012' Synopsis Background: Unsuccessful bidder on an addition to an existing contract for all-weather coats for United States Armed Forces brought action seeking a permanent injunction requiring government to terminate an award to successful bidder for all-weather coats for Air Force and Coast Guard. Successful bidder intervened as a defendant, and both defendants moved to dismiss. Submitted into the pubic t, r record f r itT(s) i may__k - Citv Clerk accordance with law. 5 U.S.C.A. § 706(2)(A); 28 U.S.C.A. § 1491(b)(4) Cases that cite this headnote [21 Public Contracts a Evidence United States Evidence A disappointed bidder has the burden of demonstrating the arbitrary and capricious nature of the agency decision by a preponderance of the evidence. 5 U.S.C.A. § 706(2)(A); 28 U.S.C.A. § 1491(b)(4) Cases that cite this headnote 131 [Holding:l The Court of Federal Claims, Marian B. Horn, J., held that government's post -award request for additional items could not serve as basis for a viable bid [41 protest. Motion granted. West Headnotes (10) [11 Public Contracts Scope of review United States � > Scope of review In a bid protest case, an agency's award must be upheld unless it is arbitrary, capricious, an abuse of discretion, or otherwise not in Public Contracts Evidence United States Evidence To demonstrate that an agency decision is arbitrary or capricious, a disappointed bidder must identify hard facts, and a mere inference or suspicion is not enough. 5 U.S.C.A. § 706(2) (A); 28 U.S.C.A. § 1491(b)(4) Cases that cite this headnote Public Contracts Scope of review United States Scope of review Under the arbitrary or capricious standard, a court reviewing a bid protest should not substitute its judgment for that of the agency, but should review the basis for the agency decision to determine if it was legally permissible, reasonable, and supported by the facts. 5 U.S.C.A. § 706(2)(A); 28 U.S.C.A. § 1491(b)(4) Cases that cite this headnote 151 Public Contracts Necessity for submission to competition in general WESTLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) United States Necessity for submission to competition in general Modifying an existing contract so that it materially departs from the scope of the original procurement violates the Competition in Contracting Act (CICA) by preventing potential bidders from participating in or competing for what should be a new procurement. 41 U.S.C.A. § 3301(a) (1) Cases that cite this headnote [6] Public Contracts Necessity for submission to competition in general United States 4— Necessity for submission to competition in general Just as the cardinal change doctrine prohibits an agency from compelling a contractor to perform contract terms that are not within the scope of the original bargain, the Competition in Contracting Act (CICA) prevents an agency from modifying a contract to such an extent that the modified contract is materially different from the contract for which a competition was held. 41 U.S.C.A. § 3301(a)(1) Cases that cite this headnote 171 Public Contracts ,k)— Necessity for submission to competition in general United States *�- Necessity for submission to competition in general In determining whether a contract, as modified, is materially different in violation of the Competition in Contracting Act (CICA), a court should first focus on the modification in the context of the original procurement and then determine the expectations of potential offerors. 41 U.S.C.A. § 3301(a)(1) Submitted into thet II �Pe Z record fPr ite�n(s) Cases that cite this headnote 181 Public Contracts Necessity for submission to competition in general United States ��- Necessity for submission to competition in general To determine whether a modification is within the scope of the original procurement in compliance with the Competition in Contracting Act (CICA), a court should consider whether the modification substantially changes the type of work, performance period, and costs as between the original contract and the modified contract. 41 U.S.C.A. § 3301(a)(1) Cases that cite this headnote [91 Public Contracts Necessity for submission to competition in general United States -- Necessity for submission to competition in general A modification generally falls within the scope of the original procurement in compliance with the Competition in Contracting Act (CICA) if potential bidders would have expected it to fall within the contract's changes clause, and whether potential bidders would have anticipated a particular modification is judged under an objective standard and depends heavily on the language of the solicitation. 41 U.S.C.A. § 3301(a)(1) Cases that cite this headnote 1101 Public Contracts Necessity for submission to competition in general Public Contracts Operation and effect United States WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) Submitted into the pu lic M44 - record ttr rte s ! on City Clerk ' Necessity for submission to competition in general HORN, J. ' United States Operation and effect FINDINGS OF FACT Government's post -award request for The United States Defense Logistics Agency (DLA), additional items on a contract for all-weather coats for United States Armed Forces was an Defense Supply Center Philadelphia, issued Solicitation SPM1C1-08—R-0153 (the solicitation) for "Coats, All in -scope modification of existing contract, not Weather, Various, Mens and Womens" for the United a competitive negotiated procurement subject States Marine Corps, Army, and Navy on September 10, to Competition in Contracting Act (CICA), 2009. The solicitation sought proposals for five line items, and, thus, request could not serve as basis of a viable bid protest under. Tucker Act; with a base period of one year and four option years for each line item. The line items solicited were: Item 0001, for request referenced original solicitation's add/ "PGC [Product Group Code] 02850 Coat, All Weather, delete clause and indicated that all other Marine Corp Men's," Item 0002, for "PGC 02851 Coat, terms and conditions of contract remained All Weather, Marine Corp Women's," Item 0003, for in effect, original solicitation indicated that "PGC 02110 Coat, All Weather, Army Women's," Item three more coats potentially could be added 0004, for "PGC 01940 Coat, All Weather, Navy Men's," to procurement on a post -award basis, and and Item 0005, for "PGC 01908 Coat, All Weather, Navy nature and purpose of work contemplated by original solicitation remained unchanged. 10 Women's." ` U.S.C.A. § 2305; 28 U.S.C.A. § 1491(b)(1) The September 10, 2009 solicitation included a Notice to Cases that cite this headnote Offerors, in which the agency listed evaluation criteria to be used in selecting the awardee: Attorneys and Law Firms *13 Victor A. Kubli, Grayson Law Center, P.C., Germantown, MD, for plaintiff. With him was Alia J. 1 Roberts, Grayson Law Center, P.C., Falls Church, VA. William J. Grimaldi, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C., for defendant. With him were Kirk T. Manhardt, Assistant Director, ' Jeanne E. Davidson, Director, Commercial Litigation Branch, and Stuart F. Delery, Acting Assistant Attorney General, Civil Division. Marc Lamer, Kostos and Lamer, P.C., Philadelphia, PA, for defendant -intervenor. Post—Award Bid Protest; Motion to Dismiss; Contract Modification OPINION Proposals will be evaluated for both technical merit and price reasonableness following the evaluation procedures in this solicitation. In order to provide full consideration of your qualification for contract award, you are encouraged to ensure that the information furnished in support of your technical proposal is factual, accurate *14 and complete. The Department of Defense (DoD) is committed to applying "Best Value" contracting as a means to rely on industry for timely delivery of quality products, while reducing the Government's administrative costs associated with contractor oversight. To this end, we are evaluating factors in addition to price under this solicitation. The Notice -to Offerors further provided: I WESTLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 Submitted into the pHe , Z record r ite (s) `� American Apparel, Inc. v.. United States, 108 Fed.Cl. 11 (2012) on ��. City Clerk Offerors are required to submit a technical proposal consisting of the following technical evaluation factors: (1) Product Demonstration Model (PDM) (2) Past Performance/Experience a. Experience b. Quality of Items c. Delivery Performance d. Compliance with Contractual Socioeconomic Subcontracting (3) Socioeconomic Consideration. 3 In a separate section titled "FAR 52.212-2 Evaluation— Commercial Items (JAN 1999)," 4 the solicitation stated that technical factors were "[s)ignificantly more important than cost or price." The solicitation also included a clause titled, "52.216-9006 Addition/Deletion of Items" (the Add/Delete Clause). 5 The Add/Delete Clause provided: As prescribed in 16.506(90), 6 insert the following clause: *15 ADDITION/DELETION OF ITEMS (AUG 2005) —DLAD (a) The Government reserves the right to unilaterally delete items that were available from only one manufacturer at the time of award if an alternate source of supply becomes available or the Government's requirements are modified to provide for full and open competition. The Government will provide a 30 day advance notice to the contractor prior to deleting any item from the contract. (b) New items may be added to the contract through bilateral modification with negotiated prices. All new requirements are subject to synopsis prior to addition to the contract. Six offerors submitted proposals in response to the solicitation. One of the offerors, [deleted], was eliminated for failure to submit prices in its proposal. The technical proposals from the remaining five offerors were evaluated. On December 13, 2010, the Source Selection Authority and contracting officer, T.D. Lockley, issued a Source Selection Decision, identifying DJ Manufacturing, Corp. (also referred to as DJ Mfj in the administrative record) 7 as representing the best value to the government for Item 0001, and identifying American Apparel, Inc. (American Apparel) as representing the best value to the government for Items 0002, 0003, 0004, and 0005. The Source Selection Decision referred to the FAR 52.212-2, Evaluation —Commercial Items, included in the September 10, 2009 solicitation, as the basis for its selection decision, specifying that "all evaluation factors other than cost or price, when combined, are significantly more important than cost or price." The Source Selection Decision included charts showing which of the five proposals represented the best value to the government, for each of the items, 0001 through 0005, identified in the solicitation. The charts were based on alphabetical and numerical evaluations and each proposal received a number of alphabetical ratings, with "E" for exceptional, "V" for very good, "S" for satisfactory, "M" for marginal, "U" was for unacceptable, and "N" for neutral (no submission). Each proposal also received a numerical ranking, with "1" being the highest and "5" being the lowest. With respect to the Item 0001, "PGC 02850 Coat, All Weather, Marine Corp Men's," the Source Selection Authority, prepared the following evaluation summary in the December 13, 2010 Source Selection Decision: 8 *16 WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 Submitted into thep u lic �+ American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) record r item(s) , I _..- OFFERC?F PflA PAST Sacioetoncamic TECHkP�RICE lT TOTAL. (Al PERFORMANCE Coinideralions PROP EVALUATED A B C D &A°L)J _P9PRICE L4FJ 1,4) 9 V V VM V 2 S leted deleted AMERICAN V E V V u V 3 V (detetedj [deleted) APPAREL 1 [deleted (6) 141 S if V N S 4 M [creieted], delelc-d i eleted 2 V E V MN it 5 Veli -ted deletedl deleted {�'} V 'V 'V N V 1 S 'deleted deleted Editor's Note: The preceding image contains the reference for footnote g , 10 The Source Selection Authority conducted a detailed comparison of each offer, determining that Bluewater represented the best value to the government for Item 0001. Comparing Bluewater and American Apparel for Item 0001, 11 the source selection decision stated: Although American Apparel has a superior technical proposal, paying a [deleted] premium to American Apparel is not considered in the best interest of the Government. In comparing PDMs, which is the most important factor, both vendors had deficiencies that were easily correctable, but DJ also had four deficiencies that require preventative corrective action. While there is a difference in the quality of the PDMS, it is not considered to be significant after considering the number of deficiencies in each offeror's PDM as well as the nature of the deficiencies. Although DJ had four deficiencies requiring preventative corrective action, that is a relatively low number and the overall number of deficiencies in each PDM is fairly close (9 vs. 12). Because both vendors' PDMS meet the stated technical requirements of the solicitation and do not contain any significant deficiencies, there is no significant difference between the two PDMS. As to past performance, the Source Selection Authority concluded: [W]hile American has more extensive experience in making the same exact item, DJ has successfully manufactured a similar item, in particular, the Extreme Cold Weather Parka, without any quality issues. Both DJ and American have relatively low delinquency rates, although it is noted that American Apparel has manufactured a much larger number of the same and similar coats. While American has strengths under Past Performance/ Experience, given DJ's very good quality and delivery record, and their experience, the strengths are not substantial enough to warrant paying a [deleted] premium to American. Regarding Socioeconomic Conditions, the Source Selection Authority determined that "[n]o adjectival rating exists for the Socioeconomic Conditions factor, the third and least important factor, because offerors were ranked in comparison to each other with respect to offeror efforts to develop additional opportunities for small, small disadvantaged and women -owned small businesses." The December 13, 2010 Source Selection Decision included a similar analysis for Item 0002, "PGC 02851 Coat, All Weather, Marine Corp Women's." Comparing American Apparel to the other offerors, the Source Selection Authority determined that American Apparel was the best value to the government for Item 0002. As to the differences between *17 American Apparel WESTLAW @ 2016 Thomson Reuters. No claim to original U.S. Government Works. 5 d Submitted into the pu lic record f ite s) A —� American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) on ��� city Clerk and Bluewatet, the December 13, 2010 Source Selection PDM is warranted and is considered to be in the best Decision stated: interest of the Government." American Apparel has a superior technical proposal (Very Good vs. Unsatisfactory) when compared to DJ Manufacturing. American has a superior PDM (Very Good vs. Unsatisfactory), the most important factor. While both vendors have the same Very Good rating for Past Performance, the second most important factor, American is considered superior having superior Experience, the most important subfactor. DJ is superior for Socioeconomic Considerations (second vs. third), the least important factor. Finally, American Apparel's total evaluated price of $ 1,176,151.68 is [deleted] higher than DJ Manufacturing [sic] total evaluated price of [deleted], representing [deleted] additional premium dollars for the base year and four options years. Paying such a premium to American Apparel for a superior technical proposal and a superior PDM, is warranted and is considered in the best interest of the Government. In comparing PDMS, which is the most important factor, American's does not have any significant deficiencies, but DJ's PDM has a very significant deficiency that requires extensive corrective action or a remedy tantamount to a new PDM. The difference between the PDMS is considered significant after considering the nature of the deficiencies. Because DJ's PDM does not meet the stated requirements of the solicitation; because there is a significant difference between the PDMS; and because DJ failed to demonstrate their ability to produce an acceptable item indicating little to no probability of successful contract performance, the difference is so substantial that it warrants paying a premium to American Apparel. The Source Selection Authority similarly found American Apparel the best value for Item 0003, "PGC 02110 Coat, All Weather, Army Women's." Comparing Bluewater and American Apparel, the Source Selection Authority concluded that American Apparel had a superior technical proposal, including the Product Demonstration Model and Past Performance/Experience. Although American Apparel's total evaluated price of $8,408,089.44 was approximately [deleted] percent higher than Bluewater's total evaluated price of [deleted], the Source Selection Authority concluded that "[p]aying such a premium to American Apparel for a superior technical proposal and Likewise for Item 0004, "PGC 01940 Coat, All Weather, Navy Men's," the Source Selection Authority determined that American Apparel represented the best value to the government based on its superior technical proposal, including the Product Demonstration Model and Past Performance/Experience. Again, the Source Selection Authority concluded that paying a premium of approximately eleven percent for a superior technical proposal, including a superior PDM, was warranted and considered in the best interest of the government. American Apparel's price of $12,354,251.20 was approximately [deleted] percent higher than Bluewater's price of [deleted], representing an additional sum of [deleted], based on the base year and four option years. In the evaluation for Item 0005, "PGC 01908 Coat, All Weather, Navy Women's," American Apparel again was found to be the best value to the government based on its superior technical proposal, including the PDM and Past Performance/Experience. Although American Apparel's total evaluated price of $2,795,036.64 was approximately [deleted] percent higher than Bluewater's total evaluated price of [deleted], the Source Selection Authority concluded that paying such a premium to American Apparel was warranted and in the best interest of the government, based on American Apparel's superior technical proposal and PDM. As a result of the evaluations, on December 22, 2010, DLA awarded Contract No. SPM 1 C1 -10-D-1100 to Bluewater for Item 0001 and Contract No. SPM 1 Cl -10- D1099 1-10- D1099 to American Apparel for Items 0002, 0003, 0004, and 0005. On February 18, 2011, DLA invoked the Add/Delete Clause included in the September *18 10, 2009 solicitation, and issued a request for additional items, Item 0006, "PGC 01958 Coat, All Weather, Air Force/Coast Guard Men's," and Item 0007, "PGC 01959 Coat, All Weather, Air Force/Coast Guard Women's," to American Apparel and Bluewater. Both items PGC 01958 and PGC 01959 had been specifically referenced in the August 10, 2009 Initial Procurement Synopsis, as all-weather coats that "may be added [to the solicitation] on a post -award basis via Add/Delete Clause." The Initial Procurement Synopsis also listed the potentially additional items as WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 6 American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) "PGC 02111 Army, Men's, Coat, All—Weather," "PGC 01958 Air Force Men's, Coat, AllWeather," and "PGC 01959 Air Force Womens, Coat, All—Weather." Specifically, the February 18, 2011 request for additional items stated: In accordance with FAR [sic] clause 52.216-9006/ ADDITION AND DELETION OF ITEMS clause, referenced on page 56 of the solicitation, the attached two product group codes for the Air Force/Coast Guard Men and Women All—Weather Coats are being proposed for addition to the Universal All Weather Coat Contract. All contract terms and conditions remain in effect and apply to the addition of any items. Two PreProduction Samples are required including one AWC, Air Force, Woman and one AWC, Air Force, man. All offers will be subject to evaluation procedures, as described in the subject solicitation. All offers remain valid for a minimum of 100 days from the closing of this solicitation.... The Contracting Officer intends to make award without negotiations; Submitted into the public record fol' items) on therefore, your proposal should represent your best offer. Technical data is attached. The deadline for receipt of offers is February, 28, 20011 [sic]. Vendors are requested to provide offer prices in advance of the deadline. The 2011 request reiterated that "offers will be subject to evaluation procedures, as described in the subject [September 10, 2009] solicitation," but did not list separately the evaluation criteria to be considered in deciding whether Bluewater or American Apparel would provide the additional items. On March 10, 2011, the initial February 28, 2011 deadline for submission of proposals was extended to March 14, 2011. American Apparel submitted its offer on February 25, 2011 and Bluewater submitted its offer on March 11, 2011. Bluewater's offer for Item 0006 was $12,973,435.20 for the base year and the four option years, and American Apparel's offer for Item 0006 was [deleted] for the base year and four option years. Bluewater's offer for Item 0007 was $4,429,724.88 for the base year and the four option years, and American Apparel's offer for Item 0007 was [deleted] for the base year and four option years. The government evaluated the offers by unit price and determined the following evaluated price for each item as proposed by the offerors: Offeror Item 0006 Iters 0007 BIuevvater deleted deleted American Apparel deleted deleted The DLA—FQCB Memo for Record, dated May 13, 2011, titled "Combined PreNegotiation Briefing Memorandum (PBM)/Price Negotiation Memorandum (PNM)/ Price Analysis," stated that the February 18, 2011 request intended to add new items to an existing contract with similar items for which PDMS have been already evaluated, and, therefore, the request for additional items was issued only to Bluewater and American Apparel, for addition to either, or both, of their contracts. The memorandum stated, with respect to the offers submitted in response to the February 18, 2011 request for additional items, that "price will be the determining factor to the addition of items." In addition, the memorandum also noted that the Air Force Man and Woman All—Weather Coats were "considered to be within the scope of the universe of all-weather coats as they [were] similar in kind and *19 complexity to the all-weather coat(s) under the Universal All—Weather Coat Contracts." Based solely on Bluewater and American Apparel's prices, DLA modified Bluewater's contract to include both Items 0006 and 0007 on March 31, 2011. American Apparel was notified by letter on June 6, 2011 that it "was determined I WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 7 American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) not to be the most advantageous to the Government based on price" for Items 0006 and 0007. American Apparel filed a protest at the United States Government Accountability Office (GAO) on June 15, 2011, asserting, in part, that the "RFP [for the February 18, 2011 request for additional items] explicitly stated that the award decision would be based on `best value;' and further stated that in conducting that best value determination `Technical factors are... Significantly more important than cost or price.' Nevertheless, the DSC [Defense Supply Center Philadelphia] admittedly made the award of Items 0006 and 0007 to BlueWater `based on price.' " 12 On June 29, 2011, DLA announced that it "decided to take corrective action" and canceled the February 18, 2011 request for additional items, indicating that it would issue a new request, which more clearly stated the evaluation criteria. Following the cancellation, on June 30, 2011, the GAO dismissed American Apparel's protest because DLA canceled the February 18, 2011 addition of items request and noted that a cancellation "renders a protest academic." 13 In the corrected request for additional items, issued to Bluewater and American Apparel on September 22, 2011, DLA stated: In accordance with DLAD Clause 52.216-9006, Addition/Deletion of Items, found on page 56 of the subject Solicitation SPM 1C1 -08—R-0153, the attached Items 0006 and 0007 for the Air Force/Coast Guard Men and Women All—Weather Coats are being solicited for addition to either the Universal All Weather Coat Contract SPM 1 C1 -10—D-1099 or SPM 1 C1 -10—D- 1100. Offers will be evaluated based on price only.... All other terms and conditions of the offeror's contract, Contract SPM1C1-10—D-1009 [sic] and/or SPM1C1- 10—D-1100 remain in effect and apply to the addition of items. On September 30, 2011, and prior to plaintiffs resubmission of its offer for Items 0006 and 0007, American Apparel challenged the corrected request for additional items at the GAO. American Apparel argued that the corrected request violated FAR 16.505(b) (2011), "Orders under multiple -award contracts," which states that the contracting officer "should consider" Submitted into the pu lic S record fqr item ) 1'P ° � 1? n ! I L City Clerk "past performance on earlier orders under the contract, including quality, timeliness and cost control." Consequently, American Apparel argued that the *20 notice should be amended to include past performance as a basis for award and not have price as the only factor. DLA sought dismissal of the protest, arguing that the request for Items 0006 and 0007 did not fall under FAR 16.505 because it was not an order under a multiple -award contract, but rather an addition to an existing contract, and that considering only price was consistent with the Add/Delete Clause, American Apparel responded, and asked the GAO also to consider FAR 15.304(c)(2) (2011), 14 which states: " `The quality of the product or service shall be addressed in every source selection through consideration of one or more non -cost evaluation factors such as past performance....' " On November 1, 2011, the GAO dismissed American Apparel's protest, finding that: [E]ven assuming for the sake of argument that the provisions of FAR § 16.505 are applicable here, they do not mandate that the agency consider past performance. In this regard, FAR § 16.505(b), in addition to expressly granting contracting officers "broad discretion in developing appropriate order placement procedures," sets forth certain things that the contracting officer must do or consider in the ordering process. With regard to specific evaluation criteria, the FAR provides only that "the contracting officer must..... [c]onsider price or cost under each order as one of the factors in the selection decision." FAR § 16.505(b)(1)(ii)(E). In contrast to the FAR's usage of the mandatory term "must" in referring to the consideration of price or cost, the FAR, as quoted above, uses the permissive term "should" in referring to the consideration of past performance information. FAR§ 16.505(b)(1)(v)(A)(1). (second bracket in original). Following issuance of the GAO decision, American Apparel filed a Request for Reconsideration with the GAO on November 10, 2011, arguing that pursuant to the Competition in Contracting Act (CICA) 10 U.S.C. § 2305(a)(2)(A)(i) (2006),15 and FAR § 15.304(c)(2) (2011), the agency must consider non -cost or non -price related factors. American Apparel further insisted that "should" in the context of FAR § 16.505 (2011) means "an expected course of action or policy that is to be followed unless inappropriate for a particular circumstance," and that WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 8 IAmerican Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) I I I I M n L here, no explanation was given for a *21 departure. The GAO issued a decision on March 14, 2012, stating, in part: As we explained to the protestor in our earlier decision, there is no requirement that past performance be considered under the instant solicitation. As the agency previously pointed out, the notification did not solicit quotations for the purpose of placing an immediate order, rather the notification was for the purpose of soliciting additional products for addition to the vendors' existing multiple award contracts as provided under FAR [sic] § 52.216-9006, Addition/Deletion of Items, and contemplated that future orders of those additional items would be further solicited from vendor.... With respect to the new arguments that American Apparel has raised in its reconsideration request— that is that agencies must also consider vendor past performance under FAR § 15.304(c) and CICA—we will, not consider new arguments and information that Submitted into the pu lic� record fprr iter(s) nn I t Clty `1c: could have, and should have, been raised in the protest. (citations omitted). Shortly after American Apparel filed its September 30, 2011 protest with the GAO, on October 4, 2011, both Bluewater and American Apparel submitted revised offers in response to the corrected request for additional items, issued on September 22, 2011. Both offerors' price quotes were lower than those submitted in response to the February 18, 2011 request. Bluewater's offer for Item 0006 was $12,805,235.52 for the base year and the four option years, and American Apparel's offer for Item 0006 was [deleted] for the base year and four option years. Bluewater's offer for Item 0007 was $4,382,311.12 for the base year and the four option years and American Apparel's offer for Item 0007 was [deleted] for the base year and four option years. DLA determined the weighted evaluated average prices of the offers as follows: Offeror Item 0006 Item 0007 Bluewater deleted deleted American Apparel deleted deleted. In its April 11, 2012 DLA–FQCB Memo for Record, titled "Addendum to Combined Pre–Negotiation Briefing Memorandum (PBM)/Price Negotiation Memorandum (PNM)/ Price Analysis," the agency determined that Bluewater's prices for Item 0006 were [deleted] lower than American Apparel's, and its prices for Item 0007 were [deleted] lower from those submitted by American Apparel. Subsequently, on April 18, 2012, DLA issued a modification to Bluewater's contract reflecting the award of Items 0006 and 0007 to Bluewater, by "Amendment/ Modification No. P00007" to Contract No. SPM 1C1 -10– D-1100. American Apparel was notified of the award to Bluewater by letter dated May 8, 2012. American Apparel filed a protest in this court, asserting that pursuant to 10 U.S.C. § 2305(a)(2)(A)(i), FAR 15.304(c)(2) (current as of Nov. 21, 2012), and FAR 16.505(b)(1)(v)(A)(1) (current as of Nov. 21, 2012), DLA was required to, but did not, consider non -price related factors when awarding Items 0006 and 0007 pursuant to the Add/Delete Clause. Plaintiff seeks a permanent injunction requiring DLA to terminate the award to Bluewater for Items 0006 and 0007. Plaintiff also asks the court to "require the DLA to conduct the acquisition in accordance with law," and to grant such other relief as the court deems just and proper. Both defendant and defendant -intervenor filed motions to dismiss for lack of subject matter jurisdiction, 16 and defendant- *22 intervenor also argued that plaintiff has failed to state a claim. Furthermore, both plaintiff and defendant, but not defendant -intervenor, have filed cross-motions for judgment on the administrative record. DISCUSSION The Administrative Dispute Resolution Act of 1996 (ADRA), Pub.L. No. 104-320, §§ 12(a), 12(b), 110 Stat. 3870, 3874 (1996) (codified at 28 U.S.C. § 1491(b)(1)- (4) (2006)), amended the Tucker Act to establish a statutory basis for bid protests in the United States Court of Federal Claims. See Impresa Constru=ioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1330- 32 (Fed.Cir.2001). The statute provides that protests WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 9 American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) of agency procurement decisions are to be reviewed under Administrative Procedure Act (APA) standards, making applicable the standards outlined in Scam,1e11 Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C.Cir.1970), and the line of cases following that decision. See, e.g., Galen Meda Assocs., Inc., v. United States, 369 F.3d 1324, 1329 (Fed.Cir.) (citing to Stanwell Laboratories, Inc. v. Shaffer for its reasoning that "suits challenging the award process are in the public interest and disappointed bidders are the parties with an incentive to enforce the law."), reh'g denied (Fed.Cir.2004); Banknote Corp. of Ain., Inc. v. United States, 365 F.3d 1345, 1351 (Fed.Cir.2004) ("Under the APA standard as applied in the Stanwell line of cases, and now in ADRA cases, 'a bid award may be set aside if either (1) the procurement official's decision lacked a rational basis; or (2) the procurement procedure involved a violation of regulation or procedure.' " (quoting Impresa Constru_ioni Geom. Domenico Garufi v. United States, 238 F.3d at 1332)); Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed.Cir.), reh'g and reh'g en banc denied (Fed.Cir.2003); Am. Fed'n gf'Gov't Emps. v. United States, 258 F.3d 1294, 1302 (Fed.Cir.2001) (" (fongress intended to extend the jurisdiction of the Court of Federal Claims to include post -award bid protest cases brought under the APA by disappointed bidders, such as the plaintiff in Stanwell."), cert. denied, 534 U.S. 1113, 122 S.Ct. 920,151 L.Ed.2d 885 (2002). The Federal Circuit has stated that the Court of Federal Claims' jurisdiction over "any alleged violation of statute or regulation in connection with a procurement or a proposed procurement," 28 U.S.C. § 1491(b)(1), "provides a broad grant of jurisdiction because `[p]rocurement includes all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services and ending with contract completion and closeout.' " Sys. Application & Techs., Inc. v. United States, 691 F.3d 1374, 1381 (Fed.Cir.2012) (emphasis in original) (quoting Res. Conservation Grp., LLC v. United States, 597 F.3d 1238, 1244 (Fed.Cir.2010) (quoting 41 U.S.C. § 403(2))); see also Distrib. Solutions, Inc. v. United States, 539 F.3d 1340, 1345 (Fed.Cir.), reh'g denied, (Fed.Cir.2008) ("[flhe phrase, 'in connection with a procurement or proposed procurement,' by definition involves a connection with any stage of the federal contracting acquisition process, including 'the process for determining a need for property or services.' "); RAMCOR Servs. Grp„ Inc. v. United States, 185 F.3d Submitted into the Pu 111; cJ` record f?r itein(s) .� I I r;*— rlPrk 1286, 1289 (Fed.Cir.1999) ("The operative phrase 'in connection with' is very sweeping in scope."). [1] Agency procurement actions should beset aside when they are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," or "without observance of procedure required by law." 5 U.S.C. § 706(2)(A), (2)(D) (2006);1 7 see also *23 Savantage Fin. Servs. Inc., v. United States, 595 F.3d 1282, 1285- 86 (Fed.Cir.2010); Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1358 (Fed.Cir.2009); Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1381 (Fed.Cir.2009) (noting arbitrary and capricious standard set forth in 5 U.S.C. § 706(2)(A), and reaffirming the analysis of Impresa Construzioni Geom. Domenico Garuf v. United States, 238 F.3d at 1332); Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308,1312 (Fed.Cir.2007) ("[T]he inquiry is whether the [government's] procurement decision was `arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.' " (quoting 5 U.S.C. § 706(2) (A) (2000))); Bannum, Inc. v. United States, 404 F.3d 1346, 1351 (Fed.Cir.2005); Contracting, Consulting, Eng`g LLC v. United States, 104 Fed.Cl. 334, 340 (2012). "In a bid protest case, the agency's award must be upheld unless it is `arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law."' Turner Constr. Co. v. United States, 645 F.3d 1377, 1383 (Fed.Cir.) (quoting PAI Corp. Y. United States, 614 F.3d 1347, 1351 (Fed.Cir.2010)), reh'g en banc denied (Fed. Cir.201 1). In discussing the appropriate standard of review for bid protest cases, the United States Court of Appeals for the Federal Circuit specifically has addressed subsections (2)(A) and (2)(D) of 5 U.S.C. § 706, see Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at 1332 n. 5, but the Federal Circuit has focused its attention primarily on subsection (2)(A). See NVT Techs., Inc. v. United States, 370 F.3d 1153, 1159 (Fed.Cir.2004) ("Bid protest actions are subject to the standard of review established under section 706 of Title 5 of the Administrative Procedure Act (`APA'), 28 U.S.C. § 1491(b)(4) (2000), by which an agency's decision is to be set aside only if it is `arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,' 5 U.S.C. § 706(2)(A) (2000).") (citations omitted); Banknote Corp. of Am., Inc. v. United States, 365 F.3d at 1350 ("Among the various APA standards of review in section 706, the proper standard to be applied in bid protest cases is provided by 5 U.S.C. § 706(2)(A): a reviewing court shall WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 10 IM � I I I 1 i Is American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) set aside the agency action if it is `arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.' " (citing Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054, 1057-58 (Fed.Cir.), reh'g denied (Fed.Cir.2000))); Info. Tech. & Applications Corp. v. United States, 316 F.3d at 1319 ("Consequently, our inquiry is whether the Air Force's procurement decision was `arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.' 5 U.S.C. § 706(2) (A) (2000)."). The United States Supreme Court has identified sample grounds- which can constitute arbitrary or capricious agency action: [Me will not vacate an agency's decision unless it "has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Nat'l Assn oJ' Home Builders v. Defenders of Wildlife, 551 U.S. 644, 658, 127 S.Ct. 2518, 168 L.Ed.2d 467 (2007) (quoting *24 Motor Vehicle Mfrs. Assn of U.S.. Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983)); see also Alabama Airc•ruJ't Indus., Inc.—Birmingham v. United States, 586 F.3d 1372, 1375 (Fed.Cir.2009), reh'g and reh'g en banc denied (Fed.Cir.2010); In re Sang Su Lee, 277 F.3d 1338, 1342 (Fed.Cir.2002) ("The agency must present a full and reasoned explanation of its decision.... The reviewing court is thus enabled to perform a meaningful review ...."), ajfd on subsequent appeal, 262 Fed.Appx. 275 (Fed.Cir.2008); Textron, Inc. v. United States, 74 Fed.Cl. 277, 285-86 (2006), appeal dismissed sub nom. Textron, Inc. v. Ocean Technical Servs., Inc., 222 Fed.Appx. 996 (Fed.Cir.2007), and dismissed per stipulation sub nom. Textron. Inc. v. Ocean Technical Servs., Inc., 223 Fed.Appx. 974 (Fed.Cir.2007). The United States Supreme Court has also cautioned, however, that "courts are not free to impose upon agencies specific procedural requirements that have no basis in the APA." Pension Benefit Guar. Corp. v. LTV Corp.. 496 U.S. 633, 654, 110 S.Ct. 2668, 110 L.Ed.2d 579 (1990). Bannum, Inc. v. United States, 404 F.3d at 1351. In describing the prejudice requirement, the Federal Circuit of also has held that: Submitted into the Pu lic f1% record rite (s)`L See Grumman Data Sys. Corp. v. Dalton, 88 F.3d 990, 995-96 (Fed.Cir.1996); Contracting, Consulting, Eng'g LLC v. United States, 104 Fed.Cl. at 340; Textron, Inc. v. United States, 74 Fed.Cl. at 285; Labat—Anderson Inc. v. United States, 50 Fed.Cl. 99, 106 (2001); Emery Worldivide Airlines, Inc. v. United States, 49 Fed.Cl. 211, 222, ajfd , 264 F.3d 1071 (Fed.Cir.), reh'g and reh'g en banc denied (Fed.Cir.2001); Dynacs Eng'g Co, v. United States, 48 Fed.Cl. 614, 619 (2001); Ellsworth Assocs., Inc. v. United States, 45 Fed.Cl. 388, 392 (1999), dismissed per stipulation , 6 Fed.Appx. 867 (Fed.Cir.2001). The Federal Circuit has made clear that "[t]his court will not overturn a contracting officer's determination unless it is arbitrary, capricious, or otherwise contrary to law. To demonstrate that such a determination is arbitrary or capricious, a protester must identify 'hard facts;' a mere inference or suspicion ... is not enough." PAI Corp. v. United States, 614 F.3d at 1352 (citing John C. Grimberg Co. v. United States, 185 F.3d 1297, 1300 (Fed.Cir. 1999); CA. CL, Inc.—Fed v. United States, 719 F.2d 1567, 1581 (Fed.Cir.1983); and Filtration Dev. Co., LLC v. United States, 60 Fed.Cl. 371, 380 (2004)). Furthermore, to prevail in a bid protest case, the protestor not only must show that the government's actions were arbitrary, capricious, or otherwise not in accordance with the law, but the protestor also must show that it was prejudiced by the government's actions. See 5 U.S.C. § 706 ("[D]ue account shall be taken of the rule of prejudicial error."). Recognizing the two-step analysis of bid protest cases, the Federal Circuit has stated that: A bid protest proceeds in two steps. First ... the trial court determines whether the government acted without rational basis or contrary to law when evaluating the bids and awarding the contract. Second ... if the trial court finds that the government's conduct fails the APA review under 5 U.S.C. § 706(2) (A), then it proceeds to determine, as a factual matter, if the bid protester was prejudiced by that conduct. 121 131 A disappointed bidder has the burden demonstrating the arbitrary and capricious nature of the agency decision by a preponderance of the evidence. W[STLAW n 2016 Thomson Reuters. No claim to original U.S. Government Works. 11 American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) To prevail in a bid protest, a protester must show a significant, prejudicial error in the procurement process. See Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996); Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed.Cir.1996). `.`To establish prejudice, a protester is not required to show that but for the alleged error, the protester would have been awarded the contract." Data General, 78 F.3d at 1562 (citation omitted). Rather, the protester must show "that there was a substantial chance it would have received the contract award but for that error." Statistica, 102 F.3d at 1582; see CACI, Inc. -Fed. v. United States, 719 F.2d 1567, 1574-75 (Fed.Cir.1983) (to establish competitive prejudice, protester must demonstrate that but for the alleged error, " `there was a substantial chance that [it] would receive an award— that it was within the zone of active consideration.' ") (citation omitted). *25 Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed.Cir.), reh'g denied (Fed.Cir.1999) (citation omitted in original); see also Allied Tech. Grp., Inc. v. United States, 649 F.3d 1320, 1326 (Fed.Cir.), reh'g en banc denied (Fed.Cir.2011); Galen Med. Assocs., Inc. v. United States, 369 F.3d at 1331; Info. Tech. & Applications Corp. v. United States, 316 F.3d at 1319; Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1370 (Fed.Cir2002); Inipresa Construsioni Geoin. Domenico Garuft v. United Suites, 238 F.3d at 1332-33; OMV Med., Inc. v. United States, 219 F.3d 1337, 1342 (Fed.Cir.2000); Advanced Data Concepts, Inc. v. United States, 216 F.3d at 1057; Stratos Mobile A'etivorks USA, LLC v. United States, 213 F.3d 1375, 1380 (Fed.Cir.2000). In Data General Corporation v. Johnson, the United States Court of Appeals for the Federal Circuit wrote: We think that the appropriate standard is that, to establish prejudice, a protester must show that, had it not been for the alleged error in the procurement process, there was a reasonable likelihood that the protester would have been awarded the contract.... The standard reflects a reasonable balance between the importance of (1) averting unwarranted Submitted into theV:J n record fir itepq(s)`' interruptions of and interferences with the procurement process and (2) ensuring that protesters who have been adversely affected by allegedly significant error in the procurement process have a forum available to vent their grievances. This is a refinement and clarification of the "substantial chance" language of CACI, Inc. -Fed [v. United States], 719 F.2d at 1574. Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed.Cir.), reh'g denied, en banc suggestion declined (Fed.Cir.1996); see also Bannum, Inc. v. United States, 404 F.3d at 1353, 1358 ("The trial court was required to determine whether these errors in the procurement process significantly prejudiced Bannum.... To establish `significant prejudice' Bannum must show that there was a `substantial chance' it would have received the contract award but for the [government's] errors" in the bid process. (quoting Info. Tech. & Applications Corp. v. United States, 316 F.3d at 1319; Alfa Laval Separation, Inc. v. United States, 175 F.3d at 1367; Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed.Cir.1996); and Data Gen. Corp. v. Johnson, 78 F.3d at 1562)); see also Galen Med. Assocs., Inc. V. United States, 369 F.3d at 1331 ("To establish prejudice, the claimant must show that there was a `substantial chance it would have received the contract award but for that error.' " (quoting Statistica, Inc. v. Christopher, 102 F.3d at 1582)); Mvers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d at 1370 (using the "substantial chance" standard); OM Med, Inc. v. United States, 219 F.3d at 1342 (invoking a "reasonable likelihood" of being awarded the contract test); Advanced Data Concepts, Inc. v. United States, 216 F.3d at 1057 (using a "reasonable likelihood" rule); Stratos Mobile Networks USA, LLC v. United States, 213 F.3d at 1380 (using a "substantial chance" test); Info. Scis. Corp. v. United States, 73 Fed. Cl. 70, 96 (2006) (using a "substantial chance" test), recons. in part, 75 Fed.Cl. 406, 412 (2007) (using a "substantial chance" test); Park Tower Mgmt., Ltd. v. United Suites, 67 Fed.Cl. 548, 559 (2005) (using a "substantial chance" test). But see Weeks Marine, Inc. v. United States, 575 F.3d at 1362 (holding that a pre -award bid protest claimant must show " `a non -trivial competitive injury which can be redressed by judicial relief....' "). 141 Under an arbitrary or capricious standard, the reviewing court should not substitute its judgment for WESTLAW © 2016 Thomson Reuters, No claim to original U.S. Government Works. 12 I American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) that of the agency, but should review the basis for the agency decision to determine if it was legally permissible, reasonable, and supported by the facts. See Motor Vehicle Mins. Ass'n of US., Inc. v. State Fann Mut. Auto. Ins. Co.. 463 U.S. at 43, 103 S.Ct. 2856 ("The scope of review under the arbitrary and capricious standard is narrow and a court is not to substitute its judgment for that of the agency."); see also R & W Flammann GmbH v. United States, 339 F.3d 1320, 1322 (Fed.Cir.2003) (citing Ray v. Lehman, 55 F.3d 606, 608 (Fed.Cir.), cert. denied , 516 U.S. 916, 116 S.Ct. 304, 133 L.Ed.2d 209 (1995)). "If the court finds a reasonable basis for the agency's action, the court should stay its hand even though it *26 might, as an original proposition, have reached a different conclusion as to the proper administration and application of the procurement regulations." Honeys+yell, Inc. v. United States, 870 F.2d 644, 648 (Fed.Cir.1989) (quoting M. Steinthal & Co. v. Seamans, 455 F.2d 1289, 1301 (D.C.Cir.1971)); see also HP Enter. Servs., LLC v. United States, 104 Fed.Cl. 230, 238 (2012); Vanguard Recovery Assistance v. United States, 101 Fed.Cl. 765, 780 (2011); Seaborn Heulth Care, Inc. v. United States, 55 Fed.Cl. 520,523 (2003) (quoting Honeywell, Inc. v. United States, 870 F.2d at 648 (quoting M. Steinthal & Co. v. Seamans, 455 F.2d at 1301)). As stated by the United States Supreme Court: Section 706(2)(A) requires a finding that the actual choice made was not "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." To make this finding the court must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. Although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency. Citizens to Pres. Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971), abrogated on other grounds by Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977); see also U.S. Postal Serv. v. Gregor v, 534 U.S. 1, 6-7, 122 S.Ct. 431, 151 L.Ed.2d 323 (2001); Bowman Transp., Inc. v. Arkansas—Best Freight Sys., Inc., 419 U.S. 281, 285, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974), reh'g denied, 420 U.S. 956, 95 S.Ct. 1340, 43 L.Ed.2d 433 (1975); Co—Steel Raritan, Inc. v. ITC, 357 F.3d 1294, 1309 (Fed.Cir.2004) (In discussing the "arbitrary, capricious, and abuse of Submitted into the p lie record fir ite�n(s) 1 1-t discretion otherwise not in accordance with the law" standard, the Federal Circuit stated that "the ultimate standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency."); In re Sang Su Lee, 277 F.3d at 1342; Advanced Data Concepts, Inc. v. United States, 216 F.3d at 1058 ("The arbitrary and capricious standard applicable here is highly deferential. This standard requires a reviewing court to sustain an agency action evincing rational reasoning and consideration of relevant factors." (citing Bowman Transp., Inc. v. Arkunsas-Best Freight Svs., Inc., 419 U.S. at 285, 95 S.Ct.-438)); Lockheed Missiles & Space Co. v. Bentsen, 4 F.3d 955, 959 (Fed.Cir.1993); Gulf Grp. Inc. v. United States, 61 Fed.Cl. 338, 351 (2004) ("Although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency."); Man Tech Telecomms. & Info. Sys. Corp. v. United States, 49 Fed.C1.57, 63 (2001), affd, 30 Fed.Appx. 995 (Fed.Cir.2002); Ellsworth Assocs., Inc. v. United States, 45 Fed.Cl. at 392 (citing Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 743-44, 105 S.Ct. 1598, 84 L.Ed.2d 643 (1985)) ("Courts must give great deference to agency procurement decisions and will not lightly overturn them."). According to the United States Court of Appeals for the Federal Circuit: Effective contracting demands broad discretion. Burroughs Corp. v. United States, 617 F.2d 590, 598 (Ct.C1.1980); Sperry Flight Sys. Div. v. United States, 548 F.2d 915, 921, 212 Ct.CI. 329 (1977); see NKF Eng'g, Inc. v. United States, 805 F.2d 372, 377 (Fed.Cir.1996); Tidewater Management Servs., Inc. v. United States, 573 F.2d 65, 73, 216 Ct.CI. 69 (1978); RADVA Corp. v. United States, 17 C1.Ct. 812, 819 (1989), aff d , 914 F.2d 271 (Fed. Cir. 1990). Accordingly, agencies "are entrusted with a good deal of discretion in determining which bid is the most advantageous to the Government." Tidewater Management Servs., 573 F.2d at 73. Lockheed Missiles & Space Co., Inc. v. Bentsen, 4 F.3d at 958-59; see also Grumman Data Sys. Corp, v. Dalton, 88 F.3d at 995; Grumman Data Sys. Corp. v. Widnall, 15 F.3d 1044, 1046 (Fed.Cir.1994); Cybertech Grp., Inc. v. United States, 48 Fed.Cl. 638, 646 (2001) ("The court recognizes that the agency possesses wide discretion in the application of procurement regulations."); *27 WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 13 rr American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) Lockheed Missiles & Space Co. v. United States, 4 F.3d at 958; JWK Int'1 Corp. v. United States, 49 Fed.Cl. 371, 388 (2001), affd , 279 F.3d 985 (Fed.Cir), reh'g denied (Fed.Cir.2002). Similarly, the Federal Circuit further has indicated that: Contracting officers "are entitled to exercise discretion upon a broad range of issues confronting them in the procurement process." bnpresa Construzioni Geom. Domenico Caruft v. United States, 238 F.3d 1324, 1332 (Fed.Cir.2001) (internal quotation marks omitted). Accordingly, procurement decisions are subject to a "highly deferential rational basis review." CHE Consulting, bic. v. United States, 552 F.3d 1351, 1354 (Fed.Cir.2008) (internal quotation marks omitted). Applying this highly deferential standard, the court must sustain an agency action unless the action does not "evince[ ] rational reasoning and consideration of relevant factors." Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054, 1058 (Fed.Cir.2000) (alterations added). PAI Corp. v. United States, 614 F.3d at 1351; see also Weeks Marine, Inc. v. United States, 575 F.3d at 1368-69 ("We have stated that procurement decisions `invoke[ ] "highly deferential" rational basis review.' Under that standard, we sustain an agency action `evincing rational reasoning and consideration of relevant factors.' ") (quoting CHE Consulting, Inc. v. United States, 552 F.3d at 1354 (quoting Advanced Data Concepts, Inc. v. United States, 216 F.3d at 1058)). CICA generally directs executive agencies, "in conducting a procurement for property or services" to "obtain full and open competition though the use of competitive procedures." 41 U.S.C. § 3301(a)(1) (Supp. V 2011) (formerly 41 U.S.C. § 253(a)(1)(A) (2006)). As stated by the United States Court of Appeals for the Federal Circuit: CICA, however, does not prevent modification is of a contract by requiring a new bid procedure for every change. Rather only modifications outside the scope of the original competed contract fall under the statutory competition requirement. CICA sets forth no standard for determining when Submitted into the pulic r �p record fpr iter(s) S�. modification of an existing contract requires a new competition or falls within the scope of the original competitive procurement. [5] AT & T Commc'ns, Inc. v. Wiltel, Inc., 1 F.3d 1201, 1204-05 (Fed.Cir.) (footnote removed), reh'g denied, en Banc suggestion declined (Fed.Cir.), suggestion for reh'g declined (Fed.Cir.1993). Contract modification for changes beyond the scope of the original procurement, however, should not be utilized as a way to avoid competition. See HDM Corp. v. United States, 69 Fed.Cl. 243,253 (2005) (citation omitted); CESCPlaza Ltd. P'ship v. United States, 52 Fed.Cl. 91, 93 (2002). Modifying an existing contract so that it materially departs from the scope of the original procurement violates CICA by preventing potential bidders from participating in or competing for what should be a new procurement. See HDM Corp. v. United States, 69 Fed.Cl. at 253; see also AT & T Commc'ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205; VMC Behavioral Healthcare Servs. v. United States, 50 Fed.Cl. 328, 332 (2001). A modification that is within the scope of the original procurement "does not raise a viable protest under [28 U.S.C.] § 1491(b) (1)." See *28 Distrib. Sohttions, Inc. v. United States, 539 F.3d at 1346; See also Ceradyne, Inc. v. United States, 103 Fed.Cl. 1, 12-13 (2012) (citing AT & T Cwnrrtc'ns, Inc. v. Wiltel, 1 F.3d at 1204-05) ("If the modification materially departs from the scope, then a new competition may be required and jurisdiction will stand.... If the modification was, however, within the scope of the solicitation, the protest must be dismissed."); Rhino Corps Ltd Co. v. United States, 87 Fed.Cl. 481, 489 (2009) (citing AT & T Commc'ns, Inc. v. Wiltel, 1 F.3d at 1205) ("Mo sustain a bid protest stemming from a change or modification to a contract, the protestor must allege facts that establish that the modification falls outside the scope of the original contract, thereby triggering the statutory competition requirement. If any change made to a procurement is within the scope of work originally contemplated, no competition is required, and jurisdiction is not present."). 19 The United States Court of Appeals for the Federal Circuit, accordingly, has recognized that modifications of an existing contract are permissible to procure products or services, as long as the modification is "within the scope of the original competitive procurement." See AT & T Co»mtc'ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205; see WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 14 1 I 1-1 Submitted into the American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) record dor itgm(s) also Krygoski Constr. Co. v. United States, 94 F.3d 1537, 1543 (Fed.Cir.) (citation omitted), reh'g denied, en banc suggestion declined (Fed.Cir.1996), cert. denied, 520 U.S. 1210, 117 S.Ct. 1691, 137 L.Ed.2d 819 (1997) (relying on AT & T Communications, Inc. v. 13'iltel, Inc. in its analysis of a necessary change to a contract's scope); Golden Mfg. Co., Inc. v. United States, No. 12-317C, 2012 WL 4479422, at *10, — Fed.Cl. (2012) (relying on AT & T Communications, hic. v. Wiltel, Inc. when discussing an amendment to a contract solicitation); Solute Consulting v. United States, 103 Fed.Cl. 783, 792 (2012) (applying AT & T Communications, Inc. v. Wiltel, Inc. to the issue of the in -scope contract modification); Ceradvne, Inc. v. United States, 103 Fed.Cl. at 12 (analyzing AT & T Communications, Inc. v. Wiltel, Inc. to determine whether the contract modification was within the scope of the original procurement); RN Expertise, Inc. v. United States, 97 Fed.Cl. 460, 473 (using AT & T Communications, Inc. v. Wiltel, Inc. as a basis for the court's analysis of the contract modification), reconsideration denied (2011). 161 Because CICA itself does not define whether a modification of an existing contract is "within the scope of the original competitive procurement," the Federal Circuit has relied on the "cardinal change" doctrine by analogy as the test to ascertain whether the modification is in -scope or violates the competition requirements of CICA. See AT & T Conimc'ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205 ("The cardinal change doctrine asks whether a modification exceeds the scope of the contract's changes clause; this case asks whether the modification is within the scope of the competition conducted to achieve the original contract. In application, these questions overlap."); see also Ceradvne. Inc. v. United States. 103 Fed.Cl. at 12 n. 9; Cardinal Maint. Serv., Inc. v. United States, 63 Fed.Cl. 98, 106 (2004). " '[A] cardinal *29 change ... occurs when the government effects an alteration in the work so drastic that it effectively requires the contractor to perform duties materially different from those originally bargained for.' " AT & T Conimc'ns, Inc. v. Wiltel,,1 F.3d at 1205 (quoting Allied Materials & Equip. Co. v. United States, 215 Ct.CI. 406, 409, 569 F.2d 562, 563-64 (1978)); see also Krygoski Constr. Co. v. United States, 94 F.3d at 1543. "Just as the cardinal change doctrine prohibits an agency from compelling a contractor to perform contract terms that are not within the scope of the original bargain, the CICA prevents an agency from modifying a contract to such an extent that on I Ito I I h . City Cl': the modified contract is `materially different' from the contract for which a competition was held." GraphicData, LLC v. United States, 37 Fed.Cl. 771, 781 (1997) (citing AT & T Cominc'ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205); see also Mgnit. Solutions & Sys., Inc. v. United States, 75 Fed.Cl. 820, 830 (2007); cf. Solute Consulting v. United States, 103 Fed.Cl. at 793 (discussing the merits of the GAO's application of the "material difference standard" to multiple -award contracts and its conclusion that "'[t]he analysis of whether a task order is outside the scope of a multiple -award contract is the same as the analysis of whether a contract modification is outside the scope of a single -award contract' " (alteration in original) (quoting DynCorp Int'l LLC, B-402349, 2010 CPD 159, 2010 WL 893517, at *4 (Comp.Gen. Mar. 15, 2010))). 171 181 In determining whether a contract, as modified, is "materially different," a court should "first focus on the modification in the context of the original procurement" and then determine "the expectations of potential offerors." See RN Expertise, hic. v. United States, 97 Fed.Cl. at 473-74 (citing AT & T Convne'ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205, 1207). The analysis of whether a contract modification "materially departs from the scope of the original procurement .... focuses on the scope of the entire original procurement in comparison to the scope of the contract as modified." AT & T Cointnc'ns, Inc. v. Wiltel, Inc., I F.3d at 1205. "Thus a broad original competition may validate a broader range of later modifications without further bid procedures." Id. at 1205. To determine whether a modification is within the scope of the original procurement, a court should consider whether the modification "substantially changes `the type of work, performance period, and costs as between the original contract and the modified contract.' " CESC Plaza Ltd. P'ship v. United States, 52 Fed.Cl. at 93 (quoting CCL, Inc. v. United States, 39 Fed.C1. 780, 791 (1997)); see also Cardinal Maint. Serv., Inc. v. United States, 63 Fed.Cl. at 106 (noting that the question of whether "the contract, as modified, is materially different from the contract that was originally competed ... turns on whether the original contract, as modified, calls for 'essentially the same performance' " (quoting Exec. Bits. Media, Inc. v. United States Dep't of Defense, 3 F.3d 759, 763 n.3 (4th Cir.1993))); Northrop Grumman Corp. v. United States, 50 Fed.Cl. 443, 466 (2001) (describing factors that courts have considered under the cardinal change doctrine, including "[c]hanges in the type of product or service that were not anticipated due to I I WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 15 American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012).. their lack of resemblance to the original procurement," "[s]ignificant addition or subtraction of the quantity of work," and "[a]dditional time spent on performance of a contract ... when such time is extended in order to add significantly more quantity or new requirements to the contract."). "Because every situation in which parties enter into a contractual relationship is unique, there is no definitive test for determining whether a change is beyond the scope of a particular contract." Keeter Trading Co. v. United States, 79 Fed.Cl. 243, 260 (2007) (citation omitted); see also Runafeld v. Freedom NY Inc., 329 F.3d 1320, 1332 (Fed.Cir.), reh'g and reh'g en banc denied, 346 F.3d 1359 (Fed.Cir.2003), cert. denied, 541 U.S. 987, 124 S.Ct. 2016, 158 L.Ed.2d 491 (2004) ("The finding of a cardinal change is `principally a question of fact"' (quoting Allied Materials & Equip. Co. v. United States, 215 Ct.CI. at 411, 569 F.2d 562 at 565)); Golden Mfg. Co., Inc. v. United States, 2012 WL 4479422, at * 10, — Fed.Cl. at ("In emphasizing that there is no mechanical or arithmetical answer, we have repeated that (t)he number of changes is not, in and of *30 itself, the test[.]" (alterations in original) (quoting Air -A -Plane Corp. v. United States, 187 Ct.CI.269, 276, 408 F.2d 1030, 1033 (1969))); Thermo Cor, Inc. v. United States, 35 Fed.Cl. 480, 490 (1996) (" `Each case must be analyzed on its own facts and in light of its own circumstances, giving just consideration to the magnitude and quality of the changes ordered and their cumulative effect upon the project as a whole.' " (quoting Wunderlich Contracting Co. v. United States, 173 Ct.CI. 180, 194, 351 F.2d 956, 966 (1965))). [91 In addition, as indicated by the Federal Circuit, a factor to consider when determining the scope of the original competition is " 'whether the solicitation for the original contract adequately advised offerors of the potential for the type of changes during the course of the contract that in fact occurred, or whether the modification is of a nature which potential offerors would reasonably have anticipated.' " AT & T Commc'ns, Inc. v. Wiltel. Inc., I F.3d at 1207 (quoting Neil R Gross & Co., Inc., B-237434, 90-1 CPD 1212, 1990 WL 269546, at *294 (Comp.Gen. Feb. 23, 1990) (citation omitted)); see also RN Expertise, Inc. v. United States, 97 Fed.Cl. at 474; Chapman Law Firm Co. v. United States, 81 Fed.Cl. 323, 327 (2008). "A modification generally falls within the scope of the original procurement if potential bidders would have expected it to fall within the contract's Submitted into the pculic+ �n record fpr ite[n(s) 1 1 changes clause." AT & T Commc'ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205. Whether potential bidders would have anticipated a particular modification is judged under an objective standard, see Global Computer Enters., Inc. v. United States, 88 Fed.Cl. 52, 56 (2009); CESC Pla=a Ltd. P'ship v. United States, 52 Fed.Cl. at 93 (citing CCL, Inc. v. United States, 39 Fed.Cl. at 791), and "depends heavily on the language of the solicitation." See Northrop Grumman Corp. v. United.States, 50 Fed.Cl. at 466 (citing John Cibinic, Jr. & Ralph C. Nash, Jr., Administration of Government Contracts 389 (3d ed.1995)). If a court ultimately finds a modification "to be outside the reasonable expectations of the bidders, the government must show that it adequately advised the bidders that such a change might occur." Id. at 465 (citation omitted). American Apparel alleges that DLA violated the competition requirement in CICA and the Federal Acquisition Regulation in connection with the September 22, 2011 request for additional Items 0006 and 0007. Specifically, plaintiff contends that, pursuant to 10 U.S.C. § 2305(a)(2)(A)(i), FAR 15.304(c)(2), and FAR 16.505(b)(1)(v)(A)(1),20 the agency was required to include non -price factors in its award evaluation criteria in addition to an evaluation based on price. American Apparel claims that the September 22, 2011 request for additional items was a solicitation, and resulted in a "competitive negotiated procurement" between two current contractors. Therefore, according to American Apparel, DLA was obligated to comply with the competition requirements mandated by CICA and the FAR and not only review price but also other factors, such as past performance. Plaintiff asserts that this court has jurisdiction to review its claims because it has alleged a "violation of statute or regulation in connection with a procurement or a proposed procurement." See 28 U.S.C. § 1491(b)(1). The defendant, United States, and the defendant - intervenor and awardee of the added Items, Bluewater, both contend that American Apparel's claims fall outside the bid protest jurisdiction of this court under 28 U.S.C. § 1491(b), although each argues American Apparel's claims are not within the court's jurisdiction on different grounds. The government maintains that what occurred in this case was a modification by DLA of an existing contract, No. SPM1C1-10–D-1100, awarded to Bluewater on December 22, 2010, and that WE51 LAW t-)2016 Thomson Reuters. No claim to original U.S. Government Works. 16 ' American Apparel, Inc. v. United States, 108 Fed.C1. 11 (2012) I � I � I I I qM ft the inclusion of two additional all-weather coat types was a permissible in -scope modification of that existing Bluewater contract. Therefore, according to defendant, *31 plaintiffs complaint does not raise a viable protest under 28 U.S.C. § 1491(b)(1) over which this court would have jurisdiction, because it is a "challenge to the administration of B1ueWater's Contract." In support of this argument, defendant cites Distributed Solutions, Inc. v. United States, 539 F.3d at 1346, which in turn cites AT & T Communications, Inc. v. Wiltel, Inc., 1 F.3d 1201. The government and Bluewater also contend that the phrase in the Add/Delete Clause, "[n]ew items may be added to the contract through bilateral modification with negotiated prices," should have alerted American Apparel in 2009, when the solicitation was issued, that the future award of additional items to be included in the contract would be based only upon price. The government and Bluewater argue that American Apparel waived any objection to the Add/Delete Clause by failing to object to the terms of the original September 10, 2009 solicitation prior to submitting its offer on October 28, 2009. The government concludes that American Apparel's alleged waiver also deprives this court of jurisdiction over American Apparel's protest, and, therefore, asks the court to dismiss American Apparel's complaint under RCFC 12(b)(1)• 71 Although not critical to the ultimate decision of the court in this case, American Apparel asserts it only became aware of DLA's intention to use price -only evaluation after receiving the June 6, 2011 notification from the government that American Apparel's proposal "was determined not to be the most advantageous to the Government based on price." Soon thereafter, on June 15, 2011, American Apparel filed a protest with the Government Accountability Office, raising its objection to the price -only evaluation. After review, DLA agreed that the February 18, 2011 request "did not clearly provide the basis for award," leading the agency to cancel the original request and reissue the request clearly identifying price as the only evaluation factor. American Apparel, therefore, argues that it should not be faulted for failing to protest the terms of the September 10, 2009 solicitation before submitting its offer to the solicitation on October 28, 2009. The court does not reach the issue of whether American Apparel's protest failed to object timely to the Add/Delete Clause in the September 10, 2009 solicitation because, as indicated below, the court dismisses American Apparel's Submitted into the u�lic record fTr itet�(s) A Z complaint on alternate grounds, but notes that even defendant acknowledged and canceled the first request because a clearer articulation of the price -only evaluation was warranted. 1101 The government asserts that DLA's April 18, 2012 modifications of Bluewater's original contract, No. SPM1C1-10–D-1100, awarded on December 22, 2010, to include two additional types of all-weather coats were simply "adding work to an existing contract that [were] clearly within the scope of the contract [which] does not raise a viable protest under § 1491(b)(1)." Plaintiff, by contrast, states: "American's position on this point is simple—Items 0006 and 0007 were not `covered by' the original American or B1ueWater Contracts, because DLA issued the 2011 Solicitation in order to procure them." (emphasis in original). Plaintiff characterizes the defendant's argument as follows: As the United States would have it, DLA is free to acquire additional items by contract modification as long as the item is covered by a generic description in a contract. Furthermore, DLA may do so without a competitive acquisition, without complying with CICA and FAR requirements on the conduct of such an acquisition, and with no regard whatsoever for non -price factors such as past performance. Plaintiff asserts that defendant's "in -scope" modification argument, and defendant-intervenor's argument that plaintiff challenges the issuance of a delivery order, "mischaracterize" the issues alleged in its complaint. Specifically, plaintiff asserts that its complaint does not question the agency's right to modify an existing contract, but rather its decision to change the evaluation criteria from the original solicitation to exclude *32 the non - price factors and to make the additional awards based only on price. Plaintiff contends that the September 22, 2011 request for additional items was "part of a `procurement' or 'acquisition' within the meaning of CICA and the FAR." 22 Plaintiff maintains that "[a]bsent valid grounds for conducting an acquisition using other than full and open competition (absent here), CICA and the WES7LAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. M American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) FAR mandate that an acquisition be conducted using sealed bidding or competitive, negotiated acquisition. 10 U.S.C. § 2305(a)(2); FAR Subpart 6.4." According to plaintiff, because DLA invited competing proposals for the additional Items 0006 and 0007 from both American Apparel and Bluewater, and evaluated the proposals received in order to make an award, the September 22, 2011 request was a "competitive acquisition," which was required to comply with the competition requirements of CICA and the FAR. Plaintiff also claims that " '[p]ast performance should be an important element of every evaluation and contract award for commercial items.' " Plaintiff argues that DLA cannot evade the statutory "legal basic requirements by labeling its entire acquisition process for Items 0006 and 0007 a `contract modification.' " Moreover, plaintiff contends that there is no provision contained in the Add/Delete Clause that authorizes the agency to depart from the mandatory competition requirements of CICA and the FAR. American Apparel argues that its complaint is properly before this court pursuant to the Tucker Act, which grants this court jurisdiction to review an action brought by an interested party objecting to "any alleged violation of statute or regulation in connection with a procurement or a proposed procurement." See 28 U.S.C. § 1491(b) (1). Plaintiff alleges that the phrase "in connection with a procurement or a proposed procurement" is " `very sweeping in scope,' " citing Distributed Solutions, Inc. v. United States, 539 F.3d at 1345, and allows the court to hear the current protest, challenging "the terms of the 2011 Solicitation, even if DLA subsequently implemented its resulting award decision via a modification to B1ueWater's contract." (emphasis in original). In Distributed Solutions, Inc. v. United States, 539 F.3d at 1345, the United States Court of Appeals for the Federal Circuit adopted the definition of "procurement" found in 41 U.S.C. § 403(2) (2006) (now codified at 41 U.S.C. § 111 (Supp. V 2011)), to determine the scope of 28 U.S.C. § 1491(b)(1). The court stated: " `[P]rocurement' includes all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services and ending with contract completion and closeout." Distrib. Solutions, Inc. v. United States, 539 F.3d at 1345 (emphasis in original) (quoting 41 U.S.C. § 403(2)). The Distributed Solutions court further stated that "adding work to an existing contract that is clearly within the scope of the contract does not raise a viable Submitted into thepu llic record1for ilgm(s) J� ,� �1- protest under § 1491(b)(1)." Distri.b. Solutions, Inc.. v. United States, 539 F.3d at 1346 (citing AT & T Comnic'ns, Inc. v. Wiltel, Inc., 1 F.3d 1201). Similarly, in RhinoCorps Ltd. Co. v. United States, the United States Court of Federal Claims wrote: "The Federal Circuit pointedly excluded `adding work to an existing contract' from the ambit of procurement actions." RhinoCorps Ltd. Co. v. United States, 87 Fed.Cl. at 486 (citation omitted). Both Distributed Solutions and RhinoCorps refer to the decision in AT & T Communications, Inc. v. Wiltel, Inc., 1 F.3d at 1203, which states "the Competition in Contracting Act (CICA) does not require a separate competitive procurement for this modification...." See also Ceradyne, Inc. v. United States, 103 Fed.Cl. at 12, n. 8 (indicating *33 this court's bid protest jurisdiction "turns on `whether the modification is within the scope of the competition conducted to achieve the original contract.' " (quoting AT & T Contmc'ns, Inc. v. Wiltel, Inc., 1 F.3d at 1204-05)). In AT & T Communications, Inc. v. Wiltel, Inc., 1 F.3d 1201, the General Services Administration Board of Contract Appeals granted a bid protest challenging an agreement to modify a contract for government - wide telecommunications services. The contractor alleged that a contract modification that added a new, faster type of dedicated transmission service, "73," to the three existing types of transmission services, including "71," had exceeded the scope of original contract, and the modification required a separate, competitive procurement under CICA. Id. at 1204. The United States Court of Appeals for the ]Federal Circuit disagreed, and rejected the Board's narrow reading, which focused on the difference between T1 and T3, "rather than on the modification in the context of the contract as a whole." See id. at 1207. The Federal Circuit looked at the objective of the original contract, described broadly as " 'a comprehensive set of telecommunications services' for the entire Federal Government," covering a "broad range of telecommunications services." Id. at 1205. The contract incorporated by reference a standard changes clause and a Service Improvements clause, which encouraged the contractors to propose improvements to the services, features, or other requirements of the contract. See id. at 1204. The Federal Circuit emphasized that the proposed improvements to the services were to be " 'processed as modifications to the contract.' " Id at 1206. The Federal Circuit further noted that the contract itself expressly mentioned transition WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 18 IAmerican Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) � I 1 � I to more advanced technology, giving bidders notice that the contract would require potentially significant modifications to meet the government's changing needs as the technology advanced. See id. The Federal Circuit pointed to "the contractor's obligation to improve Dedicated Transmission Service as a whole," and "to propose improvements to keep the Government's telecommunications technology in step with technology advances." Id. The Federal Circuit concluded that "[a] modification adding a more advanced speed of dedicated transmission service does not substantially affect the type of service AT & T performs under the contract as a whole," id. at 1206-07, and held that the contract modification was within the scope of the original procurement. Id. at 1208. The Federal Circuit made clear that "CICA ... does not prevent modification of a contract by requiring a new bid procedure for every change," id. at 1205, and that "Congress did not intend to prevent contract modification." Id. at 1205n. 1. In fact, contract modification has been described as "contract administration," which is an agency responsibility. See Cent. Tex. Coll. Sys., B-215172, 85-1 CPD 1153, 1985 WL 52293, at *3 (Comp.Gen. Feb. 7, 1985). American Apparel, however, argues that the September 22, 2011 request for additional items was a "competitive negotiated procurement." The provisions for contracting using negotiation procedures are included in FAR Part 15. The following types of negotiated acquisitions are identified in FAR 15.002: (a) Sole source acquisitions. When contracting in a sole source environment, the request for proposals (RFP) should be tailored to remove unnecessary information and requirements; e.g., evaluation criteria and voluminous proposal preparation instructions. (b) Competitive acquisitions. When contracting in a competitive environment, the procedures of this part are intended to minimize the complexity of the solicitation, the evaluation, and the source selection decision, while maintaining a process designed to foster an impartial and comprehensive evaluation of offerors' proposals, leading to selection of the proposal representing the best value to the Government (see [FAR] 2.101). FAR 15.002 (current as of Nov. 21, 2012). Submitted into the puwic SB4 L record fpr itepn(s) — ^J Although plaintiff argues that the September 22, 2011 request for additional items was a "competitive negotiated procurement," the administrative record does not support plaintiff's position. The title of the September 22, 2011 request for additional items stated that *34 it was intended to add items to the September 10, 2009 solicitation, and specifically identified that solicitation by number: "Addition of Items to Solicitation SPM1C1-08—R-0153 for Coats, All—Weather, Various, Men and Women, Indefinite Delivery Type Contract." Furthermore, the September 22, 2011 request invoked the Add/Delete Clause included in the 2009 solicitation as the basis for the manner of procurement of the new items, and explained that DLA intended to add Items 0006 and 0007 to either Bluewater's or American Apparel's contract. Using the procedures described in the referenced Add/Delete Clause, "bilateral modification with negotiated prices," the agency asked both contractors to submit price proposals for the additional items. The defendant explained at the oral argument, "the United States had a contractual right to modify this contract without using nonprice factors or CICA requirements," because "competition requirements were addressed in 2009 when these contracts were originally awarded." Both Bluewater and American Apparel were selected after the 2009 and 2010 full and open competition, with the agency considering the technical evaluations of the factors described above in addition to price for the all-weather coats for each of the offerors, including American Apparel and Bluewater. The all-weather coat contracts awarded to Bluewater and American Apparel on December 22, 2010 were "similar in kind and complexity" to the items to be added to the procurement "on a post -award basis via Add/ Delete Clause" to contractors able to supply additional coats. In Ceradyne, Inc. v. United States, a judge of the United States Court of Federal Claims found that the contract modification was within the scope of the original procurement, and offered the following guidance: This court has looked to a variety of factors to determine whether a contract, as modified, materially departs from the scope of the original procurement. Courts look to "whether the solicitation for the original contract adequately advised offerors of the potential for the type of changes during the course of the contract that in fact occurred, or whether the modification is of a nature which potential offerors would reasonably have anticipated." AT & T, 1 F. 3d at 1207 (quoting WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 19 American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) Neil R. Gross & Co., 69 Comp. Gen 247 (1990)). Courts will also examine whether the modification substantially changes the type of product or service being delivered or performed, the quantity of the product or service, the performance period, and the costs as between the original contract and modified contract. See Cardinal Maint. Serv., 63 Fed.Cl, at 106-07; Northrop Grumman Corp. v. United States, 50 Fed.Cl. 443, 466 (2001). Thus, if the court concludes as a matter of law that the modification was contemplated in the original procurement and the type of work, quantity, performance period, and costs have not substantially changed, CICA is not implicated and the protest must be dismissed. Ceradyne, Inc. v. United States, 103 Fed.Cl. at 13 (citing AT & T Cornmc'n.s, Inc. v. Wiltel, Inc., 1 F.3d at 1208; Distrib. Solutions, Inc. v. United States, 539 F.3d at 1346). This language is instructive in the case before the court, although the court notes that the issues presented in Ceradyne were simpler than the issues presented here because, in Ceradyne , the Army did not have to alter any aspect of the original procurement, including the overall monetary ceiling, quantity, specifications, and unit price. See Ceradyne, Inc. v. United States, 103 Fed.Cl, at 14. The current American Apparel protest and Ceradyne , however, share general similarities including that the solicitations, as issued, contemplated that a future "next in line" award could.be made by the government to add additional items, and the existing contract was modified to include the additional items. Previously, the same Judge had offered similar advice in an earlier case, although in somewhat different terms: Significantly, CICA does not contain a standard for determining whether a modification falls within the scope of the original competed contract. To address this problem, the Federal Circuit looked to the "cardinal change" doctrine by analogy. The cardinal change doctrine prohibits the government from forcing contractors to undertake tasks that were not within the *35 scope of their original contract. In applying this concept to CICA,... the government cannot modify a contract to such Submitted into the pu lic record rit(s) �n 71) 11(, . City Clerk an extent that the contract, as modified, is materially different from the contract that was originally competed.... [T]he question turns on whether the original contract, as modified, calls for "essentially the same performance." [ (citation omitted) ] Cardinal plaint. Serv., Inc. v. United States, 63 Fed.Cl. at 106. In Cardinal Maintenance, the court, however, found the changes were "considerable," and the costs "extremely excessive," making it incorrect to identify them as modifications of the original contract, especially when the Air Force actually had deleted the Add/Delete Clause from the contract, id. at 107, and the government could not "point to any provision in the contract that show[ed] that the bidders were on notice that the types of changes which were made were within the scope of the contract." Id. at 109. Thus, the guidelines to this court regarding the distinction between a change that merely modifies an existing procurement and a change significant enough to warrant the issuance of a new solicitation remains of a general nature and is, therefore, left to the discretion of the trial court, based on the facts of an individual case. See Keeter Trading Co. v. United States, 79 Fed.Cl. at 260 ("[T]here is no definitive test for determining whether a change is beyond the scope of a particular contract."). The objective of the September 10, 2009 solicitation was defined as the procurement of "Coats, All Weather, Various, Mens and Womens." The items solicited, at the time, were Item 0001, "PGC 02850 Coat, All Weather, Marine Corp Men's," Item 0002, "PGC 02851 Coat, All Weather, Marine Corp Women's," Item 0003, "PGC 02110 Coat, All Weather, Army Women's," Item 0004, "PCG 01940 Coat, All Weather, Navy Men's," and Item 0005, "PGC 01908 Coat, All Weather, Navy Women's." The agency also indicated, in its August 10, 2009 pre -solicitation Initial Procurement Synopsis that three additional all-weather coats "may be added on a post -award basis via Add/Delete Clause," listing them specifically as "PGC 02111 Army, Men's, Coat, All Weather," "PGC 01958 Air Force Men's, Coat, All Weather," and "PGC 01959 Air Force Womens, Coat, All Weather." WESTLAW �J 2016 Thomson Reuters. No claim to original U.S. Government Works. 20 1 American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) The Add/Delete Clause included in the September 10, 2009 solicitation and incorporated by reference into Bluewater's contract stated, in pertinent part: b) New items may be added to the contract through bilateral modification with negotiated prices. All new requirements are subject to synopsis prior to addition to the contract. The Add/Delete Clause appears on page 56 of the original September 10, 2009 solicitation, under the section "52.216-9006 Addition/Deletion of Items," including the following: As prescribed in 16.506(90), insert the following clause: ADDITION/DELETIONS OF ITEMS (AUG 2005) — DLAD. b) New items may be added to the contract through bilateral modification with negotiated prices. All new requirements are subject to synopsis prior to addition to the contract. Plaintiff argues that in the context of the entire solicitation, including the terms of the September 10, 2009 solicitation for the Items 0001 through 0005, as well as DLAD 16.506(90), application of the Add/ Delete Clause, the process of addition or deletion of "items covered by the contract," must comply with competition requirements. Plaintiff maintains that the phrase contained in DLAD 16.506(90)(1) "[c]ompetition requirements must be addressed before new items may be added to a contract" supports its case. Defendant, on the other hand, asserts that "to the extent the language [of the DLAD 16.506(90) ] applied to the Addition / Deletion clause," in -scope modifications are not subject to CICA requirements. The Add/Delete Clause was invoked in the context of the August 10, 2009, pre -solicitation Initial Procurement Synopsis, issued by the agency, which announced the agency's intention to issue the solicitation and indicated that three more coats potentially could be *36 added to the procurement "on a post award basis:" Army Men's, Submitted into the pu lie record fpr ite (s) 5�, 2 Air Force Men's and Air Force Women's all-weather coats. The Clause includes the following language: In accordance with DLAD Clause 52.216-9006, Addition/Deletion of Items, found on page 56 of the subject Solicitation SPM1C1-08—R-0153, the attached Items 0006 and 0007 for the Air Force/Coast Guard Men and Women All—Weather Coats are being solicited for addition to either the Universal All Weather Coat Contract SPM 1 C1 -10—D-1099 or SPM 1 C1 -10—D- 1100. Offers will be evaluated based on price only.... All other terms and conditions of the offeror's contract, Contract SPM1C1-10—D-1009 [sic] and/or SPM1C1- 10—D-1100 remain in effect and apply to the addition of items. The September 22, 2011 corrected request for additional items not only referenced the Add/Delete clause in the 2009 solicitation, but also indicated that "[a]ll other terms and conditions of the offeror's contract ... remain in effect and apply to the additional items." The September 22, 2011 request included technical data for the new coats and stated that the coats were "considered to be within the scope of the universe of all-weather coats as they [were] similar in kind and complexity to all weather coat(s) under the Universal All—Weather Coat Contracts." Price offers for the new coats were requested from American Apparel and Bluewater. The May 13, 2011 DLA—FQCB Memo for Record stated "price will be the determining facts to the addition of items." To determine whether the addition of Items 0006 and 0007 for Air Force/Coast Guard Men's and Women's All—Weather Coats were modifications or should have resulted in new competitive procurements requires a comparison of what occurred in this case in 2009 and 2011. Although the competition goals of CICA are a critical part of the government procurement framework, so is the modification process, if the procurement system is to function efficiently. See AT&T Comrnc'ns, Inc. v. tViltel, Inc., 1 F.3d at 1205, 1205 n. 1 (noting, with respect to CICA, that "Congress did not intend to prevent contract modification"). This is why "only modifications outside the scope of the original competed contract fall under the statutory competition requirement [s]" of CICA. Id. at 1205. WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 21 Submitted into the I' S record fr r ite (s)� American Apparel-, Inc. v. United States, 108 Fed.Cl. 11 (2012) on 1' City Clerk Based on the language of the Add/Delete Clause, in addition to the earlier indication in the August 10, 2009 pre -solicitation Initial Procurement Synopsis that three additional items could be included in the contracts ultimately awarded to Bluewater and American Apparel, later identified as all-weather coats Items 0006 and 0007 for additional branches of the United States military, the court determines that what occurred in this case in 2011 was a modification to Bluewater's contract, No. SPM 1C1 -10—D-1100, that was within the scope of the original procurement. The original September 10, 2009 solicitation, listed five different coats as "items:" Marine Corp coats for men and women, Navy coats for men and women, and Army coats for women. The February 18, 2011 and September 22, 2011 requests for additional items added the same type of coats, with somewhat different specifications, but only slightly varying types of functionally similar all-weather military coats. Moreover, Item 0006, "PGC 01958 Coat, All Weather, Air Force/ Coast Guard Men's" and Item 0007, "PGC 01959 Coat, All Weather, Air Force/Coast Guard Women's," were "items" contemplated by the agency at the time of original September 10, 2009 solicitation SPM 1 C1 —08—R-01 53, as evidenced by the August 10, 2009 pre -solicitation Initial Procurement Synopsis. The line items solicited pursuant to the original procurement, and awarded to Bluewater and American Apparel on December 22, 2010, and the items added to Bluewater's contract on April 18, 2012, after reviewing price offers from American Apparel and Bluewater, were, as described by DLA, "similar in kind and complexity:" all-weather coats for the various branches of the United States military. See The May 13, 2011 DLA—FQCB Memo for Record; Combined Pre—Negotiation Briefing Memorandum (PBM)/Price Negotiation Memorandum (PNM)/Price Analysis. The fact that the *37 agency designated Items 0006 and 0007 as all-weather coats for "Air Force/Coast Guard," indicating that they could be used by either of the two branches, confirms the similarity of the coats, and reinforces that the "items" procured by the agency pursuant to the September 10, 2009 solicitation and September 22, 2011 notice are of similar kind and complexity. In fact, the government decided that there was no need to change any of the contracts terms upon the addition of the new items. "[T]he scope of the entire original procurement in comparison to the scope of the contract as modified," therefore, indicates that Bluewater's contract, as modified, did not "materially depart[ ] from the scope of the original procurement." AT & T Commc'ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205. As stated in AT & T Communications, Inc. v. Wiltel, Inc.: An important factor in determining the scope of the original competition is "whether the solicitation for the original contract adequately advised offerors of the potential for the type of changes during the course of the contract that in fact occurred, or whether the modification is of a nature which potential offerors would reasonably have anticipated." Id. at 1207 (quoting Neil R Gross & Co., 90-1 CPD ¶ 212, 1990 WL 269546, at *3 (citation omitted)). Because the Add/Delete Clause, in conjunction with the pre - solicitation Initial Procurement Synopsis, envisioned the addition of similar items, and both existing contractors were offered the same opportunity to submit price quotes to add one or both of the additional items to their existing contracts, American Apparel " `would reasonably have anticipated' " the addition of Items 0006 and 0007 to either contract awarded under the original September 10, 2009 solicitation. See id. at 1207 (quoting Neil R. Gross & Co., 90-1 CPD ¶ 212, 1990 WL 269546, at *3 (citation omitted)). The pre -solicitation Initial Procurement Synopsis "adequately advised" American Apparel that items, such as Items 006 and 007, may be added to a contract awarded under the original September 10, 2009 solicitation. See Northrop Grumman Corp. v. United States, 50 Fed.Cl. at 465. The most difficult part of the assessment in the instant case is that, in addition to a comparison of the type of work contemplated by the original procurement and the type of work contemplated by a contract modification, or a comparison between services or products procured under the original procurement and those added by a contract modification, courts also consider whether a contract modification significantly increases the costs of the contract, as compared to the original procurement. See Cardinal Alfaint. Serv., Inc. v. United States, 63 Fed.Cl. at 106; CESC Plaza Ltd. P'ship v. United States, 52 Fed.Cl. at 93. Some price increase certainly is to be anticipated with the addition of new items for production. By addition of Items 0006 and 0007, the total annual estimated amount of Bluewater's contract for Item 0001 was increased by "$17,187,887.08 from $20,016,708.00 to $37,204,592.08 sic]." 23 Although Bluewater's estimated contract price WESTt.AW O 2016 Thomson Reuters. No claim to original U.S. Government Works. 22 II American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) I i I I I I � I UJ 91 W increased by approximately $17,187,887.08, the nature of the items procured. under Bluewater's contract remained the same. The Weighted Average Price per unit for Items 0006 and 0007 was, respectively, [deleted] and [deleted], which was near the average of the Weighted Average Price per unit for Items 0001 through 0005, demonstrating that Items 0006 and 0007 were similar in price, and presumably quality, to Items 0001 through 0005. This is consistent with DLA's statement that Items 0006 and 0007 were "considered to be within the scope of the universe of all- weather coats as they are similar in kind and complexity to the all-weather coat(s) under the Universal All–Weather Coat Contracts." As indicated in Golden Manufacturing Co., Inc. v. United States, 2012 WL 4479422, at *14, — Fed.Cl. at , it is not simply a *38 matter of arithmetic calculations. In cases that apply the cardinal change doctrine, even a substantial price increase alone is not enough to establish that modifications are beyond the scope of a contract, as long as the nature and purpose of the contract has not changed. See, e.g., S.J. Groves & Sons Co, v. United States, 228 Ct.Cl. 598, 602, 661 F.2d. 170, 173 (1981); Dej: Sys. Grp., B240295, 1990 WL 293536 (Comp.Gen. Nov. 6, 1990) (a 120 percent increase in price was not a cardinal change because the nature and purpose of the contract had not changed). In contrast, in circumstances where a large price increase is accompanied by a substantial change in the nature of work contemplated by a contract, courts have deemed a contract modification to be a cardinal change. See Golden Mfg. Co., Inc. v. United States, 2012 WL 4479422, at *14, — Fed..Cl. at (quoting Cardinal Maint. Serv.. Inc, v. United States, 63 Fed.Cl. at 109) ("Where, as here, the amount of additional work nearly doubles the price of the contract that was awarded, and the nature of the work was so substantially increased that the change provision of the contract had to be deleted to accomplish the modifications, the originally awarded contract has been materially changed."). In the case currently before the court, the nature and purpose of the work contemplated by the original September 10, 2009 solicitation, to provide service -member coats, remained unchanged. The agency consistently announced the contract's intended purpose, once in the September 10, 2009 solicitation, and again in the February 18, 2011 request for additional items, which remained constant in the September 22, 2011 request for additional items. The December 22, 2010 Submitted into the pu tic record f9r itep(s) Z, on awards of contract Item 0001 to Bluewater, and contract Items 0002-0005 to American Apparel were made after evaluation of the product demonstration model (PDM), past performance/experience, and socioeconomic considerations. Both Bluewater and American Apparel, therefore, had gone through the entire evaluation process, and had been vetted and approved after a full and open competition prior to receiving the December 22, 2010 awards. The time to challenge those evaluations conducted by the agency is long past due. The all-weather coats added to Bluewater's contract in 2012 are in the nature of modifications forecast in the 2010 contract between the defendant and Bluewater, and within the scope of the September 10, 2009 solicitation. Specifically, the items added to the Bluewater contract by DLA following the September 22, 2011 request did not differ materially from the other all-weather coats procured as a result of the September 10, 2009 solicitation. As stated by the agency in the May 13, 2011 DLA–FQCB Memo for Record; Combined Pre–Negotiation Briefing Memorandum (PBM)/Price Negotiation Memorandum (PNM)/Price Analysis: The Air Force Man and Woman All–Weather Coats are considered to be within the scope of the universe of all-weather coats as they are similar in kind and complexity to the all-weather coat(s) under the Universal A11Weather Coat Contracts. These additional items were also included in the synopsis of subject Universal AWC solicitation. The addition of Item 0006, "PGC 01958 Coat, All Weather, Air Force/Coast Guard Men's" and Item 0007, "PGC 01959 Coat, All Weather, Air Force/Coast Guard Women's," to the existing Bluewater's Contract No. SPM1C1-10–D-1100, was an in -scope modification pursuant to the Add/Delete Clause also included as part of the 2009 solicitation and, therefore, not a material departure from the original procurement. CONCLUSION For the reasons discussed above, the court concludes that the addition of two items by the defendant were in - scope modifications of the existing Bluewater contract for WESTLAW O 2016 Thomson Reuters. No claim to original U.S, Government Works. 23 Submitted into the i l " () American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) record r it m(s) P �X_t t1C�_T �' zy ClQrk which new competition pursuant to CICA is not required. Defendant's motion to dismiss plaintiffs complaint is GRANTED. Defendant-intervenor's motion to dismiss plaintiffs complaint, as well as defendant's and plaintiffs cross-motions for judgment on the administrative record, are MOOT. Plaintiffs complaint is DISMISSED, regardless of whether the dismissal is for lack of subject matter jurisdiction or for failure to state a *39 claim. The Footnotes 6 3 M Clerk of the Court shall enter JUDGMENT consistent with this opinion. IT IS SO ORDERED. All Citations 108 Fed.Cl. I I This opinion was issued under seal on November 30, 2012. The parties were asked to propose redactions prior to public release of the opinion. This opinion is issued with the redactions that the parties proposed in response to the court's request. Where words have been redacted, it is reflected in the text of the opinion with the word "[deleted]." Prior to issuing the solicitation, on August 10, 2009, DLA released its pre -solicitation Initial Procurement Synopsis, detailing its intention to announce a solicitation for universal all-weather coats. The Initial Procurement Synopsis stated that "additional three [3] fully competitive All Weather Coats (127 NSNs [national stock numbers] ) may be added on a post -award basis via Add/Delete Clause." (first bracket in original). The Initial Procurement Synopsis included the listing for the potential add items as an attachment, describing them as "PGC 02111 Army, Men's, Coat, All–Weather," "PGC 01958 Air Force Men's, Coat, AIIWeather," and "PGC 01959 Air Force Womens, Coat, All–Weather." The Notice to Offerors provided further: PDM is the most important factor and will be used to assess the credibility of the overall proposal with respect to the offeror's technical ability to interpret specifications and manufacture an actual end item. Experience/Past Performance is the second most important factor, as an indicator of vendors [sic] ability to deliver that end item free of defects, on-time, and provide support to socioeconomic entities during contract performance. Under the factor Experience/Past Performance, experience is the most important subfactor, and the best indicator of offeror's ability to perform overall. Quality of Items is the second most important subfactor, as an indicator of offeror's ability [sic] provide a product free of defects; Delivery Performance is the third most important subfactor, as an indicator of ability to delivery [sic] on time; and Compliance with Contractual Socioeconomic Subcontracting is the fourth most important subfactor, as an indicator of offeror's ability to adhere to promises made to support socioeconomic entities. The Socioeconomic Consideration is the third most important factor in which support will be made part of any resulting contract for use in determining how well the offeror has adhered to is [sic] socioeconomic plan. FAR 52.212-2 Evaluation—Commercial Items, provides: As prescribed in 12.301(c), the Contracting Officer may insert a provision substantially as follows: Evaluation—Commercial Items (JAN 1999) (a) The Government will award a contract resulting from this solicitation to the responsible offeror whose offer conforming to the solicitation will be most advantageous to the Government, price and other factors considered. The following factors shall be used to evaluate offers: (Contracting Officer shall insert the significant evaluation factors, such as (i) technical capability of the item offered to meet the Government requirement; (ii) price; (iii) past performance (see FAR 15.304); (iv) small disadvantaged business participation; and include them in the relative order of importance of the evaluation factors, such as in descending order of importance.) Technical and past performance, when combined, are _ (Contracting Officer state, in accordance with FAR 15.304, the relative importance of all other evaluation factors, when combined, when compared to price.) (b) Options. The Government will evaluate offers for award purposes by adding the total price for all options to the total price for the basic requirement. The Government may determine that an offer is unacceptable if the option prices are significantly unbalanced. Evaluation of options shall not obligate the Government to exercise the option(s). (c) A written notice of award or acceptance of an offer, mailed or otherwise furnished to the successful offeror within the time for acceptance specified in the offer, shall result in a binding contract without further action by either party. Before the offer's specified expiration time, the Government may accept an offer (or part of an offer), whether or not there are negotiations after its receipt, unless a written notice of withdrawal is received before award. FAR 52.212-2 (current as of Nov. 21, 2012). VVESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 24 LAmerican Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) Submitted into the puic record fpr iter. (s) 5 The clause "52.216-9006 Addition/Deletion of Items" is apparently referring to the Defense Logistics Acquisition Directive (DLAD) Revision 5, issued on May 11, 2000 and revised on August,15, 2012, available at http://www.dia.mil/Acquisition/ Documents/DLAD% 20Rev% 205.htm. DLA, however, erroneously referred to this directive as a FAR provision in its February 18, 2011 request for additional items. 6 The cited provision, 16.506(90), is partofthe DLAD Subpart 16.5, Indefinite—Delivery Contracts, and the provision 16.506, "Solicitation provisions and contract clauses," was mentioned on page 56 of the original September 10, 2009 solicitation, under the section "52,216-9006 Addition/Deletion of Items." DLAD 16.506(90) provides: Additions or deletions. The clause at 52.216-9006 may be used in solicitation when a mechanism is needed for making additions or deletions to items covered by the contract, e.g. corporate contracts, LTCs incorporating a manufacturer's price list, comprehensive weapon system spare parts support or a specific range of items, etc. (1) Competition requirements must be addressed before new items may be added to a contract. (2) A scope of contract statement is necessary in both solicitation and contract to clearly establish the Government's intentions and rights under the contract. The contract scope statement should communicate a comprehensive objective for the acquisition, i.e. whether it is based on a specific stock class, weapon system, product line, manufacturer, or distributor. The scope statement must not include information that conflicts with Section B or other terms of the solicitation. Contract specialists have considerable flexibility in defining contract scope but must be careful to avoid ambiguities. DLAD 16.506(90) (current as of Aug. 15, 2012). 7 During the course of the procurement, on September 13, 2010, DJ Manufacturing, Corp. became Bluewater Defense Inc. (Bluewater). The offeror is referenced under both names throughout the administrative record. $ The Source Selection Authority prepared similar evaluation summaries for the other four items, Items 0002 through 0005. Because the evaluation methods used in the December 13, 2010 Source Selection Decision are not at issue in the above - captioned protest, after a detailed description of the evaluation process for Item 0001, as an example for DLA's overall evaluation methodology, the analysis below will be limited to general discussion of the evaluation results. 9 "WAP" refers to the Weighted Average Price, as defined by DIA. 10 "A" refers to Experience, "B" refers to Quality of Items, "C" refers to Delivery Performance, "D" refers to Compliance with Contractual Socioeconomic Subcontracting Goals, and "O/A" refers to Overall score. 11 The Source Selection Authority conducted a thorough analysis of all five offers received for Item 0001. Having determined that Bluewater represented the best value to the government for Item 0001, the Source Selection Authority compared the other four offers to the one submitted by Bluewater. Because [deleted], [deleted], and [deleted] are not parties in the above -captioned protest, the analysis is limited to the offers submitted by American Apparel and Bluewater. 12 At the GAO, American Apparel also claimed that extending the deadline for the submission of proposals in response to the request for additional items, without changing the item requirements, was prejudicial. American Apparel explained that the notice about extending the deadline for the submission of proposals for Items 0006 and 0007 to March 14, 2011 was issued on March 10, 2011, nearly two weeks after the original February 28, 2011 deadline had passed, moving the deadline for proposals to March 14, 2011. According to American Apparel, "[s]uch an extension after the deadline for submission of offers, and with notice just a few days prior to the new deadline, is highly prejudicial to offerors like American that complied with the original deadline and were left with little time to create and submit a neer or modified proposal. Such prejudice is particularly acute if BlueWater failed to meet the original deadline, or received notice of the extension earlier than American." As noted below, the GAO dismissed the protest after DIA canceled the February 18, 2011 request for additional items. 13 On July 8, 2011, following the DIA decision to take corrective action and cancel the February 18, 2011 request for additional items, and GAO's subsequent dismissal of American Apparel's protest, Bluewater filed a protest with the GAO arguing that the agency's corrective action was "improper because there was no merit to AAI's [American Apparel's] protest." On September 1, 2011, GAO dismissed Bluewater's protest, concluding that "BlueWater's contention that the agency should not have taken corrective action in response to American Apparel's protest, because in BlueWater's view the protest was untimely under our Bid Protest Regulations, is without merit." The GAO noted that "[o]ur Office has long held that when a contracting agency recognizes the validity of a protest and proposes to take corrective action, it is irrelevant whether the protest complied with the timeliness requirements of our Bid Protest Regulations." 14 FAR 15.304(c) states, in pertinent part: The evaluation factors and significant subfactors that apply to an acquisition and their relative importance are within the broad discretion of agency acquisition officials, subject to the following requirements: WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 25 Submitted into the pVicll on f JQ,1, American Apparel, Inc. v. United) States, 108 Fed.Cl. 11 (2012) recordr ite(s) DO 16 City Cler-k (1) Price or cost to the Government shall be evaluated in every source selection (10 U.S.C. 2305(a)(3)(A)(ii) and 41 U.S.C. 253a(c)(1)(B)) (also see part 36 for architect-engineer contracts); (2) The quality of the product or service shall be addressed in every source selection through consideration of one or more non-cost evaluation factors such as past performance, compliance with solicitation requirements, technical excellence, management capability, personnel qualifications, and prior experience (10 U.S.C. 2305(a) (3)(A)(i) and 41 U.S.C. 253a(c)(1)(A)); and (3)(i) Except as set forth in paragraph (c)(3)(iii) of this section, past performance shall be evaluated in all source selections for negotiated competitive acquisitions expected to exceed the simplified acquisition threshold. (ii) For solicitations involving bundling that offer a significant opportunity for subcontracting, the contracting officer must include a factor to evaluate past performance indicating the extent to which the offeror attained applicable goals for small business participation under contracts that required subcontracting plans (15 U.S.C. 637(d)(4)(G) (ii)). (iii) Past performance need not be evaluated if the contracting officer documents the reason past performance is not an appropriate evaluation factor for the acquisition. 15 10 U.S.C. § 2305(a)(2)(A)(i) provides, in relevant part: [A] solicitation for sealed bids or competitive proposals (other than for a procurement for commercial items using special simplified procedures or a purchase for an amount not greater than the simplified acquisition threshold) shall at a minimum include— (A) a statement of— (i) all significant factors and significant subfactors which the head of the agency reasonably expects to consider in evaluating sealed bids (including price) or competitive proposals (including cost or price, cost-related or price-related factors and subfactors, and noncost-related or nonprice-related factors and subfactors). 16 Defendant-intervenor argues that the Federal Acquisition Streamlining Act of 1994 (FASA), Pub.L. No. 103-355, § 1004(a)(1), 108 Stat. 3243, 3252-53 (codified as amended at 10 U.S.C. § 2304c (Supp. V 2011)), deprives the court of jurisdiction over this protest as the government decision that American Apparel challenges was made "in connection with the issuance or proposed issuance" of a delivery order. Defendant does not adopt defend ant-intervenor's view of the contract at issue in this case, stating at oral argument: "[W]e did not raise this issue. We don't think it's a principal issue. I hate to disagree with Defendant–Intervenor." Defendant continued: "We believe that this is a multiple-award IDIQ [indefinite delivery, indefinite quantity] contract because there's no competition for individual delivery orders underneath line items, so therefore it doesn't apply." Given the nature of the IDIQ contract at issue in this case, and as a result of court's conclusion set out below, the court does not reach defendant-intervenor's arguments regarding FASA. 17 The language of 5 U.S.C. § 706 provides: To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall— (1) compel agency action unlawfully withheld or unreasonably delayed; and (1) hold unlawful and set aside agency action, findings, and conclusions found to be– (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (B) contrary to constitutional right, power, privilege, or immunity; (C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; (D) without observance of procedure required by law; (E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute; or (F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court. In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error. 5 U.S.C. § 706. 18 According to FAR 2.101(b), "contract modification means any written change in the terms of a contract (see [FAR] 43.103)." FAR 2.101(b) (current as of Nov. 21, 2012). FAR 43.103 further provides that "[c]ontract modifications are of the following types: (a) Bilateral. A bilateral modification (supplemental agreement) is a contract modification that is signed by the contractor and the contracting officer. Bilateral modifications are used to— (1) Make negotiated equitable adjustments resulting from the issuance of a change order, Wt STLAW 9 2016 Thomson Reuters. No claim to original U.S. Government Works. 26 American Apparel, Inc. v. United States, 108 Fed.Cl. 11 (2012) Submitted into theu is on __71 Zk1(b City Clerk (2) Definitize letter contracts; and (3) Reflect other agreements of the parties modifying the terms of contracts. (b) Unilateral. A unilateral modification is a contract modification that is signed only by the contracting officer. Unilateral modifications are used, for example, to— IL (1) Make administrative changes; (2) Issue change orders; (3) Make changes authorized by clauses other than a changes clause (e.g., Property clause, Options clause, or Suspension of Work clause); and (4) Issue termination notices." FAR 43.103 (current as of Nov. 21, 2012). 19 Although a number of decisions in the United States Court of Federal Claims indicate that this court lacks jurisdiction over a protest challenging a modification to a contract that is within the scope of the original procurement, one judge has argued in a footnote that these decisions "have elided the distinction between jurisdiction and merits, on the grounds that a modification within the scope of the contract does not involve a procurement and, therefore, does not trigger jurisdiction under [28 U.S.C. §] 1491(b)(1)." See Intl Genomics Consortium v. United States, 104 Fed.Cl. 669, 675 n. 7 (2012). Given that a court's analysis of whether a modification to a contract is within the scope of the original procurement requires the court to consider the merits of a protestor's complaint, and considering the Federal Circuit's guidance that the meaning of "procurement" under Section 1491(b)(1) extends to "'all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services and ending with contract completion and closeout,' " see Sys. Application & Techs., Inc. v. United States, 691 F.3d at 1381 (emphasis in original) (citation removed), a protest that challenges a modification to a contract that is within the scope of the original procurement may be more appropriately dismissed under Rule 12(b)(6) of the Rules of the Court of Federal Claims (RCFC) for failure to state a claim upon which relief may be granted, rather than under RCFC 12(b)(1) for lack of subject matter jurisdiction. As this distinction does not alter the ultimate resolution of this case, the court does not reach this issue. 20 Although American Apparel cites to FAR 16.505(b)(1)(v)(A)(1) in its complaint and its briefs quote the FAR provision, "Orders under multiple -award contracts," American Apparel does not address why it believes the multiple -award contract provision applies to the above -captioned protest. DLA modified Bluewater's contract, No. SPM1C1-10-D1100, after requesting proposals from Bluewater and American Apparel for Items 006 and 007. DLA did not make this request under a master IDIQ contract. ' 21 Defendant -intervenor concludes that the court should dismiss American Apparel's complaint under RCFC 12(b)(6) for failure to state a claim upon which relief can be granted, rather than RCFC 12(b)(1) 22 The FAR defines an "acquisition" as: ' the acquiring by contract with appropriated funds of supplies or services (including construction) by and for the use of the Federal Government through purchase or lease, whether the supplies or services are already in existence or must be created, developed, demonstrated, and evaluated. Acquisition begins at the point when agency needs are established and includes the description of requirements to satisfy agency needs, solicitation and selection of sources, award of contracts, contract financing, contract performance, contract administration, and those technical and management functions directly related to the process of fulfilling agency needs by contract. FAR 2.101(b). 23 Although the modification of Bluewater's contract to include Items 0006 and 0007 states that it reflects a $17,187,887.08 M increase in annual estimated price, the prices individually listed in the modification reflect a $17,187,884.56 increase in price. In addition, an addendum to a Combined Pre -Negotiated Briefing Memorandum, dated April 11, 2012, indicates that the total estimated value of the amendment was $17,403,160.08. End of Document Q 2016 Thomson Reuters. No claim to original U.S. Government Works. I WESTLAW @ 2016 Thomson Reuters. No claim to original U.S. Government Works. 27 �i Avtron Manufacturing, Inc., 67 Comp. Gen. 404 (1988) record for itm s) — S on City Clerk KeyCite Yellow Flag - Negative Treatment Modified on Reconsideration by Defense Technology Corp., Comp.Gen., September 21, 1988 67 Comp. Gen. 404 (Comp.Gen.), B- 229972, 88-1 CPD P 458,1988 WL 222812 COMPTROLLER GENERAL Matter of: Avtron Manufacturing, Inc. May 16,1988 DIGEST **1 *404 Where a contract for an aircraft generator test stand as modified would be materially different from the contract for which a competition was held, the modifications go beyond the scope of the contract so that the contract should be terminated and the requirement resolicited. DECISION Avtron Manufacturing, Inc., protests the proposed modification by the Naval Supply Systems Command, Department of the Navy, of contract No. N00140 -87–C-9064 with Defense Technology Corporation. The fixed-price, multiyear contract is for the design, construction, installation and testing of aircraft generator system test stands. Avtron contends that the proposed modifications to the contract are beyond the scope of the contract for which the competition was conducted, such that a new solicitation should be issued. We sustain the protest. Under the request for proposals (RFP), issued on March 15, 1985, the Navy solicited offers for first article units, data, and production and option quantities of hardware to be used to test Navy aircraft generators at land bases and on shipboard. The RFP anticipated that offerors would propose individual technical approaches *405 to meet the Navy's needs, which were described in performance specifications set forth in the purchase description. The test stand consists of four assemblies: the variable speed drive assembly that provides the power to drive and cool the generator; the load bank assembly that simulates the electrical load of the aircraft systems; the oil supply assembly that provides oil to the unit; and the control and instrument assembly that provides the operator a means of controlling, selecting and monitoring the test. The purchase description for the test stands imposed no requirements for input power to the test stands or for the amount of heat allowed to emanate from the units. However, it did state that the variable speed drive assembly output shaft should be capable of being set to any speed between 0 and 30,000 RPM, and the minutes of the preproposal conference, contained in an amendment to the solicitation, emphasized that the use of two shafts in the variable speed drive assembly, each with a different speed range, was unacceptable. The Navy received four proposals in response to the solicitation. Defense Technology offered the low evaluated price of $31,891,676.91. Avtron was the third low offeror at $46,391,962. Defense Technology proposed to use a hydroviscous drive in the variable speed drive assembly. Avtron proposed the more conventional electric drive. The Navy found Defense Technology's proposal to utilize the hydroviscous drive for transmitting power and cooling the test stand technically acceptable and, after a favorable preaward survey, made award to that firm on December 24, 1986. IN EST , r 01€ .1 , E ind = Gor nirq ni v ° ; ics, Submitted into the pub 'c record Or ite (s) Avtron Manufacturing, Inc., 67 Comp. Gen. 404 (1988) First articles under the contract are due in August of 1988. During a routine design review of the contract in February of 1987, the Navy learned that the input power required to run the test stands and the heat created by the units would exceed the capabilities of the existing facilities to house them. In addition, the Navy determined that the output requirement of the test stands could be reduced from 160 to 100 horsepower because of the phase-out of the only aircraft requiring the higher horsepower output. As a result of that modification, the Navy determined that the input power required to run the test stands and heat ejection would be significantly reduced. Accordingly, the Navy changed the purchase description, and modified the contract on April 10, 1987, to revise the output horsepower requirement from 160 to 100. **2 However, continued review by the Navy resulted in the conclusion that the reduction in horsepower specified in the April 10, 1987, modification was not adequate to allow the units to be used aboard ship since the heat ejection resulting from running the test stands still exceeded the acceptable level of heat for shipboard use. As a result, the Navy proposes to modify the purchase description further, and issue a change order to the contract with Defense Technology, to specify a limitation on the input power required to run the test stands. The modification would allow for two output shafts running to the aircraft generator rather than one in order to reduce the level of heat gdnerated through the use of two lower -capacity units with different speed ranges. *406 In response to the Navy's proposed revisions to the contract, Defense Technology assessed the cost impact of the changes as resulting in an increase of $3,329,674, or 10.5 percent, including costs attributable to a possible conversion of the government -furnished generators to contractor -furnished generators. In addition, Defense Technology proposed a 180 -day extension in the delivery schedule for all deliverables; this extension, however, if accompanied by the firm's proposed production rate increase for delivery of the units, still would result in all units being delivered within the timeframe of the current schedule. Defense Technology also noted that if the proposed modification was not issued by January 15, 1988, a day -for -day extension beyond the proposed 180 days would be necessary. Avtron asserts that the Navy's proposed modification to the purchase description materially alters the terms of the original contract in that it significantly affects the design, construction, and performance of the aircraft generator test stand, thereby changing the scope of the contract so as to amount to a renegotiation of a new contract with Defense Technology on a noncompetitive basis. Avtron argues that the contract with Defense Technology should be terminated and the requirement resolicited, and that Avtron's proposal in response to the new solicitation would be significantly lower in price than its previous proposal because the modifications contemplated by the Navy create a significantly different test stand and delivery schedule. The Navy argues that the proposed modification to the number of output shafts is a result of the change, in the input power requirement and that the proposed modification is not substantial, does not change the nature, purpose or method of operation of the test stand, and is therefore within the scope of the Changes clause set forth in Federal Acquisition Regulation § 52.243-1 (FAC 84-29) and incorporated into the contract with Defense Technology. As a general rule, our Office will not consider protests against contract modifications, as they involve matters of contract administration that are the responsibility of the contracting agency. 4 C.F.R. § 21.3(m)(1) (1988). We will, however, consider a protest that a modification is beyond the scope of the original contract. If a contract as modified is materially different from the contract for which a competition was held, the subject of the modification should be competitively procured unless a sole -source award is appropriate. Ingersoll-Rand, B-225996, May 5, 1987, 87-1 CPD 1474. **3 In determining whether a changed contract would be materially different from the contract originally awarded so that the modified contract should be the subject of competition, for guidance we have looked to the "cardinal changes" doctrine developed by the Court of Claims to deal with a contractor's claim that the government breached a contract by ordering changes that were outside the scope of the contract's Changes clause. See American Air Filter Co., Inc., 57 Comp.Gen. 285 (1978), 78-1 CPD 1136, affd on reconsideration, 57 Comp.Gen. 567 (1978), 78-1 CPD 1443. The basic standard defined by the court for determining when a cardinal change has occurred is whether the modified work WESTLAW n 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 Submitted into the public Avtron Manufacturing, Inc., 67 Comp. Gen. 404 (1988) record rite s) C ✓� _..__.... _ .. .._ �..,._..--.Cltyer __ is *407 essentially the same as the work for which the parties contracted. See Air -A -Plane Corp. v. United States, 408 F.2d 1030 (Ct.C1.1969). Thus, where it is alleged that a proposed contract modification will be outside the scope of the original contract, the question is whether the original purpose or nature of the contract would be so substantially changed by the modification that the original contract and the modified contract would be essentially different and the field of competition materially changed. American Air Filter Co., Inc., 57 Comp.Gen. 285, supra; Webcraft Packaging, Division of Beatrice Foods Co., B-194087, Aug. 14, 1979, 79-2 CPD ¶ 120. We find that the Navy's proposed modifications to the performance specifications in the purchase description for aircraft generator test stands will materially alter the terms of the original contract and change the field of competition. The Navy's addition of an input power requirement and the increase in the permissible number of output shafts modify the performance specifications of the major assembly of the test stand—the variable speed drive assembly—by allowing two drive shafts operating at different speed ranges. This conventional method of operation was specifically and expressly disallowed by the RFP that led to Defense Technology's contract. As a result of that restriction, firms like Avtron were compelled to offer high-priced units that could span the entire speed range, and Defense Technology won the competition in large part because its approach to meeting the Navy's needs—the hydroviscous drive—could be offered at a lower price. That somewhat unique approach, however, ultimately was found unworkable, and the currently proposed modification would specify the offeror -desired approach that expressly had been disallowed at the outset of the procurement. We think it entirely unfair to firms that lose a contract competition because an agency proscribes a conventional, suggested performance approach for the agency to decide, after award, that the same approach is precisely the one needed and then modify the contract accordingly. The record strongly suggests that proposals submitted on the basis of the modified performance specifications, which relax the requirement for one output shaft operating over the entire speed range, would be significantly lower in price, and different in design and delivery schedule, from those submitted under the original purchase description. See Webcraft Packaging, Division of Beatrice Foods Co., B-194087, supra. In sum, the Navy's proposed modification cannot be said to fall within the scope of the procurement since it is not of a nature which potential offerors would have reasonably anticipated under the Changes clause incorporated into the contract with Defense Technology. Accordingly, we conclude that the competition for the contract as modified would be materially different from the competition originally obtained, and by separate letter to the Secretary of the Navy we are recommending that the contract with Defense Technology be terminated and the requirement resolicited under the modified specifications. **4 The protest is sustained. Milton J. Socolar Comptroller General of the United States 67 Comp. Gen. 404 (Comp.Gen.), B- 229972, 88-1 CPD P 458, 1988 WL 222812 End of Document C 22016 Thomson Reuters. No claim to original U.S. Government Worb. 1 1 I WESTLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 r� L 1 CESC Plaza Ltd. Partnership v. U.S., 52 Fed.Cl. 91 (2002) 52 Fed.Cl. 91 United States Court of Federal Claims. CESC PLAZA LIMITED PARTNERSHIP, et al., Plaintiffs, V. The UNITED STATES, Defendant, and LCOR Alexandria, LLC, Intervenor. No. 01-715C. Originally Filed: March 22, 2002. 1 Reissued: April 16, 2002.1 Disappointed bidder filed bid protest, alleging that modifications made to a contract between the General Services Administration (GSA) and awardee exceeded the scope of permissible changes and that the project should have been resolicited. Awardee intervened. Plaintiffs moved for injunctive and declaratory relief, and the government moved for judgment on the administrative record. The Court of Federal Claims, Bruggink, J., held that protestor did not establish that post -award modifications to government contract for lease of office space so exceeded scope of original procurement that they violated the Competition in Contracting Act (CICA), based on claim that the modifications increased the cash flow to awardee and shifted the risk of payment and performance to the government beyond what was permitted in the original solicitation. Plaintiffs motion denied; defendant's motion granted. West Headnotes (2) Ill Public Contracts Necessity for submission to competition in general Public Contracts Material amendments doctrine United States Necessity for submission to competition in general Submitted into the on / City Clerk United States Material amendments doctrine Modifying a government contract after its award so that it materially departs from the scope of the original procurement violates the Competition in Contracting Act (CICA) by preventing potential bidders from participating or competing for what should be a new procurement. Federal Property and Administrative Services Act of 1949, § 303(a) (1)(A), 41 U.S.C.A. § 253(a)(1)(A). 6 Cases that cite this headnote l21 Public Contracts Award United States ­ Award Bid protestor did not establish that post - award modifications to government contract for lease of office space so exceeded scope of original procurement that they violated the Competition in Contracting Act (CICA), based on claim that the modifications increased the cash flow to awardee and shifted the risk of payment and performance to the government beyond what was permitted in the original solicitation. Federal Property and Administrative Services Act of 1949, § 303(a) (1)(A), 41 U.S.C.A. § 253(a)(1)(A). 8 Cases that cite this headnote Attorneys and Law Firms *91 John L. Oberdorfer, Patton Boggs, LLP, Washington, D.C., for plaintiffs. With whom were Michael Schaengold, Mary Beth Bosco, Rodney Grandon, and Rand L. Allen. Opher Shweiki, Civil Division, Commercial Litigation, with whom were Donald Kinner, Assistant Director, David M. Cohen, Director, and Robert D. McCallum, Jr., Assistant Attorney General, Department of Justice, Washington, D.C., for defendant. Michael Briskin and William Covey, Patent and Trademark Office, and Barry Segal, General Services Administration, of counsel. ' WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 CESC Plaza Ltd. Partnership v. U.S., 52 Fed.Cl. 91 (2002) Kim Sperduto, The Sperduto Law Firm, PLC, Washington, D.C., for intervenor. With whom were Marian K. Riedy and Michael J. Wade. OPINION BRUGGINK, Judge. Pending in this bid protest is plaintiffs' motion for injunctive and declaratory relief. Also pending is defendant's motion for judgment on the administrative record. Plaintiffs contend that modifications made to a contract between the General Services Administration ("GSA") and intervenor exceeded the scope of permissible changes and that the project should have been resolicited. For reasons explained at the conclusion of oral *92 argument held on March 18, 2002, and as more fully set out below, we deny plaintiffs motion and grant defendant's Motion for Judgment on the Administrative Record. FACTUALBACKGROUND In November 1995, Congress granted the GSA, on behalf of the Patent and Trademark Office ("PTO"), authorization to procure a lease for up to 2,386,940 rentable square feet of office space to house the consolidated PTO in Northern Virginia. AR at 8407. The approved lease prospectus capped annual rent at $57,286,560, and the actual annual rent per rentable square foot at $24.00. Both rent caps were based on fiscal year 1996 dollars, with an annual escalation of 2.9 percent compounded to the effective date of the lease. AR at 8402. The project would constitute the largest lease ever executed by GSA. On June 26, 1996, GSA issued Solicitation for Offers No. 96.004 ("SFO"), inviting offers to lease office space for the PTO. AR at 3651. The SFO had a two-phase selection process. Phase I was open to all potential offerors who met the minimum SFO qualifications. Phase I evaluated the quality of the proposed site, design team, and developer. AR at 3720. Once an offeror met Phase I qualifications, it was allowed to submit Phase II proposals. Offerors' technical and pricing proposals were required during Phase II. The technical proposals were evaluated by quality of site, design, interior architect, and operating Submitted into thepu tlic record fp r it �) 5 on r% l 1.) I I � City Clerk and maintenance firm. AR at 3724. On November 16, 1998 four offerors submitted initial Best and Final Offers ("BAFO"). The SFO was amended fourteen times. The most far-reaching of those was Amendment Twelve. AR at 4000-50. Plaintiffs are five Charles E. Smith Companies ("CESC") which submitted a joint BAFO. Before filing this suit, CESC lodged a pre -award bid protest in 1999 under the Competition in Contracting Act ("CICA"), claiming that the SFO was inherently prejudicial to CESC. CESC Plaza Ltd. Partnership v. United States, C.A. No. 98-1837 (E.D.Va.1999), affd, 215 F.3d 1317 (4th Cir.2000). CESC was the incumbent on most of the PTO's existing leases. It argued that the SFO did not properly take into consideration its unique position as an existing building owner instead of a bidder proposing to build a new building. Id slip op. at 2. The district court preliminarily enjoined the procurement until GSA provided additional information and the offerors submitted new BAFO's. Id. Permanent injunctive relief was denied on grounds that the SFO comported with CICA's requirements. Id slip op. at 26. On June 1, 2000, GSA awarded the lease to intervenor, LCOR Alexandria, Inc. ("LCOR"). LCOR is a single - purpose entity created for the special purpose of this project. Its assets are those that the lease transaction has generated. This lease included a provision which stated: The Government may terminate this Lease if, within one hundred eighty (180) working days of the date of execution of this Lease, the Lessor fails to obtain the requisite financing or fails to satisfy the other obligations set forth in Section 5.1.4 of this Lease, as such time frame may be extended by the Government pursuant to Section 5.1.5. Once such financing has been obtained and such other obligations have been satisfied and once all or any portion of the leased Premises has been substantially completed by the Lessor and has been accepted by the Government, the Government shall have no right to terminate the Space Lease portion of this Lease under any circumstances ... notwithstanding any other term or WESTLAW C 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 u i u u [1 fl At CESC Plaza Ltd. Partnership v. U.S., 52 Fed.Cl. 91 (2002) provision of this Lease to the contrary.... AR at 7058.1. On February 2, 2001, seven months after award, LCOR advised GSA that the project costs exceeded its ability to finance the project. AR at 3104. LCOR presented GSA a list of proposed changes to the lease on March 9, 2001. The list was described by LCOR as "critical to successfully financing this project." AR at 3112. GSA entered into a new lease with LCOR on December 19, 2001, GSA Lease No. GS—IIB—LVA80671. AR at 1. One of the buildings contracted for was a parking garage, although very few parking spaces were actually included in the lease. A second lease, Lease No. USPTO 01-100A, was also executed between PTO *93 and LCOR. It involves the separate lease of 3561 parking spaces and the office space in townhouses constructed as a facade to the parking garage structure. DISCUSSION This court has jurisdiction to entertain "an action by an interested party objecting to ... any alleged violation of statute or regulation in connection with a procurement." 28 U.S.C. § 1491(b)(1) (Supp.1999). Plaintiffs allege that the government violated 41 U.S.C. § 253(a), (b) (1.994) and various Federal Acquisition Regulations by modifying the original lease between LCOR and GSA so that the parties circumvented the statutory requirement of competition. To have standing to bring a bid protest, plaintiffs must be interested parties. "Interested parties" are defined as "actual or prospective bidders or offerors whose direct economic interest would be affected by the award of the contract or by failure to award the contract." American Fedn of Gov't Employees, et al. v. United States, 258 F.3d 1294, 1302 (Fed.Cir.2001) (citing 31 U.S.C. § 3551(2) (1994)). See also Mvers Investigative and Sec. Serv., Inc. v. United States, 275 F.3d 1366, 1370-71 (Fed.Cir.2002) (stating that a contractor must "show that it would have been a qualified bidder.") Plaintiffs were finalists in the competition for the lease under the original SFO and would presumably have bid again if the lease had been resolicited. We are satisfied plaintiffs have standing. Submitted into the p We record for itfrp�(s) (lj CICA demands "full and open competition through the use of competitive procedures." 41 U.S.C. § 253(a) (1)(A). This requirement should not be avoided by using the device of a contract modification. See AT & T Commcinications v. Wiltel, Inc.. 1 F.3d 1201, 1204 (Fed.Cir.1993); CCL, Inc. v. United States, 39 Fed.Cl. 780, 791(1997). Modifying the contract so that it materially departs from the scope of the original procurement violates CICA by preventing potential bidders from participating or competing for what should be a new procurement. See AT & T, 1 F.3d at 1204; VMC Behavioral Healthcare Serv. v. United States, 50 Fed.Cl. 328 (2001); CCL, 39 Fed.Cl. at 791; Graphic Data, LLC v. United States, 37 Fed.Cl. 771, 781-82 (1997). It is to be noted, however, that CICA "does not prevent modification of a contract by requiring a new bid procedure for every change." AT & T, 1 F.3d at 1205. To determine whether a modification is within the scope of the original solicitation the court must compare the modified contract with the scope of the competition conducted to achieve the original contract. See id. Several factors may be considered. The court should look to see "whether the modification is of a nature which potential offerors would reasonably have anticipated." AT & T, 1 F.3d at 1204. Since this inquiry is viewed from the perspective of potential bidders, it is primarily an objective one. CCL, 39 Fed.Cl. at 791. Another factor is whether the modification substantially changes "the type of work, performance period, and costs as between the original contract and modified contract." CCL, 39 Fed.Cl. at 791 (citing MCI Telecoinnt. Corp., 97-2 C.P.D. ¶ 90, 1997 WL 602194, at *6 (Sept. 29, 1997)). 121 Plaintiffs complain that the amended lease between GSA and LCOR violates CICA by procuring a lease without the necessary competition or findings excusing competition. Plaintiffs do not argue that alteration of the end -product places the modifications outside the scope. PTO still will be consolidated on a campus in Northern Virginia with a twenty year lease for the premises. Instead they allege that modifications made by the amended lease increase the cash flow to LCOR and shift the risk of payment and performance to the government beyond what was permitted by the SFO. Plaintiffs argue that the changes allow LCOR to finance the construction of the buildings in a way which gives it advantages not available to other bidders. WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. .c3 CESC Plaza Ltd. Partnership v. U.S., 52 Fed.Cl. 91 (2002) Plaintiffs are not alleging a typical modification bid protest. Typically a third -party plaintiff in a bid protest involving a modification argues that a new addition to the contract is so far outside the scope of the solicitation that the government in effect granted a sole source contract. If the court agrees, it may remedy the CICA violation by carving the modification out of the contract and requiring that the work be solicited as a separate *94 contract. In the case at bar, plaintiffs are not asking that changes be removed and separately solicited. Plaintiffs are asking that we reopen the entire procurement. Plaintiffs argue that the sum of the changes materially alters the contract, not that the specific changes themselves are out of scope modifications. Plaintiffs must prove that the amount of increased cash flow and the magnitude of the shift in the risk of payment and performance, if any, created by the changes found in the amended lease, are materially outside the scope of the SFO and that these modifications were not foreseeable to the bidders. Modifications A. Cash Flow The Congressionally -approved prospectus capped annual rent at $57,286,560, and the actual annual rent per rentable square foot at $24.00, both based on fiscal year 1996 dollars, with an annual escalation of 2.9 percent compounded to the effective date of the lease. AR at 8402. Plaintiffs argue that six specific changes to the GSA/ LCOR Lease add significantly to the cash flow features which together exceed the SFO's mandated rent cap. 1. Base Rent Increase Plaintiffs complain that the amended lease increases the base rental rate between GSA and LCOR. The SFO stated that GSA would evaluate offers regarding price on "the basis of the annual price per occupiable square foot during the initial Lease term." AR at 3673. The original contract between GSA and LCOR fixed the rent at $27.89 rent per square foot. AR at 7081. The amended contract sets the rent at $28.36 rent per square foot. AR at 27. The net increase is 1.7 percent, however, which is less than the allowable 2.9 percent annual escalation. LCOR will receive annual rent of $67,693,618.40. Int. Rec. at 86. Defendant claims that the increase was necessary due to changes LCOR incorporated as mandated by the City Submitted into the p is record fpr itim(s) of Alexandria 2 and the increased costs of construction. Defendant also points out that in return for the increased rent, it receives a lowered option renewal rate. The rate for the first 10—year extension term was lowered from $35.3799 per rentable square foot to $34.3799 per rentable square foot; the rent for the first 5—year extension term remained the same at $35.3799 per rentable square foot; and the rate for the second 5—year extension was lowered from $37.6744 per rentable square foot to $35.3799 per rentable square foot. Compare AR at 7400 3 with AR at 30. The adjustment in price per rentable square foot does not exceed the rent cap nor is the increase beyond the scope of the SFO. Furthermore, the government receives consideration for the increase. 2. Square Footage Increase Plaintiffs claim that the square footage amount has been increased beyond the prospectus limit by using a different measurement technique, specifically the inclusion of the parking and office space under a separate PTO lease with LCOR. The SFO specified that GSA wanted to lease up to 2,386,940 rentable square feet, and that the space must yield 1,989,116 occupiable square feet. AR at 3668-69. The original GSA/LCOR contract was for 2,235,164 rentable square feet which yielded (subject to final measurements) 1,989,116 occupiable square feet. AR at 7081-82. The contract also included a clause that stated "[i]n no event shall the Government be obligated to use, occupy or pay for rentable square footage in excess of 2,386,940 rentable square feet." Id. The amended lease is for 2,235,164 rentable square feet with 1,989,116 square feet occupiable, with the same clause limiting the amount square footage that the government *95 would pay for. AR at 27-29. Plaintiffs claim that the square footage added by the PTOILCOR lease for the parking spaces and townhouse office space should be counted in the calculation as part of the GSA/LCOR lease that is subject to the rent cap. Although the PTO lease is separate from the GSA lease, plaintiffs contend that this is an artificial separation. The SFO called for the availability of the empty parking facility, and the reservation of only twenty-five spaces for PTO use. It also contemplated that the Lessor would lease the remaining spaces to PTO employees. Plaintiffs' concern is that, by executing a separate lease for the space, the original lease is effectively expanded beyond the limited square footage. WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 1 CESC Plaza Ltd. Partnership v. U.S., 52 Fed.Cl. 91 (2002) We disagree. The SFO creates the possibility of a separate lease with the winning bidder. The PTO is an entity separate from GSA. The court cannot force into one contract two individual acquisitions. The fact that they involve the same physical space is insufficient basis for overturning the agencies' procurement practices. 3. LCOR's Receipt of $6,000,000 Per Year for Parking Plaintiffs claim that LCOR's contract with PTO for the lease of the parking garage and office townhouses has added $6,000,000 to the cash flow of LCOR. The SFO stated that: The Lessor shall provide, within ' the rental rate, 25 parking spaces reserved for the Government. In addition, the Lessor shall provide and distribute among all offered buildings parking, to be paid for separately by the individual parking t users, in an amount sufficient to meet the needs of PTO employees and visitors and satisfying all ' local requirements. This additional parking shall include, in any event, between 3,500 and 7,000 parking spaces, depending upon the site's distance from an operating Metrorail station. AR at 3652. The SFO also states that "[i]f there is a charge for parking, the PTO's employees and visitors will pay individually for the number of such parking spaces actually used." AR at 3670. The original lease and amended lease state that there will be "reserved parking spaces for twenty-five (25) vehicles, all to be located on that certain parcel of real property." AR at 7081, 27. Regarding the townhouses, the original lease and amended lease state that "[1]essor shall have the right at its sole cost and expense to construct 3—story office townhouses along John Carlyle Street and Elizabeth Lane backing up on the parking garages (and without direct access to such parking garages) and to lease such office townhouses to third -party tenants." AR at 7082. In neither contract does the GSA pay for the parking of all employees or visitors. Instead, PTO has entered into a separate lease to rent 3.561 parking spaces and the 77,000 rentable square feet of office space in the townhouses. The Submitted into the pu is record f1 r ite (s) _ ,� K on City Clerk PTO parking/townhouse lease is for one year with 29 one- year options. The annual rent received by LCOR from PTO for parking and townhouses will be $6,558,040.08. The base rent portion of that amount is subject to a 3.5 percent annual escalation. AR at 1154, 1157. LCOR would expect to receive rental income for the use of this space, either from PTO or its employees. The guarantee of rental income is created by the PTO lease. It is therefore not a material change to the GSA/LCOR lease. 4. Real Estate Tax Plaintiffs allege that the amended lease enhanced the guarantee of payment by the government of real estate taxes. The SFO required that: As to each building holding a portion of the Leased premises, the Government shall make annual lump sum payments to cover its share of increases in real estate taxes over the arithmetic mean ("Base Year") of (i) taxes paid for the calendar year during which the Building Lease Commencement Date (as defined in Section D.7) for that building occurs or, if no full tax assessment is made during the calendar year in which the Building Lease Commencement Date occurs, taxes paid during the first calendar year of a full assessment, plus (ii) taxes paid for that building during the next succeeding calendar year. AR at 3693. The SFO thus made the rental rate inclusive of all taxes, with the exception *96 of any amount over the base year of real estate taxes. GSA was to contribute an uncertain amount, to be defined after occupancy, by calculating an averaged base tax amount, and paying the excess, if any, over that amount. Id. The original lease mirrors the SFO's language regarding taxes. The amended lease, however, states: 2.6.1 In addition to the payment of the annual Rent called for under this Lease, commencing with the first fiscal real estate tax year following the Commencement Date for which all Buildings are fully assessed for real estate tax purposes ..., the Government shall be responsible to reimburse the Lessor for one hundred WESTLAW U 2016 Thomson Reuters. No claim to original U.S. Government Works. 5 CESC Plaza Ltd. Partnership v. U.S., 52 Fed.Cl. 91 (2002) percent (100%) of all real estate taxes actually paid by Lessor with respect to the Leases Premises in excess of an agreed initial annual base amount of $5,071,214. 2.6.3 If the real estate taxes for the aggregate Base Year as determined pursuant to Section 2.6.4 below exceed $5,071,214, the Government will continue to pay the full amount of the increase over $5,071,214 in accordance with the procedure set forth above, but the amount of difference between $5,071,214 and the real estate taxes for the Base Year shall accrue each year for the remaining Lease Term together with interest at six percent (6%) per annum until either: (i) the Project Financing has been repaid in full, or (ii) the term of this Lease including any Extension Term(s) elected by the Government shall have expired, at which time the Government shall be entitled to receive a rent-free Lease Term extension in accordance with Section 5.7.11 below. AR at 41-42. Unlike the SFO and original lease, in which the base amount of taxes was to be determined following completion and occupancy of the buildings, the amended lease thus fixes the base amount for tax escalation purposes at $5,071,214. AR at 41-43. It eliminates uncertainty, but this is the tax amount that LCOR projected in its final revised proposal and which was included in the original lease. AR at 7382. To the extent that the "base" rate for taxes under the original lease would have been greater than the $5,071,214 agreed to in the amended lease, this difference will be carried forward over the term of the lease and accrue interest for the government at 9 percent per annum. AR at 42. This is not a material change. The government's obligation to pay real estate taxes above a base amount existed in the SFOR. The difference is that under the amended lease there is a certain dollar amount applied. The government somewhat protected itself by requiring that LCOR pay interest on the difference between the $5,071,214 amount and the actual aggregate Base Year and by fixing the base at a reasonable level. 5. Up Front Cash Contribution Plaintiffs claim that LCOR is receiving a new up front cash contribution from GSA in the amount of $29 million. This Submitted into theu lic (� record Nr itcm(s) p , L 5\ Z is something of an exaggeration. The SFO (as amended by "Amendment Number Twelve") describes Fit—Out allowances. It stated: a. For improvements under $5,000.000.00, the Government shall pay a lump sum. b. For improvements over $5,000,000.00, the Government may pay lump sum or may amortize the cost of the improvements through a corresponding adjustment in the rental rate.... c. Government funding for Fit—Out in excess of the Fit— Out Allowance shall be limited to $29,000,000.00. AR at 4002. The SFO stated that it would be possible for the government to make its Fit—Out allowances, in excess $5,000,000.00 in either lump sum or amortized payments and that the sum should not be more than $29,000,000. The original lease language was the same except the last paragraph stated: (c) Government funding for initial Fit—Out in excess of the Fit— Out Allowance shall be limited to Twenty—Nine Million and No/100 Dollars ($29,000,000.00) ( "Above GSA—Standard Fit—Out Sums") and shall be paid lump sum. AR at 7102. The amended lease states: *97 c. Government funding for initial Fit—Out in excess of the Fit— Out Allowance shall be limited to Twenty—Nine Million and No/100 Dollars ($29,000,000.00) ("Above GSA—Standard Fit—Out Sums") and shall be paid lump sum to the Lessor's Lender or Master Servicer at the time of the Financial Closing. Such funds shall thereafter be treated as part of the Fit—Out Allowance for all purposes of this Lease, except for Section 6.1.1 below. WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 6 i II I I A ri CESC Plaza Ltd. Partnership v. U.S., 52 Fed.Cl. 91 (2002) AR at 48. The amended lease is admittedly different in that the lump sum payment will be made at the time of Financial Closing. It in effect sets a definite time for the payment of the $29,000,000. The $29,000,000 is to be placed in escrow, however. LCOR will only be able to draw the money by presentment of actual fit -out expenses to the Trustee. AR at 48, 9725; Int. Rec. at 753, 754, 1318. In exchange for use of the interest on the $29,000,000, LCOR agreed to reduce its supervision and management fee related to construction and supervision of the fit -out work from 6.5 percent to five percent. AR at 388,7400, 9725. As with most other changes, this one leaves the contract basically unaffected. What is different is that, in exchange for some predictability in cash flow to LCOR, GSA extracted some minor concessions. The change, in itself, cannot be considered beyond the scope of the SFO or the original contract. 6. Design Changes Plaintiffs allege that the amended lease includes design changes that equal a cost savings to LCOR of $30 to $60 million. Unfortunately plaintiffs do not point to any specific design changes that they allege are beyond the scope of the SFO or original contract. To support this allegation plaintiffs point to two documents. The first is a document titled "PTO Status and Strategy" dated February 1, 2001 and written by Rick Hendrick, Project Manager. AR at 10221-22. [ ]AR at 10222. The second is a letter dated April 5, 2001 from Craig King, a government consultant. [ ]AR at 10177. [ ] Id. [ ] Id. [ ] Id. These citations do not support a finding of a fundamental change to the work. Design changes which leave the end product basically the same are uniquely matters of contract administration. The fact that changes were proposed to the buildings for the purpose of saving money is not proof that a material change in the amended lease occurred or that the design changes were outside of the SFO. Moreover, the government's internal assessment about potential changes, particularly during what amounted to negotiations, is not conclusive. B. Shift of Risk of Performance and/or Payment Independently, none of the items above constitute fundamental alterations to what was originally solicited. Submitted into the pu is record Jo! iten(s) Plaintiffs argue, however, that these six changes, along with others discussed below, when considered as a whole, gave LCOR a critical advantage in terms of the cost of its financing. This was done, allegedly, by shifting the payment risk to the government. The government and LCOR respond that any change made by the amended lease was in exchange for an amount of consideration that mitigates any potential shift of the risk of performance and/or payment. 1. Fixed Rent Start Date Plaintiffs claim that the amended lease's fixed rent start date was initially prohibited. The SFO, after the addition of Amendment Twelve, states: [T]he Government shall have no obligation to occupy and/or commence paying rent on any portion of the Leased premises prior to October 1, 2001 ... The Government shall commence paying rent for a Stage within Block 1 upon the Government's acceptance of each such Stage; ... no such rent for any Stage within Block 1 shall be payable ... if within twenty weeks after the Government's acceptance of the first Stage in Block 1, all remaining portions of Block 1 have not been delivered to and accepted by the Government ... AR at 4008, see also AR at 4000. The original lease states: *98 5.7.9. Building Lease Commencement/Lease Commencement. The "Building Lease Commencement Date" for a particular Building shall mean the composite weighted average of the dates of space acceptances made by the Government in a particular Building, as indicated in the Government's written acceptance of each Stage. The Contracting Officer shall compute, subject to the reasonable approval of Lessor, the composite weighted average by taking into account the date of space WESTLAW U 2016 Thomson Reuters. No claim to original U.S. Government Works. 7 CESC Plaza Ltd. Partnership v. U.S., 52 Fed.Cl. 91 (2002) acceptance by the Government and - the percentage of space delivered in a given Stage or group of Stages in a particular Building relative to the total space to be leased by the Government in such Building. However, if a Government delay occurs in a given Stage, then the acceptance date used to compute the composite weighted average shall be the same number of calendar days earlier than the actual acceptance date as the number of calendar days of Government Delay. Additionally, if Lessor Delay occurs in a given Stage, then the date used to compute the composite weighted average will be the actual acceptance date and the Government shall have the right to seek those damages described in Section 5.7.11. AR at 7129. These clauses provide for a phased acceptance of space and for payment of rent to commence on a phased basis. After the government's acceptance of the final block of space, the Lease Commencement Date was to be established as the weighted average delivery date for all blocks of space. AR at 4008, 7129. The amended lease, on the other hand, states: 5.7.9. Commencement. The term of this Lease and the payment of the Rent reserved hereunder for the entire Leased Premises shall commence 978 days after the Financial Closing (the "Commencement Date"). The Commencement Date shall be confirmed by a Supplemental Lease Agreement to be executed by the Lessor and the Government concurrent with the Financial Closing and shall not be subject to any condition subsequent, including, but not limited to the completion or availability of all or any portion of the Leased Premises for Government use and occupancy. Submitted into t) pu ic�Z record fps it"(s , AR at 75. The date for rent commencement is August 24, 2004. This start date is based on the delivery schedule contained in the original lease, however, and reflects LCOR's current contract with its general contractor, Turner Construction Company. AR at 8225; Int. Rec. at 2747. There are also benefits that the government receives in the amended lease. Approximately 729,500 square feet will be delivered prior to the rent start date for use by the PTO before paying rent. AR at 9721-9723. Also, in the event that delivery of the project is delayed, the amended lease offers GSA a new remedy. " Mhe Contracting Officer may elect in his discretion to withhold an amount from the Service Agreement Rent equal to the government's cost (including all administrative overhead), as estimated by the Contracting Officer or his designee, to correct or complete the Leased Premises so as to bring them into complete compliance with Lease requirements." AR at 184. LCOR has pledged a portion of its development fee to GSA, worth the equivalent of forty-five days of base rent in the event that delivery of the project is delayed. AR at 56, 76, 9721; Int. Rec. at 323, 754. These exchanges may not constitute a perfect quid pro quo. The amended lease, for example, only says that at the Contracting Officer's discretion, he may withhold payment to LCOR, and it does not state what amount may be withheld. But the government received other concessions. For example, GSA received an assignment of LCOR's right to collect liquidated damages against Turner Construction Company. AR at 76. See also Int. Rec. at 2565-66 (contract between Turner and LCOR [ ] ). The government will also receive four free days of rent following the retirement of the project financing for every one day of rent it had to pay without occupancy. AR at 76. In sum, while the fixed rent start date is new, the other changes negotiated by the government mitigate any shift in the burden of performance and payment. 2. Unconditional Obligation to Pay Rent The next allegation is that the amended lease makes the government's obligation to *99 pay rent unconditional for the first time and that there are no termination or withholding rights for late delivery. The original lease stated: Except in the event of a fire or other casualty as specifically provided by the terms of this Lease, the WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 8 CESC Plaza Ltd. Partnership v. U.S., 52 Fed.Cl. 91 (2002) Government may neither terminate the Space Lease portion of this Lease nor set off, reduce or terminate the Base Rent once the Contracting Officer has accepted the Leased Premises, or any portion thereof, in writing. AR at 7102. In the amended lease, the relevant clause states that: Except in the event of a fire or other casualty as specifically provided by the terms of this Lease, once the Financial Closing has occurred, the Government may neither terminate the Space Lease portion of this Lease nor set off, abate, suspend, reduce or terminate the Base Rent or any portion thereof for any reason, including without limitation, an breach by Lessor of its obligation under this Lease. AR at 48-49. The net change is that the dater the non- interruptibility of Base Rent becomes binding was moved from the point at which the Contracting Officer accepted the leased premises to the date of financial closing. This does not mean that rent would begin to be paid at financial closing or at acceptance of the premises, but that these actions would trigger the non-interruptibility of Base Rent. This change is not material not does it shift a burden to the government that did not previously exist. 3. Minimum Renewal Rent Rate and Option to Purchase Plaintiffs claim that the amended lease impermissibly changes the minimum renewal rent rate and guarantees a minimum option purchase price. With respect to the rental rate extensions, the SFO stated that bidders should include a figure for fixed rental rates for one 10 -year and two 5 -year options. AR at 3676. The government, when exercising the option would pay either the fixed rental rate or a percentage of the fair market rental rate at the time. Id The original lease set the fixed rental rate $35.3799 for 10 -year extension or 95% of Fair Annual Rent; $35.3799 for the first 5 -year extension or 95% of Fair Annual Rent; and $37.6744 for the second 5 -year extension or 90% of Fair Annual Rent. AR at 7083, 7400.4 Submitted into the p lic n(� record for it on / City Clerk The amended lease states that: [T]he applicable Extension Term will be, (i) for the Extension Options applicable to years 21-30 of the Lease Term, the fixed rental rate ("Fixed Rental Rate") set forth below on a per rentable square foot basis or (ii) for the Extension Options applicable to years 31- 40 of the Lease Term, ninety- five percent (951/o) of the then - current market rental rate ("Fair Annual Rent") at the beginning of such term, as such Fair Annual Rent is determined in accordance with appraisal procedure described below. AR at 30. The amended lease sets out the fixed rental rate as follows: $34.3799 for the 10 -year extension term; $35.3799 for the first 5 -year extension term; and $35.3799 for the second 5 -year extension term. Id. The amended lease provides that at GSA's option, it can "extend the Initial Term for up to two (2) additional periods of ten (10) years each..., or three (3) additional periods of five (5) years each." AR at 29. This change gives the government the option to extend the lease for up to forty years, as opposed to the SFO's option for 30 years. The purchase option after twenty and thirty years at a fixed purchase price or 100% of fair market value existed in the SFO. AR at 3680. The original lease also set the purchase option as either a fixed purchase price ($821,330,253 after twenty years or $985,596,304 after thirty years) or 100% of fair market value. AR at 7088. The amended lease also states that the purchase option is available at either the fixed purchase price ($830,330,253 after twenty years or $975,546,304 after thirty years) or 100% of fair market value. AR at 34. But, the amended lease adds that "in no event shall such purchase price be less that $489,323,000." Id. This .is a little over one-half the actual anticipated full value at that time. In consideration for the added minimum purchase price, moreover, LCOR *100 agreed to reduce its fixed purchase option prices by $20 million for the 20 -year purchase option and $50 million for the 30 -year purchase option. 5 See AR at 9543. Not only are these changes within scope, but the government's assessment that they I 41FtwSTIAW 0 2016 Thomson Reuters. No claim to original U.S. Government Works. 9 CESC Plaza Ltd. Partnership v. U.S., 52 Fed.Cl. 91 (2002) do not fundamentally shift the parties'respective financial positions is reasonable. 4. Real Estate Tax Plaintiffs allege that the amended lease impermissibly guarantees payment by the government of real estate taxes. Plaintiffs make the same argument regarding the alleged change in cash flow, supra. We are not persuaded that the change with respect to real estate taxes places the change outside the scope of the solicitation, when considered in light of what appears to be a fair exchange which GSA received. 5. Parking Garage and Townhouse Lease Plaintiffs allege that LCOR is receiving additional rent from the parking garage which impermissibly shifts further the risk of payment away from the contractor. We have explained above, however, why this separate lease should not be considered when assessing changes to the SFO. Analysis We find that these changes, individually or collectively, are not outside the scope of the SFO. The SFO's scope of competition was broad and it is reasonable that changes between the final lease and SFO would develop. AT & T, 1 F.3d at 1205 ("Thus a broad original competition may validate a broader range of later modifications without further bid procedures."). Although the amended lease contains some provisions not contemplated by the SFO, these modifications do not improperly change the cash flow in any significant amount, nor do they impermissibly shift the payment/performance obligations. The most that plaintiffs can argue is that the financing terms have been altered in a way that eliminates some uncertainty of payment, thereby allowing LCOR to obtain cheaper financing. These changes, even viewed as a whole, would have only affected those bidders whose proposals were inhibited by debt constraints. G But in this respect there is not a radical departure from the SFO. It did not require any particular type of financing and even asked for a description of any non-traditional sources, including securitized bond financing. AR at 3703. Amendment Twelve also included a "Further Assurances" clause which states that: Submitted into the ptc record fpr it,rr,(s) _ ,,_ �._ _ , The Government shall cooperate with the Lessor and the Lessor's Lender to make such additional changes to this Lease as may be required to facilitate the project financing to the extent such requested changes do not alter the Lessor's obligations, do not increase the costs to the Government and are otherwise consistent with the purpose and intent of this Lease as reasonably determined by the Government. *101 AR at 4050. Given the these provisions, the potential for changes to accommodate securitized bond financing cannot be characterized as surprising from the perspective of other bidders. Plaintiffs point to the fact that some of the modifications ultimately included in the amended lease were the subject of question and answer during the bidding period. These included the right to offset rent in case of Lessor default, separating parking from the base lease, providing guaranteed lease start date, waiving lease termination rights, and restricting or eliminating the government's right to offset rent in the case of a default. AR at 3905, 3929. The mere fact of a denial of a change, by itself does not mean that they were unforeseeable. See AT & T, 1 F.3d at 1206. Yet plaintiffs' concern is relevant -the fact that a change is specifically rejected establishes that it was not within the four corners of the solicitation. But it also has the ironic effect of making it difficult to establish a disconnect between the scope of what was contemplated and the scope of the contract as amended. In other words, the change was sufficiently close in association to prompt an inquiry. In order to grant injunctive relief plaintiffs must establish: "(1) actual success on the merits; (2) that it will suffer irreparable injury if injunctive relief were not granted; (3) that, if the injunction were not granted, the harm to plaintiff outweighs the harm to the government and third parties; and (4) that granting the injunction serves the public interests." Interstate Rock Products, Inc. v. United States, 50 Fed.Cl. 349, 354 (2001). Injunctive relief is inappropriate here because the plaintiffs did not prove the merits of their claim. Moreover, even assuming plaintiffs establish a violation of law, there is no question that the fourth element is not satisfied. The overwhelming public interest here is in avoiding further delay in this project. The PTO consolidation has been on the drawing board for over seven years. Resolicitation would send this entire project back to the drawing board. wESTLAW @2016 Thomson Reuters. No claim to original U.S. Government Works. 10 Submitted into the puc I S Q s) _ � P� CESC Plaza Ltd. Partnership v. U.S., 52 Fed.Cl. 91 (2002) ` ] record ft r ite l r) V rih, Clerk CONCLUSION Plaintiffs' consolidated motion for injunctive and declaratory relief is denied and defendant's motion for judgment on the administrative record is granted. Defendant's motion to supplement the administrative record is granted: Clerk is ordered to enter judgment accordingly. All Citations 52 Fed.Cl. 91 Footnotes In accordance with the protective order in this case, publication was deferred pending the parties' review for redaction of controlled materials. Those redactions are indicated by brackets. 2 LCOR was required to submerge a pedestrian walkway that was originally planned for the surface and build a townhouse facade on a parking garage. 3 The June 1, 2000 lease contained errors in Section 2.3.2. AR at 7083. Section 2.3.2 conflicts with the Rent Schedule which states LCOR's offered rates in annual terms (as required by the SFO). AR at 3979. Therefore, per rentable square foot rates are derived from a calculation: 10 -year extension term is $79,079,879 annually/2,235,164 rentable square feet ("RSF")=$35.3799; first 5 -year extension option is $79,079,879 annually/RSF=$35.3799; and the second 5 -year extension option is $84,208,463 annually/RSF=$37.6744. 4 See supra in. 2. 5 The City of Alexandria required LCOR to add a townhouse facade to a parking garage and the GSA agreed to increase the purchase option prices to $855,330,253 and $1,025,546,304. AR at 9727. In consideration for agreeing to the minimum purchase option price, LCOR agreed to reduce its fixed purchase option prices by $20 million for the 20 -year purchase option and $50 million for the 30 -year purchase option. AR at 34. 6 Plaintiffs rely on Old Stone Leasing v. United States, GSBCA No. 10613-P, Jul. 2, 1990, 90-3 BCA 123084, 1990 WL 92744, as an example of changes to financing that were viewed as modifications outside the scope of a solicitation. In Old Stone Leasing, the protester alleged that the agency's modification of the contract was prohibited by the terms of the solicitation. The underlying contract involved the " 'sale/leaseback' and 'refinancing' of existing agency leases of personal property." Id. The protestor claimed that two modifications "redefined the scope of work and altered the basic pricing structure of the contract" and "expanded the applicability of the contract to leases entered into by the agency after contract award." Id. The board found that the shift in the payment provision and amount of capital altered the risk of the contractor so that the contract was impermissibly modified. Id. The facts are readily extinguishable, however. In Old Stone Leasing, the type work to be performed was a financial package. In the present case, the type work to be performed is a lease for a building to house PTO. The financing behind the construction of the building is not what the government procured. Although the financing was of interest to GSA, it was not the purpose of the solicitation. The solicitation did not require a specific type of financing. End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 WE5TLAW Ccs 2016 Thomson Reuters. No claim to original U.S. Government Works, M 11 II 11 Submitted into the purecord f r ite lic (s) 5� p City of Lakeland, Fla. v. Union Oil Co. of Cal., 352 F.Supp. 758 (1973)-)I/ ? ' 1 1, ' t' on -) /Pi 111, r -:f., 352 F.Supp• 758 United States District Court, M. D. Florida, Tampa Division. CITY OF LAKELAND, FLORIDA, a municipal corporation, Plaintiff, V. UNION OIL COMPANY OF CALIFORNIA, a corporation authorized to do business in the State of Florida, Defendant. Civ. No. 71-539• 1 Jan. 1o, 1973• City brought action against oil supplier for breach of contract to supply oil for city's electric generating facilities. The District Court, Hodges, J., held that although both natural gas and Bunker "C" oil were susceptible to interchangeable use in city's generating facilities, they were not the same commodities; thus, fact that city was free to purchase natural gas in place of oil did not render city's obligation to purchase all its oil from supplier illusory and did not render contract unenforceable. Order accordingly. West Headnotes (12) [I] Public Contracts v� Unauthorized or Illegal Contracts States 4-- Unauthorized or illegal contracts In Florida, a contract is absolutely void if made by public officers in derogation of a statutory duty to solicit competitive bids. Laws Fla. 1959, c. 59-1481, § 31. Cases that cite this headnote [2[ Municipal Corporations ,, Constitutional and statutory provisions Public Contracts Constitutional and statutory provisions Legislation requiring city to solicit competitive bids before executing a contract to purchase goods should be liberally construed to foster its purpose of preventing favoritism or extravagance and protecting the public from collusive contracts and to avoid any likelihood of circumvention, even in absence of fraud or bad motive. Laws Fla. 1959, c. 59-1481, § 31. Cases that cite this headnote [3) Municipal Corporations ~- Award to lowest bidder Public Contracts Evaluation process Private negotiations conducted between city and oil supplier after public bidding procedure for contract to supply city with oil had been concluded and after supplier had been determined to be low bidder did not violate competitive bidding provisions of city charter where proper bidding procedures had been followed, subsequent negotiations resulted in lower price than that contained in supplier's low bid, postbid negotiations did not involve any departure from original specifications and there was no suggestion of fraud or favoritism. Laws Fla. 1959, c. 59-1481, § 31. 1 Cases that cite this headnote 141 Municipal Corporations vv— Effect of partial invalidity and presumptions in favor of validity Public Contracts Q-- Effect of partial invalidity Though lack of fraud or favoritism will not save contract executed by city in clear violation of competitive bidding requirements, their absence at least creates a presumption of validity where contract has already been awarded and partially performed, there was bona fide effort to comply with statutory bidding requirements, it is not shown that agreement is to public disadvantage and challenge is made by other party to the agreement as opposed to a IWESTLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 Submitted into the pubt,tc j ► � � SP. (, City of Lakeland, Fla. v. Union Oil Co of Cal., 352 F Supp record fpr it�(s) 5 758 (1973) on �► l h City Clerk taxpayer or another bidder who claims denial of fair competition. Laws Fla. 1959, c. 59- 1481, § 31. Cases that cite this headnote 151 Municipal Corporations Proposals or Bids Public Contracts Power to let contract without submission to competition or to dispense with requirements Rebidding prior to extension of contract executed by city and low bidder was not required where city's election to extend original contract did not create new and successive contracts but merely operated to extend duration of original agreement for specified periods under same terms and conditions, all of which, including the option to extend, had been subject of initial bidding procedure. Laws Fla. 1959, c. 59-1481, § 31. 3 Cases that cite this headnote 161 Municipal Corporations Validity and Sufficiency Public Contracts Validity and Sufficiency of Contract Natural gas and Bunker "C" oil were not the same commodity though they were susceptible of interchangeable use in city's electric generating facilities; thus, fact that city which contracted with oil supplier for oil required for city's generating facilities was free to purchase natural gas for use in its generating facilities in place of oil did not render contract with supplier to furnish all oil required for the facilities invalid on theory that city's promise to purchase oil was illusory. Cases that cite this headnote [71 Municipal Corporations - Construction and operation Public Contracts 4�- Goods sold or furnished Contract whereby supplier agreed to sell and city agreed to purchase from supplier oil used in city's generating facilities, which contract was born out of competitive bidding procedures and specified a definite term, bound city to purchase all oil needed for use in the generating facilities from supplier during life of contract and, therefore, contract was supported by sufficient consideration and was enforceable even though contract lacked specific or ascertainable standards by which to measure or reliably estimate the quantity of oil that might be ordered by the city. 28 U.S.C.A. ti§ 1332, 1441(a), 1446. Cases that cite this headnote [81 Municipal Corporations Performance or breach Public Contracts Sufficiency of performance in general City's purchase of more oil than natural gas for use in its generating facilities was not beyond contemplation or specifications of contract which provided for city's purchase of all its oil needs from supplier and for use of oil rather than natural gas as primary fuel in event supply of natural gas was curtailed or interrupted or price of oil became lower than price of natural gas and which additionally provided that city would have option to increase requirements for oil at any time and by any amount throughout life of contract in order to meet 100% of fuel requirements of city's power plants even though natural gas was the primary fuel used at time of execution of the contract. Cases that cite this headnote 191 Municipal Corporations Performance or breach Municipal Corporations Rights and remedies of municipality Public Contracts Sufficiency of performance in general Public Contracts a;-- Damages and amount of recovery WESTLAW C�? 2016 Thomson Reuters. No claim to original U.S. Government• Works. 2 1 City of Lakeland, Fla. v. Union Oil Co. of Cal., 352 F.Supp. 758 (1973) City could not take undue advantage of its favorable contract with oil supplier for purchase of all oil used in city's electric generating facilities by increasing its wholesale exchange of energy with neighboring system pursuant to interchange agreement; increases in amount of energy produced by city and sold to neighboring system was beyond contemplation of parties and scope of contract and such increases would be taken into account as a limiting factor in determining damages to be awarded city for supplier's breach of contract to supply oil. F.S.A. § 672.306(1). Cases that cite this headnote 1101 Stipulations Use and enforcement in general Pretrial stipulations are binding compacts and should be strictly enforced. 1 Cases that cite this headnote 1111 Stipulations Setting aside or relief from stipulation Party seeking relief from pretrial stipulation must sustain heavy burden by demonstrating manifest injustice with clear and convincing force. 4 Cases that cite this headnote [121 Stipulations Setting aside or relief from stipulation In city's action against oil supplier for breach of oil supply contract executed as of July 16, 1968, supplier was not entitled to be relieved from pretrial stipulation that city should have right to extend sales agreement until July 15, 1974 if contract shall be held valid, which stipulation referred to portion of contract specifications providing that agreement could be renewed yearly not to exceed five years, on theory that option provision should have been construed, as matter of law, to include initial one-year term of contract and did not contemplate five years thereafter, as the Submitted into the p1C, record f r ite () on City Clerk stipulation was in accord with applicable law. 28 U.S.C.A. k§ 1332, 1441(a), 1446. 1 Cases that cite this headnote Attorneys and Law Firms *760 J. Hardin Peterson, Jr., of Peterson, Carr & Harris, P. A., Lakeland, Fla., for plaintiff. John R. Lawson, Jr., of Holland & Knight, Tampa, Fla., for defendant. MEMORANDUM OPINION HODGES, District Judge. The City of Lakeland is a municipal corporation existing under the laws of the State of Florida. For many years, acting in a proprietary capacity, the City has owned and operated an electrical generation system for the distribution of electrical energy to its inhabitants and others in the surrounding geographic territory. In 1968 the City had two generating facilities -the Larsen Memorial Power Plant, which was operating, and the Lake Mirror Plant, which was being held in reserve on a "cold standby" basis. The Larsen Plant included four steam turbine generators, the furnaces of which could be fired by burning as fuel either natural gas or Bunker "C" oil, or a mixture of both at the same time. Pursuant to a contract with the Florida Gas Transmission Company negotiated in 1960 for a ten year term, the City was using natural gas as the base or primary fuel at the Larsen Plant. Under that agreement the City was obliged to purchase certain minimum quantities of gas, but it also had the right to terminate the agreement in the event Bunker "C" oil became available at a more favorable price and the gas company refused to meet that price. As a practical matter, since either fuel could be used interchangeably or even simultaneously, the principal distinction between natural gas and Bunker "C" oil, other than price, was and continues to be the difference in the methods of delivery. Bunker "C" oil is transported by common carrier and stored in on-site tanks, whereas natural gas is received on a continuous feed basis from the mains of the gas transmission company without on- WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 0 Submitted into the pu is n record f r ite (s) SV, 1 � SP, City of Lakeland, Fla. v. Union Oil Co.. of Cal., 352 F.Supp. 758 (1973) City C'1Prk site storage facilities. As a result, the supply of gas may be curtailed or suddenly interrupted due to difficulties in the transmission lines or increases in consumption by priority consumers, particularly during cold weather. On May 24, 1968, the City prepared written specifications and solicited bids with respect to a contract for the purchase of Bunker "C" oil as a stand-by or alternate fuel. The Defendant, Union Oil Company of California, submitted the lowest of several bids. It offered a price of $2.31 per barrel. The parties then engaged in negotiations, however, resulting in a proposal by Union Oil to make Whereas natural gas is, at the present the base fuel at the Larsen Memorial Power Plant and whereas the Lake Mirror Plant is on a cold standby status, the use of No. 6 oil is presently regarded as a standby or alternate fuel to be used only when natural gas is unavailable and or Lake Mirror Plant is operated. It is estimated that after the initial fill of the 55,000 barrel tank the oil requirements under this contract for the next twelve (12) months will be a minimum of fifty thousand (50,000) barrels. deliveries at a maximum price of $2.28 per barrel.' This It shall be the Buyer's option to increase the above proposal was accepted by the City and a written contract was executed as of July 16, 1968. The bid specifications as earlier prepared by the City were incorporated into the agreement and comprised the essential terms of the contract which are now the focal point of this litigation. Those terms, in pertinent part, were as follows: 1 -General This specification covers the furnishing and delivery of Bunker "C" (No. 6) Fuel Oil to the Municipal Power Plants of the City of Lakeland, Florida. 2 -Period of Contract The period of contract shall be twelve (12) months and at the option of the City of Lakeland may be renewed yearly not to exceed five years. The City may use No. 6 Fuel Oil in any amount up to 100% of its fuel requirements if the Natural Gas supply is curtailed or interrupted by the Florida Gas Transmission Company. Should the equivalent price of No. 6 *761 oil as compared to the price of gas become lower than the price of natural gas the quantity of oil the City may elect to purchase may be approximately 18,000 bbls. per week increasing yearly as electric energy production increases. 3 -Quantity Approximately fifty-five thousand (55,000) barrels will be required for the initial fill of a new storage tank and some additional oil from time to time over the twelve month period. requirements at any time and by any amount throughout the life of the contract in order to meet the 100% of the fuel requirements of the City's power plants. During the year next succeeding the execution of this agreement, July 16, 1968, through July 15, 1969, the City ordered and Union Oil delivered approximately 234,000 barrels of Bunker "C" oil. During the same period the City also consumed natural gas in a volume equal to approximately 892,902 barrels of oil. 2 In terms of total fuel purchases, therefore, approximately 20% was oil and 80% was gas. In the meantime, on May 27, 1969, the City notified Union Oil of its election to exercise the renewal option contained in the contract specifications so as to extend the agreement for an additional year from July 16, 1969, to July 16, 1970. This extension was acknowledged by Union Oil on June 4, 1969; and during the second year of the contract (July 16, 1969 through July 15, 1970) the City purchased and Union Oil delivered approximately 458,526 barrels of oil. The quantity of natural gas consumed during the same per was equivalent to 696,848 barrels of oil -a ratio of approximately 60% gas to 40% oil. The City's purchase of oil thus increased substantially during the second year of the agreement, not only in terms of total barrels but also in proportion to the volume of gas consumed during the same period. By letter dated June 2, 1970, the City again elected to extend the agreement for an additional year (July 16, 1970 through July 15, 1971), and Union Oil responded on June 5, 1970, acknowledging that extension. 3 WESTLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 9 City of Lakeland, Fla. v. Union Oil Co. of Cal., 352 F.Supp. 758 (1973) Thereafter, during the third contract year (July 16, 1970 through July 15, 1971), the City purchased approximately 736,348 barrels of oil and consumed natural gas equal to 582,063 barrels of oil; a ratio of approximately 56% oil to 44% gas. *762 Once again, therefore, it is obvious that the City substantially increased its consumption of oil in relation to the previous year, not only in terms of total volume, but in proportion to the consumption of natural gas as well. Indeed, oil had become the primary fuel, and the evidence suggests three reasons for these developments. First, the City had commenced operating the new Plant No. 3, thereby increasing its generating and fuel consumption capacity. Secondly, the City had entered into a new interchange agreement with Tampa Electric Company (neighboring electrical utility) pursuant to which it sold more net electrical energy to that Company during 1970-1971 than it had in previous years.4 These factors, coupled with the City's normal rate of growth, fully explain the increase in total fuel consumption (gas and oil combined). The emergence of oil as the City's principal fuel during the same period was apparently caused by a third, contemporaneous event. On May 1, 1970, the City entered into a new agreement with the Florida Gas Transmission Company concerning the purchase of natural gas. Under that agreement the base price of gas was fixed at .033 cents per therm plus an escalation factor of .01587 cents per therm for each one cent per barrel by which the monthly average market price of oil exceeded $2.34 per barrel.' The net effect of this pricing scheme made it economically advantageous for the City to purchase oil from Union at $2.28 per barrel whenever the market price of oil reached $2.48 per barrel. 6 And, it is apparent from the record that the market price of oil began increasing and reached that level in August or September, 1970, after which the City increased its purchases of oil in relation to its purchases of gas. On June 7, 1971, in keeping with the same procedure followed in the past, the City notified Union by letter of its election to extend the contract for an additional year from July 16, 1971 to July 15, 1972. On this occasion Union replied, on July 8, 1971, that it would "... no longer be able to sell fuel oil to the City of Lakeland, Florida, after July 16, 1971, at a price of $2.28 per barrel or any other price Submitted into thefg:_u record fqr itej�?ss)E S�, (, on r) 1 Z� / I I_ . City Clerk other than a different price negotiated between the parties. We cannot accept your letter of June 7, 1971, as creating or extending any contractual relationship." At all times subsequent to July 15, 1971, therefore, the City has purchased oil on the market (including some purchases from Union itself) at prices consistently exceeding $3.00 per barrel. It *763 then instituted this action in October 1971, alleging a breach of contract by Union for which the City seeks injunctive relief and a judgment for damages. 7 I It is first contended by Union that the contract offends public policy and is void by reason of non-compliance with the simple and direct provision of the City's charter that "opportunity for competition shall be given" with respect to all purchases in an amount exceeding $500.00. Section 31, Chapter 59-1481, Laws of Florida. Union claims that this requirement was violated at the inception of the contract when the parties entered into private negotiations after the public bidding procedure had been concluded; and was subsequently violated again each time the City elected to extend the agreement for another year without re -bidding. ill 121 It is axiomatic in Florida that a contract is absolutely void if made by public officers in derogation of a statutory duty to solicit competitive bids. The object of such legislation is to prevent favoritism or extravagance and to protect the public from collusive contracts. As a consequence, the statute should always be liberally construed to foster that purpose and avoid any likelihood of circumvention even in the absence of fraud or bad motive. E. G., Robert G. Lassiter & Co. v. Taylor, 99 Fla. 819, 128 So. 14 (1930); Wester v. Belote, 103 Fla. 976, 138 So. 721 (1931); City of Miami Beach v. Klinger, 179 So. 2d 864 (F1a.App.3d Dist. 1965). 131 141 In this instance, however, those salutary principles are clearly inapplicable. Indeed, it might even be said that the same principles and purposes, from the public's point of view, require that the contract be applauded and validated, not condemned, because it is plain by any measurement that the City got the best of the bargain. It is equally clear that proper procedures were followed. Detailed specifications were prepared and bids were solicited and received without irregularity of any kind. Union Oil was the low bidder, and in the WESTLAW @ 2016 Thomson Reuters. No claim to original U.S. Government Works. 5 Submitted into the pu 1c r p City of Lakeland, Fla. v. Union Oil Co. of Cal., 352 F.Supp. 758 (1973) record �f�r itei1l�(s) process of awarding the contract the City was successful in negotiating a price even better than that contained in the bid. The post bid negotiations did not involve any departure from the original specifications, as occurred in both Robert G. Lassiter & Co. v. Taylor, and City of Miami Beach v. Klinger, supra; and neither is this a case in which the City undertook to negotiate with a high bidder to the exclusion and prejudice of a lower bidder, as occurred in Louchheim v. City of Philadelphia, 218 Pa. 100, 66 A. 1121 (1907), the principal decision upon which Union relies. The record is also devoid of any suggestion of fraud or favoritism, and while the lack of such elements will not save a contract made in clear violation of competitive bidding requirements, their absence at least creates a presumption of validity when (1) the contract has already been awarded and partially performed; (2) there was a bona fide effort to comply with the statutory bidding requirements; (3) it is not shown that the agreement is to public disadvantage; and (4) the challenge is made by the other party to the agreement as opposed to a taxpayer or, perhaps, another bidder who claims a denial of fair competition. See Wester v. Belote, supra, and Dillingham v. Mayor of City of Spartanburg, 75 S.C. 549, 56 S.E. 381 (1907). [5] Union's related contention that the contract, if initially valid, could not be extended absent re -bidding is equally unfounded. The City's election to extend did not create new and successive contracts. Rather, such elections merely operated to extend the duration of the agreement for specified periods under *764 the same terms and conditions, all of which, including the option itself, had been the subject of the initial bidding procedure. Savage v. State, 75 Wash.2d 618,453 P.2d 613 (1969); 64Am.Jur.2d, Public Works and Contracts, § 49 (1972). The option to extend, therefore, is in no different posture than the contract as a whole, and for the reasons already expressed, is not subject to challenge. The City fully complied with its duty to afford "opportunity for competition" under the terms of its charter. II With greater vitality and more substance, Union also urges a variety of contentions which assail the contract as invalid upon the ground that the City's promise was illusory and that the agreement was not an enforceable "needs" or "requirements" contract. These arguments are, first, that natural gas and Bunker "C" oil are the same general commodity -fuel -and the City has actually committed to nothing more than a hollow promise to purchase fuel from Union whenever it desires, while being equally free to purchase fuel from the natural gas company. Secondly, and by the same token, it is urged that the contract lacks the required degree of specificity since the City is not bound to purchase all or any ascertainable portion of its total fuel requirements from Union. An instructive and leading authority concerning such agreements in Florida is Jenkins v. City Ice & Fuel Co., 118 Fla. 795, 160 So. 215, 218 (1935): "Upon a research of the authorities we find that the adjudicated cases deal with contracts that naturally fall into the following classifications with reference to the proposition of mutuality of engagement as an element of the enforceability of agreements like that now under consideration: "(1) Agreements by the buyer to buy and the seller to sell such quantity, if any, as the buyer may want, i. e., capriciously desire; the buyer being at liberty to buy elsewhere articles of the kind in question. "(2) Agreements by the buyer to buy and the seller to sell all that the buyer may need or require in his established business. "(3) Agreements of the buyer to buy and the seller to sell all that the buyer may want during the terms of the contract, i. e., capriciously desire; the buyer agreeing not to buy elsewhere during a given time any of the articles covered by the contract." In the aggregate, Union's several arguments are clearly designed to compel the conclusion that its agreement with the City falls into the first classification or category of such contracts as described by the court in Jenkins; and if the agreement is so classified, Union must prevail since the Jenkins decision, and other authorities generally, would vitiate the contract as illusory or lacking in consideration and mutuality. There can be no doubt, under the literal terms of the contract, and in the language of the Jenkins opinion, that the City is free to purchase as much or as little Bunker WESTLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. ~ �6 ICity of Lakeland, Fla. v. Union Oil Co. of Cal., 352 F.Supp. 758 (1973) "C" oil as it may want from Union, i. e., "capriciously desire." Hence, the prime question is whether the City is also at liberty to purchase the same article or commodity from other suppliers as well. Union insists that it is, arguing that gas and oil are "apples and apples," that both are fuels subject to interchangeable or even simultaneous use. As a result, since the agreement also permits the City to purchase natural gas in any amount it desires, Union would conclude that the contract contains no promise at all sufficient to supply a valid consideration. Several decisions are cited in support of this position and are said to involve analogous facts, but all are clearly distinguishable. In C. A. Andrews Coal Co. v. Board of Directors of Public Schools, 151 La. 695, 92 So. 303 (1922), for example, the school authorities had traditionally used both anthracite and bituminous coal as fuel for heating their buildings. C. A. *765 Andrews Coal Co. contracted to deliver at a fixed price all of the bituminous coal that might be required during the next fiscal year, estimated to be approximately 1,000 tons. :During the year the School Board abandoned. the use of anthracite and began burning bituminous coal exclusively, with the result that it ordered more than twice the amount of bituminous coal originally estimated in its contract with C. A. Andrews Coal Co. The court held the contract to. be valid, but also determined that the coal company was not obliged to sell any bituminous coal at the contract price beyond the tonnage that would have been required if the school board had not. converted to the exclusive use of that product. It is readily apparent, therefore, that this decision is of little aid to Union, first because the agreement was held to be valid, not invalid, and secondly because the agreement between the City and Union in this instance expressly contemplated the possibility of a conversion from gas to oil as the primary fuel. 8 [6] Furthermore, while it is quite true that both natural gas and Bunker "C" oil are fuels susceptible of interchangeable use, it does not follow that they are "apples and apples" as contended by Union. Their physical properties are entirely distinct so that the means of delivery and storage are likewise different, a factor of utmost importance in this case. This and other considerations also produce critical differences in availability and price. Natural gas and Bunker "C" oil are not the same commodity. [7] The fact that the City was free to purchase natural gas elsewhere did not render meaningless its agreement to purchase oil from Union. Rather, the question becomes Submitted into the pc SP Z record r it s) , J on City Clerk whether or not the City was bound to purchase its oil from Union alone, and a fair reading of the entire agreement requires the conclusion that the City was so committed at least to that extent. While the contract does not in specific terms preclude purchases of oil from other suppliers, that was its clear intent and legal effect. As already noted, the agreement was born out of competitive bidding procedures, specified a definite term, and began with the phrase that "Seller agrees to sell and Buyer agrees to purchase from Seller, upon the terms and conditions herein expressed ..." (emphasis supplied). If the City elected to purchase any oil at all, it was plainly bound to make such purchases only from Union during the life of the contract. Thus, reverting to the three categories or classifications of such agreements as described in Jenkins, supra, the contract in this case is plainly within category three; that is, an agreement of the buyer to buy and the seller to sell all that the buyer may want during the term of the contract, i, e., capriciously desire; the buyer agreeing not to buy elsewhere during a given time any of the articles covered by the contract. As so classified, Union would still dispute the validity of the contract due to the lack of specific or ascertainable standards by which to measure or reliably estimate the quantity of oil that might be ordered; and, to be sure, some authority can be marshaled in support of that position. In Jenkins, however, the court squarely held that agreements of this description are supported by sufficient consideration and are enforceable at law (160 So., at 218-219): "(2) We hold, therefore, that an agreement in writing under seal, such as that involved in the case now before us, whereby the buyer has agreed to buy, and the seller has agreed to sell, all the ice at a specified price, for a specified purpose, during a specified period of time, and limited to being performed in a stipulated locality, that *766 the buyer may elect to order, i. e., capriciously desire to order within the limits of his needs, in consideration of the promise of the buyer, as the owner and operator of a then established ice business, not to buy any ice for the specified purpose elsewhere than from the seller during the contract period, is to be upheld on its face as I WESTI,AW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 7 City of Lakeland, Fla. v. Union Oil Co. of Cal., 352 F.Supp. 758 (1973) being supported by a sufficient legal consideration to sustain an action at law based upon its repudiation and consequent breach by the seller." It is also noteworthy that the views of Professor Corbin are in accord with this result. In IA Corbin, Contracts, § 156, p. 33 (1963), he states: "It is true that by such a promise as this, the promisor may not undertake to continue a business on its present scale or even to run the business at all. It is true that the amount that will be needed or required will vary with the scale on which the business is run. Much, therefore, is left to the judgment of the promisor, even to his will and desire; but not everything is thus left. The promise contains one very definite element that specifically limits the promisor's future liberty of action, he definitely promises that he will buy of no one else. If he needs or requires or uses any of the named commodity, he must buy it of the one specified. "Promises of this type have various forms; and the extent of the limitation they impose varies accordingly. The following are examples of valid bilateral contracts: (1) A promises to sell on stated terms, and B promises to buy, all the coal that may be used by certain vessels then owned by B. Here, B is privileged to withdraw his vessels from service and buy no coal at all. He is privileged, also, to install oil burning boilers or a gas engine, and buy no coal. But no coal for their use may be bought of anyone other than A; if the vessels use coal, it must be coal purchased of him." III Having concluded that the contract was supported by sufficient consideration and is enforceable, attention must now be given to two additional points advanced by Union: (1) that the City has unilaterally changed or expanded the contract from one for standby or alternate fuel to one for primary or base fuel; and (2) that the City's new interchange agreement with Tampa Electric Company has resulted in an enlargement of purchases not contemplated by the parties. 181 The first of these contentions is easily subject to summary disposition. There can be no doubt that the contract specifications as prepared by the City, and ultimately the contract itself, had the object of securing to Submitted into the Pu is C record f r it e (s) �I J� nn '7 lei ril j City Clerk the City a contract source of Bunker "C" oil as an alternate or standby fuel at a fixed, delivered price. Indeed, the specifications recited that "natural gas is, at the present, the base fuel at the Larsen Memorial Power Plant and ... oil is presently regarded as a standby or alternate fuel to be used only when natural gas is unavailable..." It is equally clear, however, that the City took care in preparing the specifications to provide for the possible future use of oil as a primary or even an exclusive fuel. Specific reference was made in the early portions of the specifications to the use of oil as a primary fuel in the event the supply of natural gas was curtailed or interrupted, or the price of oil became lower than the price of natural gas, followed later by the broad and sweeping provision that the City would have an "option to increase the above requirements at any time and by any amount throughout the life of the contract in order to meet the [sic] 100% of the fuel requirements of the City's power plants." The fact that the City ultimately began purchasing more oil than natural gas can hardly be described as beyond the contemplation of the parties or the purview of the contract specifications. *767 The effect of the new interchange agreement with Tampa Electric Company is a more troublesome proposition. As noted earlier, that new agreement was made in April, 1969. Prior to that time, for many years, the arrangement between the City and Tampa Electric was governed by a letter which provided for little more than an exchange of energy at certain rates when either party so requested, but always dependent upon the sole discretion of the other concerning its capacity to comply. Under this arrangement it appears that the net exchange was relatively insignificant insofar as the City was concerned. During the first year of its contract with Union (July 15, 1968 through July 15, 1969), for example, the City generated approximately 565,855,000 net kilowatt hours of electricity, and it sold net to Tampa Electric approximately 3,868,500 kilowatt watt hours, or substantially less than 1% of its total electrical production. The new interchange agreement of April 21, 1969, however, was considerably more detailed and sophisticated. Among other things, it defined four distinct classes of energy and the means of computing the rate or price of each class. One of these was designated as "Economy Energy Interchange Service" and, as that description implies, was simply defined as energy which WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 8 City of Lakeland, Fla. v. Union Oil Co. of Cal., 352 F.Supp. 758 (1973) one party could produce and provide at a lower cost than the other. The evidence developed in the case to date does not reveal the amount of energy exchanged in each class between the City and Tampa Electric since April, 1969, but only the net totals regardless of class (i. e., all classes). Thus, during the period July 16, 1970 through July 15, 1971 (the third year of the contract between the City and Union Oil), the City generated approximately 692,565,000 net kilowatt hours of electricity and sold approximately 32,137,500 net kilowatt hours to Tampa Electric, or 4.64% of its total production. During the next six months, through December, 1971, the City generated approximately 388,045,000 net kilowatt hours and sold approximately 52,237,000 net kilowatt hours to Tampa Electric, or almost 13.5% of its total production. It must also be remembered in considering these figures that the substantial increase in the market price of oil occurred in August or September 1970, after which the City enlarged its purchases of oil from Union. It has already been determined that the agreement between the City and Union was a valid contract and, to be sure, the City purchased 736,348 barrels of oil during the third year of the agreement term whereas the contract contained a stated estimate of 18,000 barrels of oil per week (936,000 barrels per year) that the City might elect to take in the event the contract price of oil became lower than the price of gas. It might be said, therefore, that Union is in no position to complain about the increased sale of energy to Tampa Electric since the City's purchase of oil was still below the quantity estimated in the agreement. The stated estimate of 18,000 barrels per week, however, was an obvious reference to the City's total anticipated fuel requirements exclusive of the take -or -pay minimum in its contract with the natural gas company; and the total fuel consumption during the third year of the Union contract was equivalent to approximately 1,318,411 barrels of oil. Florida Statute 672.306(1) (.1971), F.S.A., Section 2-306(1) of the Uniform Commercial Code, provides: "(1) A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate of in the absence of Submitted into the pu I �Q recor•dfri � elms) , ), on I I h City Clerk a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded." See also, C. A. Andrews Coal Co. v. Board of Directors of Public Schools, supra; and 1 A Corbin, Contracts, § 156, pp. 37-38 (1963). *768 191 The simple fact is that Union entered into an agreement which later proved to be improvident, from its point of view, when the market price of oil advanced to unforeseen heights. The City, on the other hand, realized a concomitant advantage; and that is precisely what the business and the law of contracts is all about. This is not to say, however, that the City may add insult to injury by taking undue advantage of its favorable contract and increase its wholesale exchange of energy with a neighboring system. Such increases must be regarded as beyond the contemplation of the parties and the scope of the contract, and must be taken into account as a limiting factor in determining the damages to be awarded to the City. I MA The pre-trial stipulation of the parties contained a provision that in the event the contract should be held valid "... then Lakeland shall have the right or option to extend the term of the Sales Agreement until July 15, 1974 ..." This was an obvious reference to, and construction of, that portion of the contract specifications providing that the agreement "... may be renewed yearly not to exceed five years." Union now seeks, by separate motion, to be relieved of this stipulation on the ground that any construction of the contract is a matter of law, not fact; that another portion of the stipulation disclaimed any agreement between the parties as to any issue of law; and that it inadvertently agreed to that part of the stipulation concerning the extended term. 1101 1111 The rules of this court require that counsel confer in advance of the pre-trial conference for the purpose of preparing and filing a pre-trial stipulation. Such agreements supplant the pleadings, clarify and narrow the issues, and are of inestimable value to the parties and the court in controlling the trial and future IWESTLAW © 2016 Thomson Reuters. No claim to original US, Government Works. 9 City of Lakeland, Fla. v. Union Oil Co. of Cal., 352 F.Supp. 758 (1973) course of the litigation. They are binding compacts and should be strictly enforced. While no one would question the power and duty of the court to modify a stipulation when necessary to avert manifest injustice, the party seeking relief must sustain a heavy burden by demonstrating such injustice with clear and convincing force. 1121 Implicit in Union's request for relief is the contention that the option provision "may be renewed yearly not to exceed five years" must be construed, as a matter of law, to include the initial one year term of the contract and does not contemplate five additional years thereafter. If the pertinent decisional authorities uniformly supported that construction of this or substantially similar language in contracts generally, then Union would doubtless be entitled to relief. Otherwise, the stipulation would be tantamount to an unintended amendment of an essential term of the contract itself. In this instance, however, the position now taken by Union is merely debatable at best. Indeed, there is Submitted into the pu is record rite (s} se► I V I' t on City Clerk authority in support of the construction agreed upon in the stipulation. Keith v. McGregor, 163 Ark. 203, 259 S.W. 725 (1924); First -Citizens Bank & Trust Co. v. Frazelle, 226 N.C. 724, 40 S.E.2d 367 (1946). Also see, 50 Am.Jur.2d, Landlord and Tenant, § 1161, and 172 A.L.R. 421, 426. Under these circumstances, therefore, since the stipulation accords with applicable law in any event, Union's motion is denied. W A separate order will be entered by the court scheduling additional hearings concerning the assessment of damages and other relief to be awarded in keeping with the views and conclusions expressed in this opinion. All Citations 352 F.Supp. 758 Footnotes 1 Specifically, Union offered to sell the oil (1) at the going market price, plus certain transportation and handling costs, or (2) at a price of $2.28 per barrel, whichever was lower. At that time the first alternative produced a delivered price of $2.16 per barrel. 2 One quantitative measure of natural gas may be expressed in "therms." A therm is a unit of heat equal to 100,000 B.T.U.'s, and the parties have stipulated that one barrel of Bunker "C" oil produces 63 therms. Thus, for comparative purposes, a given quantity of gas, expressed in therms, is divided by 63 in order to determine the equivalent quantity of oil expressed in barrels - 3 At that time the City was in the process of constructing a new power plant #3, and Union Oil's acknowledgment of the contract extension made explicit reference to the new plant. Union's letter stated, in part: "Such advice (the City's election to extend) is appreciated for many reasons including the fact that we can and will schedule inbound tanker movements accordingly. By this we mean not only for the filling of the storage tank at Plant No. 3 but additional volumes as may be required, all pursuant to the contract." 4 The new interchange agreement with Tampa Electric Company was dated April 21, 1969. Prior to that time the arrangement between the two systems primarily involved a reciprocal exchange of power to meet emergency needs. Under the 1969 agreement, however, provision was made for exchange of energy in a variety of circumstances other than emergency conditions. Thus, during the period July 16, 1969 through July 15, 1970, the City sold approximately 4,886,000 net kilowatt hours of electricity to Tampa Electric Company. During the succeeding year (i. e., the third year of the contract between the City and Union Oil), the net energy sold to Tampa Electric Company increased to 32,137,500 kilowatt hours. 5 While these prices were the same as those specified in the 1960 gas agreement, the new contract did not contain those provisions of the earlier agreement permitting the City to terminate in the event the gas company refused to meet a more favorable price of oil. 6 A base price of .033 cents per therm of gas is equivalent to a price of $2.079 per barrel of oil (.033 cents X 63 therms per barrel = $2.079). Thus, the difference between the base price of gas and the contract price of oil was .201 cents per barrel of oil ($2.28 - $2.079 = .201 cents). With an escalation factor of .01587 cents per therm, therefore, the price of gas would WESTLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. 10 n J Submitted into t) pu�li i � �, l record i it s City of Lakeland, Fla. v. Union Oil Co. of Cal., 352 F.Supp. 758 (1973) op CitV Clerk not become an equivalent of $2.28 per barrel of oil until the market price of oil exceeded $2.34 by approximately .1267 cents (.201 cents + .01587 cents = .1267 cents). Hence, even though oil was available to the City at $2.28 per barrel, gas remained the cheaper fuel until the market price of oil exceeded $2.47 per barrel ($2.34 + .1267 cents = $2.467). 7 The case was filed in state court and promptly removed here by Union Oil pursuant to 28 U.S.C.A. §§ 1441(a) and 1446 on the basis of diversity jurisdiction under 28 U.S.C.A. § 1332. No issue is made concerning the Courts' jurisdiction over the parties or the subject matter. 8 The other authorities upon which Union relies are similarly distinguishable. See, Eastern Transportation Company v. Blue Ridge Coal Corp., 159 F.2d 642 (2nd Cir. 1947); Loudenback Fertilizer Co. v. Tennessee Phosphate Co., 121 F. 298 (6th Cir. 1903); Dockson Gas Co. v. S. & W. Const. Co., 12 So.2d 847 (La.App.1943). End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works. WESYLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 11 STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS DOUBLE E CONSTRUCTORS, INC., Petitioner, VS. SCHOOL BOARD OF PALM BEACH COUNTY, FLORIDA, WASHINGTON ELEMENTARY SCHOOL, ADDITIONS/ REMODELING, Respondent. Submitted into the pub 'c record for it (s) on City Clerk CASE NO. 91-1017BID RECOMMENDED ORDER Pursuant to written Notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Daniel Manry, held a formal hearing in the above -styled case on March 1, 1991, in West Palm Beach, Florida. APPEARANCES For Petitioner: Edward J. Pozzuoli, Esquire Miller, Beilly & Pozzuoli Broward Financial Centre 500 East Broward Boulevard, Suite 1900 Ft. Lauderdale, Florida 33394 For Respondent: Robert A. Rosillo, Esquire Office of the General Counsel 3970 RCA Boulevard, Suite 7010 Palm Beach Gardens, Florida 33410-4283 STATEMENT OF THE ISSUES The ultimate issue for determination in this proceeding is whether Respondent's proposed determination that Petitioner's bid is non-responsive and Respondent's proposed rejection of all bids is arbitrary, capricious, or beyond Respondent's scope of discretion as a state agency. PRELIMINARY STATEMENT By letter dated February 8, 1991, Petitioner filed a formal written protest of Respondent's preliminary determination that Petitioner's bid for additions and remodeling of one of Respondent's elementary schools was non-responsive and Respondent's proposed rejection of all bids. The matter was referred to the Division of Administrative Hearings (the "Division") for assignment of a hearing officer, by letter dated February 11, 1991. The letter was received by the Division and assigned to the undersigned on February 15, 1991. A Notice of Hearing was issued on February 18, 1991, and the formal hearing was scheduled for March 1, 1991, in West Palm Beach, Florida. Submitted into the pu is record fif r ite (S) 4 It on City Clerk At the formal hearing, the parties submitted 10 joint exhibits which were admitted in evidence pursuant to the stipulation of the parties. Petitioner presented the testimony of three witnesses, and Respondent presented the testimony of one witness. A transcript of the formal hearing was requested by Respondent and filed with the undersigned on March 6, 1991. Proposed findings of fact and conclusions of law were timely filed by Respondent on March 12, 1991, and by Petitioner on March 18, 1991. 1/ The parties proposed findings of fact are addressed in the Appendix to this Recommended Order. FINDINGS OF FACT 1. A request for bids to remodel and make additions to Washington Elementary School was issued by Respondent on August 15, 1990, for Project No. 0191-8210. The request for bids included requests for a base work (the "base bid") and additional work described in various alternates (the "total bid"). Respondent had the option of selecting one or more alternates or none of the alternates. Bids were filed by four bidders on January 15, 1990. 2. Bid tabulations were posted on January 23, 1991. Petitioner was the lowest bidder, and Select Contracting, Inc. ("Select"), was the second lowest bidder. Petitioner's base bid was in the amount of $1,406,500. Petitioner's bid for the alternates eventually selected by Respondent was in the amount of $1,594,300. 2/ 3. The bid documents required bidders to include a bid bond in an amount not less than five percent of the bid. Petitioner included a bid bond with its bid in the amount of $75,000 which was more than five percent of its base bid but less than five percent of the total bid calculated after taking into account the alternates selected by Respondent. 4. Respondent recommended to its Superintendent that the contract should be awarded to Petitioner. Select filed a bid protest on January 25, 1991, seeking an informal hearing. Select alleged that Petitioner's bid was not responsive because it failed to include a bid bond for five percent of Petitioner's total bid, including the alternates selected by Respondent. Select included a bid bond for five percent of its total bid, including the alternates selected by Respondent. 5. Respondent conducted an informal hearing on February 6, 1991, and proposed that all bids should be rejected and the project re -advertised. Respondent determined that Petitioner's bid was non-responsive in that it failed to include a bid bond in an amount equal to five percent of the total bid, including all alternates selected by Respondent. Respondent further determined that relevant language in the bid documents is ambiguous and may create an economic advantage for bidders who provide a bid bond in an amount less than that provided by other bidders. In a written analysis of the basis for recommending the rejection of all bids, the General Counsel stated: In the instant case, since bid amount is not specifically defined by the SCHOOL BOARD, one bidder may receive an unfair economic advantage over another by only including in its bid amount the cost for obtaining a bond 7 I I I I I I I W 7 Submitted into the pu is record *°r it (s) w SP, on I City Clerk which was less than the actual bid amount, (i.e. base bid plus alternates). The only reason that Respondent did not regard the amount of Petitioner's bid bond as a minor irregularity was that Respondent wanted to assure that all bidders were placed on ". . . an equal playing field . . ." by avoiding an unfair economic advantage for one or more bidders. 3/ 6. Relevant language in the bid documents which defines the amount of the required bid bond is ambiguous. The Advertisement For Bid, in relevant part, requires that bids ". . . must be accompanied by a bid bond or cashier's check in an amount not less than five percent (5%) of the bid . . . ." Section 3.05(d) of the Instructions to Bidders refers bidders to Section 3.08 for purposes of the bid bond. Section 3.08 in relevant part requires bids to be accompanied by a bid bond ". . . of not less than five percent (5%) of the amount of the Bid . " The bid proposal form, however, provides that the bidder ". . . further agrees that the security in the form of a Bid Bond, or Cashier's Check in the amount of not less that five percent (5%) of the total Bid Price . . . accompanies this Bid . . . ." 7. A bid bond in an amount equal to five percent of the base bid satisfies the requirements in the bid documents for a bid bond in all but one instance. A bid bond in an amount not less than five percent of the base bid is not consistent with the representation in the proposal form that a bidder has included a bid bond equal to five percent of the total bid price. 8. Respondent's bid documents have historically required a bid bond for only five percent of the base bid. The reference in the bid proposal form to a bid bond equal to five percent of the total bid is a recent change made by Respondent and is limited to the bid proposal form. The inclusion of a bid bond for only five percent of the base bid is consistent with Petitioner's historical practice in bidding previous jobs offered by Respondent. 9. Petitioner obtained no unfair economic advantage over Select by including a bid bond for only five percent of the base bid while Select included a bid bond equal to five percent of the total bid, including the alternates selected by Respondent. The uncontroverted evidence establishes that both Petitioner and Select obtained their respective bid bonds at no cost to either bidder. Companies that issue bid bonds, including the companies that issued bid bonds to Petitioner and Select, do not impose a charge for issuing a bid bond in the ordinary course of doing business. Such companies make their money if and when they issue a performance and payment bond for the successful bidder. 4/ 10. Respondent did not know at the time it formulated its proposed agency action that no unfair economic advantage was gained by a bidder who submitted a bid bond for five percent of the base bid rather than five percent of the total bid. Respondent was uncertain of the economic advantage derived from submitting a lower bid bond, if any. Counsel for Select represented that an economic advantage was gained by Petitioner. Respondent decided to reject all bids and look ". . . for . . . direction from a Hearing Officer. " 11. Petitioner is ready, willing, and able to contract for and perform the work necessary to complete the Project. Petitioner is a pre -qualified contractor IP for projects undertaken by Respondent. Petitioner has a bonding limit substantially in excess of that required to complete the Project and substantial experience in similar projects for the Broward County School Board. Respondent 1 k Submitted into theu is P record f r ite s) on b . City Clerk is confident and has no concern over Petitioner's ability to complete the Project. 5/ CONCLUSIONS OF LAW 12. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this proceeding. The parties were duly noticed for the formal hearing. 13. Petitioner has the burden of proof. Petitioner must show by a preponderance of the evidence that Respondent's proposed agency action would be arbitrary, capricious, or beyond the scope of Respondent's discretion as a state agency. Capeletti Brothers, Inc. v. State Department of General Services, 432 So.2d 1359, 1363 (Fla. 1st DCA 1983); Volume Services Division v. Canteen Corp., 369 So.2d 391, 395 (Fla. 2d DCA 1979); Mayes Printing Company v. Flowers, 154 So.2d 859, 864 (Fla. 1st DCA 1963); William A. Berbusse, Jr., Inc. v. North Broward Hospital Dist., 117 So.2d 550 (Fla. 2d DCA 1960). 6/ 14. Bid proposals containing material or substantial deviations from the requirements of an invitation for bid are not responsive. Harry Pepper & Associates, Inc. v. City of Cape Coral, 352 So.2d 1190, 1192-1193, (Fla. 2nd DCA 1977); cf. Robinson Electrical Co. v. Dade County, 417 So.2d 1032, 1034 (Fla. 3rd DCA 1982). 7/ A material or substantial deviation in a bid proposal cannot be waived. Robinson Electrical, 417 So.2d at 1034 (citing Harry Pepper & Associates, 352 So.2d 1190). 15. A deviation is material or substantial if its waiver would either: (a) deprive the public body of an assurance that a contract will be entered into, performed, and guaranteed in accordance with specified requirements; or (b) adversely affects competitive bidding. Robinson Electrical, 417 So.2d at 1034. A determination of whether a deviation is material or substantial must be made based on the facts and circumstances present in a particular case. 16. Petitioner's inclusion of a bid bond for five percent of Petitioner's base bid, instead of five percent of Petitioner's total bid, including alternates selected by Respondent, does not deprive Respondent of an assurance that a contract will be entered into, performed, and guaranteed in accordance with bid specifications. The uncontroverted evidence establishes that Petitioner is a pre -qualified contractor for Respondent, has substantial experience in performing similar projects for the Broward County School Board, has bonding limits well in excess of those necessary to perform the subject project, and is otherwise ready, willing, and able to complete this Project. Furthermore, Respondent considers the asserted deficiency in Petitioner's bid bond to be de minimis. 17. Petitioner's inclusion of a bid bond for five percent of Petitioner's base bid, instead of five percent of Petitioner's total bid, including alternates selected by Respondent, does not adversely affect competitive bidding. A deviation adversely affects competitive bidding if its waiver would either place a bidder in a position of advantage over other bidders or otherwise undermine the necessary common standard of competition. Robinson Electrical, 417 So.2d at 1034. The uncontroverted evidence establishes that Petitioner gained no unfair economic advantage over Select by including a bid bond for only five percent of Petitioner's base bid. 8/ 18. The purpose of this proceeding is to formulate final agency action, not to review action taken earlier and preliminarily. Capeletti Brothers v. Submitted into the pub is record o ite (s) , 1 t on City Clerk State, Department of General Services, 432 So.2d 1359, 1363 (Fla. 1st DCA 1983); Couch Construction Company, Inc. v. Department of Transportation, 361 So.2d 172, 176 (Fla. 1st DCA 1978); McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (Fla. 1st DCA 1977). In formulating final agency action, the undersigned may consider competent and substantial evidence of facts and circumstances as they exist up to and including the date of the formal hearing. Baptist Hospital, Inc. v. State, Department of Health and Rehabilitative Services, 500 So.2d 620, 625 (Fla. 1st DCA 1987); Turro v. Department of Health and Rehabilitative Services, 458 So.2d 345, 346 (Fla. 1st DCA 1984). Evidence that Petitioner gained no unfair economic advantage, therefore, may be considered in recommending final agency action even though such evidence was not known to Respondent at the time Respondent formulated its proposed agency action. 9/ 19. Respondent proposes to reject all bids in order to prevent Petitioner from gaining an unfair economic advantage when the uncontroverted evidence establishes that Petitioner has gained no unfair economic advantage. Such action by Respondent would be arbitrary and capricious. Although Respondent has wide discretion in awarding contracts to responsible bidders, Respondent can not act arbitrarily and capriciously when deciding whether to award a contract. Groves -Watkins Constructors v. State, Department of Transportation, 511 So.2d 323, 328 (Fla. 1st DCA 1987). Accordingly, Respondent does not have unbridled discretion to reject all bids with or without cause. Wood- Hopkins Contracting Co. v. Roger J. Au & Son, Inc., 354 So.2d 446, 450 (Fla. 1st DCA 1978). 20. Public bidding requirements serve many purposes including protection against collusive contracts, prevention of favoritism toward contractors, and the assurance of fair competition upon equal terms to all bidders. Even if requirements in the bid documents for a bid bond, when considered together, are interpreted as requiring a bid bond for five percent of the total bid, including the alternates selected by Respondent, Petitioner's failure to comply with such requirements is not a material or substantial deviation which should not be waived by Respondent. Rather, it is a minor irregularity having de minimis consequences. Such an irregularity creates no unfair economic advantage for any bidder and has no adverse impact on the ability of Petitioner to complete the Project. 10/ RECOMMENDATION Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner's written formal protest be GRANTED and the contract awarded to Petitioner. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 3rd day of April, 1991. t DANIEL MANRY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 EW Submitted into the pu record r it ) �V"I on sCity Clerk Filed with the Clerk of the Division of Administrative Hearings this 3rd day of April, 1991. ENDNOTES 1/ Proposed findings of fact and conclusions of law were required to be filed no later than 10 days after the date the transcript was filed on March 6, 1991. March 16, 1991, fell on a Saturday, and Petitioner filed its proposed findings of fact and conclusions of law on the next business day, March 18, 1991. 2/ Alternates selected by Respondent were: (a) a bus turn around area for $55,000; (b) an area for parent drop off and parking for $121,500; and (c) certain exterior lighting for $11,300. The aggregate cost of alternates selected by Respondent was $187,800. The sum of the base bid ($1,406,500) and the aggregate cost of alternates selected by Respondent ($187,800) is $1,594,300. 3/ The bid documents provide that bid bonds are intended as liquidated damages in the event the lowest bidder fails to enter into a contract after being selected as the lowest bidder. However, Respondent considers any deficiency in Petitioner's bid bond to be de minimis. A bid bond is primarily used to cover the incremental cost to Respondent when a low bidder refuses to enter into a contract and Respondent must enter into a contract with a higher bidder. A bid bond also functions as liquidate damages for Respondent in the event that all bidders refuse to enter into a contract with Respondent. The amount of Petitioner's bid bond was sufficient for both purposes of a bid bond. 4/ Only one company within the entire industry imposes a service fee for issuing bid bonds. That service fee is a flat $50 fee. The amount of the fee is not determined as a percentage of the face amount of the bid bond. A flat fee of $50 is de minimis in comparison to a bid in excess of $1 million and would not impose an unfair economic advantage on a bidder required to pay such a fee. 5/ Petitioner has been the lowest bidder and completed numerous projects for another school board in the area; the Broward County School Board. Although Petitioner has bid on a number of Respondent's previous projects, this is the first time Petitioner has been the successful bidder. Select has been the lowest bidder and successfully completed numerous projects for Respondent. 6/ See also System Development Corp. v. Department of Health and Rehabilitative Services, 423 So.2d 433, 434 (Fla. 1st DCA 1982); Glatstein v. City of Miami, 399 So.2d 1005 (Fla. 3rd DCA 1981)(pertaining to the burden of proof in an administrative proceeding involving a protest of a request for proposals). 7/ See also Glatstein v. City of Miami, 399 So.2d at 1008 (pertaining to deviations in responses to requests for proposals). 8/ Tropabest Foods, Inc. v. Florida Department of General Services, 493 So.2d 50 (Fla. 1st DCA 1986). The submission of either a cashier's check instead of a required bid bond or a bid bond instead of a required certified check was found not to be a material deviation. Robinson Electrical, 417 So.2d at 1034-1035. Deviations in a bid proposal consisting of the failure to comply with the form required by a public body and the failure to list exceptions to the successful bidder's proposal for maintenance and service of a city water system were found Submitted into the pu' (� record f r ite (s) V. I SC, Z on City Clerk i, to be deviations that could be waived. Any subsequent exceptions to the maintenance and service proposed by the successful bidder could be treated by the public body as non-binding proposed alternatives. Technical Sales of Jacksonville, Inc., v. City of Jacksonville, 258 So.2d 839 (Fla. 1st DCA 1972). See also System Development Corporation v. Department of Health and Rehabilitative Services, 423 So.2d 433 (Fla. 1st DCA 1982)(holding that proposed technological enhancements, innovations, and improvements that include advanced, state -of -the art equipment and processes do not constitute material irregularities in bid proposals submitted in response to requests for proposals). 9/ Respondent included in its proposed conclusions of law an alternate t recommendation that this matter be remanded to permit Respondent an opportunity to formulate proposed agency action in light of the evidence adduced in the formal hearing. Such action would circumvent the purpose of this proceeding. Accordingly, Respondent's alternate request for remand is denied. 10/ As a general proposition, an unfair economic advantage may be created for an unsuccessful bidder by rejecting all bids on the basis of deviations by the successful bidder that are neither substantial nor material. The potential for t creating an unfair economic advantage by rejecting all bids may be greater when the unsuccessful bidder is customarily the successful bidder for the public body. There is no evidence that the creation of an unfair economic advantage for Select was the purpose for Respondent's proposed rejection of all bids. APPENDIX TO RECOMMENDED ORDER Petitioner submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 Accepted in Finding 1 2 Rejected as immaterial 3 Accepted in Findings 1, 3 4 Accepted in Findings 1-2 t 5 Accepted in part in Finding 2 Rejected in part as immaterial 6 Accepted in Findings 4, 10 7 Rejected as irrelevant to matters at issue. It is discussed in the Preliminary Statement 8 Accepted in Finding 11 ' 9 Accepted in Finding 11 Respondent submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. Submitted into the pu 'c1 n record f r ite (s) on City Clerk Respondent's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 Accepted in Finding 1 2 Accepted in Findings 2, 4 3-7 Accepted in Findings 5-6 8 Accepted in Findings 2, 4 9 Accepted in Finding 5 COPIES FURNISHED: Hon. Betty Castor Commissioner of Education The Capitol Tallahassee, FL 32399-0400 Sydney H. McKenzie General Counsel Department of Education The Capitol, PL -08 Tallahassee, FL 32399-0400 Mr. Thomas J. Mills, Superintendent Palm Beach County School Board 3323 Belvedere Road West Palm Beach, FL 33402 Robert A. Rosillo, Esq. Office of the General Counsel Palm Beach County School Board 3970 RCA Boulevard, Suite 7010 Palm Beach Gardens, FL 33410-4283 Edward J. Pozzuoli, Esquire Miller, Beilly & Pozzuoli Broward Financial Center Suite 1900 500 E. Broward Boulevard Ft. Lauderdale, FL 33394 NOTICE OF RIGHT TO SUBMIT EXCEPTIONS All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case. Matter of Fischbach & Moore v New York City Tr. Auth., 79 A.D.2d 14 (1981) KeyCite Yellow Flag - Negative Treatment Distinguished by Maross Const., Inc. v. Central New York Regional Transp. Authority, N.Y.A.D. 4 Dept., January 29, 1985 79 A.D.2d 14,435 N.Y.S.2d 984 In the Matter of Fischbach and Moore, Incorporated, Appellant, V. New York City Transit Authority et al., Respondents Supreme Court, Appellate Division, Second Department, New York 3380 E January 29,1981 CITE TITLE AS: Matter of Fischbach & Moore v New York City Tr. Auth. SUMMARY Appeal from a judgment of the Supreme Court at Special Term (Thomas R. Jones, J.), entered November 19, 1980 in Kings County, which denied a petition, in a proceeding pursuant to CPLR article 78, to enjoin the New York City Transit Authority from entering into a certain contract with the General Electric Company. HEADNOTES Municipal Corporations Bids and Bidders Postbid Negotiations ([1]) A municipal agency may obtain cost concessions on a public project through postbid negotiations with the lowest responsible bidder; accordingly, where one bidder was fairly and properly established as the lowest responsible bidder in a round of bidding that has never been challenged, the public interest was advanced when the authority subsequently negotiated a reduction in cost for the project, which negotiations resulted in no departure from the contract's original specifications and involved no concessions to the bidder, and the award of the public contract to said low bidder was proper under the circumstances. Submitted into the record f r itc ori APPEARANCES OF COUNSEL M. Carl Levine, Morgulas & Foreman (Jerrold Morgulas of counsel), for appellant. Joan Offner (Walter J. McCarroll of counsel), for New York City Transit Authority and others, respondents. Anderson Russell Kill & Olick, P. C. (John E. Daniel, James P. Heffernan and Erich R Eiselt of counsel), for General Electric Company, respondent. OPINION OF THE COURT Mollen, P. J. The primary issue presented on this appeal is whether a municipal agency may obtain cost concessions on a public project through postbid negotiations with the lowest responsible bidder. Our determination necessarily depends upon an examination of the policy considerations underlying the practice of sealed competitive bidding for public contracts. *15 We turn first to a review of the pertinent and undisputed facts. In June, 1979 the New York City Transit Authority published an invitation for bids on its Contract No. P-36300. The contract called for the furnishing and installation of certain supervisory control equipment for power substations of the city's transit system. Two bids were received. The General Electric Company submitted a low bid of $28,676,386, some $200,000 less than the bid submitted by the petitioner. After the bids were opened, the Transit Authority made inquiries of the low bidder, General Electric, regarding one item of its bid. The authority asked that certain costs listed under item 20 of the bid be eliminated on the ground that they were duplicative of those listed in a separate item. General Electric ultimately acceded to the request, lowering its bid by $891,050. The authority also expressed concern over the fluctuating price of copper which, it felt, had been unreasonably high when the bids were prepared and which had come down since they were opened. After some negotiation, an accord was reached by which it was agreed that, if copper prices fell below a certain level at the time of shipment, General Electric would reduce its bid to reflect the decrease. An increase in copper prices beyond that originally contemplated in the bid, however, would not be passed along to the authority. IWESTLAW O 2016 Thomson Reuters. No claim to -original U.S. Government Works. 1 Submitted into the puc Matter of Fischbach & Moore v New York City Tr. Auth., 79 A.D.2d 14 (1981) record f r ite l(s) 5 S = L —_-- — - __ ^n `1 1 1 ON Ilk City Clerk Although General Electric made these concessions and although, as finally arrived at, its bid was only 3.9% higher than the authority's most recent revised cost estimate, the authority did not award the contract to General Electric. Instead, it rejected all bids and called for a new round of bidding. The authority apparently took that action on the basis of representations made to it by the Westinghouse Electric Corporation, a nonbidder. It appears that, while General Electric's low bid was pending, the Transit Authority had conducted private negotiations with Westinghouse, obtaining a commitment that, if the contract were rebid, Westinghouse would submit a bid lower than General Electric's. No new round of bidding was ever held, however, because, *16 upon the rejection of its bid, General Electric instituted a CPLR article 78 proceeding to enjoin the authority from rebidding the contract and to compel the agency to award the contract to General Electric. Special Term (per Jones, J.) (General Elec. Co. v New York City Tr. Auth., NYLJ, Sept. 25, 1980, p 15, col 1) granted the petition, finding that the authority had acted improperly in negotiating with a nonbidder while a responsive low bid was pending and that the impropriety had tainted the authority's later decision to reject all bids. The Transit Authority appealed but, immediately prior to oral argument in this court, a settlement was reached. The Transit Authority agreed to withdraw its appeal with prejudice and to award the contract to General Electric as the lowest responsible bidder. In return, General Electric agreed to add to the specifications of its bid a provision for liquidated damages for any extended equipment failure. The matter did not thus come to a rest, however. Before work on the contract could begin, petitioner, the original unsuccessful bidder, commenced this article 78 proceeding seeking a judgment permanently restraining the Transit Authority from awarding the contract to General Electric and directing that the authority reject all bids and open the contract to a new round of bidding. By a decision and judgment dated November 10, 1980, Special Term (per Jones, J.), denied the petition. This is an appeal from that ruling. Arguing that the authority's action here violates both the letter and the spirit of the provisions requiring sealed competitive bidding for public contracts, petitioner maintains that a municipal agency is prohibited from engaging in postbid negotiations, even with the established low bidder. Petitioner would require that the agency either accept the low bid precisely as submitted or reject all bids and open the contract for a further round of bidding. According to the petitioner, when an agency withholds a contract pending postbid negotiations with a low bidder, it is, in essence, conducting what amounts to a new round of bidding in which only the low bidder, and no one else, may participate. In the petitioner's view, such a practice admits of at least two major flaws. First, it is unfair to other bidders since, if given the opportunity to participate in the "negotiations," *17 they might be willing to attempt to obtain the contract by lowering their bids below that ultimately offered by the low bidder. Second, it is unfair to the low bidder since it permits the agency to coerce unfair and unwarranted concessions through a stated or implied threat that, unless the concessions are made, the contract will be rebid and thus will be lost to the low bidder. Although the petitioner's argument has a certain surface appeal, we conclude that the broad prohibition it seeks is neither compelled by statute nor required by considerations of public policy. The controlling statutory provisions are section 103 of the General Municipal Law and subdivision b of section 343 of the New York City's Charter. The former provides, in pertinent part: "1. Except as otherwise expressly provided by an act of the legislature or by a local law adopted prior to September first, nineteen hundred fifty-three, all contracts for public work involving an expenditure of more than five thousand dollars and all purchase contracts involving an expenditure of more than three thousand dollars, shall be awarded by the appropriate officer, board or agency of a political subdivision or of any district therein ... to the lowest responsible bidder furnishing the required security after advertisement for sealed bids in the manner provided by this section ... Such officer, board or agency may, in his or its discretion, reject all bids and readvertise for new bids in the manner provided by this section." (Emphasis supplied.) Section 343 of the New York City Charter provides, in pertinent part: "b. The agency letting the contract may reject all bids if it shall deem it for the interest of the city so to do; if not, it shall, without other consent or approval, award the contract to the lowest responsible bidder, unless the board of estimate by a two-thirds vote shall determine that it is for the public interest that a bid WESTLA'W 0 2016 Thomson Reuters. No claim to original U.S. Government Works.. 2 Submitted into the puVc rd f r ate s) S. L 104Matter of Fischbach & Moore v New York City Tr. Auth., 79 A.D.Zd 14 (1981)record dN V C qrl 00A other than that of the lowest responsible bidder shall be accepted. Tie bids are to be decided by the agency letting the contract and the award made. Whenever a contract is awarded to another than the lowest bidder, except by action of the board of estimate, the agency awarding the same shall file in its office *18 and in the offices of the comptroller, the commissioner of general services and the city clerk a statement in detail of the reasons therefor. Notwithstanding any other provision of this subdivision, the agency letting the contract may award the contract to other than the lowest bidder upon prior approval of the corporation counsel and the comptroller." (Emphasis supplied.) It is at once apparent that these provisions do not contain any language which would prohibit an agency from engaging in postbid negotiations with a low bidder prior to awarding the contract. (Cf. Merritt Plumbing v City of New York, 55 AD2d 552.) Hence, if the petitioner is to prevail, it must demonstrate that the practice, although not violative of the letter of the law, is contrary to its spirit. We conclude that it is not. The rapid growth of our counties, cities, towns and villages has brought with it a vast increase in the sums annually expended for public projects. This, in turn, has provided a fertile source of profit for contractors who are willing and able to fulfill the needs of the municipality. (See Jered Contr. Corp. v New York City Tr. Auth., 22 NY2d 187, 193.) In deciding how to spend taxpayers' money, officials authorized by law to contract on behalf of the municipality owe their total and undivided allegiance to the interests of the public whom they serve. The public, of course, receives its greatest benefit when it obtains the highest quality of work. at the best possible price, and that is the goal for which municipal officials must continually strive. They are under no obligation to provide work for contractors and have no independent responsibility to guard the interests of those bidders who are eager to achieve maximum profit from public contracts. That is not to suggest that a municipal agency may act unfairly or arbitrarily in connection with the letting of public contracts. To the contrary, the law and public policy mandate that bidders be treated equally and fairly in their pursuit of public work. That requirement, however, is not grounded in a concern for the welfare of the bidder, but rather in the firm belief that fairness in the bidding process is inextricably connected with the objective of obtaining the *19 best quality work at the lowest possible price. Bidding laws are predicated upon the principles of the free marketplace which hold that the most desirable offer from the perspective of both quality and price will emerge through a process of vigorous, free and fair competition among the greatest number of potential contractors. (See Asbury Park Press v City of Asbury Park, 23 NJ 50; 3 Yokley, Municipal Corporations, § 442.) Hence, our courts have consistently held that "[t]he provisions of the statutes and ordinances of this State requiring competitive bidding in the letting of public contracts evince a strong public policy of fostering honest, competition in order to obtain the best work or supplies at the lowest possible price. In addition, the obvious purpose of such statutes is to guard against favoritism, improvidence, extravagance, fraud and corruption. They 'are enacted for the benefit of property holders and taxpayers, and not for the benefit or enrichment of bidders, and should be so construed and administered as to accomplish such purpose fairly and reasonably with sole reference to the public interest' (10 McQuillan [Municipal Corporations (3d ed)] § 29.29, p. 322; emphasis added)." (Jered Contr. Corp. v New York City Tr. Auth., 22 NY2d 187, 192-193, supra; see, also, Matter of Signacon Controls v Mulroy, 32 NY2d 410, 413; Matter of Allen v Eberling, 24 AD2d 594; cf. Matter of Exley v Village of Endicott, 51 NY2d 426.) Petitioner contends that these purposes are not served by the conduct of the Transit Authority here, inter alfa, because the petitioner, or perhaps some other bidder, if given the opportunity at a second round of bidding, might better conserve public funds by submitting a bid more favorable than the one the authority ultimately obtained from General Electric. The flaw in this argument, aside from its speculative nature, is that it exaults one of the goals of the bidding statutes -- obtaining the lowest price for a particular contract -- over the fundamental principles upon which those statutes are founded. Competitive bidding statutes are intended to secure the lowest practicable price for each public project. Equally important, however, they are designed to achieve that aim within a strictly enforced framework of fair competition, for the provisions are predicated upon the belief that, in the long run if not in each individual case, *20 the public will receive the best value if its officials consistently adhere to a policy of impartiality and fair dealing in letting public contracts. Hence, the petitioner's suggestion that, if General Electric's bid were WEST1_AW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 Matter of Fischbach & Moore v New York City Tr. Auth., 79 A.D.2d 14 (1981) rejected, a better price might be achieved for this particular project, is insufficient to warrant a departure from the established practice of awarding public contracts to the lowest responsible bidder. And the petitioner has offered no other argument which would lead us to believe that the award to General Electric is inconsistent with the principles of competitive bidding. As the name suggests, the practice of competitive bidding seeks value through free and fair competition. Logic and experience teach that competition for public contracts may be promoted only by fostering a sense of confidence in potential bidders that their bids will be fairly considered and that they will not be deprived of any substantial benefit afforded to their competitors. (See Molloy v City of New Rochelle, 198 NY 402; Matter of Glen Truck Sales & Serv. v Sirignano, 31 Misc 2d 1027 [Hopkins, J.]). To that end, courts have held, for example, that a municipality may not ease contract specifications after bids have been submitted or waive material variances in bids received. (See e.g., Le Cesse Bros. Contr. v Town Bd. of Town of Williamson, 62 AD2d 28, affd 46 NY2d 960; Blandford Land Clearing Corp. v Davidson, 62 AD2d 1007; 10 McQuillin, Municipal Corporations [3d ed], § 29.65.) Were it otherwise, legitimate bidders, who might have been willing to reduce their bids had they known that the specifications of the job would be relaxed, would be unfairly deprived of the opportunity to do so. This, combined with the danger of favoritism, fraud or corruption inherent in a selection process conducted under such circumstances, might well discourage contractors from bidding on future contracts, thus diminishing competition to the detriment of the public. (Le Cesse Bros. Contr. v Town Bd. of Town of Williamson, supra.) Similarly, as the cases relied upon by the petitioner suggest, a municipality may not engage in postbid negotiations through which a contractor other than the low bidder may become the low bidder. (See, e.g., American Totalisator Co. v Seligman, 34 Pa Cmwlth 391, affd 489 Pa 568; Platt Elec. Supply v City of Seattle, 16 Wash App *21 265.) Were this practice permitted legitimate bidders might be reluctant to participate in the bidding process because of a lack of confidence that their sealed bids would actually determine the contract award. (Cf. Matter of Delta Chem. Mfg. Co. v Department of Gen. Servs. of City of N. Y., Div. of Municipal Supplies, 106 Misc 2d 617.) Moreover, the same reluctance might result if the municipality were permitted to reject all bids arbitrarily, and, hence, "the bidding law may not be Submitted into the puis record dor itlm(s) j�1 R S�, Z evaded under the color of a rejection." (10 McQuillin, Municipal Corporations [3d ed], § 29.77, p 438; see, also, Matter of Delta Chem. Mfg. Co. v Department of Gen. Servs. of City of N. Y., Div. of Municipal Supplies, supra.) The crucial question, therefore, is whether the municipal agency, in seeking to conserve public funds, has abided by those rules designed to promote competition and to avoid favoritism and corruption. If it has, then the requirements of the competitive bidding law are satisfied. Significantly, in City of Lakeland v Union Oil Co. of Calif. (352 F Supp 758), the court employed this standard and approach in rejecting a claim which was virtually identical to the one advanced by the petitioner at bar. The court wrote (p 763): "It is axiomatic in Florida that a contract is absolutely void if made by public officers in derogation of a statutory duty to solicit competitive bids. The object of such legislation is to prevent favoritism or extravagance and to protect the public from collusive contracts. As a consequence, the statute should always be liberally construed to foster that purpose and avoid any likelihood of circumvention even in the absence of fraud or bad motive ... "In this instance, however, those salutary principles are clearly inapplicable. Indeed, it might even be said that the same principles and purposes, from the public's point of view, require that the contract be applauded and validated, not condemned, because it is plain by any measurement that the City got the best of the bargain. It is equally clear that proper procedures were followed. Detailed specifications *22 were prepared and bids were solicited and received without irregularity of any kind. Union Oil was the low bidder, and in the process of awarding the contract the City was successful in negotiating a price even better than that contained in the bid. The post bid negotiations did not involve any departure from the original specifications ... and neither is this a case in which the City undertook to negotiate with a high bidder to the exclusion and prejudice of a lower bidder ... The record is also devoid of any suggestion of fraud or favoritism". Precisely the same analysis is appropriate in the instant case. First, the record here contains no suggestion of favoritism, fraud or corruption. General Electric was fairly and properly established as the lowest responsible } WESTtAW rJ 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 Submitted into the pub 'c P record f r it�(s) J S Matter of Fischbach & Moore v New York City Tr. Auth., 79 A.D.2d 14 (1981) on ► 16 City Clerk A AI V Q 9d OCA bidder in a round of bidding which has never been challenged. Hence, from the outset, General Electric was fairly entitled to primary consideration for the contract award. Second, the public interest was advanced since the authority obtained through negotiations a reduction in cost for the project. Three modifications were made on the initial bid: (1) the elimination of duplicative costs; (2) the agreement regarding copper prices; and (3) the inclusion of a provision for liquidated damages. Each represented an actual or potential savings on the price of the project. Third, the negotiations resulted in no departure from the contract's original specifications and no concessions whatsoever were made to General Electric. Thus no unfair benefit was afforded to General Electric at the petitioner's expense. Hence, the award of the contract to General Electric after postbid negotiations was not, under the circumstances at bar, inconsistent in any way with the policies underlying the bidding statutes. We do recognize that, as petitioner suggests, postbid negotiations, even with a low bidder, may be conducted in such a manner as to violate the principles of competitive bidding. It is possible that an agency, through the threat of rejecting all bids, might attempt to coerce a low bidder to making unfair and unwarranted concessions. Yet, the bidder in such circumstances would not be without remedy since, as previously noted, the actions of an agency in awarding or in refusing to award a contract are not beyond judicial review and will be set aside where arbitrary. (See Matter of Carucci *23 v Dulan, 24 AD2d 529; Matter of Gottfried Baking Co. v Allen, 45 Misc 2d 708 [Cooke, J.].) In the case at bar, the Transit Authority was guilty of no such impropriety. It acted reasonably in seeking elimination of duplicative costs and in protecting itself against what it deemed to be inflated copper prices. And the liquidated damages provision was a reasonable concession, protective of the public interests. Moreover, the ultimate price of the bid was fair, being only slightly higher than the Transit Authority's own revised cost estimate and well below the original low bid. Accordingly, we hold that the award of the contract to General Electric, the low bidder, under the circumstances at bar, was proper and should be sustained. The judgment appealed from is therefore affirmed. Hopkins, Lazer and Gibbons, JJ., concur. Judgment of the Supreme Court, Kings County, dated November 10, 1980, affirmed, without costs or disbursements. *24 Copr. (C) 2016, Secretary of State, State of New York Footnotes It was on these grounds that Special Term initially enjoined the Transit Authority from rejecting all bids based upon its private postbid negotiations with Westinghouse, a nonbidder. End of Document 40 © 2016 Thomson Reuters. No claim to original U.S. Government Works. WESTLAW 0 2016 Thomson Reuters. No claim to original U.S. Government Works. 5 ,i -o Submitted into the pu is State, Dept. of Lottery v. Gtech Corp., 816 So.2d 648 (2001) record or it m(s) 26 Fla. L. Weekly D621, 26 Fla. L. Weekly D1733 on�Th�rTi b- �t process, in which unsuccessful bidder claimed it was aggrieved by agency action taken KeyCite Yellow Flag - Negative Treatment after completion of bid protest hearing and Distinguished by Lowe v. City of Hot Springs, S.D., January 28, appeal, should have been resolved in an 2015 administrative tribunal rather than the trial 816 S0.2d 648 court. West's F.S.A. § 120.57(3). District Court of Appeal of Florida, First District. 3 Cases that cite this headnote ' STATE of Florida, DEPARTMENT OF 121 Declaratory Judgment LOTTERY and Automated Wagering State officers and boards International, Inc., Appellants, Although dispute involving legitimacy ' V. of contract resulting from competitive GTECH CORPORATION, Appellee. procurement process should have been resolved in administrative proceeding, the ' Nos. lDoa-451,1Doo-578. trial court had jurisdiction to entertain unsuccessful bidder's action for declaratory Feb. 28, 2001. relief, as there was no objection by successful Opinion on Denial of Rehearing July 17, 2001. bidder or state agency to the failure of unsuccessful bidder to exhaust administrative Unsuccessful bidder challenged agreement between remedies, such that the point was waived. Department of the Lottery and successful bidder to 3 Cases that cite this headnote provide computerized gaming systems and related services for state lottery, seeking declaratory and injunctive relief ' and alleging that agreement was illegal, null, and void 131 Public Contracts because it omitted or altered material provisions required In general; advertising by request for proposals (RFP). The Circuit Court, Leon States County N. Sanders Sauls, J., granted unsuccessful bidder's Request or advertisement;specifications motion for summary judgment, declared agreement void, Department of Lottery could not use request and permanently enjoined its performance. Successful for proposals (RFP) process for ranking bidder and Department appealed. The District Court of purposes only, and then negotiate contract Appeal, Miner, J., held that Department could not use with successful bidder that materially differed RFP process for ranking purposes only and then negotiate from original proposal; bidders were entitled contract that differed from original proposal. to rely on RFP process. in submitting a responsive proposal. West's F.S.A. § 287.01 et Affirmed; questions certified. seq. Katui, J., filed a dissenting opinion. 2 Cases that cite this headnote West Headnotes (3) ' Attorneys and Law Firms it] Public Contracts *649 Jeffrey L. Frehn and Katherine E. Giddings, of -�- Conditions precedent;exhaustion of Katz, Kutter, Haigler, Alderman, Bryant & Yon, P.A., administrative remedies Tallahassee, for Appellants State of Florida, Department Dispute involving legitimacy of contract of Lottery. resulting from competitive procurement UVESTLAW r -c) 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 State, Dept. of Lottery v. Gtech Corp., 816 So.2d 648 (2001) Sylvia H. Walbolt, Martha Harrell Chumbler, and Joseph H. Lang, Jr., of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Tallahassee, for Appellants Automated Wagering International, Inc. Thomas Panza, Mark A. Emanuele, and Deborah S. Platz, of Panza, Maurer, Maynard & Neel, Ft. Lauderdale; and John K. Aurell, John R. Beranek, and Martin B. Sipple, of Ausley & McMullen, Tallahassee, for Appellee. Opinion MINER, J. Albeit involving different issues, this ongoing dispute makes its second appearance before this court. In GTECH v. State, Department of Lottery, 737 So.2d 615 (Fla. 1st DCA 1999) (Gtech I) a divided court held that the Department of Lottery did not violate applicable procurement procedures or due process by referring contending proposals back to an evaluation committee for correction of errors. All the events leading up to the instant dispute over the contract at issue are generally set forth in Gtech I and will be repeated hereafter only as necessary to give perspective to the issues raised in this appeal. This dispute centers on a contract for administrative services awarded by the Florida Department of Lottery to Automated Wagering International, Inc. (AWI). In Gtech I, all parties agreed that the subject contract was one of the largest, if not the largest, goods and services procurement contract awarded by a state agency. In 1988, the Department of Lottery (Lottery) entered into a contract with AWI for the implementation and operation of an on-line lottery system in Florida. In 1995, in anticipation of the expiration of that contract, the Lottery issued a Request for Proposals (RFP) for a new on-line lottery system and related services. Only AWI and Gtech responded with proposals. *650 These proposals were submitted to an evaluation committee for the purpose of ranking the contenders, and thereafter a contract for provision of these services was privately negotiated and entered into between the Lottery and AWI. Gtech challenged the ranking procedure, which resulted in the negotiated contract, and the matter was submitted to an administrative law judge, who ultimately upheld such procedure which led to the appeal decided in Gtech I. Submitted into the on `7 1 7AH1_City Clerk After the Lottery and AWI negotiated a contract, Gtech filed the action below that is the subject of the instant appeal. Seeking both declaratory and injunctive relief, Gtech challenges the agreement between the Lottery and AWI on three bases, only one of which is of dispositive consequence here. In its amended complaint below, Gtech alleged that the agreement negotiated between the Lottery and AWI is illegal, null, and void because it omitted or altered certain material provisions required by the RFP and added other provisions never contemplated by the RFP. It further asserted that AWI could not have provided the system and services proposed in its response to the RFP for the price quoted in its proposal. According to Gtech, AWI purposely "low balled" its proposal in order to attain superior ranking over Gtech and then negotiated a contract on much more favorable terms than it initially proposed to the Lottery. In time, both the Lottery and AWI answered the allegations in Gtech's amended complaint after which Gtech, the Lottery, and AWI filed motions for summary judgment asserting that there were no disputed issues of material fact to be decided but that the resolution of their dispute was a matter of law. A hearing was held on these motions and the trial court granted Gtech's motion and declared the negotiated contract between the Lottery and AWI null and void and permanently enjoined its performance . It is from this judgment *651 that the Lottery and AWI appeal. We affirm the judgment of the trial court. I11 We begin by noting that this dispute should have been resolved in an administrative tribunal rather than the circuit court. The Administrative Procedure Act affords a procedural mechanism to review any agency decision that affects the substantial interests of a party. See § 120.569, Fla. Stat. Moreover, the Act provides the exclusive remedy for disputes arising in the competitive procurement process. See § 120.57(3), Fla. Stat. Department of Transportation v. Groves—Watkins Constructors, 530 So.2d 912 (Fla. 1988); State Contracting and Engineering Corp. v. Department of Transportation, 709 So.2d 607 (Fla. 1st DCA 1998). 121 In the case at hand, Gtech argues that it is aggrieved by agency action taken after the completion of the bid protest hearing and appeal. This claim should have been asserted before the agency in the form of a request for WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 State, Dept. of Lottery v. Gtech Corp., 816 So.2d 648 (2001) an administrative hearing. See Bankers Ins. Co. v. Florida Residential Property & Casualty Underwriting Assn, 689 So.2d 1127 (Fla. 1st DCA 1997); State ex rel Department of General Set -vices v. Willis, 344 So.2d 580 (Fla. 1 st DCA 1977). Had appellants argued the failure of appellee to exhaust administrative remedies, the trial court would have been required to defer to the agency. Indeed, the trial court would have been precluded from entertaining the merits of the case over such an objection. See Willis. Notwithstanding the foregoing, the circuit court has jurisdiction to entertain actions for declaratory relief. Because there was no objection by appellants to the failure of appellee to exhaust administrative remedies, the point is waived Z . 131 Our analysis of what we believe to be the dispositive issue involved in this appeal is necessarily framed by consideration of the provision of section 24.102, Florida Statutes, which requires the Lottery to operate as an entrepreneurial business enterprise and to maximize its revenues on the one hand and Chapter 287, Florida Statutes, which governs the procurement by state agencies of goods and services through a system of "fair and open competition" that "inspires public confidence." Provision 8.7.2. of the RFP involved herein provides, as follows: If the Secretary determines that the proposals under this RFP are the best method of obtaining the desired gaming system and services, the Secretary shall negotiate a contract with the most highly qualified respondent. Should the Secretary be unable to negotiate with the respondent the conditions in price that the Lottery deems to be fair, competitive, and reasonable, negotiations with that respondent shall be terminated. The Secretary shall then undertake negotiations with the second most qualified respondent. Should the Lottery be unable to negotiate a satisfactory contract with that firm, additional firms may be selected to participate in this negotiation process or negotiations may be reinstated Submitted into the pu c record qor ite (s)_,�, on City Clerk following the original order of priority. Negotiations shall continue until an agreement is reached or all proposals are rejected. The Lottery reserves the right to reject all proposals at any time during negotiations. Under this provision of the RFP, in order to get to the point of negotiating a final contract for goods and services, the Secretary first had to determine that "the proposals *652 under this RFP are the best method of obtaining the desired gaming system and services." If the AWI proposal was the "best method," then material changes to the proposal in the final contract would seem to be contrary to the finding by the Secretary that AWI's proposal was the "best method." By negotiating several material elements and entering into a contract that was materially different than the AWI proposal, Lottery officials at least implicitly determined that the AWI proposal was not, at contract time, the "best method" for obtaining such goods and services. Thus, it seems to us that the Lottery's interpretation of Provision 8.7.2. of the RFP is contrary to the plain language of that provision in that it does not contemplate carte blanche revisions with the preferred provider, AWI. Instead, it envisions finalizing an agreement by turning the winning proposal into a contract 3 . Influenced perhaps by the fact that all parties were presumably in accord during the summary judgment hearing below that there were no disputed material facts to be resolved, the trial judge found that the contract negotiated by the Lottery and AWI was financially more favorable to AWI than was the proposal which earned AWI most preferred provider status in the first place. In doing so, the court rejected the contention by the Lottery and AWI that they were no longer bound by Florida's statutorily required method of contracting for goods and services as set out in Chapter 287, but rather were free to negotiate without limitation after Gtech was eliminated from the process. The judge then concluded that the Lottery treated AWI, its preferred and longtime vendor, more favorably in the privately negotiated contract "which was not even the subject of the competitive bidding process." We agree. Common sense alone suggests that in an undertaking of the scope and magnitude of the relationship between IWESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 State, Dept. of Lottery v. Gtech Corp., 816 So.2d 648 (2001) the Lottery and a gaming services provider, whether it be AWI, Gtech, or another such entity, the Lottery must be free to determine that RFP proposals either are or are not responsive to its current needs. However, rather than relying on proposals being no longer responsive in its decision to negotiate a new contract with AWI, the Lottery should have rejected both responses under Provision 8.7.2. of the RFP and started anew. To countenance the Lottery's entry into a contract that was materially different than AWI's proposal would encourage responders to RFPs to submit non- competitive, unrealistic proposals solely for the purpose of receiving the highest ranking for subsequent negotiations. It seems to us that such a procedure is at odds with the proscriptions of Chapter 287 and is not likely to inspire public confidence in the fairness of the process or that the Lottery has entered into the most beneficial agreement. In affirming summary judgment for Gtech, we acknowledge a concern that our decision might, but should not, encourage losing vendors to employ delaying tactics to take unfair advantage of the vendor ranking process by resorting to administrative challenges and appellate proceedings thereby prolonging the time between achieving preferred provider status and the actual entry of a contract. There are public policy considerations at play here: 1) to ensure realistic, competitive responses to RFPs, and 2) to prevent unnecessary delay thereby and to award the most responsive *653 proposer the first crack at negotiating a final agreement. Appellants take the position that appellee, Gtech, is the cause of the four-year delay that rendered AWI's proposal so outdated that material changes in the final contract had to be made to meet the Lottery's needs. However, the record before us reflects that Gtech, while unsuccessful in some of its contentions, did not raise any claims during the protracted period from response submission to contract entry that were completely without merit. Indeed, some of Gtech's challenges were successful and we are not prepared to hold that a party to a legal dispute should be penalized for seeking redress, provided such is not undertaken in bad faith or with frivolity. Again, losing vendors should not take comfort in this opinion as encouraging prolonging a process such as this in an attempt to render a winning proposal outdated thereby placing the issuer of an RFP in the position of having to begin the acquisition of goods and services process anew. Submitted into the p p record f} iter,(s) 1c, To summarize the above, it seems clear to us that the pivotal issue before the trial court and in this appeal is whether the Lottery can treat the RFP process as little more than a ranking tool to determine a preferred provider and then negotiate a contract with that provider with little or no concern for the original proposal of that preferred provider. The issue is not to what extent the contract entered into between the Lottery and AWI materially differed from the proposal initially submitted by AWI, which issue would require a factual determination and render inappropriate the summary judgment awarded Gtech below. Rather, what was at issue here was whether the Lottery and AWT were free to negotiate a contract without limitation once the competitive responder Gtech was eliminated by virtue of its less -competitive response to the RFP. Given this view of the primary issue presented, no factual determination was required. Further, it seems to us that to hold otherwise would be to approve the use by the Lottery of the RFP process for ranking purposes only and would result in a disincentive for responding vendors to submit accurate and responsible responses to RFPs. We hold that Gtech was entitled to rely on the RFP process in submitting a responsive proposal under Florida's system of competitive bidding and that the Lottery now cannot ignore those laws in reaching a new agreement which may in the final analysis bear little resemblance to the proposal that earned AWI preferred provider status in the first instance. Next, we are not persuaded by Appellants' arguments that the type of contract involved here is the same as ones for provision of legal or engineering services or the like which may be statutorily acquired through a process of direct negotiations without complying with requirements of Chapter 287. Having an attorney or an engineer or a landscape architect on board, as it were, is light-years away from awarding a multi-million dollar contract for furnishing the gaming system that makes Florida's lottery work. Finally, we are cognizant of the fact that affirming the trial court's judgment will not, nor should it, result in the award of a gaming contract to Gtech. It is of no moment to us which vendor is successful in securing said contract. Our only concern is that the procedure utilized in the award comport with the requirements imposed by Chapter 287, Florida Statutes, from which mandate the WESTLAW 9 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 State, Dept. of Lottery v. Gtech Corp., 816 So.2d 648 (2001) Lottery is not exempt. To some, this decision will be interpreted as penalizing AWI for the shortcomings of the process which resulted in this dispute. To others, the prospect of returning to ground zero will be frustrating, at best. *654 However, we believe that fundamental fairness requires the decision we reach today. We ascribe no intentional wrongdoing to any party to this dispute. The failure here seems to us to be one of commitment, rather than conscience. AFFIRMED. BOOTH, J., concurs; KAHN, J., dissents with opinion. KAHN, J., dissenting. I conclude that this case turns on the question of whether Specification 8.7.2 of the Lottery's Request for Proposals (RFP) is valid. Neither the court below, nor the majority, has undertaken to strike down that specification of the RFP. Because I conclude that the specification is valid, I would uphold the contract negotiated between the Lottery and AWI. Specification 8.7.2 is set out in full in the majority opinion. Op. at 651. The specification closely resembles the language of Rule 53ER87-13(5)(1), Florida Administrative Code (replaced by 53ER97-39(5)(i)5, F.A.C.). In particular, both the administrative rule and the RFP direct the Secretary of the Lottery to negotiate a contract with the most highly qualified firm. Both the rule and the RFP envision the prospect of failed negotiations, because they both direct that if the Secretary is unable to negotiate successfully with the most highly ranked firm, those negotiations shall be terminated and the Secretary "shall then undertake negotiations with the second -most qualified firm." 53ER87-13(5)(i)5, F.A.C. Because the rule and the RFP both contemplate failed negotiations, I have no alternative but to conclude that the RFP envisioned negotiations of substantive terms such as price and implementation plans. I would find, therefore, that Specification 8.7.2 is lawful, and that the Secretary of the Department of the Lottery followed the requirements of this provision by engaging in negotiations, ultimately successful, with AWI. The Department of the Lottery is uniquely endowed by the Legislature. Specifically, the Legislature has recognized Submitted into the pyll c �� L record for itepl(s) I e that the Department of the Lottery should function "as much as possible in the manner of an entrepreneurial business enterprise." § 24.102(2)(b), Fla. Stat. (1995). The Legislature has also recognized "that structures and procedures appropriate to the performance of other governmental functions are not necessarily appropriate to the operation of a state lottery." Id. Moreover, the Lottery is legislatively authorized to "adopt rules providing alternative procurement procedures." § 24.105(14), Fla. Stat. (1995). The Legislature clearly intended the Lottery to function, to the extent possible, as a business. Indeed, the primary purpose of the Lottery is to make money so that the people of Florida may "benefit from significant additional moneys for education...." § 24.102(1), Fla. Stat. (1995). Given the statutes and rules applicable to the Lottery's procurement function, the contract negotiated by the Lottery should be upheld absent a finding illegality, fraud, oppression, or misconduct. See Department of Transp. v. Groves Watkins, 530 So.2d 912, 913 (Fla. 1988); cf. Brasfield & Gorrie General Contractor, Inc. v. Ajax Constr. Co., Inc., 627 So.2d 1200 (Fla. 1st DCA 1993)(noting in dicta, that city's negotiations with the highest ranked bidder, where such negotiations altered the terms of an invitation for bids, were not arbitrary and capricious.) The trial court made no such finding. Even if some legal challenge could be framed to the validity of Specification 8.7.2, GTECH has waived the right to make such a challenge. GTECH has never administratively challenged the Lottery's *655 authority to negotiate a contract pursuant to the specifications of the RFP. As a sophisticated bidder, GTECH could not have failed to recognize that Specification 8.7.2 contemplated substantive negotiations, and further contemplated the possibility of successive negotiations based upon a ranking of bidders. Nevertheless, GTECH failed to file a protest directed toward that particular specification. The Administrative Procedure Act requires that a notice of protest of specifications contained in a RFP shall be filed by a dissatisfied prospective bidder "within 72 hours after the receipt of notice of the project plans and specifications or intended project plans and specifications in an invitation to bid or request for proposals, and the formal written protest shall be filed within ten days after the date the notice of protest is filed." § 120.53(5)(b), Fla. Stat. (1995). Because GTECH was on notice that the RFP contemplated substantive negotiations between the Lottery and the highest ranked bidder, it was required by I WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 5 State, Dept. of Lottery v. Gtech Corp., 816 So.2d 648 (2001) statutory law to protest the specification, if it felt such specification was contrary to Florida procurement law. GTECH argues that it did not interpret the negotiation provision as permitting negotiation on items such as scope of work and price. This argument is unavailing, particularly in the context of the Lottery's need to implement a highly sophisticated and expansive on-line lottery system. During the time period in which this case has transpired, the area of information technology has undergone incredible changes in almost unimaginably short time intervals. I find it inconceivable that anyone reading Specification 8.7.2 would not conclude that the Lottery might reserve the right to negotiate scope of work, and thereby, unavoidably, negotiate price. I would therefore conclude that GTECH has waived its right to challenge Specification 8.7.2. The final order affirmed by the majority of this panel is troubling. The order does not set aside specification 8.7.2, but merely finds that the Lottery treated AWI "more favorably in the negotiated contract which was not even the subject of the competitive bidding process." It is, of course, self evident that the ultimately negotiated contract was not the subject of a competitive bidding process. This is the nature of the RFP here at issue. Certainly, the Secretary's right to negotiate under the RFP could not be made subject to a competitive bidding process. Moreover, no one reading the final judgment can determine what the Lottery's authority now is. The trial court did not strike down or judicially alter Specification 8.7.2. How, then, is the Lottery to know whether its negotiations will later be found by a circuit judge to be unacceptable? This sort of uncertainty is the antithesis of the entrepreneurial business operation envisioned by the Legislature for the Florida Lottery. Again, no court should strike down this contract absent a finding that the contract transgresses the limitations imposed by Groves—Watkins. For these reasons, I would reverse the order on review and find that the contract negotiated between the Lottery and AWI is valid according to Florida law and the Request for Proposals. ON MOTIONS FOR REHEARING, REHEARING EN BANC, AND FOR CERTIFICATION Submitted into the on /I (I) I I b City Clerk PER CURIAM. Appellants, State of Florida, Department of the Lottery, and Automated Wagering International, Inc., have each filed motions seeking rehearing, rehearing en bane, or certification of questions to the Florida Supreme Court. In response to these motions, we certify the following *656 questions as being of great public importance: 1. Does the Department of the Lottery, pursuant to a specification included in a request for proposals, have the authority to negotiate substantive contract terms with the most highly qualified respondent, and pursuant to such negotiations, award a contract that must be upheld absent a finding of illegality, fraud, oppression, or misconduct? 2. Where the negotiation clause in a request for proposals indicates that the agency will negotiate a contract with the most highly qualified respondent, including conditions and price that the agency deems to be fair, competitive, and reasonable, may an unsuccessful proposer that has failed to administratively contest the negotiation clause later attack the contract in circuit court on the basis that the negotiations conducted pursuant to the terms of that clause were impermissible? We deny the motions for rehearing and for rehearing en bane. BOOTH and KAHN, JJ., concur. MINER, J., specially concurring with opinion. MINER, J., specially concurring with opinion. Because the issues presented herein need to be resolved without further delay, I concur in the denial of the motions for rehearing and rehearing en bane. I also concur in the substance of the questions certified to the Florida Supreme Court although, were the decision mine alone to make, I might frame them a bit differently. All Citations 816 So.2d 648, 26 Fla. L. Weekly D621, 26 Fla. L. Weekly D1733 WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 6 1 State, Dept. of Lottery v. Gtech Corp., 816 So.2d 648 (2001) record or it m(s) bV, I k ;',�_ on City Clerk Footnotes The trial court's finding and reasoning supporting the Final Summary Judgment for Gtech are, as follows: The case concerns a challenge to the March 9, 1999 contract now in existence between the Florida Lottery and its longtime service/hardware provider, AWI. There are no material fact issues as to the basic legal question. That question is whether the Lottery could eliminate all but the lowest bidder in an administrative RFP process and then later privately negotiate the mandatory and price terms of the contract which have been set out in the AWI proposal by which it gained the status of a winning bidder. It is clear that the negotiated contract was financially more favorable ' to AWI than was the proposal by which it became the winning bidder. The Lottery and AWI contend that they were no longer bound by the competitive bidding statutes but were free to negotiate without limitation after Gtech was eliminated from the process. The court finds this position contrary to Florida law and untenable under the concept of fair competition among bidders. Long ago the Florida Supreme Court made it clear that public bidding laws were designed to prevent "opportunities for favoritism, whether any favoritism is actually practiced or not ... [.]° Wester v. Belote, 103 Fla. 976, 138 So. 721, 724 (1931). This basic tenant [sic] remains the law of Florida and the facts are uncontested that the Lottery treated its preferred vendor, AWI, more favorably in the negotiated contract which was not even the subject of the competitive bidding process. Wherefore, the motions for summary judgment as to Count II filed by AWI and the Lottery are denied, and Gtech's cross-motion for summary judgment as to Count II is granted. The contract is declared null and void and the defendants are permanently enjoined from proceeding under the March 9, 1999 contract. This order shall not take effect until five days after the date it is rendered in order to allow the Lottery and/or AWI to perfect an appeal, if they so desire. Further, this order does not prohibit the Lottery from continuing to operate on an interim basis under its emergency powers. 2 Additionally, we note that the issue of standing was not properly preserved for review and therefore we do not specifically address this issue. 3 A close reading of the majority opinion and dissent herein will reflect that the judges in the majority do not interpret specification 8.7.2 as expansively as does our esteemed dissenting colleague. End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works. M I WESTLAVV © 2016 Thomson Reuters. No claim to original U.S. Government Works. 11 i Submitted into the p c ``nn Golden Mfg. Co., Inc. v. U.S., 107 Fed.Cl. 264 (2012) record r ite (s) _._._ op— �-�ityt-'ierk 107 Fed.Cl. 264 United States Court of Federal Claims. GOLDEN MANUFACTURING CO., INC., Plaintiff, V. The UNITED STATES, Defendant. No. 12-317 C. I Oct. 1, 2012.' Synopsis Background: Offeror filed pre -award bid protest complaint, challenging actions of agency as it conducted a procurement for Army combat uniforms. Offeror sought a permanent injunction and declaratory relief, alleging that the solicitation was materially changed by a subsequent amendment and, as a consequence, that a new competition had to issue for the revised requirements for uniform trousers. Parties filed cross-motions for judgment on the administrative record. (Holding:1 The Court of Federal Claims, Bush, J., held that revised requirements for flame resistant trousers contained in amendment to trousers requirement advertised in solicitation for Army combat uniforms was not a cardinal change to solicitation, and therefore neither Competition in Contracting Act (CICA) nor federal acquisition regulation (FAR) was violated by the issuance of amendment, and agency's decision to proceed with the second phase evaluation of the remaining offerors. Defendant's motion granted. West Headnotes (11) 111 Public Contracts Parties; standing r' United States Parties; standing Bid protest standing is limited to those plaintiffs who are actual or prospective bidders or offerors whose direct economic interest would be affected by the award of the contract or by the failure to award the contract; in the context of a pre -award bid protest, a plaintiff must establish that it has suffered or will suffer a non -trivial competitive injury which can be addressed by judicial relief. 28 U.S.C.A. § 1491(b)(1). 2 Cases that cite this headnote 121 Public Contracts Scope of review United States Scope of review Under arbitrary and capricious standard, procurement decision may be set aside if it lacked a rational basis or if the agency's decision-making involved a clear and prejudicial violation of statute, regulation or procedure. 5 U.S.C.A. § 706(2). Cases that cite this headnote 131 Public Contracts Rights and Remedies of Disappointed Bidders;Bid Protests Public Contracts Evidence United States Riahts and Remedies of Disappointed Bidders;Bid Protests United States Evidence De minimis errors in the procurement process do not justify relief; bid protest plaintiff bears the burden of proving that a significant error marred the procurement in question. 5 U.S.C.A. § 706(2); 28 U.S.C.A. § 1491(b)(1). Cases that cite this headnote 141 Administrative Law and Procedure Theory and grounds of administrative decision Court will uphold an agency decision of less than ideal clarity if the agency's path may reasonably be discerned. 5 U.S.C.A. § 706(2). I WESTLAW n 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 Submitted into the pulie Golden Mfg. Co., Inc. v. U.S., 107 Fed.Ci. 264 (2012) record fps item4s) 2 Cases that cite this headnote 161 Public Contracts „ Parties; standing United States et— Parties; standing If amendment of solicitation was a cardinal change to the trousers requirement, prospective bidder, which was an actual bidder in procurement under the original solicitation, suffered a non -trivial competitive injury when the agency failed to issue a new solicitation; thus, prospective bidder had standing to bring pre -award bid protest. 28 U.S.C.A. § 1491(b)(1). 3 Cases that cite this headnote 171 Public Contracts Necessity for submission to competition in general United States Necessity for submission to competition in general In bid protest context, a "cardinal change" occurs when the government effects an alteration in the work so drastic that 191 Public Contracts Necessity for submission to competition in general United States _- Necessity for submission to competition in general Regardless of the procurement scenario, inquiry under cardinal change doctrine is fundamentally the same, whether government modifications changed the contract requirements enough to circumvent the statutory requirement of competition. 41 U.S.C.A § 3301(a)(1). 1 Cases that cite this headnote 1101 Public Contracts Necessity for submission to competition in general United States Necessity for submission to competition in general A cardinal change to a solicitation may constitute a violation of Competition in Contracting Act (CICA) and federal acquisition regulation (FAR), unless the agency takes steps to re -open the WESTLAW Oc 2.016 Thomson Reuters. No claim to original U.S. Government Works. 2 it effectively requires the contractor to Cases that cite this headnote perform duties materially different from those originally bargained for. 151 Public Contracts Parties; standing Cases that cite this headnote United States Parties; standing 181 Public Contracts "Non -trivial competitive injury" test for Necessity for submission to competition pre -award bid protest standing was proper in general measure of prejudice in a pre -award protest United States despite the fact that protestor submitted a bid Necessity for submission to competition in response to the original solicitation and in general its bid was evaluated by agency on two of A bid protest that a task order or delivery the three evaluation criteria; no bids for a order exceeds the scope of an underlying procurement under a new solicitation were in indefinite delivery/indefinite quantity (ID/ the record, and little factual basis existed for IQ) contract implicates the cardinal change determining protestor's "substantial chance" doctrine. 28 U.S.C.A. § 1491(b)(1). of award under a new solicitation. 28 U.S.C.A. § 1491(b)(1). Cases that cite this headnote 2 Cases that cite this headnote 161 Public Contracts „ Parties; standing United States et— Parties; standing If amendment of solicitation was a cardinal change to the trousers requirement, prospective bidder, which was an actual bidder in procurement under the original solicitation, suffered a non -trivial competitive injury when the agency failed to issue a new solicitation; thus, prospective bidder had standing to bring pre -award bid protest. 28 U.S.C.A. § 1491(b)(1). 3 Cases that cite this headnote 171 Public Contracts Necessity for submission to competition in general United States Necessity for submission to competition in general In bid protest context, a "cardinal change" occurs when the government effects an alteration in the work so drastic that 191 Public Contracts Necessity for submission to competition in general United States _- Necessity for submission to competition in general Regardless of the procurement scenario, inquiry under cardinal change doctrine is fundamentally the same, whether government modifications changed the contract requirements enough to circumvent the statutory requirement of competition. 41 U.S.C.A § 3301(a)(1). 1 Cases that cite this headnote 1101 Public Contracts Necessity for submission to competition in general United States Necessity for submission to competition in general A cardinal change to a solicitation may constitute a violation of Competition in Contracting Act (CICA) and federal acquisition regulation (FAR), unless the agency takes steps to re -open the WESTLAW Oc 2.016 Thomson Reuters. No claim to original U.S. Government Works. 2 Golden Mfg. Co., Inc. v. U.S., 107 Fed.Cl. 264 (2012) competition and disclose its changed contract requirements to potential offerors. 41 U.S.C.A § 3301(a)(1); 48 C.F.R. § 15.206(e). 1 Cases that cite this headnote fill Public Contracts Necessity for submission to competition in general United States Necessity for submission to competition in general Revised requirements for flame -resistant trousers contained in amendment to trousers requirement advertised in solicitation for Army combat uniforms was not a cardinal change to solicitation, and therefore neither Competition in Contracting Act (CICA) nor federal acquisition regulation (FAR) was violated by the issuance of amendment, and agency's decision to proceed with the second phase evaluation of the remaining offerors; an offeror responding to original solicitation would have anticipated that agency would update the flame resistant fabric specifications as an improved flame resistant fabric became available and that corresponding price proposals would increase, and record did not indicate that different offerors would have competed for the lots of trousers, or that their price proposals would have been restructured in response to the changes in the evaluative quantities of the varieties of trousers announced in the amendment. 41 U.S.C.A § 3301(a)(1); 48 C.F.R. § 15.206(e). Cases that cite this headnote Attorneys and Law Firms *266 Marc Lamer, Philadelphia, PA, for plaintiff. A. Bondurant Eley, United States Department of Justice, with whom were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, Harold D. Lester, Jr., Assistant Director, Washington, DC, for defendant. Submitted into the polic on T] I M I I �_• City Clerk OPINION AND ORDER BUSH, Judge. Plaintiff Golden Manufacturing Co., Inc. (Golden) filed its pre -award bid protest complaint on May 16, 2012. In its complaint, Golden challenges actions of the Defense Logistics Agency Troop Support (DLATS or Agency) as it conducts a procurement for Army combat uniforms based on Solicitation No. SPM1C1-10—R4025 (Solicitation). In this protest, Golden seeks a permanent injunction and declaratory relief, alleging that the Solicitation was materially changed by a subsequent amendment and, as a consequence, that a new competition must issue for the revised requirements for uniform trousers. The administrative record (AR) of this procurement was originally filed on May 31, 2012, and corrections to the AR were filed on June 8, 2012, June 22, 2012 and July 12, 2012. Briefing was filed according to an expedited schedule and oral argument was held on July 24, 2012. As discussed below, the Agency's modification of the Solicitation did not violate statutory requirements for full and open competition. Defendant's motion for judgment on the administrative record is therefore granted, and plaintiffs motion for judgment on the administrative record is denied. BACKGROUND I. The Solicitation The Solicitation for Army combat uniforms may be viewed as a bundle of six smaller solicitations, pursuant to which DLATS would obtain three lots of coats and three lots of trousers by making six separate contract awards. Three of the awards would be for Lots 0001C, 0002C and 0003C, where "C" indicates coats, and three of the awards would be for Lots 0001T, 0002T and 0003T, where "T" indicates trousers. Plaintiff in this bid protest only contests the trousers portion of the procurement. The Solicitation issued on January 25, 2010. A. Lots 0001T, 0002T and 0003T The Agency wished to procure the combat uniform trousers from multiple offerors, while reserving the right to award multiple lots to a single source if such a course of WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 Submitted into the public Golden Mfg. Co., Inc. v. U.S., 107 Fed.Cl. 264 (2012) record Jor itQm(s) , 4 3V- T action were deemed to be in the government's best interest. AR at 2. Of the total number of trousers the Agency was to purchase under the Solicitation, Lot OOO1T would comprise 55.52% of the total, Lot 0002T would comprise 28.15% of the total, and Lot 0003T would comprise 16.33% of the total. Id. The maximum quantity of trousers to be ordered annually in each lot remains constant in the base year and four option years. Id. at 13, 15, 17. The annual maximum order of trousers for Lot OOO1T is 764,150, for Lot 0002T the maximum is 387,500 and for Lot 0003T it is 224,750. Z Id Within each lot, three varieties of trousers may be purchased. Although the varieties of trousers share many common characteristics, the fabrics from which the trousers would be made differ. For evaluative purposes, the relative proportion of the three varieties of trousers remains constant in all three lots. AR at 14-18. The varieties of trousers in each lot are the subject of much argument in this bid protest, and for this reason the court discusses those varieties in some detail here. *267 The fabrics for the trousers, all in a camouflage pattern, are described as being either Type I ("50/50% nylon/cotton ripstop blend") or Type 11 ("65/25/10 flame resistant rayon/para-aramid/nylon blend"), and as being either untreated with insecticide (Class 1) or treated with the insecticide Permethrin (Class 2). AR at 108- 09. There are three varieties of trousers in each lot, with the percentage of each variety indicated for evaluative purposes: Type 1, Class 1 (62.5% of each lot); Type 11, Class 1 (18.75% of each lot); and, Type 11, Class 2 (18.75% of each lot). Id. at 14-18; see also Pl.'s Mot. at 4. All varieties of trousers are to be constructed according to Pattern Style PD07_14 (October 7, 2009). AR at 44. All varieties of trousers are to be "made in accordance with [Purchase Description] GL/PD 07-14A dated June 10, 2009." Id. B. Evaluation Procedures and Pertinent Solicitation Terms The Solicitation permits a two-phase evaluation procedure if numerous offers are received, a condition which indeed occurred. In essence, the Agency could eliminate less -competitive offerors during a first phase screening process: During the first phase of this process, all offeror[s] Product Demonstration Models (PDM) and proposed prices will be evaluated. PDM and pricing are of equal importance during the first phase. Based off of this initial evaluation, only those firms that have submitted the most highly rated PDM's and who have submitted price proposals that are realistic and competitive with other offerors who have submitted highly rated PDM's will be included in the second phase. Offerors not included in the second phase will be promptly notified that their offer has been eliminated from competition and no proposal revisions will be considered. AR at 188. As this Solicitation section demonstrates, offerors were warned that their product sample (the "PDM") and their proposed price could be determinative of their opportunity to continue on in the competition for the lots of trousers. The second phase of the evaluation would introduce a third evaluation factor, that of past performance. AR at 188. The Solicitation provides this description of the second phase evaluation and further procedures: Those offerors selected for the second phase will then be evaluated for past performance/experience.... These evaluations will then be combined with the first phase evaluations. As outlined ... below, the technical factors when combined are significantly more important than pricing. After the combination of the first and second phase evaluations the contracting officer will determine whether to establish a competitive range so as to enter into discussions or to award without discussions. Id The Solicitation indicates that the proposals offering the best value to the Agency, not necessarily the lowest - priced offers, would be chosen for award. Id. at 189. WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 II Golden Mfg. Co., Inc. v. U.S., 107 Fed.Cl. 264 (2012) . 11 u 11 u .Is Each offeror was required to provide one PDM, or product sample, of the Type I, Class 1 trousers. AR at 4. The product samples would be rated for how well they matched the Purchase Description in terms of visual, dimensional and manufacturing requirements. AR at 189. The adjectival rating options for the product samples are Exceptional, Very Good, Satisfactory, Marginal or Unsatisfactory. Id. at 190. The total evaluated price for each offer for a particular lot of trousers would encompass the base year and the four option years. AR at 193. The total evaluated price is calculated by taking unit prices and multiplying them against the annual evaluative quantities (which in this procurement were the maximum possible amount) of each variety of trousers in a lot over five years. Id. An offeror's total price would also be evaluated by comparing the proposed price to other offerors' prices, and by ensuring that the offered price was "fair and reasonable." Id. Finally, the Solicitation contains several statements that put offerors on notice that the awarded contract for each lot might vary from the technical specifications or the evaluative quantities of varieties of trousers noted in the Solicitation. As to technical specifications, the Solicitation states that: *268 The Government reserves the right to perform conversions to the various combat utility uniforms or any new combat utility uniform with similar patterns and specifications, shall the Government determine a need. AR at 3. The Solicitation also includes a "Changes" clause. Id. at 179. That clause provides that the "Contracting Officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract in ... [d]rawings, designs, or specifications when the supplies to be furnished are to be specially manufactured for the Government in accordance with the drawings, designs, or specifications." 48 C. F.R. § 52.243-1(a) (2011). As to the quantities to be purchased in each lot, and the relative proportion of the varieties of trousers to be purchased in each lot, the Solicitation warns offerors that: Submitted into the on ] (jb ( ( b City Clerk Offers will be evaluated based on the Evaluative quantity maximum, which is based on the maximum for each lot spread over the three types of coats or trousers. This is merely for evaluation purposes and the Government reserves the right to order any combination of the items on subject lot. AR at 3. In the court's view, the Solicitation provides for an evaluation scheme, where, in the first phase, offerors would be screened based on their ability to produce a conforming product sample and their ability to match the most competitive prices under consideration by the Agency. The Solicitation did not promise, however, that the Pattern Style, the Purchase Description, or the relative proportion of the varieties of trousers within each lot would remain constant throughout the procurement process or throughout the five years of potential contract performance. II. History of the Procurement A. Amendments 00014013 and First Phase Evaluations In Amendments 0001 through 0011, the Agency made several changes to the Solicitation, many of which were changes to or clarifications of the Purchase Description. See, e.g., AR at 195, 198, 204, 207, 209, 213, 216-17, 222, 225. The Agency also extended the deadline for proposals from February 24, 2010 to March 10, 2010. Id. at 223. Golden submitted bids for Lots 000 IT, 0002T and 0003T, and plaintiffs product sample for these proposals was evaluated on June 8, 2010. Id. at 618. Later, however, the competition for Lots OOO1T, 0002T and 0003T was re -opened by Amendments 0012-0013, and price revisions were solicited (but not required) from all offerors. AR at 226, 237. Final price proposals were due on September 23, 2010. Id. at 237. [] caused Golden to be eliminated from the competition for all three lots of trousers during the first phase evaluation process. The first phase eliminations occurred on April 28, 2011, and Golden was notified of its elimination on May 25, 2011. AR Tabs 6-7. B. Amendments 0014-0015 and Changes Affecting Second Phase Contenders IWESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 5 Submitted into thepu lic (� Golden Mfg. Co., Inc. v. U.S., 107 Fed.Cl. 264 (2012) record or it (s) The Agency issued Amendment 0014 to the Solicitation on January 12, 2012. This amendment gave offerors that remained in the competition after the first phase cuts had been made an opportunity to revise their prices once again. 3 AR at 243. The copy of the amendment in the record before the court does not indicate, however, when such price revisions were due. Subsequently, Amendment 0015 (hereinafter Amendment 15) to the Solicitation was issued on April 17, 2012. This amendment again permitted offerors still in contention for award of the lots of trousers a chance to revise their prices. AR at 269. Although the submission date is not in the record, it appears that the price revisions were due on or about May 17, 2012. Compl. 131. Amendment 15 went further than simply allowing offerors to update their prices. Changes were made to the evaluative quantities *269 in each of the lots of trousers, although the total number of trousers in each lot did not change.4 Compare AR at 13-18 with id. at 273-75. In addition, the fabrics for the three varieties of trousers were changed from those specified in the original Solicitation. Now, each lot of trousers would include: (A) Type I, Class 2 trousers; (B) Type III, Class 2 trousers; and, (C) Type III, Class 2 trousers in a particular pattern referred to as Operation Enduring Freedom Camouflage Pattern (OCP).5 Finally both the Pattern Style and Purchase Description were replaced with updated versions developed by the government, namely Pattern Style PD07_14 (January 30, 2012), Pattern Style 1`1307_14FR (November 15, 2011), and Purchase Description GL/PD 07-14C (October 4, 2011). AR at 332. Thus, it is clear that by 2012 the Agency's requirements for trousers had changed, and certain of the figures used in the Agency's formula for calculating an offeror's total evaluated price had also changed. The question before the court is whether those changes constitute a cardinal change of the contract work so that a new competition for the trousers is required by law. C. Golden's Challenge to the Procurement of the Trousers On April 24, 2012, Golden wrote DLATS and challenged plaintiffs exclusion from the ongoing competition for trousers, in light of the changes to the Solicitation made by Amendment 15. AR at 693. The letter stated that [Golden] ... hereby requests that its proposal on Lots 0001T, 0002T and 0003T (i.e., the Trouser lots) be restored to the competition so that it is permitted to submit a revised proposal on the Trouser lots.... The basis for this request, as will be explained more fully below, is that the changes (both to the items being procured and the evaluation methodology) implemented by Amendment 0015 are so extensive as to render the original evaluations (which resulted in [Golden's] proposal on the Trouser lots being excluded from the competition) no longer valid evaluations. Indeed, the changes are extensive enough to call into question whether FAR 15.206(e)[, 48 C.F.R. § 15.206(e) (2011),] is triggered, requiring cancellation of the Solicitation. Id. The letter proceeded to detail the changes made by Amendment 15. In conclusion, Golden asserted that Amendment 0015 made substantial changes in the garments to be supplied clearly affecting the price of the garments and in the mathematical formula for evaluating the offerors' prices. This came more than two (2) years since submission of the original proposals and nearly a year since the original evaluations. Thus, the original evaluations, which resulted in [Golden's] trouser proposal being eliminated from the competition no longer form a valid basis for the source selection decisions.... [W]here an amendment makes changes in requirements that are directly related to the reasons an offeror had been excluded from the competition, the offeror should be permitted to respond.... [Golden] believes the changes included in Amendment 0015, changing both the sewing operations and the materials specified bear a WESTL.AWr0 2016 Thomson Reuters. No claim to original U.S. Government Works. 6 Golden Mfg. Co., Inc v U.S., 107 Fed.Cl. 264 (2012) direct relationship to the reasons [Golden's) proposal was excluded from the competitive range, 6 i, e., PDM and price. Therefore, *270 it should be given the opportunity to submit a revised proposal on the trouser lots in response to Amendment 0015. Id. at 695-96. In a response sent May 9, 2012, the Agency disagreed with Golden's analysis of Amendment 15. Golden would not be reinstated in the competition for the lots of trousers because [t]he changes included in Amendment 0015 are considered within the scope of the solicitation and are not so substantial as to exceed what prospective offerors reasonably could have anticipated. Furthermore, the most significant changes in price as a result of Amendment 0015—adding Permethrin to the [Type I trousers] and changes in the [flame resistant (FR) ] Fabric—are largely uniform across industry as there is little price difference between Permethrin applicators and the price charged by the sole FR fabric supplier. Therefore, the determinations made during the two-phase technical/price evaluation are still valid. AR at 697. Approximately one week later, Golden filed its bid protest in this court, seeking cancellation of the Solicitation and resolicitation of the trousers requirement. Compl. 135. In its motion for judgment on the administrative record, plaintiff repeats that request, and, in the alternative, seeks the restoration to the competition of all offerors who were eliminated in the first phase of the Agency's evaluation of proposals for the lots of trousers. Pl.'s Mot. at 21. DISCUSSION Submitted into the p blic record fp! rt (s) _ on --I ILo I I b _ City Clerk I. Bid Protest Jurisdiction This court "shall have jurisdiction to render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement." 28 U.S.C. § 1491(b)(1) (2006). The jurisdictional grant is "without regard to whether suit is instituted before or after the contract is awarded." Id As a threshold jurisdictional matter, however, the plaintiff in a bid protest must show that it has standing to bring the suit. Info. Tech. & Applications Corp, v. United States, 316 F.3d 1312, 1319 (Fed.Cir.2003) (ITAC ); Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1369 (Fed.Cir.2002) (citation omitted). II. Standard of Review for Judgment on the Administrative Record Rule 52.1(c) of the Rules of the United States Court of Federal Claims (RCFC) provides for judgment on the administrative record. To review a motion, or cross- motions, under RCFC 52.1(c), the court asks whether, given all the disputed and undisputed facts, a party has met its burden of proof based on the evidence in the record. Bannum, Inc. v. United States, 404 F.3d 1346, 1356-57 (Fed.Cir.2005). The court must make factual findings where necessary. Id. The resolution of RCFC 52.1(c) cross-motions is akin to an expedited trial on the paper record. Id III. Bid Protest Review Ill The court first examines whether the plaintiff in a bid protest has standing to bring the suit. ITAC, 316 F.3d at 1319. Standing arises from prejudice, which is present if the plaintiff establishes that it is an interested party with a direct economic interest in the procurement. Id. (citing Am. Fedn of Gov't Employees v. United States, 258 F.3d 1294, 1302 (Fed.Cir.2001) (AFGE )). Bid protest standing is limited to those plaintiffs who are " 'actual or prospective bidders or offerors whose direct economic interest would be affected by the award of the contract or by the failure to award the contract.' " Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1359 (Fed.Cir.2009) (quoting AFGE, 258 F.3d at 1302). In the context of a pre -award bid protest, a plaintiff must establish that it has suffered or will suffer a " 'non -trivial competitive injury IWESTLAW Q 2016 Thomson Reuters. No claim to original US. Government Works. 7 Submitted into the pct71}blic A� [� 9 Golden Mfg. Co., Inc. v. U.S., 107 Fed.Cl. 264 (2012) record or it v) ,�C;1 y �j` 1, *271 which can be addressed by judicial relief."' 7 Id at 1362. 121 As the United States Court of Appeals for the Federal Circuit has stated, "the proper standard to be applied [to the merits of] bid protest cases is provided by 5 U.S.C. § 706(2)(A) [ (2006) ]: a reviewing court shall set aside the agency action if it is `arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.' " Banknote Corp. of Am. v. United States, 365 F.3d 1345, 1350-51 (Fed.Cir.2004) (citing Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054, 1057- 58 (Fed.Cir.2000)). Under this standard, a procurement decision may be set aside if it lacked a rational basis or if the agency's decision-making involved a clear and prejudicial violation of statute, regulation or procedure. Emery Worldwide Airlines, Inc. v. United States, 264 F.3d 1071, 1085-86 (Fed.Cir.2001) (citing Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1332-33 (Fed.Cir.2001)). "The arbitrary and capricious standard applicable [in bid protests] is highly deferential." Advanced Data Concepts, 216 F.3d at 1058. [31 [41 De minimis errors in the procurement process do not justify relief. Grumman Data Sys. .Corp. v. Dalton, 88 F.3d 990, 1000 (Fed.Cir.1996) (citing Andersen Consulting v. United States, 959 F.2d 929, 932-33, 935 (Fed.Cir.1992)). The bid protest plaintiff bears the burden of proving that a significant error marred the procurement in question. Id. (citing CACI.Field Servs., Inc. v. United States, 854 F.2d 464. 466 (Fed.Cir.1988)). Examples of arbitrary and capricious agency action include "when the agency `entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or [the decision] is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.' " Ala. Aircraft Indus., Inc. -Birmingham v. United States, 586 F.3d 1372, 1375 (Fed.Cir.2009) (quoting Motor Vehicle Mfrs. Ass'n v. StateFann Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983)) (alteration in original). The court will, however, "uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned." Bowman Transp., Inc. v. Arkansas—Best Freight Sys., Inc., 419 U.S. 281, 286, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974) (citation omitted). " `If the court finds a reasonable basis for the agency's action, the court should stay its hand even though it might, as an original proposition, have reached a different conclusion as to the proper administration and application of the procurement regulations.' " Honeywell, Inc. v. United States, 870 F.2d 644, 648 (Fed.Cir.1989) (quoting M. Steinthal & Co. v. Seamans, 455 F.2d 1289, 1301 (D.C.Cir.1971)). If, on the other hand, "the trial court determines [that] the government acted without rational basis or contrary to law when evaluating the bids and awarding the contract[,] ... it proceeds to determine, as a factual matter, if the bid protester was prejudiced by that conduct." Bannuin, 404 F.3d at 1351. Plaintiff again bears the burden of proof. Id, at 1358. "Prejudice is a question of fact." Id at 1353 (citing Advanced Data Concepts, 216 F.3d at 1057). IV. Standing A. Whether the Non—Trivial Competitive Injury Test Applies in These Circumstances 151 Defendant argues that the "non -trivial competitive injury" test for pre -award bid protest standing identified in Weeks Marine should not be the measure of prejudice in a pre -award protest where, as here, the protestor has submitted a bid. Def.'s Mot. at 10 & n. 6 (relying on CS -360, LLC v. United States, 94 Fed.Cl. 488, 495 n. 6 (2010)). There is some support for defendant's position. To resolve this question, a review of Weeks Marine and cases declining to apply the standing test identified in Weeks Marine to a subset of pre -award bid protests is required. The protestor in Weeks Marine challenged a decision by the Army Corps of Engineers *272 (Corps) to change its method of procuring contracts for dredging projects: The [challenged] solicitation represents a significant departure from current Corps practice. First, the solicitation employs a negotiated, rather than sealed bidding, format. Second, pursuant to the solicitation, multiple contractors will be awarded indefinite duration indefinite quantity multiple -award task order contracts .... It is envisioned that, thereafter, an unknown number ("indefinite quantity") of task orders will be issued under each of the contracts. [The] contractors will WESTLAW C) 2016 Thomson Reuters. No claim to original U.S. Government Works. 8 Submitted into the puhe recor for ' (� Golden Mfg. Co., Inc. v. U.S., 107 Fed.Cl. 264 (2012) f m(s) submit bids and will compete with each other for task orders as they arise. Through the solicitation, the Corps is seeking to cover all dredging projects within the South Atlantic Division over the next five years. 575 F.3d at 1355. The Federal Circuit then discussed whether the demonstration of the protestor's "substantial chance" of receiving the contract award but for the alleged agency error, the traditional test for standing in bid protests and the test proposed by the government in Weeks Marine, is the proper standard for pre -award bid protests: We have not had occasion to discuss what is required to prove an economic interest, and thus prejudice, in a case such as this, where a prospective bidder/offeror is challenging a solicitation in the pre -award context. In such a case, it is difficult for a prospective bidder/offeror to make the showing of prejudice that we have required in post -award bid protest cases. See, e.g., Statistica, 102 F.3d at 1582 (holding that a contractor lacked standing because it failed to show a "substantial chance it would have received the contract award but for" agency error). The reason of course is that, in a case such as this, there have been neither bids/offers, nor a contract award. Hence, there is no factual foundation for a "but for" prejudice analysis. Id at 1361 (citing Statistica, Inc. v. Christopher, 102 F.3d 1577, 1582 (Fed.Cir.1996)). The Federal Circuit concluded that rather than requiring the pre -award protestor to show that it had a "substantial chance" of contract award but for the agency error, a different standard should apply: [Me conclude that in a pre -award protest such as the one before us, [a] prospective bidder or offeror must establish "a non -trivial competitive injury which can be redressed by judicial relief" to meet the standing requirement of § 1491(b)(1). 1 Id at 1363. The "non -trivial competitive injury" test thus became the new, precedential standing test for pre -award bid protests brought before this court. See, e.g., Orion Tech., Inc. v. United States, 102 Fed.Cl. 218, 227 (2011) ("In ' most preaward bid protests decided after Weeks Marine, Inc. where standing was at issue, the court has analyzed a protester's direct economic interest under the Weeks Marine, Inc. test."). However, some opinions issued by this court have considered that the "substantial chance" test, not the "non -trivial competitive injury" test, should apply where bids have been received in a procurement that is challenged by a pre -award protest. See, e.g., CS - 360. 94 Fed.Cl. at 495 n. 6 ("The traditional `substantial chance' test, therefore, seems more appropriate given the facts of this [pre -award bid protest]."); DMS All—Star Joint Venture v. United States, 90 Fed.Cl. 653, 661 & n. 10 (2010) (applying the "substantial chance" test in a pre -award bid protest because the protestor challenged not the terms of the solicitation but the proposed award to a particular offeror); Med Dev. Int'l. Inc. v. United States, 89 Fed.Cl. 691, 701 (2009) (Medical Development ) ("The court finds that because this post -competitive range challenge to the competitive range determination is sufficiently analogous to a post -award challenge to award, the `substantial chance' test is the appropriate standard under which to evaluate [prejudice in] plaintiffs [pre- award bid protest]."). Subsequent pre -award bid protest opinions have noted that the "substantial chance" test for prejudice has been applied in some pre -award bid protests where bids have been received from the offerors, but, for a variety of reasons, these opinions have not stated that the "substantial chance" test was the correct test for standing in the case sub judice. See, e.g., Orion, 102 Fed.Cl, at 227- 28 (noting the lack of uniformity in this court's application of the Weeks Marine standing test, but declining to *273 choose between the competing tests for standing because the pre -award protestor in Orion lacked standing under either the "substantial chance" test or the "non -trivial competitive injury" test); ICP Northwest, LLC v. United States, 98 Fed.Cl. 29, 36 (2011) (citing CS -360 as an example of the "substantial chance" test being applied in pre -award protests where bids had been submitted, but applying the "non -trivial competitive injury" test instead); Magnunt Opus Techs., btc. v. United States, 94 Fed.Cl. 512, 531 n. 13 (2010) (distinguishing Medical Development and DMS All—Star as cases in which bids had been submitted by the protestors, whereas in Magnum Opus the protestors challenged an agency decision to not procure certain services, and concluding that the "non- trivial competitive. injury" standing test was appropriate in that pre -award bid protest). The court concludes that there is some room for debate as to whether the "non- trivial competitive injury" test should apply in pre -award 1 WESTLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. 9 Golden Mfg. Co., Inc. v. U.S., 107 Fed.Cl. 264 (2012) protests where bids have been received by the procuring agency. Although defendant has not challenged Golden's standing to bring this bid protest, standing is a threshold inquiry that the court must address. ITAC, 316 F.3d at 1319. The court notes, first, that this case is unlike DMS All– Star, a protest where all of the challenges to the proposed award decision were focused on alleged errors made in proposal evaluations and in conducting discussions with the offerors. See 90 Fed.Cl. at 660. In DMS All– Star, all the facts required to demonstrate the protestor's "substantial chance" of receiving the contract award, but for the agency's alleged errors, were available in the record. See id. at 662 (noting that the comparative ratings of the contenders for award showed that the protestor had a substantial chance of award, if the protestor won on the merits of its protest). Here, however, Golden asserts that the entire evaluation process of proposals was rendered invalid by an out - of -scope amendment to the Solicitation, and that a new solicitation for the Agency's changed trousers requirement should have issued. The inquiry to determine Golden's standing to bring such a protest asks whether Golden would be a prospective bidder on a new solicitation for the trousers and whether Golden would have a direct economic interest in the new procurement. No bids for such a procurement are in the record, and little factual basis exists for determining Golden's "substantial chance" of award under a new solicitation. Like the protestor in Weeks Marine, Golden seeks a change in the procurement vehicle chosen by the government, and the "but for" world that would follow the issuance of a new solicitation is not documented in the administrative record. For this reason, the court believes that the "non -trivial competitive injury" test for standing must be employed in this case, despite the fact that Golden submitted a bid in response to the original Solicitation and its bid was evaluated by DLATS on two of the three evaluation criteria. B. The Agency's Alleged Error in Refusing to Resolicit the Trousers Requirement Would Be a Non–Trivial Competitive Injury [6] It is clear that Golden would be a prospective bidder on a new solicitation for the trousers requirement. First, Golden was an actual bidder in this procurement and [ ] under the original Solicitation. Second, Golden contacted DLATS after Amendment 15 issued and requested that it Submitted into the p,lic record for it s) , J — � on _.,_.___... r11 er be allowed to re-enter the competition. S Third, Golden filed this protest demanding that the Agency cancel the Solicitation and issue a new solicitation for the changed trousers requirement. Thus, for purposes of this bid protest, Golden has shown that it would be a prospective bidder on a new procurement. As to Golden's non -trivial competitive injury, this is a closer question. It is clear that [ ]. Golden also has a history of successfully competing for contracts with the Agency for uniform coats. AR at 590-612. [ ], the court *274 cannot conclude that Golden's loss of an opportunity to respond to a new solicitation is only a trivial competitive injury. 9 See, e.g., Night Vision Corp. v. United States, 65 Fed.Cl. 365, 392 (2005) ("This initial evaluation of the administrative record [to identify prejudice to the protestor] is only to determine if there are sufficient facts in the record to establish standing—it does not include weighing facts and making substantive determinations on the merits.") (citation omitted). The court concludes that if, indeed, Amendment 15 was a cardinal change to the trousers requirement, Golden suffered a non -trivial competitive injury when the Agency failed to issue a new solicitation. Thus, Golden has standing to bring its protest before this court. V. The Cardinal Change Doctrine in the Bid Protest Context A. Caselaw 171 The cardinal change doctrine was developed to discern whether modifications to a government contract were severe enough to constitute a breach of contract by the government. See, e.g., Allied zVaterials & Equip. Co. v. United Stater, 569 F.2d 562, 563-64 (Ct.C1.1975) (citations omitted). A cardinal change "occurs when the government effects an alteration in the work so drastic that it effectively requires the contractor to perform duties materially different from those originally bargained for." Id. Another influential definition of the cardinal change doctrine states that: The basic standard, as the court has put it, is whether the modified job was essentially the same work as the parties bargained for when the contract was awarded. Plaintiff has no right to complain if the project it ultimately constructed Golden Mfg. Co., Inc. v. U.S., 107 Fed.Cl. 264 (2012) was essentially the same as the one it contracted to construct. Conversely, there is a cardinal change if the ordered deviations altered the nature of the thing to be constructed. Our opinions have cautioned that the problem is a matter of degree varying from one contract to another and can be resolved only by considering the totality of the change and this requires recourse to its magnitude as well as its quality. There is no exact formula.... Each case must be analyzed on its own facts and in light of its own circumstances, giving just consideration to the magnitude and quality of the changes ordered and their cumulative effect upon the project as a whole. In emphasizing that there is no mechanical or arithmetical answer, we have repeated that (t)he number of changes is not, in and of itself, the test[.] Air—A—Plane Corp. v. United States, 408 F.2d 1030, 1033 (Ct.Cl. 1969) (internal quotations and citations omitted). The cardinal change doctrine has found use in the bid protest context, as well. In AT & T Communications, Inc. v. Wiltel, Inc., 1 F.3d 1201 (Fed.Cir.1993) (AT & T ), the court explained how the cardinal change doctrine should be applied when reviewing contract modifications to ensure that competition requirements are met by a procuring agency: This [bid protest] does not ask whether Government modifications breached a contract, but asks instead whether Government modifications changed the contract enough to circumvent the statutory requirement of competition. The cardinal change doctrine asks whether a modification exceeds the scope of the contract's changes clause; this case asks whether the modification is within the scope of the competition conducted Submitted into the pu lic record ror to achieve the original contract. In application, these questions overlap. A modification generally falls within the scope of the original procurement if potential bidders would have expected it to fall within the contract's changes clause. Id at 1205 (citations omitted). 181 191 Perhaps the most common factual scenario that implicates the cardinal change *275 doctrine in bid protests occurs when a disappointed bidder learns of changes in the awardee's contract, and then attempts to invalidate the contract award on the grounds that the changed contract is not that which was competed by the agency. See, e.g., AT & T, 1 F.3d at 1202-03 (services added to awardee's contract trigger protest by disappointed bidders alleging that contract modifications are out of the scope of the original competitive procurement); CWT/Alexander Travel, Ltd. v. United States, 78 Fed.Cl. 486, 493-94 (2007) (delays in award and start dates of contract, as well as price increases, alleged to constitute a cardinal change to the contract). Nevertheless, the basic analytical framework of the cardinal change doctrine is the same whenever a protestor alleges that competition has been frustrated by modifications to a contract or solicitation, i.e., that the procuring agency has impermissibly strayed from the scope of the contract requirements that were advertised to offerors. Thus, a protest that a task order or delivery order exceeds the scope of an underlying Indefinite Delivery/Indefinite Quantity (ID/IQ) contract implicates the cardinal change doctrine. See, e.g., Cal. Indus. Facilities Res., Inc. v. United States, 104 Fed.Cl. 589, 595-96 (2012) (applying AT & T in a protest alleging that a proposed delivery order exceeded the scope of an ID/IQ contract); Batfirst Solutions, LLC v. United States, 104 Fed.Cl. 493, 503-04 (2012) (applying AT & T in a protest alleging that a task order exceeded the scope of an ID/IQ contract); Solute Consulting v. United States, 103 Fed.Cl. 783, 792-93 (2012) (noting that the analysis in AT & T applies to a protest that a task order exceeds the scope of an ID/IQ contract). Similarly, the cardinal change doctrine has been applied in the pre -award protest context, where an offeror or potential offeror asserts that the government has impermissibly modified contract requirements during the procurement process, so that procurement law requires either resolicitation or some other change to the range I W'ESTLAW © 2016 Thomson Reuters. No claim to original U.S, Government Works. 11 Golden Mfg. Co., Inc. v. U.S., 107 Fed.Cl. 264 (2012) of offerors remaining under consideration. See, e.g., Univ. uf'Arerr Orleans. B-184194, 76-1 CPD �1, 22, 1976 WL 8955 (Comp.Gen. Jan. 14, 1976). Regardless of the procurement scenario, the inquiry is fundamentally the same—"whether Government modifications changed the contract [requirements] enough to circumvent the statutory requirement of competition." AT & T, 1 F.3d at 1205.. B. Statutory and Regulatory Framework [101 The Competition in Contracting Act (CICA) requires executive agencies, when procuring property or services, to "obtain full and open competition through the use of competitive procedures," unless certain specified exceptions apply. 41 U.S.C.A. § 3301(a)(1) (West 2011). It is this statutory imperative for full and open competition that is violated if a procuring agency makes a cardinal change to a contract requirement after accepting bids in response to a solicitation. See .ALT & T. 1 F.3d at 1205 ("[M]odifications outside the scope of the original competed contract fall under the statutory competition requirement."). In other words, a cardinal change to a proposed contract during the course of a procurement, or after the contract has been awarded, disguises the essential nature of the competed contract and frustrates full and open competition. This principle is carried forth in the Federal Acquisition Regulation (FAR). FAR 15.206(e) provides: If, in the judgment of the contracting officer, based on market research or otherwise, an amendment proposed for issuance after offers have been received is so substantial as to exceed what prospective offerors reasonably could have anticipated, so that additional sources likely would have submitted offers had the substance of the amendment been known to them, the contracting officer shall cancel the original solicitation and issue a new one, regardless of the stage of the acquisition. 48 C.F.R. § 15.206(e) (2011). A cardinal change to a solicitation may thus constitute a violation of CICA and a violation of FAR 15.206(e), unless the agency takes Submitted into the Pu lic, record ifor it m(s) " __ X1.I a �l L City Clerk steps to re -open the competition and disclose its changed contract requirements to potential offerors. *276 C. Whether Changes to a Solicitation Alter the Nature of a Requirement That Was Determinative As To the Evaluation and Elimination of Offerors The cardinal change doctrine, as applied in the bid protest context, sometimes raises a distinct but related question: Has the agency substantially changed a solicitation or contract requirement that was previously determinative of the elimination of offerors, thus rendering that elimination process arbitrary and capricious? Sometimes this question as to the rationality of an evaluation process that eliminated offerors before a solicitation or contract was changed has been framed as a matter of fundamental fairness. See, e.g., Avtron Alk, hrc., B-229972, 88-1 CPD !j 458, 1988 WL 222812, at *3 (Comp.Gen. May 1.6, 1988) ("We think it entirely unfair to firms that lose a contract competition because an agency proscribes a conventional, suggested performance approach for the agency to decide, after award, that the same approach is precisely the one needed and then modify the contract accordingly."). In other cases, the changes to the contract or solicitation are seen as invalidating the evaluation process that eliminated offerors before those changes were made, because the evaluation results are no longer trustworthy in light of the agency's revised contract requirements. See, e.g., Lfurvin J. Perry & Assocs., B-277684, B-277685, 97-2 CPD 111 128, 1997 WL 687158, at *3 (Comp.Gen. Nov. 4, 1997) ("[T]he record does evidence that if quotes had been obtained from the ... vendors on the basis of ash rather than red oak furniture, prices may have been significantly lower than the award prices, and that a different vendor may well have been selected.") (citation omitted). Finally, another way to consider the impact of solicitation or contract changes on the rationality of an evaluation process that eliminated a protestor is to frame such an inquiry as a determination of prejudice to the protestor. See, e.g., AtVt11, Inc. v. United :States, 46 Fed.Cl. 126, 132 (2000) (first finding a cardinal change in a solicitation amendment, then considering whether the agency's evaluation of the winning bid was reasonable to determine whether the protestor was prejudiced by the cardinal change). These analytical approaches all have value, depending on the particular context of the procurement examined in a bid protest. Here, an important question is whether Amendment 15 rendered Golden's elimination from this '\sal ,.;r, 10 {:;'illi. t� GiIL;Etlui I.i,S. Citi'-c'y(i:TiC3t �t`l.'rk5. 42 II Golden Mfg. Co., Inc. v. U.S., 107 Fed.Cl. 264 (2012) 11 11 competition arbitrary and capricious. This inquiry goes hand in hand with the assertion that Amendment 15 effected a cardinal change of the Solicitation. For this reason, the court will address both questions as it examines the changes to the Solicitation that resulted from the issuance of Amendment 15. 10 VI. Analysis of the Merits of Golden's Protest [11] Amendment 15 caused four principal types of changes to the trousers requirement advertised in the Solicitation. The first is the replacement of the Purchase Description and Pattern Styles with updated versions, as these affect the sewing and manufacture of the trousers. The record shows that these sewing changes were not significant changes that would modify offerors' prices. See AR at 695 (letter from Golden acknowledging that the sewing and manufacturing changes do not have "a significant cost impact associated with them"); id. at 707; Def.'s Mot. at 5-6 & n. 2. Nor has plaintiff argued that these sewing changes would have an appreciable impact on the product samples submitted to the Agency. Indeed, plaintiff has largely ignored these changes in its arguments alleging that a cardinal change was *277 effected by Amendment 15. The court finds that the sewing and manufacturing changes encompassed in the updated Purchase Description and Pattern Styles were within the scope of the Solicitation, and do not constitute a cardinal change to the contract requirement. The court also finds that the sewing changes had no impact on the validity of the first phase evaluations of the offerors' PDMs or price proposals. The second principal change in Amendment 15 is the addition of Permethrin to all varieties of trousers to be purchased in each lot (Type I, Class 2; Type III, Class 2; Type III OCP, Class 2), as opposed to the addition of Permethrin to just one variety of trousers (Type II, Class 2) in the Solicitation dated January 25, 2010. Plaintiff has conceded that the minor price difference occasioned by this change would affect all offerors equally, and that this change was not beyond the Agency's contract right to perform conversions to the trousers it would order through this Solicitation. Oral Argument Recording at 2:39-2:40 PM. It is undisputed that there is only one supplier for Permethrin and that the addition of Permethrin is a fixed, and relatively minor, cost that would affect all offerors equally. See Def.'s Reply at 7 n. l (stating that Permethrin treatment costs [ ] ). Submitted into the record fKrr iter r(s) on ((,� City Clerk Given the small magnitude of this change, the court finds that the addition of Permethrin to two additional varieties of trousers in each lot was not a cardinal change. The offerors would expect the Changes clause in the Solicitation to encompass such changes. Because the addition of Permethrin would cause no change in the field of offerors who would have responded to the Solicitation had they known of this requirement, this change was not a cardinal change to the contract. The court agrees with both plaintiff and defendant that the added Permethrin affected all offerors equally, and concludes that this change would not change the relative competitiveness of the [ ] proposals evaluated in the first phase evaluation. Further, plaintiff has not alleged, and the court cannot infer, that the offerors' product samples would, in any way, be affected by the change from Type I, Class 1 fabric (without Permethrin) to Type I, Class 2 fabric (with Permethrin). Thus, the additional Permethrin requirement had no effect on the validity of the first phase evaluation process which eliminated Golden and others from the competition. The final two principal changes in Amendment 15 require a more detailed examination and comparison to analogous cases. The third principal change was the change from Type II fabric to Type III fabric for the flame resistant trousers to be purchased in each lot. The fourth principal change was the change in the evaluative quantities of the varieties of trousers to be purchased in each lot. The court addresses these changes in turn. A. Type III Fabrics Required by Amendment 15 At the heart of plaintiffs protest is Golden's contention that the revised requirements for flame resistant trousers in Amendment 15 constituted a cardinal change to the Solicitation. This view is not supported by the record or by analogous cases. As defendant argues and plaintiff has not refuted, Type III is merely an "updated version" of the Type II flame resistant fabric, and is produced by the same vendor, "Tencate," the sole supplier of these produets. Def.'s Mot. at 5 (citing AR at 697, 708); see also AR at 524 (noting that the approved Type III fabric is "Improved DefenderTM M"); id. at 710 (referencing the transition from "Current Defender M" to "Improved Durability Defender M" fabrics); id. at 716 (identifying Tencate as the supplier of Type II fabric). Defendant further alleges that Tencate charges each potential contractor essentially the IVVESTI.AW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 13 Golden Mfg. Co., Inc. v. U.S., 107 Fed.Cl. 264 (2012) same price for its Type II fabric, and similarly charges each contractor essentially the same price for Type III fabric. Def.'s Mot. at 5; see also AR at 697. This assertion is also unrefuted by plaintiff. An offeror responding to the Solicitation would have anticipated that DLATS would update the flame resistant fabric specifications as an improved flame resistant fabric became available. This specialized fabric, after all, is used in combat uniforms to protect American troops in hazardous conditions. The Solicitation reserved the right of the *278 Agency to make "conversions" to the trousers, and also included a "Changes" clause. AR at 3, 179. The lots of trousers, after Amendment 15, continue to require a large amount of Type I trousers, and smaller amounts of flame resistant trousers. Amendment 15 is not a cardinal change, because the Agency has merely required updates to the fabrics used in the manufacture of the varieties of the trousers. The essential nature of the procurement has not changed. See, e.g., AT & T, 1 F.3d at 1206 (concluding that a contract modification requiring "the next generation of [a particular type of telecommunication] services ... at a higher rate of speed" was within the scope of the solicitation, in part because offerors knew that technological improvements were contemplated by the terms of the solicitation). As to the price increases caused by the change from Type II to Type III fabrics, uniform pricing of flame resistant fabrics from a sole supplier will logically produce uniform price increases in each offeror's unit price for the flame resistant trousers. In other words, when an upgrade to a more expensive fabric is required, each offeror's price will be inflated by the same amount per unit. Indeed, defendant has provided detailed charts identifying the uniform price increase per unit for Amendment 15's changes to the flame resistant trousers, which plaintiff has not rebutted. For the change from Type II, Class 1 fabric to Type III, Class 2 fabric for one variety of flame resistant trousers, the government estimates that each vendor would experience a uniform increase in unit price of [ ]. Def.'s Reply at 7 n. 1. For the change from the Type II, Class 2 fabric to Type III OCP, Class 2 fabric for the other flame resistant trousers, the government estimates that each vendor would experience a uniform increase in unit price of [ ]. Id These figures are supported by estimates documented in the record. AR at 707-14. Submitted into the pu tic (� record f .7 T CMS) Plaintiff has not argued that defendant's estimates are incorrect, merely that they are unexplained, Pl.'s Reply at 7-8, or misleading, id. at 8-9. The court finds, however, that the figures are adequately explained, and that their meaning is clear. The record supports defendant's argument that all offerors' prices will increase by a uniform amount per unit, and that the figures provided by defendant are the most accurate estimates of those increases. It is true that the changes in Amendment 15 will make the three contracts awarded for combat uniform trousers more expensive. I I According to the court's calculation, the increase for the lowest priced offeror for Lot OOO1T is [ ]. AR at 621; Def's Mot. Ex. A at 4. The increase for Golden for Lot OOO1T is [ ]. AR at 621; Def.'s Mot. Ex. A at 4. The increase for the lowest price offeror for Lot 0002T is [ ], and for Golden it is [ ]. AR at 642; Def.'s Mot. Ex. A at 4. The increase for the lowest price offeror for Lot 0003T is [ ], and for Golden it is [ ]. AR at 666; Def.'s Mot. Ex. A at 4. The court finds that these price increases do not constitute a cardinal change in the procurement for trousers. It is not reasonable to presume that a different field of offerors would have responded to the Solicitation if the modest price increases inherent in Amendment 15 had been disclosed on January 25, 2010. In analogous bid protests, contract modifications which slightly increase price proposals are not considered to be cardinal changes to the contract. In AT & T, for example, an increase of $100 million dollars caused by a contract modification was an increase to the total estimated cost of the contract of less than 2 percent, and was not judged to be a cardinal change of contract requirements. 1 F.3d at 1204, 1208. On the other hand, in circumstances where fundamental changes were made to contract requirements, and these changes were accompanied by large price changes, the government's contract modifications have been deemed to be cardinal changes. See, e.g., Cardinal Taint. Serv., Inc. v. United States, 63 Fed.Cl. 98, 109 (2004) ( "Where, as here, the amount of additional work nearly doubles the price of the contract that was awarded, and the nature *279 of the work was so substantially increased that the change provision of the contract had to be deleted to accomplish the modifications, the originally awarded contract has been materially changed."); Poly—Pacific Techs., Inc., B-296029, 2005 CPD 1 105, 2005 WL 1299551, at *4 (Comp.Gen. June 1, 2005) (finding a cardinal change WESTLAW ® 2016 Thomson Reuters. No claim to original U.S. Government Works, 14 Golden Mfg. Co., Inc. v. U.S., 107 Fed.Cl. 264 (2012) where the contract requirements were relaxed and the modified -services decreased in cost by "as much as 50 percent"); Webcraft Packaging, Div. of Beatrice Foods Co., B-194087, 79-2 CPD $ 120, 1979 WL 12167, at *6 (Comp.Gen. Aug. 14, 1979) (finding a cardinal change where the contract's paper requirements were changed from a specialty paper to a more generally available paper, and the contractor proposed a price increase of thirty-seven percent). Although "courts must look beyond simple arithmetic when assessing a cardinal change claim," PCL Constr. Servs., Inc. v. United States, 47 Fed.Cl. 745, 806 (2000) (citation omitted), the magnitude of the price increase caused by Amendment 15, between approximately [ ], does not indicate that a cardinal change occurred in this procurement for combat uniform trousers. As to the validity of the first phase evaluation of price proposals, Amendment 15 has not been shown to have affected, in any significant way, the competitiveness of the prices of the offerors that were being evaluated. As defendant's detailed chart of revised prices shows, none of the offerors would have achieved a different result in the first phase evaluation if they had been bidding on the Amendment 15 requirements: [ ]. 12 The court concludes that Amendment 15 did not render the eliminations of the first phase evaluation process invalid. Plaintiffs principal argument to the contrary is that "[i]t cannot be assumed that all the offerors would take that figure [of the uniform increase in the unit price of each variety of trouser] and simply apply the same indirect rates and profit margins as in their original offers." Pl.'s Reply at 8-9. At oral argument, plaintiff elaborated on this argument and suggested that business decisions might be made by each offeror in response to the changes in Amendment 15, and that these business decisions might produce revised price proposals that differ from those calculated by defendant. Oral Argument Recording at 2:07 PM. The court acknowledges that any such business decisions of offerors responding to the changed contract requirements in Amendment 15 are not presented in the record before the court. Defendant, however, has provided detailed estimates of revised price proposals based on all of the significant price increases caused by Amendment 15. These estimates appear to the court to be reliable and supported by documents in the record. Plaintiff has not provided any Submitted into the pu tc record fpr iteM(s) .1� 1 , r . on countering evidence showing how the business decisions of offerors might have altered these estimates and invalidated the first phase evaluations of proposals. 13 See Murray—Benjamin Elec. Co., L.P., B-400255, 2008 CPD 11 155, 2008 WL 3311846, at *2—*3 (Comp.Gen. Aug. 7, 2008) (denying a protest because the protestor had failed to quantify the impact of changes to the solicitation's requirements, and had thus failed to refute the government's revised price analysis that showed that the protestor's bid would still be the higher -priced offer). In the bid protest context, plaintiff bears the burden of showing a significant error by the procuring agency. Grumman Data, 88 F.3d at 1000. Plaintiff has not met that burden here. B. Change in Evaluative Quantities Plaintiff appears to argue that the changes to the evaluative quantities of the varieties of trousers within each lot are significant. Pl.'s Mot. at 20. Plaintiff offers no reason, however, why these changes in Amendment 15 would have changed the field of competitors responding to the Solicitation, or that offerors would not have expected that the Agency might alter its evaluation formula. The evaluative quantities, after all, merely provide *280 the multiplier which the Agency would use for the unit price of each variety of trousers in each lot, to compare the offerors' price proposals. See supra note 4. There is no indication in the record that different offerors would have competed for the lots of trousers, or that their price proposals would have been restructured in response to the changes in the evaluative quantities of the varieties of trousers announced in Amendment 15.14 The court finds that the change in evaluative quantities is not a cardinal change. Defendant's detailed chart of revised price proposals takes these changes into account and conclusively shows that the first phase elimination of offerors was unaffected by the change in evaluative quantities. Def.'s Mot. Ex. A at 4. Thus, even though the revised evaluative quantities, along with the price increases from the fabric changes, would have produced a new set of evaluated prices from the offerors, these revised prices would not fundamentally change the competitive ranking of the offerors' proposals. See supra notes 11-12 and accompanying text. Plaintiff has offered no evidence to show that the revised evaluative quantities rendered the first phase evaluations invalid. The court concludes that the revised evaluative quantities in 'A,LA C, 201 3 Thomson Fess er:,,. N,9 o cl @i r,, to original LI.S. Government Works, 15 Golden Mfg. Co., Inc. v. U.S., 107 Fed.Cl. 264 (2012) Amendment 15 did not render the first phase evaluations arbitrary or capricious. C. The Cumulative Impact of All Changes in Amendment 15 Is Not a Cardinal Change to the Solicitation The court has considered all of the changes in Amendment 15 that were noted by plaintiff, Pl.'s Mot. at 20, and finds that Amendment 15 was not a cardinal change to the Solicitation. Neither CICA nor FAR 15,206(e) was violated by the issuance of Amendment 15 and DLATS's decision to proceed with the second phase evaluation of the remaining offerors. The court also finds that the Agency's first phase evaluation of proposals was not rendered invalid by the issuance of Amendment 15. Because plaintiff has not succeeded on the merits of its protest, the court need not consider whether Golden was prejudiced by the Agency's decision to proceed with the second phase evaluation of remaining offerors after issuing Amendment 15, or whether the standard for injunctive relief has been met in this case. CONCLUSION Submitted into the p_s` Z, record ar it�m(s) F on 9 City Clerk Accordingly, it is hereby ORDERED that (1) Plaintiffs Motion for Judgment on the Administrative Record, filed June 14, 2012, is DENIED; (2) Defendant's Motion for Judgment on the Administrative Record, filed June 29, 2012, is GRANTED; (3) The Clerk's Office is directed to ENTER final judgment in favor of defendant, dismissing the complaint with prejudice; (4) On or before September 7, 2012, counsel for the parties shall CONFER and FILE with the Clerk's Office a redacted copy of this opinion, with any material deemed proprietary marked out and enclosed in brackets, so that a copy of the opinion can then be prepared and made available in the public record of this matter; and (5) Each party shall bear its own costs. All Citations 107 Fed.Cl. 264 Footnotes This opinion was issued under seal on August 17, 2012. Pursuant to 14 of the ordering language, the parties were invited to identify source selection, proprietary or confidential material subject to deletion on the basis that the material was protected/privileged. Brackets ( [ ] ) identify the redacted portions of this opinion. 2 The Solicitation seeks offers for Indefinite Delivery/Indefinite Quantity (ID/IQ) contracts. See AR at 176-77, 188. This type of contract permits the Agency to purchase less than the maximum number of trousers specified in the Solicitation. 3 Amendments 0014 and 0015 apply to the lots of coats, as well as to the lots of trousers. Because this protest only concerns the trousers portion of this procurement, the court's discussion of these amendments does not address the competition for the lots of coats. 4 In Amendment 15, the annual evaluative quantities for the less expensive trousers (A) and the more expensive flame resistant trousers (B and C) were modified, although the total number of trousers (A + B + C) did not change. For Lot 0001T, A(477,594) + B(143,278) + C(143,278) = 764,150 was changed to A(534,905) + B(152,830) + C(76,415) = 764,150. Compare AR at 13-14 with id. at 273. For Lot 0002T, A(242,188) + B(72,656) + C(72,656) = 387,500 was changed to A(271,250) + B(77,500) + C(38,750) = 387,500. Compare AR at 15-16 with id. at 274. Finally, for Lot 0003T, A(140,469) + B(42,140) + C(42,141) = 224,750 was changed to A(157,325) + B(44,950) + C(22,475) = 224,750. Compare AR at 17-18 with id. at 275. Thus, Amendment 15's evaluative quantity modifications increased the proportion of the less expensive trousers in each lot, for evaluative purposes. 5 "Type III' fabric is defined as flame resistant ripstop cloth, with unspecified fiber content, that meets certain specifications. See AR at 427, 431, 514, 518-19. 6 Golden's reference to a competitive range is technically incorrect. The first phase evaluations screened out less - competitive offerors, but did not, pursuant to the terms of the Solicitation, create a competitive range of the remaining offerors. See AR at 188. 7 Defendant argues that the pre -award standing test identified in Weeks Marine should not apply in a pre -award protest where the protestor has submitted a bid. This argument will be addressed in the next section of this opinion. WESTLAW C-) 2016 Thomson Reuters. No claim to original U.S. Government Works. 16 V V Submitted into the public Golden Mfg. Co., Inc. v. U.S., 107 Fed.Cl. 264 (2012) record rite J on City Clerk 8 Early in this bid protest, plaintiff indicated that Golden would submit a revised price proposal in response to Amendment 15, even though the Agency rejected its request to do so. Compl. ¶ 34. It-is unclear whether Golden did indeed submit a revised price proposal. In any event, plaintiffs standing is established by its prospective bidder status, whether or not it has provided the Agency with a revised price proposal in response to Amendment 15. 9 If the court were required to apply the "substantial chance" test here, the court might find that Golden did not have a substantial chance of contract award when responding to a new solicitation, and that Golden lacked standing to bring this suit. The highly speculative nature of such an inquiry, however, only confirms the court's view that the "non-trivial competitive injury" test is appropriate in a pre-award protest of this nature. 10 The parties have not directly debated whether Amendment 15 rendered the first phase evaluations in this procurement arbitrary and capricious, but this question has been implicated by many of the factual assertions presented by counsel. See, e.g., Def.'s Reply at 2 (alleging that "the changes effected by Amendment 0015 were not substantial ... [ ] ); Pl.'s Reply at 8-9 (stating that "[i]t cannot be assumed that all the offerors would ... [ ]" if they had bid on the trousers requirements set forth in Amendment 15). These factual assertions address the validity of the first phase evaluation process. As a consequence, the court will examine this issue even though plaintiff has not explicitly brought an arbitrary and capricious challenge to the first phase evaluations as a separate and distinct bid protest ground. 11 Defendant's revised price proposals take into account the added Permethrin treatment, the fabric changes from Type If cloth to two kinds of Type III cloth, and the revised estimated quantities of the varieties of trousers within each lot. Def.'s Mot. Ex. A. 12 H. 13 Furthermore, as defendant points out, plaintiff has not shown how Golden would have [ ], strictly in response to Amendment 15's changes, so as to have avoided elimination in a first phase evaluation of proposals for any of the lots of trousers. Def.'s Reply at 9. 14 Some offerors [ ]. See AR at 622, 644, 668. [ ]. See id. Amendment 15 made no changes to the total number of trousers in each lot, and there is no reason to presume that changes to the evaluative quantities of the varieties of trousers within each lot would produce changes to the unit prices of the varieties of trousers within a lot. Interestingly, [ ]. See AR at 621, 642, 666 (showing [ ] ). End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works. I 1NESTLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. 17 II Greenberg v. Fornicota, 37 N.J. 1 (19 62) 11 U, 1W ■ KeyCite Yellow Flag - Negative Treatment Distinguished by CFG Health Systems, LLC v. County of Hudson, N.J.Super.A.D., May 14, 2010 37 N.J.1 Supreme Court of New Jersey. Irving GREENBERG, Plaintiff -Respondent, V. Donald FORNICOLA, Kendall H. Lee, etc., et al., Defendants -Appellants. No. A-62. Argued Dec. 19, 1961. Decided March 5, 1962. Taxpayer's suit to compel performance of municipality's lease to another. The Chancery Division granted the defendants' motion for summary judgment and the taxpayer appealed. The Superior Court, Appellate Division, 65 N.J.Super. 104, 167 A.2d 177, reversed and the Supreme Court granted certification. The Supreme Court, Weintraub, C.J., held that the municipality's action in advertising for competitive bids for lease of stores in ocean front pavilion with the bidder permitted to suggest line of business, subject to approval of city council, did not violate bidding statute. Judgment of Appellate Division reversed and judgment of trial court affirmed. Proctor, J., dissented in part; Francis and Hall, JJ., dissented. West Headnotes (10) 111 Appeal and Error Necessity of presentation in general Appellate court may notice plain errors affecting substantial rights of parties although they were not brought to attention of trial court. R.R. 1:5-3(c). Cases that cite this headnote Submitted into the on City Clerk 121 Municipal Corporations – Validity and Sufficiency Public Contracts Validity and Sufficiency of Contract Attacks upon public contracts must be seasonably made. 1 Cases that cite this headnote 131 Municipal Corporations Grants of rights to use public property in general Action to contest lease from municipality to individual of premises to be used for sale of specified foods should have been brought at least within 45 days. R.R. 4:88-15(a). Cases that cite this headnote 141 Municipal Corporations Proposals or Bids Municipal Corporations h, Request or advertisement Public Contracts _= Bidding and Bid Protests Public Contracts Necessity for submission to competition in general Public Contracts In general; advertising Public Contracts Specifications Competitive bidding is designed to obtain best economic result for public and public body must prescribe common standard on all matters that are material to proposals to end that interested persons may bid intelligently and will be induced to bid by promise of impartiality. 8 Cases that cite this headnote 151 Municipal Corporations r� Leases and grants of franchises and privileges I WESTLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 M Greenberg v. Fornicola, 37 N.J. 1 (1962) Legislature did not intend to deny municipality, leasing premises on Atlantic 191 Ocean, right to protect its total interests by suitable restrictions upon use. R.S. 40:60-42, 40:61-37, N.J.S.A. Cases that cite this headnote 161 Municipal Corporations ,�— Leases and grants of franchises and privileges Municipality, leasing premises owned by it on Atlantic Ocean, did not violate competitive bidding statute by authorizing bidders to submit offer for some other line of business not in original bids, subject to approval of city council. N.J.S.A. 40:61-36 to 40. 4 Cases that cite this headnote 171 Municipal Corporations Leases and grants of franchises and privileges Goal of bidding statute respecting leasing of municipal ocean front premises is not impaired by public body, in its own interest, seeking amendment of lease to meet unanticipated developments and circumstances, when new bidding would be inappropriate or impractical. R.S. 40:60-42, 40:61-37, N.J.S.A. 3 Cases that cite this headnote 181 Municipal Corporations Leases and grants of franchises and privileges City's action in amending lease of city ocean front premises after competitive bidding was completed to delete its permission to sell frozen desserts in exchange for permission to sell cold sandwich platters, cake, pie and coffee, all with consent of successful bidder, did not render lease invalid. N.J.S.A. 40:61- 36 to 40. 1 Cases that cite this headnote Submitted into the on. City Clerk Municipal Corporations Capacity to contract in general Public Contracts _-1 Application of General Rules of Construction in General Municipality may deal with its contracts in same manner as natural person in absence of statutory or constitutional limitation. Cases that cite this headnote 1101 Municipal Corporations Leases and grants of franchises and privileges Municipality, after completion of necessary competitive bidding and awarding of lease on ocean front premises could grant tenant, in response to public demand, permission to sell hamburgers and frankfurters in addition to other foods specified in lease. N.J.S.A. 40:61- 36 to 40. Cases that cite this headnote Attorneys and Law Firms *3 **340 Felix A. De Sarno, Asbury Park, for defendants -appellants Kendall H. Lee and City of Asbury Park. Charles Frankel, Asbury Park, for defendant -appellant Donald Fornicola. George S. Skokos, Asbury. Park, for plaintiff -respondent. Opinion The opinion of the court was delivered by WEINTRAUB, C.J. The Appellate Division held that a lease from the City of Asbury Park to defendant Fornicola was void for failure to comply with the law relating to competitive bidding. 65 N.J.Super. 104, 167 A.2d 177 (1961). We granted certification. 36 N.J. 28, 174 A.2d 656 (1961). 1WESTLAW Q 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 I,i Greenberg v. Fornicola, 37 N.J. 1 (1962) Under the lease the premises were to be used `for the sale of frozen desserts, ice cream, drinks (soft) and milk products.' Subsequently the lease was amended to exclude `frozen desserts' and to substitute therefor `cold sandwich platters, cakes, pies, coffee, frankfurters and hamburgers.' Plaintiff also held a lease from the city of premises some 500 feet away. His lease permitted the sale of frankfurters and hamburgers. Deeming defendant's sale of these products to compete with his business, plaintiff, as a taxpayer, sued *4 to compel the city to enforce the Fornicola lease as originally drawn. On cross-motions for judgment, the trial court found for the defendants. Upon appeal to the Appellate Division plaintiff initiated the further claim that the lease to Fornicola was void because of noncompliance with the bidding statute. The Appellate Division accepted the new issue. Thus a suit to compel performance of a lease became one to void it. [1[ Our practice permits an appellate court to notice plain errors affecting substantial rights of a party, although they were not brought to the attention of the trial court. R.R. 1:5-3(c). In Howard D. Johnson Co. v. Township of Wall, 36 N.J. 443, 177 A.2d 756 (1962), we said: `* * * Unquestionably, this authority of an appellate court will not be casually invoked. The rule does not contemplate that litigation shall be routinely rerun to explore all questions which may conceivably be involved. * * * But where upon the total scene it is manifest that justice requires consideration of an issue central to a correct resolution of the controversy and the lateness of the hour is not itself a source of countervailing prejudice, the appellate court may accept the question and indeed itself raise it, as on occasions we have.' **341 [21 The Appellate Division acted under this residual power to do justice. The difficulties here are twofold. First, the new issue was foreign to what was tried below, and hence a record was not developed in the light of it. Second, sight seemingly was lost of the principle that attacks upon public contracts must be seasonably made. See Robbins v. City of Jersey City, 23 N.J. 229, 237-239, 128 A.2d 673 (1957); Summer Cottagers' Ass'n of Cape Submitted into the record for items) on " ( L'()) ( I . City Clerk May v. City of Cape May, 19 N.J. 493, 117 A.2d 585 (1955); Travis v. Borough of Highlands, 136 N.J.L. 199, 55 A.2d 109 (Sup.Ct.1947). [3) An action to contest the lease should have been brought at least within 45 days. R.R. 4:88-15(a). Subparagraph (c) of that rule provides the court may enlarge the period `where it is manifest that the interests of justice require.' Here the lease was first challenged in a brief filed 14 months after it was made. The transaction had *5 been fully publicized. The authority to lease is not disputed, and the city had sought to comply with the bidding statute. Thus the issue is not one of power to act. See Oldfield v. Stoeco Homes, Inc., 26 N.J. 246, 262, 139 A.2d 291 (1958). Nor is corruption alleged. Rather, plaintiff projects at best a debatable question concerning the sufficiency of specifications. It may be doubted that an original suit so long after the event would be entertained except upon a moving explanation of the delay and a demonstration of the fairness of a quarrel at so late an hour. Defendants, however, do not complain, and the matter having reached the present stage, we will accept this additional issue. I. For the reasons we have stated, the record is not too satisfactory. We gather these facts: In the spring of 1959, the city erected a pavilion on its boardwalk, consisting of bathing facilities and six stores, at the approximate cost of $450,000. The city advertised for bids for the stores as it was required to do by N.J.S.A. 40:61-36 to 40. Asbury Park Press, Inc. v. City of Asbury Park, 19 N.J. 183, 115 A.2d 564 (1955); Asbury Park Press, Inc. v. City of Asbury Park, 23 N.J. 50, 127 A.2d 401 (1956). The city also communicated directly with leading restaurant operators to excite their interest in the proposals. The initial approach was to specify the class of goods to be sold in each store. Some seven advertisements of specifications so phrased were unproductive. The city then amended the specifications to provide that: `The bidder be permitted to submit an offer for some other line of business suggested by the bidder, and subject to the approval of the City Council.' .. WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. at 3 Greenberg v. Fornicola, 37 N.J. 1 (1962) Fornicola submitted a bid in which he specified the products to be sold. We gather he was the sole bidder for the store in question. An award was made and a lease executed. 141 *6 Competitive bidding is designed to obtain the best economic result for the public. Weinacht v. Board of Chosen Freeholders of County of Bergen, 3 N.J. 330, 333, 70 A.2d 69 (1949). Inherent is the requirement that the public body shall prescribe a common standard on all matters that are material to the proposals, to the end that interested persons may bid intelligently and will be induced to bid by the promise of impartiality which only specifications of that quality can give. Tice v. City of Long Branch, 98 N.J.L. 214, 215, 119 A. 25 (E. & A. 1922); Waszen v. City of Atlantic City, 1 N.J. 272, 283-284, 63 A.2d 255 (1949); Township of Hillside, Union County v. Sternin, 25 N.J. 317, 322, 136 A.2d 265 (1957); Fereday & Meyer Co. v. Board of Pub. Works of City of Elizabeth, 27 N.J. 218, 223, 142 A.2d 99 (1958). The Appellate Division found the provision permitting a bidder to suggest a line of business enabled each bidder to fix his own standard, thus violating the principles **342 we have set forth. It said the rental value of premises depends upon the use to which they are put, and hence there was no `common standard' for the bidding. We agree, of course, that the nature of the authorized use may affect rental value, but we are unable to agree that a common standard is lacking when all bidders have the common right to suggest the use, notwithstanding that the right to disapprove is reserved. A prospective tenant knows what business he wants to conduct. He starts with that interest and seeks a place to further it. If the location appeals to him, he is concerned with the amount of space and the length of the term; and if the space and term are specified, he is able intelligently to submit an offer. Restrictions upon use of course may affect the bidding. Perhaps, analytically, they so operate by way of limiting the number of persons who are interested rather than by altering the common standard, i.e., space and term. At any rate, the question is whether they are legally permissible, and if so, whether they may take the form the municipality here employed. Submitted into the on _ _11 Ut') / I h City Clerk *7 Although limitations upon use tend to reduce the likelihood of the greatest dollar yield, yet a prudent owner cannot be indifferent to the use of his property. Some uses may injure or degrade the premises or impair the return from the remainder of the property. And in special circumstances the owner may wish only a particular use, to further another interest he has in the total scene, even though that use may not attract the highest rent. Thus, for any of the suggested reasons, good management may dictate that the owner accept something less than the best return. 151 We think it clear the Legislature did not intend to deny to the municipality the right thus to protect its total interest by suitable restrictions upon use. R.S. 40:61-37, N.J.S.A, expressly authorizes a letting `upon such terms and conditions as it (the municipality) may prescribe.' This provision is not as explicit as, for example, the provision of another statute, not here involved, which authorizes a municipality to lease `to the person who will pay the highest rent therefor, for any use not detrimental to such building or the use of the remainder by the municipality.' R.S. 40:60-42, N.J.S.A., but we have no doubt the statute here involved embraces the same thought. Plaintiff argues, however, that a limitation upon use is compatible with the bidding statute only if the acceptable uses are specified in the proposal for bids, and hence a proposal for any use, subject to disapproval, violates the statutory policy. The statute does not express that distinction, and we should not find it by implication unless the sense of the situation so requires. A private owner would hardly take the route urged by plaintiff. He would not limit his opportunity for the highest return by divining in advance the particular uses he would consider to be appropriate. Rather he would welcome all offers and then decide whether the highest should be refused because of some disadvantage in the use proposed. The soundness of that course is illustrated by the experience in this case. The original plan for bids for predetermined *8 uses evoked no response, whereas the broader approach proved productive. The broader approach is well calculated to achieve the highest bid, the very aim of the bidding statute. It thus comports with the statute unless it is so beset with the prospect of evil that we must find incompatibility on that account. 161 The bidding statute seeks to prevent a predetermined result for a favored bidder. We see no special prospect WESTLAW n 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 U4 � I Greeinberg v. Fornicola, 37 N.J. 1 (1962) Submitted into therecord fq)r item(s) of this evil in a proposal for bids for any use, subject to disapproval. Indeed, the specification by the public body of a particular use can more readily be turned to an improper end, for the more specific the use, the fewer will be the interested parties. **343 Here, as in other settings, undue specificity can be the vehicle for favoritism. See, for example, Waszen v. City of Atlantic City, supra (1 N.J. 272, 63 A.2d 255); Shore Gas & Oil Co. v. Borough of Spring Lake, 27 N.J.Super. 33, 98 A.2d 689 (App.Div.1953). True, a reserved right to reject could be exercised invidiously, but overall the opportunity to reach a preconceived result is much narrowed, for if the highest bid should be refused, the public body would be under the compulsion of public opinion and judicial review to give a tenable reason for accepting less. Hence when all bids are in, it is easier to detect a corrupt motive than when the attack is upon specific limitations contained in the specifications. For these reasons an interested person would not be dissuaded from bidding because of a fear that the contest has been rigged. We do not say that a municipality may not specify in advance the uses it will permit. It doubtless may do so if under the circumstances that course is reasonable. Rather we hold that an open proposal, subject to disapproval as to use, is not incompatible with the bidding statute. It may well be that the reservation here could have been more explicit. For example, it might well have expressed the basis for rejection, i.e., if the use is injurious to the demised premises, or prejudicial to the interest of the city in its remaining property, or incompatible with the purposes *9 of a boardwalk pavilion. Perhaps a standard of that nature is implicit and would be judicially inferred. At any rate, we are not inclined, at this late date, to consider the degree of perfection which the city could have achieved in its phrasing of the reservation. No bid was in fact rejected, and the likelihood that any bid was deterred is too remote to warrant upsetting a completed transaction. II. This brings us to the issue advanced in the complaint, upon which the Appellate Division expressed no view because of its holding that the lease was void. Plaintiff does not charge bad faith, arbitrariness or improvidence. Rather he presses only a proposition on_' I IM i 16 . City Clerk of law, to wit, that the bidding statute forbade any modification or relaxation of the terms of the lease. Expressed otherwise, plaintiff contends the product of competitive bidding is immutable, and that if the parties wish a modification, they must rescind the lease and submit the subject anew to competitive bidding. The undisputed facts are these: After the lease was executed, the city received a bid for another store in the pavilion, the purpose of the bidder being to sell frozen custard. The practical impediment was the authority in the Fornicola lease for the sale of `frozen desserts.' The city asked Fornicola to agree to delete `frozen desserts' in exchange for permission to sell cold sandwich platters, cake, pie and coffee. Fornicola agreed. Later, but prior to formal approval by the Council, Fornicola was permitted also to sell hamburgers and frankfurters, under circumstances we will presently relate. The amendment of the lease as formally approved included these additional items as well. [71 [81 Quite obviously it would not be feasible to say the city's right to meet an unanticipated need is conditioned upon a tenant's willingness to risk the result of new bidding. *10 The city was the moving party. Fornicola was agreeable to the change upon his evaluation of its economic worth. It would have been foolish of him to jeopardize his investment and business to accommodate the city. The goal of the bidding statute is not impaired when the public body in its own interest seeks an amendment to meet an unanticipated development in circumstances in which new bidding would be inappropriate or impractical. See Home Owners Const. Co. v. Borough of Glen Rock, 34 N.J. 305, 315,169 A.2d 129 (1961). It would be unreasonable to construe the act to deny to the municipality an opportunity to bargain for a needed change. **344 So much of the amendment as relates to hamburgers and frankfurters presents a different problem, if we assume, as the record suggests, that permission to sell them was not part of the bargained consideration. It appears that the city suggested that Fornicola handle those delicacies to meet the complaint of visitors and city employees that they were not available at the pavilion. We gather the nearest place they could be bought was beyond a public street and the city's ordinance forbade anyone to cross the street in bathing attire. The question then is whether the city may relax a restriction upon use to obtain a service the city wishes to be provided. WESTLAW 9 2016 Thomson Reuters. No claim to original U.S. Government Works. 5 Greenberg v. Fornicola, 37 N.J. 1 (1962) t91 1101 A municipality may deal with its contracts in the same manner as a natural person in the absence of statutory or constitutional limitation. Carlin v. City of Newark, 36 N.J.Super. 74, 92-93, 114 A.2d 761 (Law Div. 1955). Here the restriction upon use was not a term of the bidding specifications, and hence the case is unlike Vaccaro v. Asbury Park Enterprises, 42 N.J.Super. 288, 126 A.2d 213 (App.Div.1956), where lands were sold upon the condition that a structure of specified type be erected and then, without any justification (see Oldfield v. Stoeco Homes, Inc.,supra (26 N.J. 246, 261, 139 A.2d 291)), the city permitted a change which would have materially altered the basis upon which bids had been submitted. So far as the present record goes, any interested *11 party could have bid for the store upon a proposed use which would have embraced all of the items Fornicola was later permitted to sell. Since the restricted use here was not part of the specifications upon which all bidders had to bid, the restriction was simply a restraint imposed by the city to protect its continuing interest as owner. The city accordingly could relax the restriction to serve its own ends without generating an issue under the bidding law, We appreciate that an amendment of the lease, as distinguished from a grant of revocable permission to sell hamburgers and frankfurters, could prejudice the city if one of the other stores should become vacant during the term of the Fornicola lease. Whether the city is irrevocably bound is not crucial and hence we need not explore that question. For the present case it is enough to hold the city could grant such permission and hence could not be compelled to enforce the restriction contained in the lease. The judgment of the Appellate Division is accordingly reversed and the judgment of the trial court is affirmed. For reversal: Chief Justice WEINTRAUB and Justices JACOBS, SCHETTINO and HANEMAN-4. For affirmance: Justices FRANCIS and HALL -2. For modification: Justice PROCTOR -1. FRANCIS, J. (dissenting). The majority opinion argues persuasively for the legality of the amended lease under attack. But we are not dealing with a private property owner endowed, as he is, with an almost unlimited freedom of contract. Lieberman Submitted into thetic record f,tit IV) ��� v. Neptune Tp., 50 N.J.Super. 192, 198, 141 A.2d 553 (App. Div. 1958). We are concerned solely with a municipal corporation whose power to demise the premises in question is circumscribed by specific legislation. N.J.S.A. 40:61-36 to 40. The Legislature has decreed that any letting of this store shall follow advertisement for bids, and shall be granted to the highest responsible bidder. R.S. 40:61-39 to 40, N.J.S.A. The requirement for competitive bidding, designed as it is to secure competition and to guard against favoritism, improvidence, extravagance and corruption, is rooted deep in sound principles of public policy. It is in the highest degree mandatory and represents a deliberate decision on the part *12 of the lawmaking branch of our government to deprive contract -making municipal officials of discretion, or to limit **345 their discretion, in areas susceptible to the abuses mentioned. No one can doubt that the statutory scheme is a wholesome rule of public policy, or that its high purpose is to afford maximum protection to taxpayers. Consequently, in its administration by the courts the sole reference must be to the public interest, which can be safeguarded only by a demand for strict compliance. Hillside Tp., Union County v. Sternin, 25 N.J. 317, 136 A.2d 265 (1957); Asbury Park Press v. City of Asbury Park, 19 N.J. 183, 188, 115 A.2d 564 (1955); A. C. Schultes & Sons v. Haddon Tp., 8 N.J. 103,108, 83 A.2d 896 (1951). Where competitive bidding is necessary and, as is usually the case, the terms and specifications of the work to be done or the article or property to be bought or sold or leased are set forth in the public advertisement, the bids submitted must conform to the terms and specifications. Any material departure invalidates the bid. Moreover, after the conforming lowest bid (or the highest, in the case of the lease of property) is accepted, the Contract entered into between the municipality and the bidder must likewise match the terms and specifications. Any Material change or departure therefrom vitiates the agreement. Where the variance is substantial, advantage to the bidder or to the municipality is immaterial; the same result must follow. Hillside Tp., Union County v. Sternin, supra; McDermott v. Jersey City, 56 N.J.L. 273, 276, 28 A. 424 (Sup.Ct.1893); Shaw v. Trenton, 49 N.J. L. 339, 12 A. 902 (Sup.Ct.1887); Diamond v. City of Mankato, 89 Minn. 48, 93 N.W. 911 (Sup.Ct.1903); Gjellefald v. Hunt, 202 Iowa 212,2 10 N.W. 122 (Sup.Ct.1926); City of Bemidji v. Ervin, 204 Minn. 90, 282 N.W. 683 (Sup.Ct.1938). The law permits no private WESTLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. 6 Submitted into the public fp it r m s Greenberg v. Fornicola, 37 N.J. 1 (1962) record ^_ T-1 At negotiations with an individual bidder, and no material alteration in his bid for the purpose of consummating a contract. Chippewa Bridge Co. v. City of Durand, 122 Wis. 85, 99 N.W. 603 (Stip. Ct. 1904). *13 The reason for the strict rule is obvious. Any other result would emasculate the whole system of competitive bidding on public projects and defeat the purpose which the Legislature intended to safeguard. As the Supreme Court of Alabama said in Inge v. Board of Public Works, 135 Ala. 187, 33 So. 678 (Sup.Ct.1903): "To require the bids upon one basis, and award the contract upon another, would, in practical effect, be an abandonment of all bids.' * * * Any material departure, in the contract awarded, from the terms and conditions upon which the bidding is had, renders the contract, in a sense, a private one. To permit such in the awarding of public contracts by public officers would be to open wide the door for favoritism, and defeat the thing which the law intended to safeguard, in requiring the contracts to be let upon bids made on advertised specifications. It is unimportant whether the additional stipulation contained in the contract awarded to one who is not the lowest responsible bidder be in itself an advantage to the city or not. If it constitutes a material change, and therefore a departure from the basis of the bidding, and becomes an element or consideration in the determination of who is the lowest and best bidder, it will invalidate the contract entered into.' 33 So., at p. 682. When the contract entered into represents a substantial departure from the proposal, it is of no consequence that the parties acted in good faith or that one or the other or both derived some benefit. If the forbidden act is in fact done, the contract is void without reference to the intent with which it was done; such result follows, as of course, in the wake of the transgression. Diamond v. City of Mankato, supra, 93 N.W., at p. 913. Assertion by municipal officials, by way of justification of their action, that the method they chose to accomplish legitimate ends was better than the one provided by law and produced gain for the public body, can only be regarded as futile. **346 Chippewa Bridge Co. v. City of Durand, supra, 99 N.W., at p. 610. Plainly, the courts have concluded that in the field of public contracts it is too difficult to look into the minds and hearts of men for motives which are opposed to the taxpayers' interests, that the external symbols by which such motives *14 are indicated are too difficult to search out and evaluate. Consequently, they have espoused the doctrine that the legislative purpose can be effectuated only by an automatic condemnation of any such contract which is materially different from the bid. Assuming as the premise of the majority that under the special circumstances of this case an open bid of the nature employed in this instance is statutorily permissible (but see, proposed revision of N.J.S. 40A:6-17 to 19 incl., Report of County & Municipal Law Revision Commission, March 1961), what are the significance and the application of the principles just discussed? The Fornicola bid, made May 12, 1959, was $39,885 for a ten-year lease of the particular boardwalk store to be used `for sale of frozen desserts, ice cream, drinks (soft) and milk products.' On May 26 a lease was executed in accordance with the bid authorizing use of the premises ,as a store for the sale of frozen desserts, ice cream, drinks (soft) and milk products, and for no other purpose whatsoever * * *.' Very shortly thereafter the agreement was altered by mutual consent on two occasions. The amended lease in its final form withdrew the right to sell frozen custard and conferred authority to engage in much broader operations. More particularly, the present scope of use is for sale of `ice cream, drinks (soft), milk products, cold sandwich platters, cakes, pies, and coffee, frankfurters and hamburgers, and for no other purpose whatsoever.' The extent of the change is indicated by signs on the store describing it as a `luncheonette' (instead of a milk bar) and `Ducky's Sea Breeze Soda Shop, Luncheonette, Fountain Service, Sodas, Sundaes, Ice Cream, Franks, Hamburgers, Breakfast, Milk Shakes, Soups, Sandwiches, Salads, Fresh Fruit Drinks, Orangeade, Lemonade, Limeade, Tea, Coffee, Lunch.' If, instead of the open bid tactic, the city had advertised for bids to lease the store in question for the purpose of selling 'frozen desserts, ice cream, drinks (soft) and milk products', and Fornicola had offered $39,885 for such a ten *15 -year lease, under the legal principles discussed above would not the authority to let necessarily have been limited to such purposes? If a lease had been entered into immediately which omitted frozen custard and included instead cold sandwich platters, cakes, pies, coffee, frankfurters and hamburgers, would not the modification have constituted a material departure from IWESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works, 7 Greenberg v. Fornicola, 37 N.J. 1 (1962) the terms of the public advertisement for bids? To me, an affirmative answer is the only one that can reasonably be given. Such a contract, with its materially altered subject matter, being in conflict with the bid, would have to be declared void as violative of the mandate for open, competitive bidding; it would not be the contract bid for. And it would make no difference in such case that Fornicola happened to be the only bidder. See City of Bemidji v. Ervin, supra; Le Tourneau v. Hugo, 90 Minn. 420, 97 N.W. 115 (Sup.Ct.1903). I am unable to perceive any distinction between the hypothetical situation just described and the present case. Compare, Asbury Park Press v. City of Asbury Park, 19 N.J. 183, 115 A.2d 564 (1955). The fact that the two differences between the bid and the final form of the lease occurred a short time after the original document was executed, rather than as part of the original, does not justify a different conclusion as to legality. The lease assailed is not the one bid for; the alterations in the bid are not inconsequential or mere irregularities, or matters of detail; they are manifestly substantial, and so opposed to the policy of the compulsory bidding statute. Thus, the only course that was open to the city to accomplish a letter of the type now allegedly covered by Fornicola's lease was readvertisement for bids. **347 The amendments to the lease being void, I vote to modify the judgment of the Appellate Division to conform with this view. PROCTOR, J. (dissenting in part.) I agree with the majority that Fornicola's lease with the city was valid when made. I also agree, from the record before us, that the *16 city could properly agree with Fornicola to alter the lease by deleting certain items to be sold, namely, frozen products, and substituting others, namely, cold sandwich platters, cakes, pies and coffee. There is no suggestion the city could have induced Fornicola to give up the sale of frozen products without permitting him to sell the substituted items. It seems to me there was good -faith bargaining to further the interests of the city, i.e., to augment its income and increase pavilion activity by leasing a vacant store. Under these circumstances I cannot say that this alteration of the lease violated the spirit or the letter of the public bidding statutes. But that part of the amended lease permitting the sale of frankfurters and hamburgers is quite another matter. No authority need be cited to Submitted into the lic record or ittw s) on i establish the proposition that these `delicacies' are highly popular with seashore resort visitors. There was no Quid pro quo for this profitable gain by Fornicola. The later inclusion permitting the sale of frankfurters and hamburgers obviously increased the attractiveness and value of the lease. Fornicola never bargained for such inclusion at the time of the original lease, nor was such inclusion bargained for when he gave up his right to sell frozen products in return for the right to sell cold sandwich platters, cakes, pies and coffee. The amendment of the lease as relates to frankfurters and hamburgers was a gratuity by the city to Fornicola of a valuable thing, i.e., permission to expand his business beyond the terms bargained for. To me this action seems to circumvent the public bidding statutes, N.J.S.A. 40:61-36 to 40, which prevent the city from leasing out its buildings except to the highest responsible bidder after proper advertising. See Asbury Park Press v. City of Asbury Park, 19 N.J. 183, 115 A.2d 564 (1955). The fact that the city suggested Fornicola handle frankfurters and hamburgers to meet the convenience of visitors and city employees has no significance. The City cannot disregard the goal of the public bidding statutes when it seeks to enlarge the scope of a lease. We are concerned here with a valuable addition to the terms of the original *17 lease, not a burdensome favor Fornicola might render the city. All boardwalk refreshment stands are for the convenience of bathers and strollers. Such convenience is translated into the lessee's profits and is the very reason why his lease becomes more valuable when he is permitted to expand the scope of his operations. I would uphold the original lease as amended to permit Fornicola to sell cold sandwich platters, cakes, pies and coffee in lieu of frozen products. I would invalidate that part of the amendment which permits Fornicola to sell frankfurters and hamburgers. HALL, J. (dissenting). While I agree with the dissenting opinions of Justices FRANCIS and PROCTOR, I would go further and hold the Fornicola lease to be void as did the Appellate Division, 65 N.J.Super. 104,167 A.2d 177 (1961). The majority appears to me to hold that a municipality like Asbury Park owning its beachfront and pavilions, stores and other buildings thereon, which are designed to remain in public ownership perpetually and to be rented for commercial operation continuously, may lease 1PVf STLAW © 2016 Thomson Reuters. No claim to original US. Government Works. ' Greenberg v. Fornicola, 37 N.J. 1 (1962) G 1 its properties in compliance with the applicable bidding statute, R.S. 40:61-36 et seq., N.J.S.A. in two ways. First, it may specify the permissible use and invite bids for that purpose only. Considering the overall circumstances I see no legal objection to this method, provided the limitation is reasonable, consistent with a fair plan for proper development and use of the entire area in the highest public interest **348 and the lease is, of course, awarded to the highest responsible bidder. Secondly, the majority says it is valid to advertise for open bids, as here, merely with the specification the use will be 'suggested by the bidder, subject to the approval of City Council.' Implicit in the holding is that the governing body need not award the lease to the highest bidder for any use but only to the party naming the highest price for that offered use decided, after the bids are opened, to be the one which will be accepted and exclusively permitted. *18 This conclusion, to me, affords the means of destroying the vitals of this court's prior decisions in the two cases of Asbury Park Press v. City of Asbury Park, 19 N.J. 183, 115 A.2d 564 (1955) and 23 N.J. 50, 127 A.2d 401 (1956). The first of these decisions held the legislative intent to require advertising for bids on uniform specifications and award to the highest bidder in the case of beachfront property, and the second, that municipal action in this regard must fairly comport with the purpose End of Document Submitted into the tuililic on '/I W �(J� _. City Clerk and spirit of the bidding laws. These conclusions are bottomed on the fundamental propositions that, where the Legislature so directs, municipalities may not deal with their real property as would a private owner, that favoritism and the possible image of favoritism are to be strictly safeguarded against and that the maximum revenue, consistent with the overall public interest and purpose, shall be obtained. Entire good faith in a particular transaction affords no excuse to vary from the statutory mandate. The method of bidding here sanctioned obviously does not conform to these principles, as the Appellate Division pointed out. I cannot conceive that the language in R.S. 40:61-37, N.J.S.A., permitting the governing body to specify 'terms and conditions' of the leasing, was intended to allow the result here reached. The policy behind the strict legislation is a strong and salutary one. If it is thought not to be workable for practical business reasons, variation can only be permitted by the Legislature. Courts should not undertake to authorize departure from clear legislative policy and provisions. I would affirm the judgment of the Appellate Division. All Citations 37 N.J. 1, 178 A.2d 339 © 2016 Thomson Reuters. No claim to original U.S. Government Works. I WESTLAW (�-) 2016 Thomson Reuters. No claim to original U.S. Government Works. 9 Marvin J. Perry & Associates, B- 277684 (1997) Submitted into the On B- 2T7684 (Comp.Gen.), B- 277685, 97-2 CPD P 128, 1997 WL 687158 COMPTROLLER GENERAL Matter of: Marvin J. Perry & Associates November 4,1997 *1 Malcolm D. Wilson for the protester. Georgia Vlahos, Esq., and Kenneth J. Densmore, Esq., Department of the Navy, for the agency. ,_,Vz51V, Z City Clerk Charles W. Morrow, Esq., and James A. Spangenberg, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Modifications of orders under General Services Administration Federal Supply Schedule for red oak sleeping room furniture to allow a change in the type of wood to ash, which is less expensive than red oak, materially changed the nature of the orders from those originally issued and thereby prejudiced the protester, a competing vendor. DECISION Marvin J. Perry & Associates protests the modifications of delivery order No. GS -27 -F -028B and purchase order No. N00210 -96-M-0566, issued by the Department of the Navy, Naval Training Center, Great Lakes, Illinois, to DCI for red oak sleeping room furniture. Perry essentially contends that the modifications were beyond the scope of these orders. We sustain the protest. This procurement was for 563 10 -piece sets of red oak sleeping room furniture to furnish a bachelor enlisted quarters (BEQ) that was under construction. Prior to the procurement, the Navy contracted with an architectural firm to design I the interior space for the project. The firm recommended Perry as the vendor holding a General Services Administration (GSA) Federal Supply Schedule (FSS) contract offering the lowest -priced red oak furniture that met the functional needs of the agency with respect to aesthetics and quality. ' In order to ensure that Perry's products represented the best value, the Navy decided to solicit quotes from those vendors with similar products on the FSS. Only 9 of the 10 pieces of each set could be obtained from the FSS, and on April 1, 1996, the Navy solicited quotes for these 9 pieces of red oak furniture under request for quotations (RFQ) No. N00210 -96-Q-1496. On that same date, quotes were solicited for the remaining piece --the red oak footboard to the bed --under RFQ No. N00210 -96-Q-1497.2 The Navy received eight quotes for the nine pieces of furniture and six quotes for the footboard by the May 30 closing dates. DCI submitted the lowest quote of $557,127.91 for the nine items; Perry was next low with a quote of $572,709. Perry submitted the lowest quote of $18,016 for the footboard; DCI submitted the next lowest quote of $19,789.45. Since DCI's quotes reflected the lowest total price, the Navy issued the delivery order from the FSS for the nine pieces to DCI on June 11 and the purchase order for the footboard to DCI on June 18. The original delivery date for the furniture was scheduled for September 30, but several construction delays resulted in the delivery date being pushed back to June 9, 1997. In May 1997, DCI advised the Navy that its supplier had mistakenly delivered ash instead of red oak. Because of this, ' DCI proposed that the Navy either accept furniture made with ash at the same price or postpone the delivery date. In ' WESTLAW (J 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 Marvin J. Perry & Associates, B- 277684 (1997) Submitted into the pu is record for itefr�(�s) - . , � 5� , (, support of accepting ash furniture, DCI provided the Navy with samples of ash stained to match the color of red oak. After comparing the samples with the red oak furniture already in the BEQ, the Navy determined that the ash furniture was an acceptable substitute. The parties agreed to the substitution on May 19. The Navy accepted delivery of the ash furniture in June. *2 In late June, Perry learned that the Navy had permitted DCI to substitute ash furniture for red oak furniture. Perry initially sought an explanation from the agency by letter dated June 30, in which it complained that changing the wood from red oak to ash would be unfair to those quoters who based their quotes on providing furniture made from red oak, because ash is a lower grade and lower priced wood, and that if "there was no authorization" to change the wood, the Navy should reject DCI's furniture and make award to the next low quoter--Perry. The Navy responded by letter dated July 21 (received by the protester on July 25) asserting that the change was insignificant. On August 4, Perry protested the Navy's actions to our Office. The Navy initially argues that the August 4 protest is untimely because it was filed more than 10 working days after late June when the protester knew of the basis of protest. We disagree. Although the protester's June 30 letter to the agency was not expressly characterized as a protest, we will treat it as an agency -level protest because it clearly conveyed an expression of dissatisfaction and a request for corrective action. See Dvnamac Corp,, B-252800, July 19, 1993, 93-2 CPD 137 at 3; American Material Handling, Inc., B-250936, Mar. 1, 1993, 93-1 CPD 1183 at 2-3. Since the August 4 protest was filed by Perry within 10 days of its receipt of the agency's response to its June 30 letter, we consider the protest to be timely filed with our Office. 4 C.F.R. § 21.2(a)(3) (1997). The agency next argues that the protest involves a matter of contract administration which is beyond the purview of our bid protest jurisdiction. See 4 C.F.R. § 21.5(a). While this is generally true, we will consider a protest that a modification to an existing contract is beyond the scope of that contract, changing the nature of the contract originally awarded. See Indian and Native Am. Employment and Training Coalition, 64 Comp. Gen. 460 (1985), 85-1 CPD ¶ 432; Dvnamac Corp., supra, at 4.3 In determining whether a modification to a contract is within the scope of the contract, we look to whether there is a material difference between the contract, as modified, and the original contract, considering such factors as the extent of any changes in the type of work, performance period, and costs between the modification and the original contract, as well as whether the original solicitation adequately advised offerors of the potential for the change or whether the change was the type that reasonably would have been anticipated, and whether the modification materially changed the field of competition for the requirement. Avtron Mfg Inc., 67 Comp. Gen. 404, 406-407 (1988), 88-1 CPD ¶ 458 at 4; Dvnamac Corp., supra, at 4. As indicated above, Perry advises that ash is materially different from red oak in terms of cost and quality. For example, Perry asserts that its supplier could have obtained ash wood in its raw form for a cost at least 40 percent cheaper than red oak. 4 Perry also asserts that it would have been able to reduce its bid price by $47,885 (which would have made its quote lower than DCI's), if it had known that ash was an acceptable alternative. In addition, Perry advises that while ash may appear similar in terms of radial grain patterns and cell growth elongation, the difference between the two woods is in hardness and density, and that red oak is superior to ash for purposes of joinery, thereby resulting in more structurally sound pieces of furniture and a greater long-term value to the user. *3 The Navy does not dispute that ash is inferior in quality to oak and can be obtained at a lower cost than red oak. The Navy does assert that it contacted two local lumberyards, who indicated that there would be only a small price differential (approximately 1 to 5 percent) between the cost of ash and red oak because ash, although cheaper, is not as readily available as red oak in the quantities needed to fill large orders. However, the Navy has presented no basis for us to question Perry's documented contention that it and other FSS vendors in the furniture business could have obtained ash at a substantial savings over red oak, and that this savings would be translated into lower prices. Further, there is no basis to regard the change as one that could reasonably have been anticipated by Perry or the other FSS vendors that submitted quotes for red oak furniture. WESTLAW @ 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 Marvin J. Perry & Associates, B- 277684 (1997) Submitted into the on /[Wilt . City Clerk In sum, we think that the original purpose of the orders was so substantially changed by the modification that the original orders and the modified orders are essentially different. Even though the record does not show that the total cost savings of the modifications to the originally placed orders would be massive, the record does evidence that if quotes had been obtained from the FSS vendors on the basis of ash rather than red oak furniture, prices may have been significantly lower than the award prices, and that a different vendor may well have been selected. See Avtron Mfg, Inc., supra, at S. The Navy, nevertheless, argues that it was not prohibited from modifying the order, irrespective of the nature of the change, or required to solicit the other FSS vendors, because the procurement was conducted under the FSS program. In this regard, FAR § 8.404(a) provides in pertinent part: When placing orders under a [FSS], ordering activities need not seek further competition, synopsize the requirement, make a separate determination of fair and reasonable pricing, or consider small business set -asides .... The Navy further asserts that, unlike an invitation for bids or request for proposals, a delivery order need not conform to every detail of the RFQ, which is issued primarily for informational purposes. The Navy argues that the RFQ was issued only to identify the FSS vendor meeting its needs at the lowest cost and that having done so, the agency was not prohibited from changing the requirement in issuing its final delivery order since it could have simply placed the order with the selected vendor without issuing RFQs. We disagree. Although the Navy conducted this procurement under the FSS program, it elected to solicit competitive quotes from vendors on the FSS and it made award to DCI, the vendor with the lowest quote. Having elected to hold a competition in order to ensure that it received the lowest -priced items, the Navy was obligated to ensure that the competition was conducted fairly; the fact that a requirement is fulfilled through the FSS does not exempt an agency from treating vendors consistent with the concern for a fair and equitable competition that is inherent in any procurement. See Haworth, Inc.; Knoll N. Am., Inc., 73 Comp. Gen. 283, 286-287 (1994), 94-2 CPD ¶ 98 at 5-6; SMS Sys. Maintenance Servs., Inc., B-270816, Apr. 29, 1996, 96-1 CPD 1212 at 4-5; Dictaphone Corp., B-254920.2, Feb. 7, 1994, 94-1 CPD 175 at 3. Here, in order to fulfill its obligation to allow vendors to compete on a fair and equal basis as well as to satisfy itself that it received the best value (in this case lowest price), we think that the Navy was required to give the competing vendors an opportunity to submit quotes for supplying furniture made from ash instead of simply modifying DCI's orders in a manner that exceeded the scope of the contracts and the original competition. *4 Because the furniture under the orders have already been delivered, corrective action is not practicable. We recommend that the protester be reimbursed its costs of filing and pursuing the protest, including reasonable attorneys' fees. 4 C.F.R. § 21.8(d)(1). The protester should submit its certified claim for such costs, detailing the time expended and costs incurred, directly to the contracting agency within 60 days of receiving this decision. 4 C.F.R. § 21.8(f)(1). The protest is sustained. Comptroller General of the United States Footnotes 1 The FSS program managed by GSA provides agencies with a simplified process for obtaining commonly used supplies and services at prices associated with volume buying. Federal Acquisition Regulation § 8.401(a). 2 Because the footboard was required to match the headboard, the RFQ for the footboard was distributed only to those FSS vendors solicited for the other furniture pieces. 3 While the cases cited here arose in the context of contracts rather than FSS orders, we believe, as explained below, that the principle they stand for holds for competed FSS orders as well. WESTLAW @ 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 Submitted into the is record or it7T(s) II Marvin J. Perry & Associates. B. 277684 (1997) r IQ I 4 To bolster its claim, the protester offers a copy of the Weekly Hardwood Review that reflects that at the time the orders were awarded ash sold for $525 per thousand board feet (MBF), while red oak sold for $855 MBF. 5 By not issuing revised RFQs or checking other vendors' FSS prices for ash furniture, the agency did not ensure that it received the best price for the ash furniture, which was the stated purpose for issuing the RFQs in the first place. B- 277684 (Comp.Gen.), B- 277685, 97-2 CPD P 128,1997 WL 687158 End of Document C) 2016 Thomson Reuters. No claim to orieinal U.S. Government Works. W'ESTLAW Ccs 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS MORPHOTRUST USA, Petitioner, VS. DEPARTMENT OF HIGHWAY SAFETY AND MOTOR VEHICLES, Respondent, and SOLUTIONS THRU SOFTWARE, INC., Intervenor. Case No. 12-2917BID RECOMMENDED ORDER Pursuant to notice, a final hearing in this cause was held in Tallahassee, Florida, on October 10, 11, 16 and 17, 2012, before the Division of Administrative Hearings by its designated Administrative Law Judge Linzie F. Bogan. APPEARANCES For Petitioner: J. Stephen Menton, Esquire Rutledge, Ecenia and Purnell, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 Tallahassee, Florida 32301 For Respondent: Douglas Sunshine, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32399 Submitted into the pub *c record fj r ite (s) � S1 -,L on '717111 City Clerk For Intervenor: Maria Elena Abate, Esquire Sharlee H. Edwards, Esquire Colodny, Fass, Talenfeld, Karlinsky and Abate, P.A. 23rd Floor 100 Southeast 3rd Avenue Fort Lauderdale, Florida 33394 STATEMENT OF THE ISSUE Whether Respondent's intended award of a contract to Intervenor, pursuant to Invitation to Negotiate 024-12 (ITN), is contrary to Respondent's governing statutes, Respondent's rules and policies, or the specifications of the ITN? PRELIMINARY STATEMENT On April 17, 2012, Respondent, Department of Highway Safety and Motor Vehicles (Respondent, Department or DHSMV), issued the ITN in question, which is entitled "Automated Driver License Testing System [ADLTS]." DHSMV issued four Addenda to the ITN, each of which contained amendments, modifications, and explanations in response to proposed vendor questions. Responses to the ITN, in the form of a Statement of Qualifications and Services Offered, were submitted on May 31, 2012, by Petitioner, MorphoTrust USA (Petitioner, MorphoTrust, or Morpho), and Intervenor, Solutions Thru Software, Inc. (Intervenor or STS). Demonstrations were held from July 9 through 13, 2012, for the responders. Best and Final Offers (BAFO) were due to the Department by August 3, 2012. Morpho and STS each timely submitted its BAFO for consideration and 2 by the Department. On August 13, 2012, the Department posted notice of its intent to award a contract to STS pursuant to the ITN. On August 16, 2012, Morpho timely submitted notice of its intent to protest the proposed award. Morpho timely filed a formal written protest, and on September 7, 2012, Morpho's Formal Written Protest and Petition for Administrative Hearing was forwarded to the Division of Administrative Hearings (DOAH) for assignment of an Administrative Law Judge to conduct the final hearing. STS was allowed to intervene in the proceedings before DOAH. The parties filed a Joint Pre -hearing Stipulation and stipulated to certain facts. The stipulated facts are reflected verbatim in numbered paragraphs 1 through 14 of the Findings of Fact, as set forth below. On October 8, 2012, Respondent and Intervenor filed a Joint Motion in Limine to Exclude Arguments and Evidence Challenging the Terms and Conditions of the ITN and/or Not Contained in MorphoTrust's Original BAFO and Price Proposal. The motion in limine was denied without prejudice to the Department and Intervenor's ability to raise objections to specific questions during the course of the hearing and to address the legal issues in their proposed recommended order(s). Submitted into the public t S� record f r ite (s) 5 � J on `1 City Clerk On October 9, 2012, Morpho filed a Motion to Amend Formal Written Protest and Petition for Administrative Hearing. There was no opposition to the motion and, accordingly, it was granted. The final hearing occurred on October 10, 11, 16, and 17, 2012, as scheduled. At the hearing, Morpho presented the testimony of two of its employees: Jenny Openshaw and Cagney Shattuck. Morpho also called the Department's procurement officer, Jon Kosberg, and STS employee, John Van der Heiden. DHSMV presented testimony from Dana Reiding, who was accepted as an expert, and Jeffry Pairin. STS presented the testimony of its president, Jim Sodero. Additionally, DHSMV and STS offered into evidence deposition testimony of DHSMV employee, Barbara Peacock, and the post -hearing deposition testimony of Jenny Openshaw. Joint Exhibits 1 through 18, 24, and 25 were admitted into evidence, as was Exhibit L which was attached to the amended petition. Exhibit 24 is a video of the negotiation sessions conducted between the Department and Morpho as part of the procurement process. The parties delineated the portions of the video that they wished to be considered, and consistent with the request, the designated portions were reviewed. An eight -volume Transcript of the hearing was filed with DOAH on November 7, 2012. All parties timely filed proposed recommended orders which have been considered in the preparation of this Recommended Order. 3 4 � i, 1 19 IL s i r f 4 Z, k J� 1] 1.1 ILA t j � �� M� FINDINGS OF FACT 1. Petitioner is a state agency authorized to enter into contracts for commodities and services subject to the procurement requirements of section 287.057, Florida Statutes [2011].' 2. On April 17, 2012, the Department released the ITN which sought proposals to provide an ADLTS. 3. The Department received and evaluated responses to the ITN from three vendors, including MorphoTrust and STS. 4. On May 15, 2012, the Department issued Addendum 1 to the ITN, which answered questions vendors submitted regarding the ITN and replaced pages 31, 39, and 40 of the ITN. 5. After completion of the first stage of [the] process of contractor selection where the Department evaluated the Statement of Qualification and Services Offered (SQSO) submitted by the vendors, the Department released the results of the initial evaluation process and proceeded to enter into negotiations with MorphoTrust and STS. 6. The Department conducted ITN negotiation meetings with the representatives of MorphoTrust on July 10, 2012, and the representatives of STS on July 12, 2012. 7. On July 18, 2012, the Department issued Addendum 2 to the ITN, which replaced pages 16, 23, 40, and 42. B. On July 26, 2012, the Department issued further instructions to MorphoTrust and STS, including a request for 5 Submitted into theu lic p record or it m S) y, � I. T. on I City Clerk their [BAFO]. At this time, the Department issued Addendum 3 to the ITN, which replaced pages 15, 40 and 42. 9. On July 31, [2012], the Department issued Addendum 4 to the ITN, which replaced page 16 of the ITN. 10. MorphoTrust did not protest the terms, conditions, and specifications contained in the ITN, including any provisions governing the methods for ranking bids, proposals, or replies, awarding contracts, reserving rights of further negotiation, or modifying or amending any contract within 72 hours of the issuance of the ITN or any addendums thereto. 11. On August 10, 2012, the evaluation team held a public meeting to evaluate the BAFOs submitted by MorphoTrust and STS. 12. On August 13, 2012, the Department issued its intent to award the ADLTS contract to STS pursuant to the ITN. 13. On August 16, 2012, MorphoTrust submitted its notice of intent to protest the intent to award the ADLTS contract to STS. 14. On August 27, 2012, MorphoTrust filed its Formal Written Protest and Petition for Administrative Hearing. 15. Section 1.1 of the ITN provides as follows: The Department of Highway Safety and Motor Vehicles, hereinafter called the Department, requests written proposals be submitted for an [ADLTS], which is to be provided at no cost to the Department. The [DHSMV] manages Florida's driver licensing program. Florida law requires a first-time driver to pass knowledge and skills exams prior to issuance of a driver license. The Department seeks 6 to improve the integrity and efficiency of its licensing system by selecting a Contractor to provide a Driver License Testing System for use in State Driver License Offices, Tax Collector Offices and by Third -Party Test Administrators. 16. Section 3.1 of the ITN provides as follows: The (DHSMV) manages Florida's driver licensing program. Florida law requires a first-time driver to pass knowledge and skills exams prior to issuance of a driver license. The knowledge and skills exams are designed to protect the public from hazards posed by unqualified motor vehicle operators. There are two (2) basic types of licenses --operator (Class E) and commercial (Classes A, B, and C). In Florida, Class E driver licenses are issued to drivers operating vehicles less than 26,001 pounds. Applicants must pass two (2) knowledge exams --road signs and road rules in order to obtain a learner's permit and must pass a driving skills exam to become fully licensed. The Department uses an aging web -based automated testing system for the administration of both Class E and commercial driver license knowledge exams in its fifty four (54) State Driver License Offices. In addition, one hundred and fifty six (156) county Tax Collector Offices in fifty two (52) counties also use the Department's automated testing system. Skills exams administered by State and Tax Collector Examiners are documented by hand, with pass/fail scores manually determined and entered into the driver license issuance system. In addition, six (6) Third -Party Contractors administer Class E knowledge exams online. The Department maintains the test databank and has established procedures for Third -Party Administrators to retrieve randomly generated test questions per applicant via web service. Submitted into the pu lic (� record f r ite (s) 5 on % I b City Clerk Currently, all operator skills exams are administered through State or Tax Collector Offices, with the exception of any teenager who completes a driver education program through their local high school. Driver education graduates are not required to complete additional skills exams. Driver education is currently offered in approximately fifty (50) of the sixty seven (67) school districts and a few private high schools. The majority of Commercial Driver License (CDL) skills exams are administered by third -parties, with less than ten percent (108) of CDL skills exams administered by State Examiners. Over the next several years, we anticipate the following changes to our business environment. 1. By 2015, all but three (3) of the sixty seven (67) counties will receive driver license services via the Tax Collectors. The Department will maintain driver license offices only in Broward, Miami -Dade, and Volusia counties; approximately twenty-six percent (268) of all driver license transactions are conducted in these three (3) counties. 2. More third -parties will offer Class E knowledge exams online. DHSMV started this program in July 2011. Seven (7) providers offer exams online now, but several others have applied. 3. Some third -parties will offer Class E knowledge exams in a proctored setting. This option has been on the table since July 2011 and one vendor currently offers proctored exams. 4. DHSMV will provide an opportunity for third -parties to administer Class E driving skills exams. The Department has delayed implementation of this opportunity until the conclusion of this ITN. DHSMV will expect third -parties administering Class E driving skills exams to use the system sought here, at their own expense. 5. The Department will encourage Third- partyadministrators of CDL driving skills exams to use the system sought here, at their own expense. While we do not expect to mandate the use of this system for existing CDL Third -party administrations, there is a possibility that federal mandates may eventually recommend and/or require it. 17. Section 3.2 of the ITN provides as follows: The Department seeks to improve the integrity and efficiency of its licensing system by selecting a Contractor to provide a NO -COST SOLUTION to the Department for a driver license testing system for use in State Driver License Offices, Tax Collector Offices and by Third -Party Test Administrators. This would include the system, web application and system maintenance, at no -cost to the Department. Third Party Administrators must be provided a consistent methodology for accessing and consuming the web -based tests questions and answers from the Awarded Contractor. The system must consist of: 1. A web -based application for the administration of Class A, B, C, and E driver license knowledge exams in driver license and Tax Collector Offices. The Prospective Contractor must agree to provide this at no cost to the Department. 2. A web -based application for the administration of Class E driver license road signs and road rules exams by third -parties. This system must also be accessible by Driver Education Licensing and Assistance Program (DELAP) administrators at no cost to the School Districts or the Department. M M Submitted into thenu lic j� record or it s) 5 S` . on City Clerk 3. A knowledge bank of at least five -hundred (500) questions for Class E road signs and road rules, plus CDL knowledge exam questions meeting American Association of Motor Vehicle Administrators (AAMVA) specifications. This must be provided at no -cost to the Department. 4. A tablet -based solution for the administration of Class E driver license skills exams. Bonus points will be given to Prospective Contractors who provide this solution at no cost to the State for use by State and Tax Collector Offices. All Third -Party Administrators of Class E driver license skills exams will be required to adopt this solution. Third -Party Administrators can be charged for this solution. 5. A tablet -based solution for the administration of Class A, B and C driver license skills exams. Third -party CDL skills exam administrators will not be mandated to adopt this solution at this time, but will be encouraged to do so. 18. Section 3.3 of the ITN provides as follows: [ADLTS] is a centrally administered testing system that supports testing centers in State and Tax Collector Driver License Offices located throughout Florida. The purpose of the system is to perform driver license testing and other testing in a user-friendly Intranet and Extranet environment. The test information is stored centrally in Tallahassee offices of [DHSMV]. The system is a web -based system that is used to display and control all driver license testing, Administrative, Supervisor, Examiner and Extranet functions. The administrators of the ADLTS system control user accounts, testing office information, creating new exam categories, 10 creating new questions, retiring questions and printing reports. In July 2011, the Department implemented a new third -party test administration program for Class E knowledge exams. The Department maintains the test databank and has established procedures for Third -Party Test Administrators to retrieve randomly generated test questions per applicant via web service. Any student who fails an exam is given the opportunity to retest with the Third Party Administrator two (2) additional times for each exam type (road rules and road signs). The Third Party Administrator is required to collect a statutory fee of ten dollars ($10.00) for each retest that is remitted to DHSMV electronically. Each exam is assigned a unique identifying number for tracking and auditing purposes. As part of this program, the opportunity exists for third -parties to administer the driver license knowledge exams in-person in a proctored setting. The Department does not currently provide a user interface application for third -party testers who administer exams on-line or in a proctored setting. Anyone wishing to offer these services must develop their own application to access the Department's web services. We have delayed implementation of this portion of the program until completion of this ITN, as we anticipate mandating that third -party administrators of Class E driving skills exams use the tablet testing system sought herein, at their own expense. All contractual language and current business rules for the Third Party Administration of Class E knowledge exams are available at http://www.flhsmv.gov/ddl/tpolts.html. Approximately fifty (50) of the sixty seven (67) Florida school districts and several private high schools conduct both Submitted into the tlie record or i�m(s),�i ponClerk Class E knowledge and road tests for their enrolled driver education students through the Driver Education Licensing and Assistance Program (DELAP). The tests administered are the same as the Class E licensing tests given in driver license offices by Department and Tax Collector DL examiners. However, DELAP testers give the knowledge tests on paper forms generated by ADLTS, as they do not have direct access to the Department's electronic testing system. Commercial driver licensing (CDL) in -vehicle skills tests are conducted primarily by about two -hundred and thirty (230) third party businesses and agencies that have the necessary resources. Testing authority is granted by the Department through contracts. Some charge a fee for their services while others test only their own employees and do not. Test procedures are prescribed by federal regulation, following the AAMVA 2005 Model CDL Testing System. 19. Section 4.1 of the ITN provides as follows: The Awarded Contractor will provide a web -based driver license testing system that will be used by Driver License Examiners in offices operated by the Department and Tax Collector Offices at no cost to the Department or County Tax Collectors. In addition, the Awarded Contractor must make available the same web -based solution for purchase by Third -Party Test Administrators. The testing system will include administrative and reporting functions. The awarded Contractor must also provide an option for purchase of a mobile tablet -based hardware/software solution for the administration of driving skills exams that will update the central testing database. The mobile solution will incorporate Global Positioning System (GPS) tracking technology for driving exam routes and time. The commercial driving skills exams must be 11 12 ® i I tF w Ir? generated inaccordance with Federal Motor Carrier Safety Administration regulations and provide for subsequent updates upon release by AAMVA. Bonus points will be given to Prospective Contractors that offer this solution at no -cost to the Department. The Awarded Contractor will provide a minimum five -hundred (500) question databank of road signs and road rules Class E exam questions, plus CDL knowledge exam questions meeting American Association of Motor Vehicle Administrators (AAMVA) specifications that comports with Florida traffic and licensing laws. The Awarded Contractor may use the Department's existing bank of questions as the basis for the new databank. Currently, road signs and road rules exams are administered as two (2), twenty (20) question tests, but the Department will consider proposals to modify this testing model. For example, the Department would consider proposals for one (1) Class E knowledge exam that including both road rules and road signs questions and increases the total number of questions asked. Currently, approximately ninety five percent (958) of applicants pass the road signs exam on their first attempt. Approximately forty eight percent (488) of applicants pass the road rules exam on their first attempt. Please refer to the attached AAMVA Guidelines (Attachment VII) for knowledge and Skill Test Development. The Awarded Contractor is responsible for project planning, coordination, implementation, installation and maintenance, as applicable and must provide the name and qualification of the proposed project manager as part of the bid response. Any changes to the project manager after the ITN is awarded must be requested through the Department in writing. The Department will designate a project manager that will be the primary contact for the ITN. Submitted into the pudic record f r on '7 City Clerk The Awarded Contractor will have access to personal identification data protected by the Florida and federal laws, including the Driver's Privacy Protection Act. The Prospective Contractor must describe in the bid response the security protocols related to employee background checks, training and monitoring. 20. Section 4.2.8 of the ITN provides, in part, that "[alt implementation, the system must provide replacements for the current test types which include[:] Class E General Knowledge, Road Signs . . . [and] Class E skill [testing]. . . . 21. Section 4.2.13 of the ITN provides, in part, as follows: With the (BAFO), the Prospective Contractor must submit a price schedule to include a description of each item available for purchase and a purchase or use price. The pricing model may be per item, per license, or per use. While this will be a no -cost contract to the Department and Tax Collectors, price to third -parties will be considered during the evaluation process. An advertising plan must also be submitted by Prospective Contractors. (emphasis added). 22. Section 8.1 of the ITN provides as follows: The Department will appoint an Evaluation Committee. The committee shall complete the evaluation of all valid proposals, in accordance with the criteria set forth in this section. Award will be to the highest scoring proposal, considering the technical proposal scoring and all costs for the five- year contract period, evaluated as described in Section 8.19 of this solicitation. (emphasis added). 13 14 Submitted into the pu lic c n '7 r ite s) S G S on City Clerk The reference in section 8.1 of the ITN to "Section 8.19" should 25. Section 1.9 of the ITN provides, in part, that "[a]ny be to "Section 8.9." The ITN does not contain a section 8.19. 23. Section 8.9 of the ITN provides as follows: Price will be evaluated by the present value methodology required by Section 287.0572, Florida Statutes, and Rule 60A-1.063, Florida Administrative Code, to determine the lowest cost proposal. The lowest cost proposal will be awarded 15 points. Lowest total cost (LC) divided by proposal being considered (PC) times maximum points score (15) equals points awarded. Formula: LC/PC x 15=score. 29. Section 1.5 of the ITN provides as follows, The Department has established certain mandatory requirements which must be included as part of any proposal. The use of the terms "shall," "must," or "will" (except to indicate simple futurity) in this solicitation indicates a mandatory requirement or condition. The words "should" or "may" in this solicitation indicate desirable attributes or conditions, but are permissive in nature. Deviation from, or omission of, such a desirable feature will not itself cause rejection of a proposal. Exception: This is a negotiation process. The DHSMV reserves the right to accept alternative means of accomplishing mandatory requirements, with reasonable assurance of satisfactory results, without addendum to this ITN. Such alternative(s) should be clearly identified by the Respondent firm in its proposal. The evaluation criteria set forth herein, and their relative weights, are also subject to modification in the negotiation process. addenda or written answers supplied by the Department Procurement Officer to participating proposer's written questions become part of this solicitation." 26. Section 1.39 of the ITN provides as follows: The contract resulting from this solicitation process shall consist solely of the purchase order issued by the Department to the successful proposer, this solicitation and any addenda thereto, and the proposal, including any license/use agreement submitted by the successful proposer as part of its proposal except to the extent of any conflict with Florida law or terms and conditions of the proposal. In the event of a conflict among any of the documents referenced herein, the following priority shall apply, with the language of each listed document governing the documents listed below it: a. The purchase order b. Any addenda to the solicitation c. The solicitation d. The awarded proposal including any agreements. Any agreements which include, but are not limited to installation, licensing, maintenance, software, etc. must be submitted with the proposal and agreed to by the Department during negotiations. 27. Attachment I to the ITN is "State of Florida PUR 1000, General Contract Conditions (PUR 1000)." PUR 1000 is incorporated into the ITN by reference. PUR 1000, 15 16 paragraph 4.(e), is entitled "Equitable Adjustment." This paragraph provides as follows: The Customer may, in its sole discretion, make an equitable adjustment in the Contract terms or pricing if pricing or availability of supply is affected by extreme and unforeseen volatility in the marketplace, that is, by circumstances that satisfy all the following criteria: (1) the volatility is due to causes wholly beyond the Contractor's control, (2) the volatility affects the marketplace or industry, not just the particular Contract source of supply, (3) the effect on pricing or availability of supply is substantial, and (4) the volatility so affects the Contractor that continued performance of the Contract would result in a substantial loss. 28. Paragraph 1.(b) of PUR 1000 defines "Customer" to mean: [T]he State agency or other entity identified in a contract as the party to receive commodities or contractual services pursuant to a contract or that orders commodities or contractual services via purchase order or other contractual instrument from the Contractor under the Contract. The "Customer" may also be the "Buyer" as defined in the PUR 1001 if it meets the definition of both terms. 29. Question 19, Addendum 1, and the answer related thereto read as follows: Question 19: "Bonus points will be given to Prospective Contractors that offer this solution at no -cost to the Department." Please define if "the Department" includes the Tax Collectors. If not, may the mobile skills test solution be sold to the Tax Collectors as well as the Third -Party Administrators? Submitted into the P, is record fqr ite (s) Z on 1 City Clerk Answer to Question 19: Bonus points may be given up to a maximum amount of fifteen (15) points. The maximum amount of bonus points will be given if the mobile skills test solution is provided to both the Department and its Tax Collector agents at no cost. A lesser amount of points will be given if the solution is provided to the Department at no cost, and no bonus points will be given if the solution is not provided at no -cost. 30. Question 37 from Addendum 1, and the response thereto, provide as follows: Question 37: Where is the Supplemental Cost Sheet shown in the ITN? Answer to Question 37: Please ignore the Supplemental Cost Sheet. There is only a Price Proposal Form (Section 9.0). Please utilize additional space in a Word, Excel or PDF format for pricing structure, if needed. Please seem amended pages 39 and 40 attached to this addendum. 31. Question 39 from Addendum 1, and the response thereto, provide as follows: Question 39: May the awarded contractor charge a standard user/license fee to each third party administrator for the knowledge test and perhaps the eventual tablet skills test? Answer to Question 39: Yes, the Awarded Contractor may charge a standard user/license fee to each Third Party Administrator. 32. Question 82 from Addendum 1, and the response thereto, provide as follows: Question 82: In regards to the Pricing Proposal Form on page 42 of the ITN, can this 17 18 Submitted into the pulic c record f r ite](s) �, J�� �- on / City Clerk form be modified to better present our Initial Term pricing strategy to the State of Florida? Tablet Cost, Per Tablet for Third Party Administrator A $ Answer to Question 82: Yes, this form can Cost To Access System for Third Party Administrator B $ be modified utilizing Word, Excel or PDF to format a proposed pricing structure. Additional Features C $_ 33. Addendum 2 added to Section 3.2, subsection 4, the Initial Term Total Cost A+B+C-D $_ Renewal Term underlined language as noted: Tablet Cost, Per Tablet for Third Party Administrator E $ A tablet -based solution for the Cost To Access System for Third Party Administrator, administration of Class E driver license Per Test F $_ skills exams. Bonus points will be given to Additional Features G $ Prospective Contractors who provide this solution at no cost to the State for use by Renewal Term Total cost E+F+G-H $_ State and Tax Collector Offices. If the tablet -based solution has a cost to the State Total cost D+H-I S_ and Tax Collector Offices associated with it, Note: the price from Section 9.0 "Price Proposal" shall be utilized. All Third -Party The quantities will vary based on need. Administrators of Class E driver license skills exams will be required to adopt this Additional Features can include any startup fees, maintenance or solution. Third -Party Administrators can be system enhancements. Please use additional space, if expand on Additional Features. needed, to charged for this solution. 36. Addendum 4 removed from the ITN the requirement that 34. Addendum 2 amended Section 9.0, which sets forth the Price Proposal Form to read as follows: Tablet Cost, Per Tablet For Third Party Administrator A $_ Annual Cost to Access System for Third Party Administrator, Per Administrator B $ Total Cost A+B-C $_ Note: Price Proposal Scoring is only calculated from a per-unit cost. The quantities will vary, based on need. 35. Addendum 3 established the final Price Proposal Form as follows: the successful proposer supply a damages bond. I. Deletion of Damages Bond Requirement 37. Section 2.5 of the ITN, labeled "DAMAGES BOND," as originally set forth provided as follows: The proposer shall supply to the Department with the performance bond a bond for the payment of any liquidated damages as may become due and payable to the Department arising hereunder, in the face amount of 5% of the total cost for the project. The bond must be renewed annually no later than fourteen (14) business days prior to the beginning of the next contract or renewal period (if renewed). For the second and subsequent contract and renewal periods, the renewal bond amount must equal or exceed five 19 20 percent (58) of the total price amount proposed for the corresponding contract or renewal period in the proposer's proposal. 38. Soon after issuance of the ITN, companies that were considering submitting a proposal were given the opportunity to tender questions regarding the ITN to the Department. 39. One of the questions submitted by MorphoTrust in response to the ITN states that "(g]iven the unique model that the state has requested in the ITN, would the state be willing to negotiate [an) alternative liquidated damage clause to better reflect the proposed solution?" The Department's response to the inquiry stated that this issue could "be discussed during the negotiation phase of the ITN process." 40. Intervenor STS, in response to the ITN, also posed a question to the Department regarding the bond requirements. STS's question and the Department's response thereto provide as follows: Question: In regards to the bonds, what value/cost is the bond supposed to represent? Is this value the price that.the State of Florida is required to pay to the contractor for the five year contract period? Or, is the value the total expense that the contractor has invested in the contract for the five year period? Response: The bonds must be in the amount [of] five percent (58) of the total pricing structure proposed by the Prospective Contractor. 21 I t l l !!!!!!!!i � � � M Submitted into the public r S� record f9r ite (s) on I tZ City Clerk 41. As previously indicated, the Department, during the period July 9 through 12, 2012, met with representatives from MorphoTrust and STS to negotiate the proposal and view demonstrations. During the negotiation and demonstration sessions, representatives from MorphoTrust and STS informed the Department of their concerns about the apparent redundancy of the ITN requirement to have both a performance bond and a damages bond. According to MorphoTrust, the Department agreed to review the performance and damages bonding requirements. 42. Addendum 2 was issued by the Department and this addendum, among other things, changed section 2.5, Damages Bond, of the ITN to read as follows: The proposer shall supply to the Department with the performance bond a bond for the payment of any liquidated damages as may become due and payable to the Department arising hereunder, in the face amount of five hundred thousand dollars ($500,000.00). The bond must be renewed annually, no later than fourteen (14) business days prior to the beginning of the next contract or renewal period (if renewed). For the second and subsequent contract and renewal periods, the renewal bond amount must equal five hundred thousand dollars ($500,000.00). 43. On July 24, 2012, Jim Sodero, on behalf of STS, sent an email to Jon Kosberg to reiterate his concerns about the bonding requirements. The email provides as follows: 22 Hi Jon, Thank you very much for the opportunity to bid and demonstrate our product. We have reviewed your request for a BAFO, and are currently exploring our options. Unfortunately, as we had mentioned during our demonstration, it is very likely your bond requirements prevent us from proceeding further. We are once again looking for a bond company that will cover this 'no cost' proposal, but are having great difficulty. At the meeting you thought you might be able to offer the names of some companies that have done this in the past. we would very much appreciate any information you can provide. Again, the bonding company's main concerns are that the State is not accepting a risk correspondent to the value of the bond. There is some risk no question, but it is STS that will assume the greater risk of investing over 2 million dollars in equipment and manpower with the hope of financial recovery over a long term contract. They feel, and we have to agree, that the hardware investment itself should guarantee that this is a contract that we will not walk away from and will service to the best of our abilities. Another way of looking at this is to remember that STS proposed a "free off-the-shelf" system with a proven track record that has provided millions and millions of exams in many jurisdictions over a period of 18 years. Again, I don't wish to minimize that the State has some risk, but asking for a bond on a proven product with an impeccable record would be like telling Microsoft that you wish a multi-million dollar bond to cover any potential risk of losing information in Microsoft word, after they have given you the product at no cost. Submitted into the pu lii % record fr ite (S) on -71City Clerk Solutions Thru Software is extremely interested in this contract and at the prospect of working with the State of Florida, however at present we have a better chance than not of being forced to withdraw. This would be a terrible situation as Solutions Thru Software is the leading vendor in solutions such as this and has been doing so longer than any other company in the market. One possible compromise may be to add Florida as a named beneficiary on our insurance policy as an alternative to a Bond. Solutions Thru Software carries 2 million dollars in Liability, and we have had other customers accept this as a means of protecting their risk in the past. Any assistance you can provide would be greatly appreciated. Of course time is of the essence. If we cannot find a bonding company by your August 1st deadline, then STS will be forced to submit a No -Bid in response to the BAFO. Sincerely, Jim 44. The following day, on July 25, 2012, Mr. Sodero sent Mr. Kosberg another email regarding the bonding requirement. This email provides, in part, as follows: The performance bond and damages bond continue to be issues.. The companies that we are dealing with still believe this is a highly irregular request. To provide a quote from their latest email, "I'm not sure the Damages Bond will be something they'll want to consider. It's an odd request." We are proceeding with the application at any rate, and if you can provide other companies, we will proceed with the paper work for them as well. 23 24 1. Y � � P" M I� M � � � � � � � � M 45. Addendum 3 issued by the Department, among other things, modified the Calendar of Events section of the ITN. The original ITN provided that "best and final offers" were due no later than 2:30 p.m. (EST), on August 1, 2012. Addendum 3 changed the due date for "best and final offers" to August 3, 2012. 46. On July 27, 2012, STS sent additional emails to the Department regarding the bonding requirements. The first email was sent at 6:15 a.m. (CST), by Jim Sodero to Jon Kosberg. The email states as follows: Hi Jon, I just thought I would let you know that I am currently writing up a formal request to have the bond request eliminated or modified as per section 2.7. . . If there are any requirements which restrict competition, the respondent may request, in writing, to the Procurement Officer identified in Section 1.3 that the specifications be changed . . . The matter is not as to whether we can get a bond as it is looking like we will be able to. The problem is that we only have slightly over one week from the time the bond value was set, until the a (sic) guarantee of such bond must be provided with the BAFO. We have also had our lawyers review section 5.6 5.6 WITHDRAWAL OF SQSO: Withdrawal of SQSO's may be requested within 72 hours (excluding State holidays, Saturdays, and Sundays) after the opening time and date. Requests received in accordance with this provision may be granted by the Department upon proof of the Submitted into the public record fpr ite nf s) Q on `� City Clerk impossibility to perform based upon an obvious error. They identified two problems with this section. The first is that it is not clear as to whether the 72 hours if [sic) from the opening of the original bid, or the BAFO. Thesecond is that they do not believe there is sufficient guarantee that an obvious error can be demonstrated given that we have been discussing this bond limitation since the onset of preparing this bid. Please give me a call if you wish to discuss this prior to me sending out our formal request. Jim 47. A few hours later, Jim Sodero, at 11:14 a.m.(CST), sent a second email to Jon Kosberg which states as follows: Mr. Kosberg, Re: Request for removal of Conditions that Restrict Competition As per section 2.7, Solutions Thru Software wishes to identify a requirement which restricts our ability to compete in this RFP process. This is a concern that was identified when submitting our submission for the original RFP. Some clarification was provided by the State through the BAFO request, but unfortunately, as it stands, this concern still prevents Florida from receiving a full complement of competitive bids for this RFP. The issue specifically concerns the bond requirements stated in sections 2.3 Proposal Bond, 2.4 Performance Bond, and 2.5 Damages Bond. Although bond requirements are common in many government contracts, they are not common in the industry of knowledge testing. 25 26 This is due to the relatively low inherent risk assumed by the State. As the longest standing company in the business, Solutions Thru Software has not been required to obtain any bonds in our 18 years of impeccable service to the industry. As a "zero cost bid," the risk to the State of Florida is even less than is typical for the industry. For Florida, it is Solutions Thru Software who will finance and install literally millions of dollars in hardware and software for the purpose of knowledge testing for the State. The only risk to Florida is the potential of delay of service due to infrastructure failure, but no actual loss of service would exist as history has shown that the designed redundant system recovery is both seldom used and results in very short outages. Our request for a RFP/BAFO modification is based on: • With 18 years of bond free service, it cannot be expected that STS would have a 'standing' bond in place or a history of successful bond completion. • As the total value of the bonds was not known until the release of the BAFO, it was impossible to be pre -approved for the bonds in question, leaving only 9 days to apply and be approved. The bonding companies we have spoken with have said that this timeline for a new bond is not possible. The bonding companies have indicated that there is insufficient information on the surrender requirements for the bonds. In particular, they are confused as to the differences between the performance bond and the damages bond and why both must be renewed annually for the duration of the contract. In their opinion, the performance bond should cover the period between the onset of the contract and the Submitted into the pu is record f r ite (s) SV. + on City Clerk final sign off by the state that Solutions Thru Software has installed an operational system that satisfies the terms of the contract. At this point, the performance bond should be released and the damages bond put in place and renewed annually to protect the State for potential losses during operation of the system. If both bonds must remain in place, then they believe the State must clearly identify the types of problems that will result in the surrendering of each bond. Although verbal assurance has been given that Solutions Thru Software 'should' have no difficulty in obtaining the performance bond, the bonding companies are more hesitant regarding the damages bond without further clarification being provided by the State. Given this situation Solutions Thru Software is very concerned with the risk of submitting the bid bond without receiving written assurance that the bid bond will be returned if the bonding companies are unwilling to accept the surrender conditions of the State. The State has recommend(ed) that we continue with the bid process with plans of using the "72 hour" clause to pull our bid if necessary, but upon review of this clause, it is still unclear if failure to secure a bond can be demonstrated as an obvious error given that we have already pointed out this shortcoming through the RFP and BAFO process. It is also very unlikely that 72 hours will make the difference on the bond approval, as the first thing that they need is clarification from the State. It is our opinion that the above points demonstrate an uneven playing field. Bonds have not been a standard requirement in this industry in the past and it cannot be expected that all companies will have 'standing' bonds in place. The only 27 28 companies that will be able to respond to this RFP/RAFO will be companies that have other services that have required bonding, or possibly may have a track record that has warranted a need for bonding. Solutions Thru Software respectfully request that the State of Florida takes one of the following actions: 1. Remove the bonding requirements 2. Modify the requirements to state that the performance bond will ensure an operational system meeting requirements and that it will be returned upon State sign - off. And, modify the requirement of the damages bond to be annually renewable bonds to cover the period of operation. And, extend the requirement date for submission of the performance bond and damages bond and provide in writing that failure to obtain these bonds will not result in forfeiture of the bid bond. Thank you very much for your consideration of this request. Jim 48. At approximately 11:30 a.m. (CST), on July 27, 2012, Jon Kosberg sent an email alerting prospective bidders to the fact that Addendum 3 had been posted the previous day. Mr. Sodero, in response to Mr. Kosberg's email, sent his third email of the day to Mr. Kosberg at 2:56 p.m. (CST), and stated therein the following: Thanks Jon, I appreciate you forwarding Addendum 3 to US. However, our request for re-evaluation of the bond requirements still stands on the 29 Submitted into the pulic record f r ite (s} `j� q, t on r? City Clerk grounds that it creates an uneven playing field. It does not address the concerns that our bonding companies have expressed to us. As well, it only allows companies that have other products that typically require bonds to be able to make the proposed deadline. That is, companies that have a precedent for this type of request or, they have substantial financial backing (i.e. millions ifnot billions of dollars) making their request to a bonding company much more palatable. Jim 49. On Tuesday, July 31, 2012, at 3:19 p.m. (EST), Mr. Kosberg sent an email to MorphoTrust and STS advising that Addendum 4 had been posted. This addendum deleted the requirement for a damages bond as previously required by section 2.5 of the ITN. 50. Less than an hour and a half after the posting of Addendum 4, Ms. Openshaw, vice-president of State and Local Sales for MorphoTrust, was speculating that the Department deleted the damages bonding requirement to assist STS. Specifically, Ms. Openshaw stated, "I wonder if this addendum is because STS said they needed relief on some of the 'bondage' or they would not bid." 51. On Wednesday, August 1, 2012, Mr. Sodero emailed Mr. Kosberg regarding Addendum 4 and stated therein the following: Hi Jon, we are still at the office getting this proposal out the door, but I wanted to 30 send you the latest from our bonding company, as we will have to remain diligent on this to meet the time line. We appreciate the changes you have made, however, they are still not meeting the main concerns of the bonding company. 52. In explaining why the Department decided to delete the requirement for a damages bond, Mr. Kosberg indicated that the Department "decided to look [at] what would be in the best interests of the Department," and through this process determined that, [B]ecause of the unique model of this no cost solution and both vendors telling us that, you know, bonding may be redundant, we realized that we can achieve what we need in our requirement for bonding by holding strong to the performance bond and the proposal bond, while at the same point . . . remov[ing] the damages bond because of the redundancy, and we realized by removing that damages bond, we may ultimately realize better pricing for the third party administrator, because ultimately every requirement that we put in this ITN gets pawned off, you know, the price, to whoever may be paying for this particular type of service or item. (Transcript pg. 797) 53. Petitioner suggested that section 2.7 of the ITN precluded the Department from considering and acting upon STS's request to change the bonding requirements. Section 2.7 of the ITN provides, in part, that if a proposer believes that there are requirements in the ITN that restrict competition, the proposer may request in writing that the requirements be changed by the Department and that any "requests for changes to the 31 Submitted into thelic I 1 record f r it S) on VCity Clerk solicitation, must be received in writing by the Issuing Officer no later than the date and time specified in the Calendar of Events (May 1, 2012, at 4:00 p.m. Eastern Time)." Section 2.7 also states that "[a] respondent's failure to request changes by the date described above, shall be considered to constitute respondent's acceptance of Department's specifications." 54. As an initial matter, it is important to note that both STS and MorphoTrust voiced concerns about the ITN's bonding requirements well after May 1, 2012. While it is true that section 2.7 of the ITN directs that requests for changes to the solicitation must be received by the Department by some date certain, the requirements of section 2.7 must be read in conjunction with the other provisions of the ITN. Section 1.3 of the ITN provides, in part, that "[t]he Procurement Officer, acting on behalf of the Department, is the sole point of contact outside of official conferences and meetings with the agency's team, with regard to all procurement matters relating to this solicitation, from the date of release of the solicitation until the Department's Notice of Intended Award or Decision is posted." Also, Addendum 1 to the ITN makes it clear that the Department reserves the right to post addendums to the ITN as necessary. 55. In reading these provisions together, it is clear that the ITN process is one where proposers are allowed to voice concerns about "all procurement matters" relating to the 32 solicitation during the window of time between the date of release of the solicitation and the posting of the Department's Notice of Intended Award or Decision. The Department, in accordance with section 2.7, is always free to inform a respondent, as appropriate, that their failure to adhere to the established timeline constitutes "acceptance of the Department's specifications." It cannot, however, be said that section 2.7 precludes, as a matter of law, the Department from deleting provisions of an ITN subsequent to the date by which proposers are to submit questions and recommended changes. Generally, the Department is free to make changes to the provisions of an ITN prior to the submission of BAFOs as long as the changes do not favor, or create the opportunity for favoritism of, one bidder over another. See generally City of Miami Beach v. Klinger, 179 So. 2d 864 (Fla. 3d DCA 1965). 56. The Department credibly explained its rationale for deleting the damages bond requirement, and there was no contrary credible evidence offered by MorphoTrust demonstrating that the Department's stated reasons are pretextural. Petitioner's argument that the Department impermissibly favored STS by deleting from the ITN the damages bond requirement is not supported by credible competent evidence. Submitted into the pu lic (� record fo ite (S) S\ , on `� City Clerk II. The Relevant ITN Specifications are not Ambiguous 57. Petitioner alleges that "the Department's proposed award is contrary to the statutory requirements for a competitive solicitation" and is "contrary to the bid documents" because "[t]he only two vendors who submitted BAFOs interpreted the required Price Proposal Form completely differently." In furtherance of the allegation, Petitioner contends that the proposers were confused throughout the procurement process about how they were going to "recoup the costs associated with the no cost contract" and that this confusion resulted in the proposers developing divergent assumptions and proposals that prevented the Department from being able to conduct "a comparable analysis of the proposals." Petitioner's allegations are without merit. 58. As an initial matter, Petitioner's assertion, that its proposal was "completely different" from that of STS because of confusion about the specifications of the ITN, is a challenge to the specifications of the ITN. This challenge to the allegedly ambiguities in the specifications is untimely given that Petitioner failed to initiate a written protest to the alleged ambiguous specifications within 72 hours of posting of the solicitation. § 120.57(3)(b), Fla. Stat.; Capeletti Bros., Inc. v. Dep't. of Transp., 499 So. 2d 855 (Fla. 1st DCA 1986). Nevertheless, even if the merits of Petitioner's argument are 33 34 considered, the plain language of the bid specifications do not reasonably support Petitioner's claim of ambiguity. 59. It is well established that bid specifications "must be sufficiently specific to permit bidders to bid upon the same product, and factors thereof which are of such importance as to be given special consideration in determining the successful bidder should be so covered in the specifications as to detail to all bidders the standards anticipated, the tests the product must meet, and all factors upon which the product will be judged and the award made." Robinson's, Inc. v. Short, 146 So. 2d 108, 113 (Fla. 1st DCA 1962). In a competitive bid process, one of the main objectives is to be able to "make an exact comparison of bids." Clark v. Melson, 82 Fla. 230, 89 So. 495 (1921). 60. In support of its contention that the bid specifications were confusing, Petitioner cites to the Price Proposal Form as reflected in Addendum 3. According to Petitioner, the portion of the Price Proposal Form that addresses the "cost to access system" reasonably caused Petitioner to believe that "the system" to which the form referred was the "knowledge testing solution" only, and thus, resulted in Petitioner not including in its proposal a fee for skills testing. This conclusion by Petitioner is not reasonable given that throughout the ITN, the Department made it clear that "the Submitted into the plic �Q 1 record f rite )�' on City Clerk system" included the hardware, software, and other issues associated with the administration of driving skills exams. 61. Section 1.1 of the ITN indicates that the Department is looking "for an [ADLTS], which is to be provided at no cost to the Department." In section 3.1 of the ITN, the Department provides "background" information about the current test administration system in Florida for both knowledge and skills examinations for Class E operators. 62. Specifically, as to skills examinations, section 3.1 notes that applicants must pass both a knowledge and skills exam, that skills examinations currently "administered by State and Tax Collector Examiners are documented by hand, with pass/fail scores manually determined and entered into the driver license issuance system." Section 3.1 also notes that "currently, all operator skills exams are administered through State or Tax Collector Offices, with the exception of any teenager who completes a driver education program through their local high school." Section 3.1 of the ITN further notes that over the next several years, the Department "will provide an opportunity for third - parties to administer Class E driving skills exams" and that the Department "will expect third -parties administering Class E driving skills exams to use the [ADLTS] system sought [by the ITN] at their own expense." Section 3.1 clearly communicates a desire by the Department to include within the scope of the ITN 35 36 issues related to skills testing. This conclusion is further supported by other provisions of the ITN. 63. Section 3.2 of the ITN provides that the Department seeks a testing system that must include among other things "[a] tablet -based solution for the administration of Class E driver license skills exams." Section 3.3 of the ITN provides that the Department anticipates "mandating that third -party administrators of Class E driving skills exams use the tablet system sought [by the ITN]." Section 4.1 of the ITN provides that "the awarded Contractor must also provide an option for purchase of a mobile tablet -based hardware/software solution for the administration of driving skills exams that will update the central testing database." Section 4.2.8 of the ITN makes it clear that when implemented, "the system" must provide "replacements for the current test types, including Class E skills testing." 64. While it may be true that Petitioner was confused, it cannot reasonably be said that the source of Petitioner's confusion was the specifications of the ITN. Contrary to Petitioner's allegation, the evidence establishes that STS's interpretation of the Price Proposal Form was consistent with the specifications of the ITN and that the specifications of the ITN were sufficiently clear so as to allow MorphoTrust and STS to bid on the same product. 37 Submitted into the p c record �rite Tit on City Clerk 65. A more likely source of Petitioner's confusion about the scope of the ITN can be found in Petitioner's general unfamiliarity with the concept of combining knowledge and skill testing as part of a single solution. According to Petitioner, "[n]o jurisdiction in the United States has previously issued a competitive procurement requiring a solution combining knowledge tests and skills tests as part of a no cost solution." Whether this is a true statement or not, it is evident that the lens through which Petitioner viewed the ITN was one that focused on knowledge testing as being the only source for generating revenue from test fees. By contrast, STS, through its operations in Canada, has merged knowledge and skill testing as part of a no cost solution and saw the opportunity to do so in Florida based on the unambiguous specifications of the ITN. 66. Petitioner's next basis for challenging the proposed award is that "the Department's proposed contract award is not based on a reasonable comparison of the anticipated overall cost of the two vendors' proposals and the proposed contract award fails to reflect a determination of best value to the state." 67. Section 8.1 of the ITN provides that the "(a]ward will be to the highest scoring proposal, considering the technical proposal scoring and all costs for the five-year contract period." Section 8.9 of the ITN references the methodology for evaluation of costs for the five-year contract period and 38 provides that the lowest cost proposal would be awarded 15 points. Based on the formula, Petitioner was awarded 2.5 cost proposal points, and STS was awarded 15 cost proposal points. When totaling all scoring categories, MorphoTrust received 168.1 points, and STS received 191.6 points. The Department's consideration of the technical and cost aspects of the respective proposals resulted in the proper determination of the "best value" to the State as required by section 287.012(9). 68. As for the issue that the proposed contract award is not based on a reasonable comparison of the anticipated overall cost of the two vendors' proposals, Petitioner specifically alleges that the cost scoring system was flawed because the Department "did not recognize or incorporate the very significant pricing assumptions and cost differences of the vendors in evaluating the ITN responses." This allegation is not supported by credible competent evidence. 69. Any pricing assumptions made by the proposers to the ITN should have as its foundation the information found in the ITN. Sections 3.1, 3.2, 3.3, and 3.6 of the ITN are particularly instructive to proposers when developing their "assumptions" for purposes of creating a cost proposal. These sections of the ITN describe the Department's current state of affairs and where the Department desires to be in the future with respect to driver license testing. In particular, Section 3.6 provides very Submitted into the pulie record for it (s) S�, 11 L on City Clerk specific information about the number of driver license examinations administered by type and how test volumes are likely to be impacted by future events. 70. MorphoTrust's written price proposal details an $8,000.00 per entity, one-time tablet set-up fee, if there is a "minimum of 90 entities." In evaluating this assumption, it was noted by the Department that MorphoTrust's proposal is silent regarding what the fee would be if there are less than 90 entities. By comparison, STS's proposal reflects a per tablet cost of $2,219.50 regardless of the number of entities purchasing tablets. A MorphoTrust tablet costs nearly four times as much as a tablet offered by STS. MorphoTrust in its price proposal identified "knowledge testing tiers" where the price would be $10.00 per test for testing volumes between 100,000 to 199,999; $7.50 per test for testing volumes between 150,000 to 199,999; and $9.95 per test for testing volumes in excess of 200,000. By comparison, STS charges $9.92 per test for knowledge and skills tests respectively, with the price for each test decreasing if annual testing volumes exceed 500,000 tests per fiscal year. Each of these assumptions, as well as others, was considered by the Department when evaluating the respective price proposals. 71. MorphoTrust argues that the Department's evaluation of STS's proposal failed to consider the fact that STS intends to charge $9.92 for each of the two portions of the knowledge test 39 40 as opposed to a single charge of $4.42 for the entire knowledge test. In calculating the total cost of STS's proposal, the Department determined the cost to be $6,447.64 using a single knowledge test fee of $4.42. If STS's knowledge test fee is doubled to $8.84 to reflect the cost for charging for both portions of the knowledge test, then the total cost of the proposal, using the department's formula, increases to $6,452.00 dollars. The amount of $6,452.00, when compared to MorphoTrust's total cost of $38,659.90, is still the better value for the Department, third -party administrators, tax collectors, and ultimately the public. To the extent that MorphoTrust suggests that its pricing structure would have been different had it known that the ITN allowed for a per test fee for skills testing, this suggestion is without merit as explained elsewhere herein. III. Petitioner did not Prove STS's Proposal is Non -Responsive 72. MorphoTrust alleges that STS's proposal should be rejected as non-responsive for three reasons. First, MorphoTrust contends that STS's BAFO proposal does not meet the mandatory performance bond requirements of the ITN. Section 2.4 of the ITN provides, in part, that "[t]he successful proposer shall supply no later than '14 calendar days of award,' a Performance Bond issued by an insurance company licensed by the State of Florida Department of Insurance." Because section 2.4 of the ITN uses the word "shall" in setting forth the performance bond 41 Submitted into the public record �°r ite s p�� on i City Clerk requirement, this requirement is considered a mandatory provision of the ITN, and the proposal must provide an explanation of how the requirement will be satisfied. Section 1.5 of the ITN provides that the Department "reserves the right to accept alternative means of accomplishing mandatory requirements, with reasonable assurance of satisfactory results, without addendum to this ITN." 73. STS proposed two options in its BAFO to satisfy the performance bond requirement. The two options provide as follows: Performance Bond Costs Option 1. Bonding companies have given us an estimate of the expected yearly cost of the bond, however we would like to have additional conversations with the State on surrender conditions. Solutions Thru Software will only charge the exact cost of the bond, without markup or handling fees. The following would be a one-time fee for the five year contract. $TBD (estimated at 3%) Performance Bond Costs Option 2. If the state prefers, the bond cost can be added onto the per test fee for an estimated additional. $TBD (estimated at 3%) 74. On August 10, 2012, after submission of BAFOs by the proposers, Mr. Kosberg sent an email to Mr. Sodero at STS and stated therein the following: Jim, Per our discussion I am clarifying the following: The option related to the Performance Bond that will be suitable for 42 the State would be to add the cost onto the per test fee, which you identified as an additional 38, which totals $0.13 per test, bringing the per test fee from $4.29 to $4.42 per test. 75. Mr. Sodero, in response to the inquiry from Mr. Kosberg, confirmed that the "13 cents per test is a firm price to cover all bond costs . . . [and that STS] will honor the 13 cents per test cost and assume any financial risk should cost go beyond this point." In considering STS's proffer with respect to the performance bond requirement, it is clear that in its BAFO response, and its clarifying statement related thereto, that STS affirmatively represented that it was prepared to comply with the performance bond requirement. Simply stated, STS's proposal as to the performance bond requirement is responsive. 76. As the second ground for rejection of STS's BAFO as being non-responsive, MorphoTrust contends that STS impermissibly submitted a "post -scoring amendment" to its pricing proposal in violation of the specifications of the ITN. The alleged "post scoring amendment" occurred when STS clarified the extent to which the three -percent bond premium would impact its cost proposal. 77. Section 1.48 of the ITN provides that "[t]he Department reserves the right to contact any and all proposers for the clarification of responses to th[e] solicitation in accordance with the attached Form PUR 1001, Paragraph 15." Form PUR 1001, Submitted into the public record for ite s} on City Clerk paragraph 15, provides that "[b)efore award, the [Department] reserves the right to seek clarifications or request any information deemed necessary for proper evaluation of submissions from all respondents deemed eligible for Contract award." Contrary to the allegations, STS did not amend its BAFO in an improper manner as suggested by Petitioner, but, instead, merely clarified its BAFO in response to an inquiry from the Department as authorized by the ITN. 78. In its third ground for rejection of STS's BAFO as being non-responsive, MorphoTrust contends that "[t)he STS proposal should . . . be rejected because it modified the required Price Proposal Form to include a per test cost to be charged for 'skills testing."' This ground, like the others, is also without merit. 79. Section 1.44 of the ITN provides, in part, as follows: "The proposal forms furnished must be submitted with your proposal. Forms to be filled out in pen or ink or typewritten with no alterations, changes or amendments made within." (emphasis added). As previously noted, section 1.5 of the ITN provides that "[t]he use of the terms 'shall,' 'must,' or 'will' (except to indicate simple futurity) in this solicitation indicates a mandatory requirement or condition." Consistent with section 1.5, the only relevant portion of section 1.44 that is mandatory is the requirement that "proposal forms must be 43 44 submitted with [the] proposal" because this is the only portion of section 1.44 that uses the mandatory term "must." As for the portion of section 1.44 that deals with the substance of the form, it is only noted therein that the pricing forms are "to be" filled out a certain way. "To be" is not identified in the ITN as imposing a mandatory requirement or condition. Additionally, even if the original ITN can be read as requiring that the pricing form not be altered, changed, or amended, the Department, in the answers to questions 37 and 82 in Addendum 1 to the ITN, authorized changes, amendments, and alterations to the pricing forms. 80. In response to question 37, the Department stated that "[t]here is only a Price Proposal Form [so] [p]lease utilize additional space in a Word, Excel or PDF format for pricing structure, if needed." Question 82 asks, "[i]n regards to the Pricing Proposal Form on page 42 of the ITN, can this form be modified to better present our pricing strategy to the State of Florida?" The Department, in reply to Question 82, responded "[y]es, this form can be modified utilizing Word, Excel or PDF to format a proposed pricing structure." Petitioner failed to present credible evidence demonstrating that STS altered the Price Proposal Form in a manner inconsistent with the requirements of the ITN. Submitted into the pu is r record f r itel _1 ,1 , on City CI -•rk CONCLUSIONS OF LAW 81. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. §§ 120.569 and 120.57, Fla. Stat. (2012). 82. Section 120.57(3)(f) provides, in part, that: Unless otherwise provided by statute, the burden of proof shall rest with the party protesting the proposed agency action. In a competitive -procurement protest, other than a rejection of all bids, proposals, or replies, the administrative law judge shall conduct a de novo proceeding to determine whether the agency's proposed action is contrary to the agency's governing statutes, the agency's rules or policies, or the solicitation specifications. The standard of proof for such proceedings shall be whether the proposed agency action was clearly erroneous, contrary to competition, arbitrary, or capricious. . . . 83. MorphoTrust, as Petitioner, has the burden to establish the material allegations of its protest, to wit, that the Department's intended award of the contract to STS is clearly erroneous, contrary to competition, arbitrary, or capricious. § 120.57(3)(f); Dep't of Transp. v. J. W. C. Co., Inc., 396 So. 2d 778, 787 (Fla. 1st DCA 1981). 84. The nature of the de novo review in a bid protest proceeding has been established as follows: [T]he phrase 'de novo hearing' is used to describe a form of intra -agency review. The judge may receive evidence, as with any formal hearing under section 120.57(1), but the object of the proceeding is to evaluate 45 46 the action taken by the agency. See Intercontinental Properties, Inc. v. State Department of Health and Rehabilitative Services, 606 So. 2d 380 (Fla. 3d DCA 1992). State Contracting and Eng'g Corp v. Dep't of Transp., 709 So. 2d 607, 609 (Fla. lst DCA 1998). 85. Agency action will be found to be "clearly erroneous" if it is without rational support and, consequently, the Administrative Law Judge has a "definite and firm conviction that a mistake has been committed." U.S. v. U.S. Gypsum Co., 333 U.S. 369, 395 (1998); see also Pershing Indus., Inc. v. Dep't of Banking and Fin., 591 So. 2d 991, 993 (Fla. 1st DCA 1991). Agency action may also be found to be "clearly erroneous" if the agency's interpretation of the applicable law conflicts with its plain meaning and intent. Colbert v. Dep't of Health, 890 So. 2d 1165, 1166 (Fla. 1st DCA 2009). In such a case, "judicial deference need not be given" to the agency's interpretation. Id. 86. An act is "contrary to competition" if it runs contrary to the objectives of competitive bidding, which have been long held to be: (T]o protect the public against collusive contracts; to secure fair competition upon equal terms to all bidders; to remove not only collusion but temptation for collusion and opportunity for gain at public expense; to close all avenues to favoritism and fraud in various forms; [and] to secure the best values for the (public] at the lowest possible expense. 47 Submitted into the pub4c record f r it s) SK,_�,� on I�n� City Clerk Wester v. Belote, 138 So. 2d 121, 723-29 (Fla. 1931); see also Harry Pepper 6 Assn, Inc. v. City of Cape Coral, 352 So. 2d 1190, 1192 (Fla. 2d DCA 1977). In that regard, public officials do not have the power "to make exceptions, releases and modifications in the contract after it is let, which will afford opportunities for favoritism, whether any such favoritism is practiced or not." wester v. Belote, at 729. The public policy regarding exceptions and releases in contracts applies with equal force to the contract procurement. 87. Section 287.001 establishes the legislative intent that public procurement be intrinsically fair and open and that it also eliminate the appearance and opportunity for favoritism so as to preserve public confidence in the process, and provides as follows: The Legislature recognizes that fair and open competition is a basic tenet of public procurement; that such competition reduces the appearance and opportunity for favoritism and inspires public confidence that contracts are awarded equitably and economically; and that documentation of the acts taken and effective monitoring mechanisms are important means of curbing any improprieties and establishing public confidence in the process by which commodities and contractual services are procured. 88. The stated legislative intent has been applied to determine whether an action is contrary to competition as follows: 98 Thus, from Section 287.001 can be derived an articulable standard of review. Actions that are contrary to competition include those which: (a) create the appearance of and opportunity for favoritism; (b) erode public confidence that contracts are awarded equitably and economically; (c) cause the procurement process to be genuinely unfair or unreasonably exclusive; or (d) are unethical, dishonest, illegal, or fraudulent. SYSLOGIC Tech. Servs., Inc. v. So. Fla. Water Mgmt. Dist., Case No. 01-4385BID (Fla. DOM Jan. 18, 2002; SFWMD Mar. 6, 2002). 89. An "arbitrary" action is "one not supported by facts or logic, or despotic." A "capricious" action is "one which is taken without thought or reason or irrationally." Agrico Chemical Co. v. Dept of Envtl. Req., 365 So. 2d 759, 163 (Fla. 1st DCA 1978); see also Hadi v. Liberty Behavioral Health Corp., 927 So. 2d 34, 38-39 (Fla. 1st DCA 2006). If agency action is justifiable under any analysis that a reasonable person would use to reach a decision of similar importance, the decision is neither arbitrary nor capricious. Dravo Basic Materials Co., Inc. v. Dep't of Transp., 602 So. 2d 632, 634 n.3 (Fla. 2d DCA 1992). 90. Chapter 287 establishes the various methods for the procurement of commodities and services by state agencies. The Submitted into the pu lc record Fpr ite ) . } � SP, Z on �7 City Clerk Department utilized an ITN as the method for procurement of the contract at issue. Section 287.057(1)(c) describes that method of procurement as follows: (c) Invitation to negotiate. --The invitation to negotiate is a solicitation used by an agency which is intended to determine the best method for achieving a specific goal or solving a particular problem and identifies one or more responsive vendors with which the agency may negotiate in order to receive the best value. 1. Before issuing an invitation to negotiate, the head of an agency must determine and specify in writing the reasons that procurement by an invitation to bid or a request for proposal is not practicable. 2. The invitation to negotiate must describe the questions being explored, the facts being sought, and the specific goals or problems that are the subject of the solicitation. 3. The criteria that will be used for determining the acceptability of the reply and guiding the selection of the vendors with which the agency will negotiate must be specified. 4. The agency shall evaluate replies against all evaluation criteria set forth in the invitation to negotiate in order to establish a competitive range of replies reasonably susceptible of award. The agency may select one or more vendors within the competitive range with which to commence negotiations. After negotiations are conducted, the agency shall award the contract to the responsible and responsive vendor that the agency determines will provide the best value to the state, based on the selection criteria. 49 50 5 -The contract file for a vendor selected through an invitation to negotiate must contain a short plain statement that explains the basis for the selection of the vendor and that sets forth the vendor's deliverables and price, pursuant to the contract, along with an explanation of how these deliverables and price provide the best value to the state. 91. Section 287.012(25) defines a "responsive" submission to a solicitation as "a bid, or proposal, or reply submitted by a responsive and responsible vendor that conforms in all material respects to the solicitation." A "responsive vendor" is defined by section 287.012(26) as "a vendor that has submitted a bid, proposal, or reply that conforms in all material respects to the solicitation." 92. For the reasons set forth above in the Findings of Fact, Petitioner failed to meet its burden of establishing that the Department's intended award to STS is contrary to the Department's governing statutes, the Department's rules or policies, or the solicitation specifications. Accordingly, the Department's proposed action of awarding the contract to STS is neither clearly erroneous, contrary to competition, arbitrary nor capricious. 93. Because of the findings and conclusions set forth herein, it is not necessary for the undersigned to consider STS's allegations that MorphoTrusts' BAFO proposal is non-responsive and that MorphoTrust is non -responsible. 51 Submitted into the puis n 9 record for rte s) V� 5 o 1. on � I ,U 6 . City Clerk RECOMMENDATION Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent, Department of Highway Safety and Motor Vehicles, enter a final order adopting the Findings of Fact and Conclusions of Law set forth herein and dismissing MorphoTrust's protest as untimely, as indicated, and otherwise unsubstantiated .31 DONE AND ENTERED this 7th day of December, 2012, in Tallahassee, Leon County, Florida. LINZIE F. BOGAN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 988-9675 Fax Filing (850) 921-6897 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 7th day of December, 2012. ENDNOTES 1/ All subsequent references to Florida Statutes will be to 2011, unless otherwise indicated. 21 As for the language reserving in MorphoTrust "the right to terminate or renegotiate," Ms. Openshaw explained that the reservation language was intended to be read in concert with the equitable termination language found in ITN Attachment 1, PUR 1000, paragraph 9(e). The equitable adjustment provision provides that "[tlhe Customer may, in its sole discretion, make an equitable adjustment in the Contract terms or pricing if 52 is M pricing or availability of supply is affected by extreme and unforeseen volatility in the marketplace. . . PUR 1000 defines the "customer" as the "State agency or other entity identified in a contract as the party to receive commodities or contractual services pursuant to a contract." There is nothing in the equitable adjustment language that reserves to a contractor the unilateral right to terminate its contract with the Department, and the Department considered MorphoTrust's reservation when evaluating the company's pricing proposal. '/ Motions for attorney fees and costs were filed prior to the entry of this Recommended Order. It would be premature to consider the motions prior to entry of the final order. COPIES FURNISHED: Julie L. Jones, Executive Director Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room B-443 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Steve Hurm, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Deana Metcalf, Director Division of Administrative Services Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room B-431 2900 Apalachee Parkway, Mail Stop 20 Tallahassee, Florida 32399-0500 Jennifer Clark, Agency Clerk Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-430 2900 Apalachee Parkway, Mail Stop 61 Tallahassee, Florida 32399-0500 Submitted into the public r�t Z ` record n orrld or it to �t J I City Clerk J. Stephen Menton, Esquire Rutledge, Ecenia and Purnell, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 Tallahassee, Florida 32301 Douglas Sunshine, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Maria Elena Abate, Esquire Sharlee H. Edwards, Esquire Colodny, Fass, Talenfeld, Karlinsky and Abate, P.A. 23rd Floor 100 Southeast 3rd Avenue Fort Lauderdale, Florida 33394 NOTICE OF RIGHT TO SUBMIT EXCEPTIONS All parties have the right to submit written exceptions within 10 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case. 53 54 IThe New Jersey & H Street Limited Partnership, B- 288026 (2001) Submitted into the public on I 1 LU I( b . City Clerk B- 288026 (Comp.Gen.), B- 288026.2, 2001 CPD P 125, 2001 WL 812307 COMPTROLLER GENERAL Matter of. The New Jersey & H Street Limited Partnership July 17, 2001 *1 Robert K. Huffman, Esq., Cameron S. Hamrick, Esq., and David F. Dowd, Esq., Mayer, Brown & Platt, and Michael J. Farley, Esq., Miller & Chevalier, for the protester. Philip M. Horowitz, Esq., Michael R. Goldstein, Esq., and Amy E. Suski, Esq., Arter & Hadden, for Louis Dreyfus Properties, LLC, an intervenor. George C. Brown, Esq., John P. Sholar, Esq., Richard J. Ufford, Esq., and Angela E. Clark, Esq., Securities and Exchange Commission, for the agency. Paul E. Jordan, Esq., and John M. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Where protester's proposal was eliminated from competitive range, agency was not required to provide protester opportunity to submit revised proposal based on amended requirement; since amendment was not substantial such that it would not have been reasonably anticipated by offerors, agency also was not required to provide all interested firms an opportunity to propose on the amended requirement. DECISION The New Jersey & H Street Limited Partnership (NJ&H) protests the award of a contract to The Louis Dreyfus Property Group of New York under solicitation for offers (SFO) No. SECHQ-00-R-0030, issued by the U.S. Securities and Exchange Commission (SEC) for construction and lease of office space. We deny the protest. The SFO, issued September 8, 2000, sought proposals to furnish 630,000 to 650,000 rentable square feet of office space to be available not later than December 31, 2003. Several offerors, includin.g NJ&H and Dreyfus, submitted proposals, all of which were included in the initial competitive range. After the SEC conducted discussions and obtained best and final offers (BAFO), it determined that NJ&H's proposal fell outside the revised competitive range. On January 29, 2001 the SEC notified NJ&H of this fact and stated that proposal revisions therefore would not be considered. The protester requested and, in the form of a letter dated February 22, received a debriefing in which the agency provided a detailed listing of the strengths and weaknesses of the firm's proposal, and specifically stated that NJ&H's BAFO was "eliminated from the competition because it does not provide the close proximity and dedicated, secure access to transportation links, metro, and amenities as is found in the revised competitive range." In response to a March 16 request for an oral debriefing, on May 7 the SEC provided additional information. On May 29, the contracting officer made award to Dreyfus. NJ&H filed this protest on June 8. NJ&H asserts that the evaluation and negotiations were flawed. Specifically, the protester asserts that the agency improperly considered whether offered properties had "dedicated access" to transportation and amenities, since that was not specifically listed as an evaluation factor. NJ&H also asserts that the agency improperly identified two areas of its proposal (ratio of perimeter glass to usable square feet and the co -developer's role) as weaknesses, maintaining 1 VVESTLAW fP, 2016 Thomson Reuters. No claim to original U.S, Government Works. 1 The New Jersey & H Street Limited Partnership, 8- 288026 (2001) Submitted into the pu is D record fpr ite[n(s) that its proposal fully addressed those matters. Further, NJ&H alleges that the agency improperly failed to discuss these matters during negotiations. *2 The agency has requested summary dismissal of the protest as untimely filed. Having considered the protester's response to the agency's dismissal request, as well as the supplemental protest (discussed below), we agree that the protest is largely untimely and that the remaining issue can be resolved without submission of a full agency report. Our Bid Protest Regulations require that protests (other than those challenging solicitation terms) be filed not later than 10 days after the basis of protest is known or should have been known. 4 C.F.R. § 21.2(a)(2) (2001). More specifically, a protest based upon information provided to the protester at a debriefing is untimely if filed more than 10 days after the debriefing. Clean Venture, Inc., B-284176, Mar. 6, 2000, 2000 CPD 147 at 4 n.5; TeleLink Research, Inc., B-247052, Apr. 28, 1992, 92-1 CPD 1400 at 5. All of the information underlying NJ&H's protest grounds was specifically identified in the SEC's February 22 written debriefing, and reiterated in the May 7 letter. Since NJ&H failed to protest any of these matters until June 8, more than 3 months after learning of them, its protest is untimely and will not be considered on the merits. NJ&H maintains that its protest is timely because it did not know it was eliminated from the competition until it learned the award had been made to Dreyfus, and it protested within 10 days after receiving that information. In this regard, NJ&H states that, after reading a February 8 official statement in which the SEC stated that it had not made an award decision and that the selection process continued, it telephoned Spaulding & Slye Services Limited Partnership, the SEC's designee and authorized representative (SFO § 1.14) which, according to the protester, served as the primary SEC contact throughout the procurement. Protester's Declaration at 13. NJ&H asked the broker for clarification "as to whether [its] original proposal could still be accepted should negotiations with [Dreyfus] be unsuccessful." Protester's Declaration at 14. While the broker informed NJ&H "that the SEC would not accept any further revisions to its proposal," it allegedly further stated that "the SEC could nonetheless accept the [NJ&H] proposal as submitted." Id. Even accepting the protester's version of its February telephone conversation with the broker, it had no reasonable basis to believe that its proposal was still under consideration. When a proposal is eliminated from the competitive range, it is "eliminated from consideration for award." Federal Acquisition Regulation (FAR) § 15.306(c)(3). The January 29 letter, signed by the contracting officer, clearly stated that the protester's offer fell outside the revised competitive range and, as noted, the February 22 debriefing letter specifically advised the protester that its proposal was "eliminated from the competition." The protester was aware of this language, as it repeated it on the second page of its March 16 letter. The contracting officer reiterated this language in her May 7 response to the March 16 letter, stating that the "February 22 letter to [NJ&H] ... fully and thoroughly summarized the rationale for eliminating [NJ&H] from the competition." NJ&H could not reasonably ignore this unequivocal notice that the contracting officer had eliminated its proposal from the competition and choose instead to assume, based solely on the alleged statement by the broker's representative, that it remained in the competition. At minimum, reason dictates that NJ&H should have clarified the status of its proposal with the contracting officer; in this regard, the agency states that, in the 4 months following the broker's statements, NJ&H never raised the issue of those statements with the contracting officer. *3 In a supplemental protest, NJ&H asserts that the SEC improperly permitted only Dreyfus to revise its proposal to respond to an amended requirement for a 14 -year lease term (instead of the 15 -year term it had offered). NJ&H, which submitted a 15 -year offer, argues that it should have been allowed the opportunity to submit a revised proposal on the basis of the amended term. This argument is without merit. Under FAR § 15.206(c), "[a]mendments issued after the established time and date for receipt of proposals shall be issued to all offerors that have not been eliminated from the competition." NJ&H was not permitted to submit a revised proposal in response to the amended lease term because, unlike Dreyfus, it had been eliminated from the competition. Under FAR § 15.206(e), where the contracting officer determines that an amendment WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. IThe New Jersey & H Street Limited Partnership, B- 288026 (2001) Submitted into the pu lie record fpr itcyn I on to a requirement after offers have been received "is so substantial as to exceed what prospective offerors reasonably could have anticipated," the solicitation must be canceled and all interested firms given an opportunity to respond to the changed requirement. The change in the lease term falls outside of this provision. Not only does a 1 -year change in the lease term not appear substantial on its face, but since the RFP expressly permitted offerors to propose lease terms of from 10 to 20 years, a 14 -year term clearly was not beyond what offerors reasonably could have anticipated. Thus, the agency was not required to provide NJ&H an opportunity to respond to the changed requirement. In any case, NJ&H has not established competitive prejudice. Rather, it merely asserts, generally, that revised proposals from all offerors would result in "steep cuts" in price and that offerors "would have engaged in aggressive cost-cutting efforts." Supplemental Comments at 5. NJ&H provides no specifics to establish that any price revisions it would make would be substantial, and has not explained why --and nothing in the record suggests that --a 1 -year shorter lease term would have a disparate impact on different offerors' proposed rates. We will not sustain a protest absent a reasonable possibility of competitive prejudice --that is, a showing that, but for the agency's actions, the protester would have had a substantial chance of receiving the award. McDonald -Bradley, B-270126, Feb. 8, 1996, 96-1 CPD 154 at 3; see Statistica, Inc. v. Christopher, 102 F. 3d 1577, 1581 (Fed. Cir. 1996). NJ&H has not made this showing. The protest is denied. Anthony H. Gamboa General Counsel Footnotes The broker's representative's recollection of this conversation is different. When asked what the SEC would do if it was unable to complete the current procurement, he responded that the SEC's options might include revisiting the market for purposes of negotiating for space beyond the expiration of the current lease, but that "the SEC would not accept further revisions from [NJ&H] because it had been removed from the competitive range." Broker's Declaration at 14. B- 288026 (Comp.Gen.), B- 288026.2, 2001 CPD P 125, 2001 WL 812307 End of Document :- - 2016 Thomson Renters. No claim to original U.S. Government Works. WESTLAW n 2016 Thomson Reuters. No claim to original U.S. Government Works. Palamar Const., Inc. v. Pennsauken Tp., 196 N.J.Super. 241 (1983) Submitted into the rvr_nrd F-,• ;t-4, t'� on City Clerk Reversed and remanded. 2 Cases that cite this headnote (31 Municipal Corporations Judicial Supervision A reviewing court cannot overturn the decision of a municipal body unless it finds IWESTLAW rJ 2016 Thomson Reuters. No claim to original U.S, Government Works. 1 KeyCite Yellow Flag - Negative Treatment West Headnotes (7) Distinguished by Garden State Equality v. Dow, N.J., October 18, 2013 III Public Contracts 196 N.J.Super. 241 Reliability and responsibility of bidder Superior Court of New Jersey, Towns Appellate Division. Making, requisites, and validity of PALAMAR CONSTRUCTION, contracts INC., Plaintiff -Respondent, Factual testimony and documentary evidence of the "responsibility" of lowest bidder on V. TOWNSHIP OF PENNSAUKEN a township construction project created a fact issue concerning whether lowest bidder and Craig Taylor Construction was a "responsible bidder" to be resolved Company, Inc., Defendants -Appellants. by the township committee, for purposes of Argued Dec. 6, 1983. requirement that a public contract be awarded to the lowest responsible bidder. N.J.S.A. Decided Dec. 21,1983. 40A:11-6.1. ;1 2 Cases that cite this headnote SYNOPSIS Action was brought challenging township committee's X21 Public Contracts award to lowest bidder on a township construction" Reliability and responsibility of bidder project. The Superior Court, Law Division, Camden Towns County, set aside the award of the contract to lowest - Making, requisites, and validity of bidder, and lowest bidder appealed. The Superior Court, contracts Appellate Division, King, J.A.D., held that: (1) evidence Evidence that lowest bidder on township that lowest bidder was a "responsible" bidder provided construction project was a "responsible a sufficient basis for township committee's ultimate bidder" within contemplation of statute conclusion that lowest bidder was a responsible bidder, requiring that a public contract be awarded even though two postbid conditions were placed upon to the lowest responsible bidder provided lowest bidder to provide full-time supervision on the a sufficient basis for township committee's construction job and requiring lowest bidder and its conclusion that lowest bidder was a owner, personally and individually, to sign any and responsible bidder, even though the township all performance warranties required for the project; (2) committee, subsequent to accepting the bid, addition of the two postbid conditions did not violate attached conditions that lowest bidder agree spirit or letter of public bidding laws and did not require to provide full-time supervision on the job and that the award be voided; and (3) failure of lowest bidder that lowest bidder, and its owner, personally to include a contractor's qualification statement in its bid and individually, sign any and all performance was not material, but was merely a technical irregularity warranties required for the project. N.J.S.A. that township could waive. 40A:11-6.1. Reversed and remanded. 2 Cases that cite this headnote (31 Municipal Corporations Judicial Supervision A reviewing court cannot overturn the decision of a municipal body unless it finds IWESTLAW rJ 2016 Thomson Reuters. No claim to original U.S, Government Works. 1 Palamar Const., Inc. v. Pennsauken Tp., 196 N.J.Super. 241 (1983) 141 that the decision was arbitrary, capricious and unreasonable; it is not the function of the reviewing court to substitute its judgment for that of the municipality's governing body and the reviewing court is bound by the record before the governing body. 10 Cases that cite this headnote Public Contracts 1 Conditions and restrictions on bidders Towns Making, requisites, and validity of contracts Addition, after acceptance of the lowest bid on a township construction project, of conditions of full-time supervision on the job and a personal guaranty by owner of lowest bidder of any and all performance warranties required in the project did not require that the award be voided, where such conditions, which placed lowest bidder in a less favorable and possibly more expensive position than his fellow bidders and which benefited township, did not violate spirit or letter of public bidding laws, and lowest bidder voluntarily consented to perform the conditions. N.J.S.A. 40A:11-1 et seq. 4 Cases that cite this headnote 151 Municipal Corporations Award to Lowest Bidder Public Contracts Award A successful bidder on a municipal construction project is legally entitled to the contract as bid and is not required to make postbid concessions to the municipality if it does not want to do so. [61 6 Cases that cite this headnote Public Contracts t Form and requisites; responsiveness Towns Submitted into the pub c record fqr ite1n(s) j�. I � SQ, t ,iw Making, requisites, and validity of contracts Failure of bid submitted by lowest bidder on township construction project to include, due to a clerical error, a contractor's qualification statement, which all bidding contractors were instructed to include, was not material but merely a technical irregularity that township could waive, where the failure neither deprived township of its guaranty that the contract would be performed nor threatened integrity of policies behind the competitive bidding statutes. N.J.S.A. 40AA 1-1 et seq. 4 Cases that cite this headnote 171 Municipal Corporations Proposals or Bids Public Contracts Constitutional and statutory provisions Competitive bidding statutes are for the benefit of the public and should be construed as nearly as possible with reference to the public good. N.J.S.A. 40A:11-1 et seq. 1 Cases that cite this headnote Attorneys and Law Firms **175 *243 John F. Strazzullo, Westmont, for defendant -appellant Tp. of pennsauken. Mario A. Iavicoli, Haddonfield, for defendant -appellant Craig Taylor Const. Co., Inc. Barry W. Rosenberg, Cherry Hill, for plaintiff -respondent (Beck, D'Elia & Rosenberg, Cherry Hill, attorneys). Before Judges MICHELS, KING and DREIER. Opinion The opinion of the court was delivered by KING, J.A.D. This case presents the issue of whether a municipality may attach post -bid conditions adverse to the bidder to WES7LAW �7 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 Submitted record itr() into the pu lic (s G Palamar Const., Inc. v. Pennsauken Tp., 196 N.J.Super. 241 (1983) �_ 482 A.2d 174 an award of a publicly -bid construction contract. The award of the contract was challenged by the second - lowest bidder, plaintiff Palamar *244 Construction, Inc. (Palamar). The award was also challenged because the low -bidder did not supply a required contractor's qualification statement until one and one-half hours after the bids were accepted. This is the procedural framework of the dispute. The defendant, Township of Pennsauken, advertised a notice to bidders on July 15, 1983 inviting bids pursuant to the Local Public Contract Laws, N.J.S.A. 40A:11-1 et .seq. for the construction of a new clubhouse facility for the Pennsauken Country Club, formerly a private club which had, recently been acquired with State Greenacres funding assistance. The bids were opened on Friday, August 5, 1983 at 2 p.m. The defendant, Craig Taylor Construction Company (Taylor), was the lowest -bidder at $1,275,000. The plaintiff, Palamar was the second lowest bidder at $1,294,975. Palamar challenged Taylor's bid on two grounds: (1) that defendant Taylor was not a responsible bidder and (2) that the absence of a contractor's qualification statement in the bid package was a material defect. Hearings on Palamar's challenge were conducted before the governing body of the Township of Pennsauken (Township Committee) on August 31 and September 14. At the conclusion of the hearings, the Township Committee rejected Palamar's challenge and awarded the contract to defendant Taylor by a vote of 3-1. A formal resolution accepting defendant Taylor's bid and awarding it the contract was adopted by the Township Committee on September 19. Palamar filed a complaint in lieu of prerogative writ on October 3 with the Superior Court, Law Division challenging the decision of the Township Committee. On that date, the Law Division judge issued an order to show cause and an interlocutory restraint enjoining the execution of the construction contract with Taylor and the initiation of any construction on the project pending final resolution. After argument on October 23 an order for judgment setting aside the award of the contract to Taylor issued. On October *245 28 Taylor filed a notice of appeal and a motion seeking a stay of the Law Division's order. A stay was granted by this court on October 31, 1983 and the appeal was accelerated **176 for argument on December 6 because of the public interest involved. R. 2:9-2. This is the factual background. On July 25, 1983 Pennsauken published a notice inviting bids for the construction of the new clubhouse facility. The notice to bidders stated that the bids would be opened in public at the municipal building on August 5 at 2 p.m. and that the plans and specifications were available at the office of the township clerk. The notice also stated that a prebid conference would be held on July 25 at 2 p.m. Plaintiff Palamar and defendant Taylor both obtained copies of the specifications and plans. The specifications contained a contractor's qualification statement and stated that the statement "must be presented" to the Township at the prebid conference. The prebid conference was held as scheduled. The conference was attended by neither Palamar or Taylor, nor did either submit a contractor's qualification statement on that date. In fact, only two of the eight bidders actually submitted a contractor's qualification statement at the prebid conference. Carruth, the Township's administrator, stated that several contractors attending the prebid conference said that they were not aware of the requirement in the specifications for providing the contractor's qualification statement at the conference. Consequently, Carruth in August sent a registered letter to each bidder stating that the "contractor's qualification statement ... must be removed from the specification packet or duplicated and submitted with your bid on Friday, August 5, 1983 at 2 p.m. in order for your bid to be considered." Defendant Taylor concededly received this letter. The bids were opened by the administrator on October 5 at 2 p.m. Defendant Taylor's bid did not contain the required qualification statement. Craig Taylor, the principal of defendant *246 Taylor, was present at the bid opening and informed Carruth that the contractor's qualification statement had been inadvertently omitted due to a clerical error and asked if he could return to his nearby office to get the statement. Carruth told him to do so expediently. Carruth also informed Taylor that a decision as to whether his bid was acceptable would be reserved until Carruth reviewed the situation with the Township Committee and the solicitor. Taylor returned with the contractor's qualification statement to the township at approximately 3:30 p.m., one and one-half hours after the scheduled opening of the bids. IWESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 Palamar Const., Inc. v. Pennsauken Tp., 196 N.J.Super. 241 (9983) A public contract must "be awarded to the lowest responsible bidder." N.J.S.A. 40A:11-6.1. Defendant Taylor was the lowest bidder at $1,275,000; plaintiff Palamar was the second lowest bidder at $1,294,975. Palamar challenged Taylor's bid in a letter on August 8. Palamar asserted two grounds for disqualifying Taylor's bid: (1) that Taylor's failure to submit a contractor's qualification statement at the time designated was a material defect in the bid that could not be cured after the bids were opened and (2) that defendant Taylor was not a "responsible" bidder within the language of N.J. S.A. 40A:11-6.1. Hearings regarding Palamar's challenge were conducted before the Township Committee on August 31 and September 14, 1983. The two hearings resulted in a 280 -page transcript which is before us and was before the Law Division judge. Most of the testimony centered on whether Taylor was a "responsible" contractor. At the end of the second hearing session the Township solicitor advised the Committee that the omission of the qualification statement was material and could not be cured, relying on Hillside Township v. Sternin. 25 N.J. 317, 136 A.2d 265 (1957). Consequently he advised the Committee that Taylor was a disqualified bidder. The Township Committee rejected this advice and unanimously concluded that the defect was not material but trivial and that waiver would not threaten the competitive bidding process. This point was not treated by the *247 Law **177 Division judge but has been briefed and argued on this appeal. 111 121 The factual testimony and documentary evidence of Taylor's "responsibility" as required by N.J.S.A. 40A:11-6.1 created a fact issue for resolution by the Committee. See Arthur Venneri Co. v. Paterson Housing Authority, 29 N.J. 392, 402, 149 A.2d 228 (1959). We see no need to review all of that testimony in detail here. While there was some dispute, we are satisfied from the record that there was a sufficient basis for the Township Committee's ultimate conclusion, by a 3- 1 vote, that Taylor was a "responsible" bidder within the contemplation of the statute. Ibid. There was testimony that Taylor had never defaulted on a job, nor failed to complete a job, nor been denied an application for a bid bond or bonding. Taylor produced 11 favorable letters of recommendation from municipal officials, owners and architects for whom he had worked. The country club construction for Pennsauken was his costliest and most Submitted into the p blie record for itgm(s) S` , L complex job to date. The Committee's main concern seemed to be supervision on the job. Taylor agreed that the job needed full-time supervision and promised to furnish same, eight hours a day, five days a week. The specifications had been silent on supervision. There was also some question raised about his break-out prices for subcontractor's services. But since the bid was in a lump -sum, the sums Taylor had planned to pay various subcontractors seems irrelevant. There was also a question about Taylor's corporate or individual status which was clarified satisfactorily and promptly. After hearing the testimony and considering the documentation, the Committee, as noted, found Taylor "responsible" by a 3-1 vote. On the vote, the members of the Committee expressed themselves as follows MR. MAROCCIA: Yes. The reasons that I am voting yes, are as follows: I believe the law to be that a person who is the lowest bidder starts out with a presumption of his responsibility, and that the burden of challenging or showing the irresponsibility rest with other parties, certainly not with himself. So that therefore, he did not have the burden to prove that he is responsible, *248 but either the Township or the challenger, whoever that person may be, have the burden of going forward, and showing that that person is irresponsible. I have severe reservations that are only [gastronomical] in nature, about Mr. Taylor. I have not been able to follow that up—Follow those [gastronomical] reservations about Mr. Taylor, with any cold hard fact before this board. I have seen no evidence to rebut that presumption of responsibility. I can tell you, Mr. Taylor, that if you are successful tonight, it will be the most closely watched project in the history of Pennsauken Township. I feel that the evidence put forth here were insufficient to show that you were irresponsible, and therefore my vote is to award you the contract. MR. O'CONNELL: My vote is a no, and I would like to explain why it is going to be no. WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 � E I I I Palamar Const., Inc. v. Pennsauken Tp., 196 N.J.Super. 241 (1983) My background is not in law. My background is 30 years in construction, and as John Maroccia said, it is gastronomical problem, and I call it gut, and it is purely that. I have severe questions on the office stand, the lack of construction background, the lack of estimating, the lack of engineering in Craig's company. I questioned here, the review of the proposed documents, and I didn't receive a satisfactory answer. In testimony tonight, we heard a lot of testimony about doors being painted that shouldn't have been painted. Jobs, not doing all the things that he should have. These are miniscule things, that I am fully well aware that happen on every single job. I take very little weight from those things, because I know they happen **178 on all jobs, but I have heard substantial people talk about lack of supervision. The supervisor himself, who has been deemed to run this job, does not have the adequate, in my opinion, that is strictly my opinion, mechanical background to handle a job this complex on mechanical work. I would like to say that I hope that I am wrong. I will do everything in the world to make sure that I am wrong, and this job comes out very very well in the end. My vote is no. MR. ORTH: My vote is yes, because I could not convince myself, that it would not be in the best interest of this municipality not to award the contract to Craig [Taylor]. I certainly wish you the best of luck, along with Mr. Mauer. We are putting a lot of faith in you, if the next vote to come is the same. Just don't fall down on us. I vote yes. *249 MAYOR JACOBS: My vote is yes, and Mr. Taylor I have reservations. I also, this June was my 30th year in construction, on the sheet -metal on HVAC, so you know that I had a hand in designing the heating system for that building. Submitted into the on _. I ('(A j [ (� . City Clerk There are some reservations that I have, but I also feel that the evidence presented was too weak for us, or for me to say that you should not be the bidder, or the qualified bidder, and have that job. I reiterate what Bill Orth said, we are putting a lot of faith in you. All we want is a building that we are paying for. We want a beautiful club house and restaurant. We want it done right, and we want it done the first time, right the first time. I am sure you do too. I think it can be a feather in your cap, because it will be the largest thing you have done, monetary and complexity wise, and I think you should make every effort to see to it, that it has the best people doing the job, and I wish you all the luck in the work, and us also. After the vote, all present agreed that the resolution of acceptance and contract would contain a provision for full-time supervision and a personal guaranty from Taylor. The formal resolution awarding the contract to defendant Taylor was adopted September 19. In addition to stating the committee's finding that defendant was a qualified and responsible bidder, the resolution also provided 3. Craig Taylor Construction Company, Inc., has agreed that full-time supervision on a job of this size is necessary and that they will supply full-time supervision, eight hours per day, five (5) days per week and any other times that work will be ongoing on this project, and 4. Craig Taylor Construction Company, Inc. and Craig Taylor, personally and individually, will sign any and all performance warranties required for this project. The prerogative writ proceeding in the Law Division was heard in a summary matter. The judge reversed the decision of the Township Committee that defendant Taylor was a responsible bidder. The judge reasoned that the two conditions imposed on the contract awarded to Taylor; i.e., full-time supervision and a personal guaranty, demonstrated such uncertainty on the part of the Township Committee that he was compelled to conclude "that they were unable to say that fair-minded and reasonable people could believe the award was in IWESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 5 Submitted into theu ici 7 Palamar Const., Inc. v. Pennsauken Tp., 196 N.J.Super. 241 (1983) record fpr it�(S) P , t J� l� -- n I n A 11 the best interest of the municipality." He found that the award to defendant Taylor was a result of"a compromise" and that there "[was] no place *250 in the award of municipal contracts for compromise." As a result of that compromise, he found the action of the Township Committee was arbitrary, capricious and unreasonable and set aside the award of the contract to Taylor. **179 131 A reviewing court cannot overturn the decision of a municipal body unless it finds that the decision was arbitrary, capricious and unreasonable. Kramer v. Sea Girt Bel. of Adj., 45 N.J. 268, 296-296, 212 A.2d 153 (1965). "Even when doubt is entertained as to the wisdom of the action, or as to some part of it, there can be no judicial declaration of invalidity in the absence of clear abuse of discretion by the public agencies involved." Ibid. In re Meadowlands Communications Systems, Inc., 175 N.J.Super. 53, 64, 417 A.2d 575 (App.Div.1980). It is not the function of a reviewing court to substitute its judgment for that of the municipality's governing body and it is bound by the record before the governing body. We do not agree that attaching the two post -bid conditions condemned the award as illegal per se or constituted a capricious municipal abuse of discretion which effectively should cast Taylor down as an "irresponsible bidder." As noted, there was ample evidence produced at the hearing to support the Committee's conclusion that Taylor was responsible. Here the factual conclusion of "responsibility" is unassailable in the courts as it was reasonably grounded in the evidence. The Township's architect testified that this clubhouse job "absolutely" required full-time supervision. Unfortunately, this "absolute" requirement did not appear in the job specifications. He did not qualify his testimony in any sense and we can only conclude from it that full-time supervision was required no matter who got the contract. Indeed, plaintiff Palamar has agreed that if it ultimately prevails, full-time supervision will be provided. Our courts have stated that a public contract cannot be awarded upon terms which are different from those contained in the invitation to bid. *251 Burroughs Corp. v. Camden County, 181 N.J.Super. 492, 495, 438 A.2d 360 (Law Div.1981). This rule is premised on the basic policy behind the competitive bidding statutes, i.e., assurance against favoritism, improvidence, extravagance and corruption in the bidding process. Terminal Construction Co. v. Atlantic City Seiverage Auth., 67 N.J. 403, 410, 341 A.2d 327 (1975). These policies, in turn, are meant to ensure that all bidders are equally situated in their competition for the public contract. Hillside Tmp. v. Sternin, 25 N.J. 317, 322, 136 A.2d 265 (1957). "The conditions and specifications must apply equally to all prospective bidders. Otherwise, there is no common standard of competition." Id. In the typical case an award is voided as against the policies behind competitive bidding because it places one bidder in a more favorable position than his competitors. Conversely, the imposition of the post -bid conditions in the present case on defendant Taylor places him in a less favorable, and possibly more expensive, position than his fellow bidders. We have discovered only two reported decisions on the propriety of attaching post -bidding conditions to a public contract where the newly -negotiated conditions are more favorable to the public agency and more onerous to the agreeable successful bidder than the original specifications had been. In both instances the courts upheld the award of the contract. In neither case, as here, was there any suggestion of fraud, favoritism, corruption, or advantage to the low bidder. In Fishbach and Moore v. New York City Trans., 79 A. D. 2d 14, 435 N, Y. S. 2d 984 (App.Div. 198 1), the Transit Authority obtained certain post -bid cost reductions through negotiations with the successful low - bidder, General Electric. Original unsuccessful bidders failed in their judicial attack on the award of the contract which award the court held was not in any way inconsistent with the policies underlying the TJew York public bidding statutes. The court stated ... First, the record here contains no suggestion of favoritism, fraud or corruption. General Electric was fairly and properly established as the lowest responsible bidder in a round of bidding which has never been challenged. **180 *252 Hence, from the outset, General Electric was fairly entitled to primary consideration for the contract award. Second, the public interest was advanced since the authority obtained through negotiations a reduction in cost for the project. Three modifications were made on the initial bid: (1) the elimination of duplicative costs; (2) the agreement regarding copper prices; and (3) the inclusion of a provision for liquidated damages. Each represented an actual or potential savings on the price of the project. Third, the negotiations resulted in no WESTLAW n 2016 Thomson Reuters. No claim to original U.S. Government Works. 6 ' Submitted into the Palamar Const., Inc. v. Pennsauken Tp., 196 N.J.Super. 241 (1983) record for itgm(s) departure from the contract's original specifications and no concessions whatsoever were made to General Electric. Thus no unfair benefit was afforded to General Electric at the petitioner's expense. Hence, the award of the contract to General Electric after post -bid negotiations was not, under the circumstances at bar, inconsistent in any way with the policies underlying the bidding statutes. We do recognize that, as petitioner suggests, post - bid negotiations, even with a low bidder, may be conducted in such a manner as to violate the principles of competitive bidding. It is possible that an agency, through the threat of rejecting all bids, might attempt to coerce a low bidder to making unfair and unwarranted concessions. Yet, the bidder in such circumstances would not be without remedy since, as previously noted, the actions of an agency in awarding or in refusing to award a contract are not beyond judicial review and will be set aside where arbitrary. (See Matter of Carucci v. Dulan, 24 A.D.2d 529, 261 N. Y.S.2d 677; Matter of Gottfried Baking Co. v. Allen, 45 Misc.2d 708, 257 N. Y.S.2d 833 [COOKE, J.].) In the case at bar, the Transit Authority was guilty of no such impropriety. It acted reasonably in seeking elimination of duplicative costs and in protecting itself against what it deemed to be inflated copper prices. And the liquidated damages provision was a reasonable concession, protective of the public interests. Moreover, the ultimate price of the bid was fair, being only slightly higher than the Transit Authority's own revised cost estimate and well below the original low bid. [435 N. Y.S.2d at 989]. In Fishbach & Moore, supra, the New York Appellate Division relied in part on City of Lakeland, Florida, v. Union Oil Co. of California, 352 F.Supp. 758 (M.D.Fla.1973). There the City was successful in negotiating post -bid a $.03 lower price per barrel for oil than the lowest bidder, Union Oil Company, had actually quoted. The federal judge stated, in upholding the award, It is axiomatic in Florida that a contract is absolutely void if made by public officers in derogation of a statutory duty to solicit competitive bids. The object of such legislation is to prevent favoritism or extravagance and to protect the public from collusive contracts. As a consequence, the statute should always be liberally construed to foster that purpose and avoid any on City Clerk likelihood of circumvention even in the absence of fraud or bad motive. [Citations omitted]. In this instance, however, those salutary principles are clearly inapplicable. Indeed, it might even be said that the same principles and purposes, from the *253 public's point of view, require that the contract be applauded and validated, not condemned, because it is plain by any measurement that the City got the best of the bargain. It is equally clear that proper procedures were followed. Detailed specifications were prepared and bids were solicited and received without irregularity of any kind. Union Oil was the low bidder, and in the process of awarding the contract the City was successful in negotiating a price even better than that contained in the bid. The post bid negotiations did not involve any departure from the original specifications, as occurred in both Robert G. Lassiter & Co. v. Taylor [99 Fla. 819, 128 So. 14 (1930) ], and **181 City of Miami Beach v. Klinger [179 So.2d 864 (Fla.App.3d Dist. 1965) ], supra; and neither is this a case in which the City undertook to negotiate with a high bidder to the exclusion and prejudice of a lower bidder, as occurred in Louchheim v. City of Philadelphia, 218 Pa. 100, 66 A. 1121 (1907), the principal decision upon which Union relies. [Id at 763.]. See also 64 Arn.Jur.2d, Public Works and Contracts, § 66 at 920. [41 [51 We conclude that the conditions of full-time supervision and a personal guaranty were not in any sense a violation of the spirit or letter of our public bidding laws. In his testimony, Taylor agreed voluntarily to perform the conditions. Nor did their imposition, by some alchemy, change Taylor from a "responsible bidder" to an "irresponsible bidder." And he certainly was shown no favoritism or special advantage in this situation. We see nothing pernicious or invidious in this situation to require voiding the award. In addition, the personal guaranty condition was really superfluous and only required because of some temporary confusion as to Taylor's corporate status. Taylor was to be fully bonded; his bonding agent testified very favorably at the hearing. He said that Taylor had signed a continuing personal guaranty for the bonding company long before this matter arose. In conclusion, we must stress that a successful bidder is legally entitled to the contract as bid. A successful bidder is not required to "knuckle under" and make post - bid concessions to a municipality if it does not want to do WESTLAW (0, 2016 Thomson Reuters. No claim to original U.S. Government Works. 7 Submitted into the p lic Palamar Const., Inc. v. Pennsauken Tp., 196 N.J.Super. 241 (1983) record fpr ite s) 482 A.2d' 17�d ' r. nn C1tVC so. We find the present situation to be entirely consensual and indeed sensible. 161 We now turn to the late submission of the contractor's qualification statement. Taylor's bid did not technically comply *254 with all requirements of the bid proposal. When the bids were opened at 2 p.m. on August 5 Taylor's bid package did not contain the contractor's qualification statement that all bidding contractors were instructed to include. None of the parties contested the fact that the qualification statement was omitted due to a clerical error and was submitted to the Township authorities one and one-half hours after the bids were opened. The sole controversy is whether this omission in Taylor's bid was a material defect that could not be cured after the bids were opened or whether it was merely a technical irregularity that the municipality could waive. Our courts have been less than consistent in articulating the difference between a defect in a bid that is material and can not be waived and one that is material and can be waived. Here we affirm the findings of the Township Committee that the defect in Taylor's bid was not material and that the defendant should not be disqualified on that ground for these reasons. In its most recent consideration of the subject, our Supreme Court stated It is firmly established in New Jersey that material conditions contained in bidding specifications may not be waived. Township of Hillside v. Sternin, supra, 25 N.J. at 324 [136 A.2d 265]; Case v. Trenton; 76 N.J. L. 696 [74 A. 672] (E. & A. 1909). This rule, however, does not apply to minor or inconsequential conditions. Public contracting units may resolve problems arising from such conditions in a sensible or practical way. [Terminal Construction Corp., Inc. v. Atlantic City Sewerage Auth., 67 N.J. 403, 411, 341 A.2d 327 (1975) ]. The "strict policy" underpinnings announced in Hillside v. Sternin, 25 N.J. 317, 322-323, 136 A.2d 265 (1957), have been distinguished in subsequent cases and not all deviations are fatal to an award of the contract. Thus, where a bidder submits a different form of security than that called for by the specifications or mistakenly submits security in an amount substantially lower than that required, and the defect is timely cured, our courts have permitted the municipality to waive the irregularity and accept the bid. See, e.g., Bryan Construction Co. v. Bd. of Trustees, 31 N.J.Super. 200, 206, 106 A.2d 303 (App.Div.1954) (submission of bid bond in lieu of certified check waivable); **182 *255 Michelotti v. Fair Lawn, 56 N.J.Super. 199, 201-202, 152 A.2d 369 (App. Div. 1959) (submission of uncertified check where certified check was called for in specifications, cured within 24 hours and waivable); Marvec Allstate, Inc. v. Gray & Fear Inc., 148 N.J.Super. 481, 372 A.2d 1156 (App.Div.1977) (bidder mistakenly submitted certified check in the amount of $120,000 less than required but cured within 24 hours, held a waivable irregularity). On the other hand, this court has held that when a defect is material, i.e., it goes to the heart of the bidder's ability to perform the contract, and it is not timely cured, the municipality may not accept the bid. See, e.g., Carey v. Boro of Fair Lawn, 37 N.J.Super. 159, 117 A.2d 140 (App.Div.1955) (bidder's prequalification questionnaire, which was made part of the specifications, was deficient as it did not indicate whether bidder had the type or number of trucks necessary to perform the contract and the bidder never attempted to cure); Turco Paving Constructors, Inc. v. City Council of Orange, 89 N.J. Super. 93, 213 A.2d 865 (App.Div.1965) (bidder failed to supply documentation that he had access to material necessary to perform the contract and attempted to cure only several months later, well past the time the municipality was statutorily - required to accept and award the contract). The common thread in these decisions is whether the defect threatens the policies underlying the competitive bidding statutes. In Township of River Vale v. Longo Construction Co., 127 N.J. Super. 207, 316 A.2d 737 (Law Div. 1974), Judge Pressler enunciated a two -prong test for determining when a defect in a bid is material and hence unwaivable. ... There must, therefore, be applied two criteria in determining whether a specific noncompliance constitutes a substantial and hence nonwaivable irregularity— first, whether the effect of a waiver would be to deprive the municipality WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. Submitted into the p lic ��j Palamar Const., Inc. v. Pennsauken Tp., 196 N.J.Super. 241 (1983) record fQr itelp s) IG — J6 ` L rl I ? A\ 1 Il f-.4- r -I -A, of its assurance that the contract will be entered into, performed and guaranteed according to its specified requirements, and second, whether it is of such a nature that its waiver would adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders or by otherwise undermining the necessary common standard of competition. [127 N.J. Super. at 212, 316 A. 2d 737]. *256 These criteria echo throughout the case law. For instance, the first criterion has been recognized both statutorily (N. J. S.A. 40A: l 1-25, N J S.A. 40A:11-26) and in the case law (Carey, 37 N.J. Super. at 163, 117 A.2d 140) as a legitimate concern in testing the bidder's qualification and responsibility in performing the contract. The second criterion is found in every case dealing with defects in bids for public contracts. The most recent expression by our Supreme Court said Essentially this distinction between conditions that may or may not be waived stems from a recognition that there are certain requirements often incorporated in bidding specifications which by their nature may be relinquished without there being any possible frustration of the policies underlying competitive bidding. In sharp contrast, advertised conditions whose waiver is capable of becoming a vehicle for corruption or favoritism, or capable of encouraging improvidence or extravagance, or likely to affect the amount of any bid or to influence any potential bidder to refrain from bidding, or which are capable of affecting the ability of the contracting unit to make bid comparisons, are the kind of conditions which may not under any circumstances be waived. [Terminal, 67 N.J. at 412, 341 A. 2d 327]. The failure of defendant Taylor to submit a contractor's qualification statement with its bid in this instance neither deprives the Township of Pennsauken of its guarantee that the contract will be performed nor threatens the integrity of the policies behind the competitive bidding statutes. With regard to the first criterion, depriving the municipality of the guarantee of performance, the omission of the contractor's **183 qualification statement did not affect assurances from either a financial or qualification viewpoint. Defendant Taylor submitted the required security to ensure that the contract would be entered into if the bid was accepted. Likewise, the Township was deprived of no assurances by the short absence of the contractor's qualification statement as there was little the Township could have learned from the qualification statement in the one and one-half hours between the opening of the bids and defendant's ultimate submission of the statement. With regard to the second criterion, the initial omission of the contractor's qualification statement and its later submission within one and one-half hours could not have adversely affected *257 competitive bidding by'granting defendant an edge over his fellow bidders. After the bids were opened at 2 p.m. on August 5, the Township personnel necessarily had to sit down at some time, but not necessarily in the first -two hours, and go over the contractors' qualification statements to determine if any of the eight bidders should be disqualified due to a deficiency in their statements. But the fact that defendant Taylor submitted his contractor's qualification statement one and one-half hours late in no way put him on a better footing than any of the other bidders or prejudiced the Township. 171 Another factor that should always be considered in the area of public contracts, is that the competitive bidding statutes are for the benefit of the public and should be construed as nearly as possible with reference to the public good. Terminal Construction, 67 N.J. at 409-410, 341 A. 2d 327. With reference to this factor, the statement of the court in River Vale is particularly applicable to the present case. The purpose of competitive bidding for local public contracts is, as has been frequently reiterated, not the protection of the individual interests of the bidders but rather the advancement of the public interest in securing the most economical WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 9 Palamar Const., Inc. v. Pennsauken Tp., 196 N.J.Super. 241 (1983) result by inviting competition in which all bidders are placed on an equal basis, thereby guarding against favoritism, improvidence, extravagance and corruption. While this policy dictates that only bids which comply with the specifications and instructions are acceptable, it also dictates, lest the primary purpose of achieving economy be unnecessarily frustrated, that minor irregularities and immaterial variances in the form of the bid not be permitted to result in its invalidation, particularly where the municipality has, as here, expressly reserved the right to waive such defects and there is no suggestion of any fraud, bad faith or collusion End of document Submitted into the pu lic D record f}r ite�n(s) S` nn `7 1111 I I�. City Clerk surrounding the transaction. [River Vale, 127 N. J. Super. at 215-216, 316 A.2d 737]. Accord Michelotti, 56 N.J.Super. at 202, 152 A.2d 369, Marvec, 148 N.J.Super. at 488, 372 A.2d 1156. The Township of Pennsauken reserved the right to waive minor defects in the bid proposals, and, properly did waive the present defect in finding that defendant Taylor was a qualified bidder. The matter is reversed and remanded for the entry of a judgment in favor of defendant Taylor, against plaintiff Palamar, and ordering the award of the contract to Taylor. All Citations 196 N.J.Super. 241, 482 A.2d 174 © 2016 Thomson Reuters. No claim to original U.S. Government Works. WESTLAW CF-) 2016 Thomson Reuters. No claim to original U.S. Government Works. 10 Or e- t Robert G. Lassiter & Co. v. Taylor, 99 Fla. 819 (1930) KeyCite Yellow Flag - Negative Treatment Distinguished by Pyle v. Keman, Or., October 16, 1934 99 Fla. 819 Supreme Court of Florida. ROBERT G. LASSITER & CO. V. TAYLOR. April 21, 1950. Commissioners' Decision. Suit by John A. Taylor . against Robert G. Lassiter & Company. From an adverse decree, defendant appeals. Affirmed. West Headnotes (7) [11 Municipal Corporations Award to Lowest Bidder Public Contracts Lowest bid Public work contract made in violation of charter requirement that contract be awarded lowest responsible bidder is void. Sp.Laws 1925, c. 11158, art. 8, § 13. 1 Cases that cite this headnote [21 Municipal Corporations 4— Award to Lowest Bidder Public Contracts 07- Lowest bid Charter requirement that public work contract be let to lowest responsible bidder cannot be circumvented by entering legal contract and subsequently making new contract with successful bidder (Sp.Laws 1925, c. 11158, art. 8, § 13). 3 Cases that cite this headnote Submitted into the record for itom(s) on City Clcrl [31 Municipal Corporations Q— Award to Lowest Bidder Public Contracts Lowest bid Charter requirement that public work contract be let to lowest responsible bidder is intended to secure best improvement at lowest cost and to prevent fraud, favoritism, and extravagance (Sp.Laws 1925, c. 11158, art. 8, § 13). 6 Cases that cite this headnote 141 Municipal Corporations Award to Lowest Bidder Public Contracts Lowest bid Charter requirement that public work contract be let to lowest responsible bidder limits municipality's general power to contract for such improvements (Sp.Laws 1925, c. 11158, art. 8, § 13). Cases that cite this headnote 151 Municipal Corporations Authority to contract in general Public Contracts Authority and capacity of particular governmental bodies to contract Persons contracting to make public improvements must at their peril inquire into municipality's power to make contract. 1 Cases that cite this headnote [61 Municipal Corporations Issuance or delivery of bonds Taxpayer may maintain bill to restrain paying out of public moneys on void public improvement contracts. 4 Cases that cite this headnote [71 Municipal Corporations ,0- Issuance or delivery of bonds WESTLAW !J 2016 Thomson Reuters, No claim to original U.S. Government Works. 1 Robert G. Lassiter & Co. v. Taylor, 99 Fla. 899 (1930) Taxpayer may sue to restrain paying public moneys on illegal public improvement contract violative of city charter, though contract is completed (Sp.Laws 1925, c. 11158, art. 8, § 13). 9 Cases that cite this headnote Syllabus by the Court. Where the charter or incorporating act requires the officers of a city to award contracts for public work to the lowest responsible bidder for the work, a contract made in violation of such requirements is illegal and void. Such a charter provision, as is referred to in the preceding headnote, cannot be circumvented by the city first entering into a legal contract and later making a new contract. The intent of the law requiring contracts for public works to be let or awarded to the lowest responsible bidder is to secure the best improvement at the lowest possible cost to the taxpayers, and to prevent fraud, favoritism, and extravagance in the expenditure of public funds. Where a municipality is given general power to make contracts for public improvements and a provision of the charter or incorporating act of such municipality limits the amounts for which contracts may be let for public work, except to the lowest bidder, such provision is a limitation, so to speak, upon the general power of the municipality to make contracts for such improvements. Persons contracting with a municipality to make improvements must, at their peril, inquire into the power of the municipality and its officers to make such contract. That a taxpayer in a city can properly maintain a bill, filed to restrain the paying out of public moneys upon void and unauthorized contracts, there can be no question. Even though a contract for public improvements in a city has been completed, if the contract is illegal and void because it was made in violation of a charter or incorporating act containing a provision for the letting of contracts in excess of a stated amount to the lowest responsible bidder, a taxpayer of the municipality may Submitted into the pu is record fpr on I tiP1 ► I Citv Clerk maintain a bill filed to restrain the paying out of public moneys upon such contract. **15 *820 Appeal from Circuit Court, Highlands County; W. J. Barker, judge. Attorneys and Law Firms Shutts & Bowen, of Miami, and Lawrence & Kash, of Sebring, for appellant. L'Engle & Shands, of Jacksonville, and R. R. Rhudy, of Sebring, for appellee. Opinion DAVIS, C. This case is here upon appeal from an order overruling a demurrer to the bill of complaint of the appellee, a taxpayer, and granting a temporary injunction restraining the city of Sebring from making further payments to the appellant on a contract which appellant had with the said city for making certain street improvements. Stated succinctly, in the language of appellant, in its brief, the application for injunctive relief is based upon the following facts: *821 1. The the contract, after being let upon competitive bidding, was subsequently modified to provide for an entirely different type of work at a different price, without submitting the contract for the work as modified to competitive bids. 2. That the work was improperly and unskilfully done, and the city should have been required to secure an abatement in price to the extent that the contract was unperformed, in settling with the contractor. **16 No question is raised as to the general power of the city to make the improvement or as to the legality of the assessments against abutting owners therefor. Nor has the legality of the proceedings culminating in the making of the contract been questioned. The appellant, in response to a notice to bidders, submitted two bids; one for concrete pavement according to the plans and specifications filed with the city clerk or city engineer, and one for `Densite' pavement according to specifications accompanying the bid. The contract was awarded to appellant for the concrete pavement as WESTLAW 9 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 i =, Robert G. Lassiter & Co. v. Taylor, 99 Fla. 819 (1930) called for by the plans and specifications prepared by the city, and it is alleged in substance that several weeks after advertising for bids and letting the contract to the appellant, the said Robert G. Lassiter & Company, for a concrete pavement with curb and gutters `in accordance with plans and specifications on file at the office of the city clerk or the city engineer,' the city council adopted a resolution changing the type of pavement from concrete as shown by the specifications to a `Densite' pavement with a `five inch Densite base and 1 '/z inch asphalt wearing surface,' at a saving to the city, but to the great advantage of, and more profitable to, the appellant. This change was made without calling for or receiving competitive bids. According to the plans and specifications on file at the office of *822 the city clerk or city engineer, the concrete was to be known as a 1:2:3 mixture, that is, one part of Portland cement, two parts of sand of a specified fineness, and three parts of gravel or crushed stone of a specified quality. The specification for `Densite' pavement called for a mixture of 1.75 barrels of cement, the required amount of water and amorphous silica (from 6 to 12 pounds), and enough sand to make one cubic yard of concrete in place. The bill further alleges that the contractor failed to perform the contract in the altered form in the manner therein required in a number of particulars, and that because of such noncompliance with the contract the pavement has cracked and broken and will rapidly deteriorate and become worthless; that the city has refused to pay the balance of the contract price, amounting to $56,000, unless the appellant secures the city against repair for a period of five years, and that the appellant and the city are about to enter into an arrangement, unless restrained, whereby the city will pay to the appellant the balance; that under and by virtue of section 11 of article 8 of the city charter, chapter 11158, Special Laws of Florida 1925, upon the completion of improvements the owners of property specially assessed for street improvements are to be repaid the difference in the assessment as originally made and approved and confirmed, and the actual cost of the improvements to be paid by special assessment as finally determined upon completion of the improvements; that the contractor had already received the reasonable worth of the work and that the city should be required to withhold a part of the contract price to indemnify it, and the abutting owners for defective performance of the contract; that if the city should pay the contractor the said sum of $56,000, in consideration of the contractor Submitted into the pu is n record f�r ite�(s) nn agreeing to repair the street as aforesaid, the abutting owners, of which *823 appellee is one, will be assessed for repairs as distinguished from the original cost of the improvement; and that the appellee requested the city council to resist the claim, but the city council refused to grant the request and has declared its intention of making settlement with the appellant. Section 13 of article 8 of the city charter (chapter 11158, Special Laws of Florida 1925) contains the following provision: `The City Council shall have exclusive power to make all public improvements and expenditures, by ordinances, but shall let all contracts for over Two Hundred ($200.00) Dollars to the lowest responsible bidder.' The appellant concedes that this provision makes competitive bidding for construction of public improvements mandatory, but says that the complainant `does not show expressly or by inference that densite concrete is not a standard concrete pavement or is not of that class or was not understood by any other bidder to have been excluded or that any bidder failed to bid thereon by reason of the manner in which the specifications were worded.' The notice to bidders called for bids for concrete, brick, or bituminous pavement with necessary curbs, etc., `in accordance with plans and specifications on file at the office of the city clerk, or the city engineer,' and did not call for bids for `Densite' concrete or any other payment, whether standard or otherwise, equally as good as concrete, brick, or bituminous pavement. While there was nothing in the notice to preclude the submission of proposals of other types of pavement, it put interested parties on notice of the kinds of pavement for which bids were desired, and prospective bidders of experience were *824 justified in concluding therefrom that bids for a character of pavement, other than those mentioned, would not be considered. The appellant, being the lowest bidder, secured a contract for a concrete pavement of the character provided for in the plans and specifications. The appellee makes no complaint as to the awarding of that contract, but insists in effect that if the said contract was to be abandoned, the city could not make a new, altered, or substituted contract, except upon competitive bids. III The pavement that was put down was a materially different pavement from the one provided for in the original contract and for which bids were invited. The quoted provision **17 of the charter being mandatory 1 WESTLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 Submitted into the pu l% I � S�� L ic record f r ite�� } < Robert G. Lassiter 8 Co. v. Taylor, 99 Fla. 819 (1930) on �%? 1h h City Clerk in its nature, any contract entered into by the city for construction work, other than the kind authorized by the original. resolution adopted by the council, the plans and specifications for which were referred to in the notice to bidders as being on file at `the office of the city clerk or the city engineer,' would have been in violation of the provision of the charter and therefore illegal and void. Anderson v. Fuller, 51 Fla. 380, 41 So. 684, 688, 6 L. R. A. (N. S.) 1026, 120 Am. St. Rep. 170; Adolphus v. Baskin, 95 Fla. 603, 116 So. 225; 19 R. C. L. 1064-1071 (§ 357, note 18); 44 C. J. 326-328; Staebler & Gregg v. Town of Anchorage, 186 Ky. 124, 216 S. W. 348; Inge v. Board of Public Works, 135 Ala. 187, 33 So. 678, 93 Am. St. Rep. 20; Reams v. Cooley, 171 Cal. 150, 152 P. 293, Ann. Cas. 1917A, 1260; Chippewa Bridge Co. v. City of Durand, 122 Wis. 85,99 N. W. 603, 106 Am. St. Rep. 931; 28 Cyc. 1036; 2 Dillon Municipal Corporations (5th Ed.) § 807; Manly Bldg. Co. v. Newton, 11.4 Ga. 245, 40 S. E. 274; Dolezal v. Bostick, 41 Okl. 743, 139 P. 964. 121 The city council, at the time the bids were opened and the original contract was awarded to the appellant, could not lawfully agree with appellant for the laying of a pavement *825 known as `Densite.' It follows that the city could not circumvent the charter provision by first entering into a legal contract for pavement `in accordance with plans and specifications on file,' and later, by agreement, change the contract to a different type of pavement or make a new contract. That would be doing indirectly what could not be done directly. 44 C. J. 326; Donnelly, The Law of Public Contracts, 220. 131 The intent of the charter provision, requiring such contracts to be let or awarded to the lowest bidder for the work, is to secure the best improvement at the lowest possible cost to the taxpayer and to prevent fraud, favoritism, and extravagance in the expenditure of public funds. 44 C. J. 324, 325; Anderson v. Fuller, supra; Inge v. Board of Public Works, supra. 141 The charter mandatorily required as a condition precedent to the making of the contract that it be let to the lowest responsible bidder. In cases where contract amounts to more than $200, section 13, article 8, of the city charter is a limitation, so to speak, upon the general power of the municipality to make contracts for public improvements. 3 McQuillin, Mun. Corps. 2620, 2621. 151 161 Mr. McQuillin, in his work on Municipal Corporations (volume 3, pp. 2565, 2566) says: `If the charter or the statute applicable requires certain steps to be taken before making a contract, and it is mandatory in terms, a contract not made in conformity therewith is invalid, and ordinarily cannot be ratified, and usually there is no implied liability for the reasonable value of the property or services of which the municipality has had the benefit.' (See also same volume, pages 2620, 2631, 2642, and 2752.) And he cites many cases to sustain the text. The same *826 author says further (volume 4, p. 4125) that the settled rule is `that persons contracting with a municipality to make improvements must, at their peril, inquire into the power of the municipality and its officers to make such contract,' See also 3 McQuillin, Mun. Corp. pp. 2565, 2628; Turney v. Bridgeport, 55 Conn. 412, 12 A. 520; Boston E. Co. v. Cambridge, 163 Mass. 64, 39 N. E. 787; Schumm v. Seymour, 24 N. J. Eq. 143; 44 C. J. 74. That a taxpayer in a city `can properly maintain the bill filed to restrain the paying out of public moneys upon void and unauthorized contracts there can be no question.' Anderson v. Fuller, supra. In Bell et al. v. Coachman, 69 Fla. 295, 68 So. 173, this court reversed a decree dismissing a bill by taxpayers of Pinellas county to enjoin a special levy upon the taxable property of the county, for the construction of a jail, because the county commissioners failed to comply with the terms of the statute requiring the board to determine that it was necessary to erect such building. And in Jones v. Pinellas County, 81 Fla. 613, 88 So. 388, we have a case where the contractor sued the county for the construction of the jail referred to in Bell v. Coachman, supra. The contract being invalid, not `for a mere irregularity, but for a direct evasion of an express mandatory provision' of the statute, the case was tried on the common counts, and the trial resulted in a judgment for the county. This court, in affirming the judgment, said (text, page 620 of 81 Fla., 88 So. 388, 390): `Even if the question of an implied liability was involved here, the promise being an express one in the form of a written contract and relied upon in support *827 of the common counts as to the amount of damages alleged to have been sustained, it would have to be resolved against the plaintiff so far as the county is concerned, because the law does not imply a liability against a county where its county commissioners proceed in the matter in violation of the express mandatory provisions of the statute, and the party seeking to enforce the liability is charged with the duty of ascertaining the WESTLAW t0 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 Submitted into the ��� lic Robert G. Lassiter & Co. v. Taylor, 99 Fla. 819 (1930) record r7 ite�l(S) �"�, nn ��/M ' r. ... legality of the proceedings. There is no implied authority in county commissioners to do something for the county which the statute expressly forbids. See 3 McQuillin's Mun. Corp. §§ 1164, 1172-1181; Whiteside v. United States, 93 U. S. 247, 23 L. Ed. 882; Appleton Waterworks Co. v. City of Appleton, 132 Wis. 563, 113 N. W. 44; Edison Electric Co. v. City of Pasadena, 178 F. 425, 102 C. C. A. 401.' In Anderson v. Fuller, supra, a citizen and taxpayer filed his bill .to enjoin the enforcement of contracts for public improvements in **18 the city of Tampa, under a statute containing a provision similar to the quoted provision of the charter of the city of Sebring, and the court not only held that a contract made in violation of that requirement of the charter was illegal and void, but also that a taxpayer in the city could properly maintain a bill filed to restrain the paying out of public moneys upon void and unauthorized contracts. There can be no question about the principle last stated being applicable in that case, inasmuch as the bill for an injunction was filed before any benefits were received by the city. By applying the principles of law stated and applied in the case of Jones v. Pinellas County, supra, we can see no reason why appellee in the instant case should not have relief by injunction, though the pavement was down at the time of the filing of the bill of complaint. 171 *828 We are therefore constrained to hold that the city council had no right to thwart the object and purpose of the charter provision requiring contracts for more than $200 to be let to the lowest responsible bidder and make, in practical effect, a new contract with the appellant for the `Densite' pavement; further, that such contract was illegal and void; and that the court was not in error when it made the order restraining, until the further order of the court, the payment of the balance alleged to be due, and overruling the demurrer to the bill of complaint. Our conclusions are not in conflict with the decision of this court in Lainhart et al. v. Burr et al., 49 Fla. 315, 38 So. 711, in which it appeared that the purchasing agent of Dade county purchased certain supplies for the county from a certain firm in which he and a county commissioner were partners, and certain other supplies from a firm in which one of the county commissioners had a partnership interest, and the court held that the contracts were illegal, being opposed to public policy, though there was no statute in force prohibiting the making of such contracts. And while it is said in the opinion (Text page 326 of 49 Fla., 38 So. 711, 714), `If a public officer having power to purchase supplies, contracts with himself to supply them, the contract is void. No action can be maintained for the contract price; and, even though the amount specified in such contract were audited and a warrant drawn to pay it, a court of equity will enjoin such payment at the suit of taxpayers,' it nevertheless held (with what was stated to be the great weight of authority) that the party or parties supplying the goods had a right to recover what they had actually expended, or what the supplies were reasonably worth, which would not include any element of profit, if *829 no actual fraud was intended or perpetrated, and the supplies were necessary and beneficial to the county. In the opinion of the court, it was proper to perpetually enjoin the payment of the then outstanding unpaid warrants; but in this connection, the court said (Text page 332 of 49 Fla., 38 So. 711, 716): `In order that no misapprehension may arise, it may be well to state that the injunction against payment of outstanding warrants issued for supplies purchased from firms in which a commissioner was a member does not operate to prevent the commissioners from issuing other warrants in lieu thereof to the parties who furnished the supplies for such amounts as may be found proper in accordance with the rules laid down above.' That is, the actual cost of the supplies which were necessary and beneficial to the county, in the purchase of which no actual fraud was perpetrated; such cost not to exceed their reasonable market value. From which we deduce that it was the purpose of the court to hold that the county was liable upon a legal implication where the supplies contracted for, and which had been delivered and used, were necessary and beneficial to the county and the purchase of same was not tainted with fraud, even though the contract was void. The purchase of the supplies from firms in which county commissioners were interested was not made in violation of a provision of law that prohibited such purchases, but was contrary to public policy. In the instant case, the new, altered, modified, or substituted contract was made in violation of a statute. The court in the Lainhart v. Burr case, supra, doubtless had in mind the distinction that was drawn by the court in City of Concordia v. Hagaman et al., 1 Kan. App. 35, 41 P. 133, 134, between a contract which is illegal because its execution *830 requires the performance of an immoral or unlawful act, or transgresses an express statutory prohibition, and one where the act to be performed is unlawful, because of the manner it was entered into, or because of incapacity to contract in either of the parties, where it was said: IWESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 5 Robert G. Lassiter & Co. v. Taylor, 99 Fla. 819 (1930) `The first receives no aid or encouragement whatever from the courts, on the principle, `ex turpi causa non oritur actio.' Of this character were the contracts in the following cases: Gerlach v. Skinner, 34 Kan. 89, 8 P. 257 [55 Am. Rep. 240]; Hinnen v. Newman, 35 Kan. 712, 12 P. 144; Bowman v. Phillips, 41'Kan. 369, 21 P. 230 [3 L. R. A. 631, 13 Am. St. Rep. 292]; Sheldon v. Pruessner, 52 Kan. 579, 35 P. 201 [22 L. R. A. 709]; Yount v. Denning. 52 Kan. 629, 35 P. 207; Oscanyan v. Arms. Co., 103 U. S. 261 [26 L. Ed. 539], cited in the preceding case. When the contract looks to the doing of a lawful act, but may be avoided by one of the parties to it because the other party at the time acted in a fiduciary capacity for the first, the rule is applied in order to avoid the possibility of reaping any undue advantage from the contract. When it has been executed without objection, and actual benefits have been received under it, all parties acting in entire good faith, the law is maintained and the ends of justice subserved by disregarding those parts of the express agreement **19 wherein advantage might have been taken, and allowing compensation merely for the reasonable value of the benefits received under it. Considerations of public policy do not require the doing of less than this. The defense of public policy has no element of punishment in it; nor is it allowed out of consideration for the defendant. It is upheld by the consideration which the law ever entertains for the protection of the public, and the settled policy of the courts to give no aid to the enforcement of contracts whose general *831 tendency is injurious to the public. Hence, the courts refuse all relief to one who asks compensation for the doing of an act which is conclusively presumed to be hurtful to public interests or morals. When, however, the thing accomplished is proper and beneficial, and not placed under the ban of any penal prohibitory enactment, the reason for the rule fails, and it should not be applied any further than is necessary for the public good. No rule which is applied for the prevention of wrong should be used to work injustice to either of two parties who have both been equally innocent of intentional illegality or wrongdoing. Principles based upon public policy fail in their object when used as instruments of wrong.' We now have before us a case where the contract was made in violation of a mandatory provision of the charter, which requires such contracts to be let to the lowest responsible bidder. We quite agree with the Supreme Court of Submitted into the public � � k Z record f lr jtetp(s) California, when it says: `This, then, is the undoubted rule, that, when a contract is expressly prohibited by law, no court of justice will entertain an action upon it, or upon any asserted rights growing out of it. And the reason is apparent; for to permit this would be for the law to aid in its own undoing. Says the supreme court of the United States in President, etc. [of Bank of United States] v. Owens, 2 Pet. 527 [7 L. Ed. 508]: `No court of justice can, in its nature, be made the handmaid of iniquity. Courts are instituted to carry into effect the laws of the country. How can they become auxiliary to the consummation of violations of law? There can be no civil right where there can be no legal remedy, and there can be no legal remedy for that which is itself illegal.' And again the *832 same august tribunal, in Coppell v. Hall, 7 Wall. 542 [19 L. Ed. 244], says: `Whenever the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case. No consent of the defendant can neutralize its effect. A stipulation in the most solemn form to waive the objection would be tainted with the vice of the original contract and void for the same reasons. Where the contamination reaches it destroys. The principle to be extracted from all the cases is that the law will not lend its support to a claim founded on its own violation." Berka v. Woodward, 125 Cal. 119, 57 P. 777, 779, 45 L. R. A. 420, 73 Am. St. Rep. 31. That no improper inferences may be drawn from this opinion, we might add that we are not deciding any question not herein discussed. The decree of the lower court is affirmed. PER CURIAM. The record in this cause having been considered by the court, and the foregoing opinion prepared under chapter 14553, Acts of 1929, adopted by the court as its opinion, it is considered, ordered, and decreed by the court that the decree of the court below should be, and the same is hereby, affirmed. TERRELL, C. J., and WHITFIELD, ELLIS, STRUM, BROWN, and BUFORD, JJ., concur. All Citations 99 Fla. 819, 128 So. 14, 69 A.L.R. 689 End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works. ' WESTLAW G 2016 Thomson Reuters. No claim to original U.S. Government Works. 6 1 in Robinson Elec. Co., Inc. v. Dade County, 417 So.2d 1032 (1982) � I 417 So.2d 1032 District Court of Appeal of Florida, Third District. ROBINSON ELECTRICAL CO., INC., Appellant, V. DADE COUNTY and The Dade County Board of County Commissioners, Dade County, Florida, and Marvin Markowitz, Inc., Appellees. No. 81-1736. July 3 1 I, 1982. Rehearing Denied Aug. 25,1982. Appeal was taken from order of the Circuit Court for Dade County, David L. Levy, J., vacating award of contract and ordering county to reissue its invitation for bids. The District Court of Appeal, Baskin, J., held that submission of cashier's check instead of bid bond did not constitute a material variance from county's invitation for bids, and thus low bidder should have been awarded the contract. r� Reversed and award reinstated. West Headnotes (4) [11 Appeal and Error Effect of delay or lapse of time in general Low bidder's appeal from order vacating award of contract to low bidder and ordering county to reissue an invitation for bids was not moot even though county had proceeded with bidding process during pendency of appeal and awarded contract to another firm. 1 Cases that cite this headnote [21 Public Contracts io— Form and requisites;responsiveness Although bid containing material variance is unacceptable, not every deviation from invitation is material. Submitted into the pu I record f?r ite`PW : F 2 Cases that cite this headnote 131 Counties Proposals or Bids Public Contracts Qr- Necessity for submission to competition in general Purpose of competitive bidding was to secure lowest responsible offer and county could waive minor irregularities in effectuating that purpose. 4 Cases that cite this headnote 141 Counties Q:- Deposit or other security Public Contracts Deposit or other security Submission of cashier's check instead of bid bond did not constitute a material variance from county's invitation for bids, and thus low bidder should have been awarded the contract. 3 Cases that cite this headnote Attorneys and Law Firms *1033 Jesse J. McCrary, Jr., Miami, for appellant. Robert A. Ginsburg, Dade County Atty., and Dianne S. Smith, Asst. County Atty., Carey, Dwyer, Cole, Eckhart & Mason and Michael C. Spring, Miami, for appellees. Before BARKDULL, SCHWARTZ and BASKIN, JJ. Opinion BASKIN, Judge. Confronted with circumstances which led the court to believe that bidding requirements for obtaining a contract to renovate a housing project confused bidders, the trial court vacated the award of the contract and ordered the County to reissue its invitation for bids. We hold that the County correctly awarded the contract to the low bidder, Robinson Electrical Company, Inc. Robinson complied IWESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 Robinson Elec. Co., Inc. v. Dade County, 417 So.2d 1032 (1982) with material bidding requirements and was entitled to the contract, even though it furnished its security in the form of a check rather than a bid bond. We therefore reverse the trial court's order with directions to reinstate the contract award to Robinson. [1] The Dade County Board of County Commissioners' Advertisement for Bid in connection with a contract to renovate the James E. Scott Homes provided: A Certified Check or bank draft, payable to the Dade County Department of Housing and Urban Development—Housing Division—U. S. Government Bonds, or a satisfactory Bid Bond executed by the bidder and acceptable surieties [sic] in an amount equal to five percent (5%) of the bid shall be submitted with each bid. The successful bidder will be required to furnish and pay for satisfactory Performance and Payment of Bond or Bonds.... The Dade County Department of Housing and Urban Development, reserves the right to reject any or all bids and to waive any informalities in the bidding. Subsequent addenda required that a bid bond in the amount of five percent of a portion of the cost be submitted with the bid. Robinson submitted the lowest bid, $10,368,515, along with a cashier's check for five percent of the designated cost as security. The second lowest bidder, a company not a party to this appeal, also submitted a cashier's check. Marvin Markowitz, Inc. submitted the highest bid, $10,700,000; its bid included a bid bond in the correct amount. When the Director of Dade County Housing and Urban Development opened the bids and learned that the two lowest bidders had submitted cashier's checks instead of bid bonds, he asked the County Attorney for his opinion. Upon receiving a recommendation that Robinson's bid be approved, the Board of County Commissioners awarded the contract to Robinson. Markowitz sued the Board, requesting injunctive and mandatory relief; Robinson intervened in the lawsuit. Upon hearing testimony, the trial court found Robinson's bid to be nonresponsive because it lacked the *1034 required form of security. The court vacated the award of the contract to Robinson and ordered the County to reissue an invitation for bids. I Robinson contends that the court erred in vacating an administrative decision which was not shown to be arbitrary or unreasonable. The Board, it contends, Submitted into thep11, ic record fpr 1i . , ,s,_ 1, on correctly waived the immaterial variance in the form of the security; the difference in the security did not affect the nature or purpose of competitive bidding. Furthermore, argues Robinson, the County reserved the right to waive formalities. Markowitz, on the other hand, argues that since its bid met the qualifications it should have been awarded the contract without reissuance of the invitation for bids. The County now supports the trial court's ruling vacating the contract and requiring rebidding and agrees with the finding that the documents were ambiguous. This argument represents a change in the County's position; the County was aware of the variance in the security when it awarded the contract to Robinson. [21 Although a bid containing a material variance is unacceptable, Glatste i17 V. City Of Miallll, 399 So.2d 1005 (Fla. 3d DCA.), rev. denied, 407 So.2d 1102 (Fla. 1981), not every deviation from the invitation is material. In determining whether a specific noncompliance constitutes a substantial and hence nonwaivable irregularity, the courts have applied two criteria—first, whether the effect of a waiver would be to deprive the municipality of its assurance that the contract will be entered into, performed and guaranteed according to its specified requirements, and second, whether it is of such a nature that its waiver would adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders or by otherwise undermining the necessary common standard of competition. In application of the general principles above discussed, sometimes it is said that a bid may be rejected or disregarded if there is a material variance between the bid and the advertisement. A minor variance, however, will not invalidate the bid. In this context a variance is material if it gives the bidder a substantial advantage over the other bidders, and thereby restricts or stifles competition. 10 McQuillan, Municipal Corporations § 29.65 (3d Ed. rev. 1981) (footnotes omitted); see Harry Pepper & Associates, Inc. v. City of Cape Coral, 352 So.2d 1190 (Fla. 2d DCA 1978). WESTLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 � I � I � I In 11 I � I � 1, Robinson Elec. Co., Inc, v. Dade County, 417 So.2d 1032 (1982) 131 141 Whether the submission of a cashier's check instead of a bid bond constitutes a material variance from bidding requirements has not previously been decided in this jurisdiction. In Bryan Construction Co. v. Board of Trustees, 31 N.J.Super. 200, 106 A.2d 303 (App. Div. 1954), the court considered the submission of a deposit in the form of a bid bond instead of a certified check as required. In affirming the bid, the court stated: If it can be said any irregularity here existed, it is patent that competitive bidding was not in any wise affected. It prevented no one from bidding, and all those that did bid were on equal footing, having the same opportunities as defendant company to read and utilize the instructions. 106 A.2d at 306. As did the New Jersey court, we hold that the purpose of competitive bidding is to secure the, lowest responsible offer and that the County may waive minor irregularities in effectuating that purpose. See Township of' Submitted into) p� ic' record f**r it( � River Vale v. R. J. Longo Construction Co., 127 N.J.Super. 207, 316 A.2d 737 (Law Div. 1974). The submission of a cashier's check instead of a bid bond does not constitute a material variance. *1035 We find no merit in the argument advanced by Markowitz to the effect that the bid bond, which indicates that a performance bond can be obtained, is substantially superior. The Advertisement for Bid contemplates that the successful bidder would be required to furnish such bonds after the award of the contract. Thus, the availability of a performance bond was immaterial to the bidding process. Finding that Robinson's bid substantially complied with the County's Advertisement for Bid, we reverse the trial court's order vacating the award of contract to Robinson and reinstate the award. All Citations 417 So.2d 1032 Footnotes During oral argument, the County advised us that it proceeded with the bidding process during the pendency of this appeal and awarded the contract to another firm. Other than to express our surprise at this unfortunate complication, we refrain from comment. We reject the County's contention that this appeal is moot. End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works. IWESTLAW ® 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 IM Tropabest Foods, Inc. v. State, Dept. of General Services, 493 So.2d 50 (1986) if 493 So.2d 50 District Court of Appeal of Florida, First District, TROPABEST FOODS, INC., Appellant, V. STATE of Florida, DEPARTMENT i OF GENERAL SERVICES, Appellee. No. BN -2. Aug. 18, 1986. Unsuccessful bidder appealed from a final order of the Department of General Services which denied its bid protest and awarded the subject "specialty foods" contract to another bidder. The District Court of Appeal, Mills, J., held that although successful bidder's bid violated invitation to bid specifications in that its beverage mix produced a yield of 3.5 gallons instead of the one gallon called for, the irregularity did not affect the price of the bid and therefore did not constitute grounds for awarding the "specialty foods" contract to another bidder whose I mix was less concentrated and yielded less than successful bidder's, therefore costing more per serving. Affirmed. West Headnotes (3) [ll Public Contracts _- Form and requisites;responsiveness Although a bid containing a material variance is unacceptable, not every deviation from the invitation to bid is material; it is only material if it gives the bidder a substantial advantage over the other bidders and thereby restricts or stifles competition. +� 3 Cases that cite this headnote 121 Public Contracts i- Form and requisites; responsiveness States Form and requisites Submitted into the nu He (J� record for it�m(s) tile. Although successful bidder's bid violated state's invitation to bid specifications in that its beverage mix produced a yield of 3.5 gallons instead of the one gallon called for, the irregularity did not affect the price of the bid and therefore did not constitute grounds for awarding the "specialty foods" contract to another bidder whose mix was less concentrated and yielded less than successful bidder's, therefore costing more per serving. 4 Cases that cite this headnote [3) Public Contracts Necessity for submission to competition in general Public Contracts Form and requisites;responsiveness Purpose of competitive bidding is to secure the lowest responsible offer and minor irregularities can be waived in effectuating that purpose. 1 Cases that cite this headnote Attorneys and Law Firms *50 Martha Harrell, Hall of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, Tallahassee, for appellant. Claire D. Dryfuss, Tallahassee, for appellee. Opinion MILLS, Judge. Tropabest Foods, Inc. appeals from a final administrative order denying its bid protest and awarding the subject "specialty foods" contract to another bidder. We affirm. The Department of General Services issued Invitation to Bid (ITB) 97-388-00—J, "Specialty Foods," which separately described 306 food commodities. All but a few of these commodities included in their specifications a "yield" requirement, i.e. a stated amount of dry or concentrated product was to yield another stated amount when mixed. Twenty of the 306 items indicated a minimum yield requirement, for example, "one pound IWESTLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. Tropabest Foods, Inc. v. State, Dept. of General Services, 493 So.2d 50 (1986) yields one gallon or more" (emphasis supplied). Items 20 and 21 solicited bids for dried, sweetened beverage mix. The yield requirement for both items provided that "1 lb. yields approximately 1 gal."; the phrase "or more" was not included. One pound of Tropabest's beverage mix, which is sweetened with sugar, yields 1.06 gallons. Its bid on Items 20 and 21, per servable ounce of beverage, was $ .0062483 and $ .006248, respectively. Its only competitor for these items, Bernard, sweetens its mix with a combination of sugar and aspartame, an artifical sweetener; one pound yields 3.5 gallons. Its bid on Items 20 and 21, per servable ounce, was $ .005639 and $ .004538, respectively. After consideration of these bids, the Department announced its intent to award the contract for these items to Bernard. *51 Tropabest filed a protest, alleging that Bernard's bid violated the ITB specifications in that its mix produced a yield of 3.5 gallons instead of the 1 gallon called for. The Department answered, finding Bernard's bid responsive based in part on Paragraph 5 of the General Conditions section of the ITB which provides, in pertinent part: 5. MANUFACTURERS' NAME AND APPROVED EQUIVALENTS: Any manufacturers' names, trade names, brand names, information and/or catalog numbers listed in a specification are for information and not intended to limit competition. The bidder may offer any brand for which he is an authorized representative, which meets or exceeds the specifications for any item(s) (emphasis supplied). The Department also relied on a paragraph appearing under the Special Conditions portion of the ITB: LABELS. Complete product labels ... [are] a requirement of this bid to accommodate an evaluation to assure products offered meet or exceed the specification attached hereto (emphasis supplied). The Department contended that the highlighted language in these provisions indicated an intent to accept products which exceeded the yield specifications appearing in the various product descriptions. The protest was heard informally by a hearing officer, Tropabest arguing that, since numerous commodity descriptions included the phrase "or more" when stating yield requirements, the omission of that phrase, such Submitted into the p lic record for itcn(s) �5 L as in Items 20 and 21, indicated an intent that the stated yield not be exceeded. Otherwise, "or more" was superfluous language, a result to be avoided in contract interpretation. It further contended that the ITB provisions cited by the Department did not apply to yield requirements. The Department countered that any intra -ITB superfluity was irrelevant, since each food item could be the subject of a separate contract; consistency of language among the items was unnecessary. It concluded that any inconsistencies could be resolved by the simple expedient of interpreting all yield requirements as indicating minimum yields. The hearing officer entered a recommended order recommending that Bernard's bids be rejected and the contract awarded to Tropabest. He found that the term "approximately" as used in the yield requirements of Items 20 and 21 should be accorded its ordinary meaning of "near" or "close," and that nothing in the items' descriptions indicated that any amount over one gallon would be acceptable. The final order rejected this recommendation, finding that the ITB specifically allowed a bidder to exceed an item's specifications by way of the previously cited paragraphs, and that a reasonable interpretation of the yield requirements themselves was that they set a minimum yield which could be exceeded. First of all, we disagree with the Department that the ITB itself authorizes the Department to accept as conforming bids which exceed the stated specifications. Paragraph 5 of the ITB General Conditions, when read in its entirety, merely gives bidders permission to offer brands other than those which might be specified, so long as the other characteristics of those brands "meet or exceed" the specifications for that item. Similarly, the "labels" section of the ITB Special Conditions simply requires a bidder to provide product labels so that the agency can determine if the product offered "meets or exceeds" the specifications therefor. In our view, neither of these provisions has the purpose of authorizing carte blanche departure from item specifications simply because the word "exceed" appears in both. Further, we do not find that the language of the individual item specifications involved herein can be interpreted so that a yield of 3.5 gallons conforms to a specification calling for a yield of "approximately one gallon." As the hearing officer found, "approximately" means "more or less but about and near the amount or quantity specified." WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 Submitted into the p, lie Tropabest Foods, Inc. v. State, Dept. of General Services, 493 So.2d 50 (1986) recordIrriteyi(s) Black's Law Dictionary, 5th ed. (1979). Words in an instrument should be *52 given their natural or most commonly understood meaning. Thompson v. CH.B., Inc., 454 So.2d 55 (Fla. 4th DCA 1984). Because 3.5 gallons is not "about and near the quantity specified," i.e. 1 gallon, Bernard's bid on these items was at variance with the specifications therefor. [11 However, although a bid containing a material variance is unacceptable, not every deviation from the invitation to bid is material. It is only material if it gives the bidder a substantial advantage over the other bidders and thereby restricts or stifles competition. Robinson Electrical Co., Inc. v. Dade Co., 417 So.2d 1032, 1034 (Fla. 3d DCA 1982). See also Rule 13A-1.02(9), F1a.Admin.Code, which reserves to the agency the right to waive any minor irregularities in an otherwise valid bid, a minor irregularity being a variation which "does not affect the price of the bid, or give the bidder an advantage or benefit not enjoyed by other bidders or does not adversely impact the interests of the agency." 121 In this case, it is not the variation at issue, i.e. a yield of 3.5 gallons instead of 1 gallon, which "affects the price of the bid." Rather, it is that Bernard's beverage mix contains a more concentrated sweetener than Tropabest's so that a pound of mix yields more End of Document beverage. Neither Tropabest nor Bernard was restricted by the specifications to a particular "strength" of mix or type of sweetener. Tropabest does not argue that it had a product which could have bettered Bernard's price, if only it had known a 3.5 gallon per pound yield would be acceptable, thus giving Bernard an unfair advantage. Its mix simply was less concentrated and yielded less than Bernard's, therefore costing more per serving. It was this characteristic and not the variation complained of which allowed Bernard to undercut Tropabest's price. [31 Finally, the purpose of competitive bidding is to secure the lowest responsible offer and minor irregularities can be waived in effectuating that purpose. Robinson, supra. Here, the Department was able to obtain beverage mix of equal quality for less money which yielded three - and -a -half times the beverage of the only other bidder. Affirmed. WIGGINTON and NIMMONS, JJ., concur. All Citations 493 So.2d 50, 11 Fla. L. Weekly 1807 © 2016 Thomson Reuters. No claim to original U.S. Government Works, Wf STLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 n Wood -Hopkins Contracting Co. v. Roger J. Au & Son, Inc., 354 So.2d 446 (1978) KeyCite Yellow Flag - Negative Treatment Disagreed With by Envirogenics Systems Co. v. City of Cape Coral, Fla.App. 2 Dist., June 24, 1987 354 So.2d 446 District Court of Appeal of Florida, First District. WOOD-HOPKINS CONTRACTING COMPANY, Appellant, V. ROGER J. AU & SON, INC., Appellee. JACKSONVILLE ELECTRIC AUTHORITY, Appellant, V. ROGER J. AU & SON, INC., Appellee. Nos. II -146, II -153, II -151 and II -152. 1 Jan. 26,1978. Rehearing Denied Feb. 16, 1978. Electric authority and general contractor appealed judgments of the Circuit Court for Duval County, Marion W. Gooding, J., restraining the authority from awarding construction contracts to the general contractor and ordering authority to award contracts to another general contractor, the lowest bidder. The District Court of Appeal, Booth, J., held that: (1) trial court was correct in taking action to preserve the status quo and secure the rights of the parties to equitable relief, and (2) the record supported the trial court's holding that the authority acted arbitrarily, unreasonably, and capriciously in recommending the rejection of the lowest bid. Affirmed. West Headnotes (4) [1] Injunction Award of contract;bids and bidders Where electric authority sought to reject lowest bid on construction contract and award contract to second lowest bidder, issuance of a permanent injunction to restrain Submitted into the puis record r it m(s) lerk authority from taking action was proper to preserve the status quo and secure the rights of the lowest bidder to equitable relief, in any event, authority and second lowest bidder could not complain that formal action had not been taken on bids at time of first order, since authority elected to take formal action on bids before seeking review of trial court's injunction order. 7 Cases that cite this headnote [2] Municipal Corporations Award to Lowest Bidder Public Contracts Lowest bid Where electric authority had prequalified two manufacturers to supply pipe for construction project, practice and custom in the industry was that design changes were contemplated beyond the initial design data, general contractors did not have expertise to check pipe design data for conformity to specification, and supplier was bound to meet the specifications at cost originally submitted, action of electric authority in rejecting low bid of general contractor who based bid on price quote from one supplier, and awarding contract to another contractor, who based bid on quote from second supplier, because of necessity of design modifications was arbitrary, unreasonable, and capricious. 9 Cases that cite this headnote [3] Municipal Corporations Consideration of reliability and responsibility of bidders Public Contracts Reliability and responsibility of bidder Where electric authority had prequalified general contractors for construction project and registration requirements of statute were inapplicable, record supported holding that low bidder was lowest "responsible" bidder on project and that electric authority could not reasonably reject bid. West's F.S.A. § 468.114. WESTLAW U 2016 Thomson Reuters, No claim to original U.S. Government Works. 1 Submitted into thebo ic. p Wood -Hopkins Contracting Co. v. Roger J. Au & Son, Inc., 354 So.2d 446 (1978) record ftiterf (S , JO 3 Cases that cite this headnote [41 Municipal Corporations 6 Acceptance or Rejection of Proposals or Bids Public Contracts Acceptance or Rejection Actions of electric authority in taking bids on construction project are, as with all other discretionary functions of public entities, subject to requirement that exercise be not arbitrary, unreasonable or capricious; therefore, electric authority does not have unbridled discretion to reject any and all bids with or without cause. 8 Cases that cite this headnote Attorneys and Law Firms *446 William Lee Allen, Asst. Gen. Counsel, Jacksonville, for appellant Jacksonville Elec. Authority. A. Graham Allen, Jacksonville, for appellant Wood - Hopkins Contracting Co. Charles T. Boyd, Jr., Jacksonville, for appellee Roger J. Au & Son, Inc. Opinion BOOTH, Judge. These consolidated cases are before the Court on appeal from final judgments entered *447 in the Circuit Court, Duval County. At issue is the bidding for, and award of, the contract for construction of a thermal discharge unit at the Jacksonville Northside Generating Station. The judgments sought to be reviewed enjoin the Jacksonville Electric Authority (JEA) from awarding the contract to Wood -Hopkins Construction Company, Jacksonville, Florida (Wood -Hopkins) and mandate the award of the contract to Roger J. Au & Son, Inc., Mansfield, Ohio (Au). The questions here are whether the trial court's holding that JEA's actions were arbitrary, capricious and unreasonable is supported by the evidence and whether, based on the evidence presented, the court could require that the contract be awarded to Roger J. Au & Son, as the lowest responsible bidder. The JEA is a body politic and corporate organized under Chapter 67-1569, Laws of Florida, as amended by Chapter 77-579, Laws of Florida Section 10 of Chapter 77-579 provides in pertinent part as follows: "All construction ... where the entire costs ... shall exceed $4,000 ... shall be done only under contract or contracts to be entered into by the authority with the lowest responsible bidder ... The authority shall keep a current list of responsible bidders and whenever there shall be an award of contract, the bidder must come from this list." (e.s.) Prior to this litigation, JEA was notified by the United States Environmental Protection Agency that it must cease discharging waters used to cool its Northside Generating Plant into the San Carlos Creek. To meet these environmental requirements JEA adopted a plan designed and recommended by its consulting engineers, Reynolds, Smith & Hills, which called for the use of 3,000 feet of specially fabricated reinforced fiberglass pipe having diameters of more than sixteen feet. The unique pipe required has never been manufactured before. The JEA approved and pre -qualified two manufacturers to design and supply this pipe: CorBan Industries and Wolf Ridge Plastics. All general contractors bidding on the project were required to use either CorBan or Wolf Ridge as their designated supplier, and to furnish with their bid the design data of the pipe supplier. The JEA pre -qualified sixteen contractors to bid on the project, including Appellee Au and Appellant Wood - Hopkins. Nine of those pre -qualified submitted bids on September 14, 1977. The bid of Au was $11,650,000, some $38,000 less than the next lowest bid which was submitted by Wood -Hopkins. The Au bid also committed the bidder to a completion date 32 days sooner than the next lowest bidder, an important consideration in view of the potential penalty of $25,000 per day for each day the JEA operates the plant after December 31, 1978, without the thermal discharge unit. WESTLAW Q 2016 Thomson Reuters. No claim to original U.S. Government Works. 2 1 Submitted into the public Wood-Hopkins Contracting Co. v. Roger J. Au & Son, Inc., 354 So.2d 446 (1978) record J°r It m(s) _a1!, _-on t U) I M C! v C'ierk Subsequent analysis of the two bids by JEA's staff and consultant engineers showed discrepancies in the pipe design data attached to the two low bids. The design data attached to Au's bid had been supplied by Wolf Ridge Plastics; Wood -Hopkins' design data had been supplied by CorBan. I Detailed design calculations were then furnished by both pipe suppliers to the JEA's consulting engineers. The pipe design proposed by Au's supplier, Wolf Ridge, was determined to deviate substantially from specifications. The proposed design attached to the Wood -Hopkins bid also deviated, but this deviation was found by the staff and consultants to be one of judgment or "interpretation." Au's supplier, Wolf Ridge, stood by its commitment to meet specifications for the same price quoted to the general contractor and proposed to modify its design in accordance with the requirements of JEA's consulting *448 engineers, primarily by adding fiberglass material along one-third of the pipe at no additional cost to the general contractor, Au, or the JEA. The JEA consultants and staff and the City Purchasing Department recommended, however, that the Au bid be rejected and that the contract be awarded to Wood - Hopkins. The grounds for rejection of the Au bid were: (1) Error in the pipe design data furnished by Wolf Ridge and (2) Failure of Au to be a certificate holder under Florida Statutes, Chapter 468.2 Au sought injunctive relief against the threatened action of JEA to award the contract to Wood -Hopkins. A temporary injunction was entered and the cause came on for hearing on the permanent injunction on November 4, 1977. After a day -long hearing of testimony, the trial court entered its order granting a permanent injunction against the award of the contract to Wood -Hopkins. 3 After this action by the court, and on the same day, the JEA held a meeting and voted to reject all bids and to rebid the project. On November 17, 1977, Au filed its petition for writ of mandamus and the alternative writ issued. On November 29, 1977, a hearing was held and thereafter the trial court entered its final judgment of mandamus requiring that the JEA award the contract to Au. 4 Appellants' contention that the trial court acted prematurely in entering its order enjoining JEA from awarding the contract to Wood -Hopkins raises the question of the point in time at which arbitrary or unlawful action of a governmental entity is sufficiently imminent or threatening to allow intervention by a court of equity. [1] There is authority that one seeking injunctive relief in a bidding controversy must act before the public entity votes to accept a bid. At that point, or at the latest on the bidder's notification of the acceptance vote, a contractual relationship arises between the entity and the accepted bidder, even though a formal contract has not been executed. The rejected bidder may then be limited to his remedy at law for damages. Dedmond v. Escambia County, 244 So.2d 758 (1st DCA 1971); Berry v. Okaloosa County, 334 So.2d 349 (1 st DCA 1976); 26 Fla Jur, Public Works and Contracts, s 21; See, William A. Berbusse v. North Broward Hospital District, 117 So.2d 550 (2nd DCA 1960). Therefore, the trial court was correct in taking action to preserve the status quo and secure the rights of the parties to equitable relief. In any event, appellants cannot now be heard to complain that formal action had not been taken on the bids at the time of the first order, since the JEA elected to *449 take formal action on the bids before seeking review of the trial court's injunction order. The basic principles of the competitive bidding system are stated in Hotel China & Glassware Company v. Board of Public Instruction, 130 So.2d 78, 81 (1st DCA 1961), in part as follows: "Competitive bidding statutes are enacted for the protection of the public. They create a system by which goods or services required by public authorities may be acquired at the lowest possible cost. The system confers upon both the contractor and the public authority reciprocal benefits, and exacts from each of them reciprocal obligations. The bidder is assured fair consideration of his offer, and is guaranteed the contract if his is the lowest and best bid received. The principal benefit flowing to the public authority is the opportunity of purchasing the goods and services required by it at the best price obtainable. Under this system, the public authority may not arbitrarily or capriciously discriminate between bidders, or make the award on the basis of personal preference." (e.s.) WESTLAW © 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 Submitted into the puhlic record f r ite (s) S, Wood -Hopkins Contracting Co. v. Roger J. Au 8, Son, Inc., 354 So.2d 446 (1978) pn City Clerk In the instant case, the trial court found, after hearing all of the evidence, that JEA's staff and consultants acted arbitrarily, unreasonably, and capriciously in recommending the rejection of Au's bid and the award to Wood -Hopkins, and that JEA's reliance on the reasoning of its staff and consultants as a basis for rejecting all bids was likewise arbitrary and unreasonable. [2] The determination of the trial court in these matters comes to this Court with a presumption of correctness, and will not be lightly set aside. We have reviewed the record and find that it supports the trial court's holding. The evidence adduced at the hearings established the practice and custom in the industry in bidding on a project such as this and what was contemplated by the bid documents. That evidence is contrary to Appellants' position that the necessity for pipe design modifications disqualified a bid. The testimony was that design changes would be contemplated and that it would be "very unusual" if the initial set of design data were accepted by the owner's consulting engineer. Testimony also established that the design of large reinforced fiberglass pipe is a highly technical and specialized field. General contractors did not have the expertise to check pipe design data for conformity to specification. It was for this reason that JEA pre -qualified two pipe suppliers whose design data and shop drawings were to be submitted with the bid so that JEA's consulting engineers could review the proposed design and require any necessary changes. It was uncontradicted that the supplier in this case is bound, as indeed the supplier itself so states, to furnish pipe meeting the specifications at the cost originally submitted, regardless of additional cost to the supplier of changes required. [3] In the instant case, no question is raised by Appellants as to the responsibility, integrity and capability of either Au or its designated pipe supplier, Wolf Ridge. Both were pre -qualified by JEA as "responsible." Further, counsel stipulated at the hearing to Au's experience and qualifications. The trial court ruled that the JEA's pre -qualification of Au, plus the express exemption of Florida Statute s 468.114, made registration requirements inapplicable. The record clearly supports the holding of the able trial court that Au is the lowest responsible bidder on the project and that the JEA could not reasonably reject Au's bid. [4] In City of Pensacola v. Kirby, 47 So.2d 533 (Fla. 1950), the Supreme Court enjoined the execution of a contract between the City and one other than the low bidder, holding: "While the law imposes no mandatory obligation upon a public agency in respect to the letting of competitive contracts that will require the agency in every case to consider the lowest dollars and cents bid as being `the lowest responsible bid' to the exclusion of all other pertinent factors that may be taken into consideration, *450 the law does require that where discretion is vested in a public agency with respect to letting public contracts on a competitive basis, the discretion may not be exercised arbitrarily or capriciously but must be based upon facts reasonably tending to support the conclusions reached by such agency." Nor do we accept Appellants' contentions that JEA has unbridled discretion to reject any and all bids "with or without" cause. Such action, as with all other discretionary functions of public entities, is subject to the requirement that its exercise be not arbitrary, unreasonable or capricious. Without these limitations the purpose of competitive bidding is circumvented. Rejection of all bidders then becomes a means of allowing a favored bidder another chance to submit a low bid. As stated in McQuillan: 5 "In exercising the power to reject any or all bids, and proceeding anew with the awarding of the contract, the officers cannot act arbitrarily or capriciously, but must observe good faith and accord to all bidders just consideration, thus avoiding favortism, abuse of discretion, or corruption. Even where the right to reject any and all bids is properly reserved, the bidding law may not be evaded under the color of a rejection." Accordingly, the judgments of the lower court are AFFIRMED. WESTLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. 4 if { I I I I u I I s1- vw Wood -Hopkins Contracting Co. v. Roger J. Au & Son, Inc., 354 So.2d 446 (1978) IT IS SO ORDERED. Submitted into the Pu lic record All Citations rtr it on Pr McCORD, C. J. and BOYER, J., concur. 354 So.2d 446 City Clerk Footnotes 1 Five of the general contractors submitted bids using Wolf Ridge's pipe design; three used CorBan. One contractor submitted a bid giving JEA the option of either pipe supplier. The same data was attached to the bids of all contractors using Wolf Ridge, and the same CorBan data was attached to those bids using that supplier. 2 The bid documents require registration "in accordance with Chapter 468" of the Florida Statutes. Florida Statute s 468.114, however, expressly exempts "contractors in work on ... utilities and services incidental thereto" from registration. 3 Final Judgment, November 7, 1977: "1. That the actions of the Jacksonville Electric Authority Bid Award Committee and its consulting engineers in recommending the rejection of the low bid of Roger J. Au & Son, Inc. was arbitrary, capricious and unreasonable. 2. That Jacksonville Electric Authority, its Board, officers, agents and employees, be permanently restrained and enjoined from approving an award to the Wood -Hopkins Contracting Company as recommended by the Bid Review Committee Report dated October 11, 1977, regarding the Thermal Discharge contract for the Northside Generating Station." 4 Final Judgment of Mandamus, November 30, 1977: "That the only evidence or testimony produced to the Court reflected that the Jacksonville Electric Authority Board followed the same reasons of the Bid Award Committee in its recommendation to the Jacksonville Electric Authority Board as a basis for rejecting all bids, which reasons this Court had previously determined to be arbitrary, capricious and unreasonable. Jacksonville Electric Authority is herewith ordered to immediately award the contract for the Thermal Discharge at Northside Generating Station as set forth in JEA Bid Specification No. F-0685-77 to Roger J. Au & Son, Inc. in accordance with the said Alternative Writ of Mandamus heretofore entered." 5 McQuillin, Municipal Corporations, s 29.77, at page 438. End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works. IWESTLAW J 2016 Thomson Reuters. No claim to original U.S. Government Works. 5 r bb § 97.Competitively bid contracts, 64 Am. Jur. 2d Public Works and Contracts § 97 1 record fpr it(s)t �(3 , on City Clerk 64 Am. Jur. 2d Public Works and Contracts § 97 American Jurisprudence, Second Edition July 2016 Update Public Works and Contracts Romualdo P. Eclavea, J.D., Jeffrey J. Shampo, J.D. VI. Obligations of Contract; Performance and Breach of Contract A. In General 3. Modification of Contract Topic Summary Correlation Table References § 97. Competitively bid contracts West's Key Number Digest West's Key Number Digest, Counties -5�— 127 6. West's Key Number Digest, Municipal Corporations X252 West's Key Number Digest, Public Contracts �- 18 West's Key Number Digest, Schools 4==•84.5 West's Key Number Digest, States Q;,-106 West's Key Number Digest, United States C-70(35), 72(1) to 72(5) Generally, under the "material amendments doctrine," competitively bid contracts involving state resources cannot be materially amended.' Thus, by seeking to modify its original bid and negotiate a more favorable agreement for itself, after it has already secured a public works contract as the low bidder, a contractor is, in effect, improperly attempting to secure an unfair competitive advantage over the other legitimate bidders and to conduct a type of postbid negotiations that violate the practice of competitive bidding. 2 However, the material amendments doctrine does not apply to amendments approved by the legislature. 3 Further, even when public bidding statutes apply, they do not foreclose changes when a public body, in its own interest, seeks an amendment to meet an unanticipated development in circumstances in which the bidding would be inappropriate or impractical. 4 © 2016 Thomson Reuters. 33-34B © 2016 Thomson Reuters/RIA. No Claim to Orig. U.S. Govt. Works. All rights reserved. AMJUR PUBLICWORK § 97 Footnotes I Baxley v. State, 958 P.2d 422 (Alaska 1998). 2 Lake Const. & Development Corp. v. City of New York, 211 A.D.2d 514.621 N.Y.S.2d 337 (1st Dept 1995). 3 Baxley v. State, 958 P.2d 422 (Alaska 1998). 4 Wassetnnan's Inc. v. Township of Middletown. 137 N.J. 238, 645 A.2d 100 (1994). End of Document C-1; 2016 Thom.on Reuters. No claim to original U.S. Government Works. WESTLAW 9 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 15.206 Amending the solicitation., 48 C.F.R. 15.206 Submitted into the pub is on I City Clerk Code of Federal Title 48. Federal Acquisition Regulations System Chapter 1. Federal Acquisition Regulation Subchapter C. Contracting Methods and Contract Types Part 15. Contracting by Negotiation (Refs & Annos) Subpart 15.2. Solicitation and Receipt of Proposals and Information 48 C.F.R. 15.206 15.2o6 Amending the solicitation. Currentness (a) When, either before or after receipt of proposals, the Government changes its requirements or terms and conditions, the contracting officer shall amend the solicitation. (b) Amendments issued before the established time and date for receipt of proposals shall be issued to all parties receiving the solicitation. (c) Amendments issued after the established time and date for receipt of proposals shall be issued to all offerors that have not been eliminated from the competition. (d) If a proposal of interest to the Government involves a departure from the stated requirements, the contracting officer shall amend the solicitation, provided this can be done without revealing to the other offerors the alternate solution proposed or any other information that is entitled to protection (see 15.207(b) and 15.306(e)). (e) If, in the judgment of the contracting officer, based on market research or otherwise, an amendment proposed for issuance after offers have been received is so substantial as to exceed what prospective offerors reasonably could have anticipated, so that additional sources likely would have submitted offers had the substance of the amendment been known to them, the contracting officer shall cancel the original solicitation and issue a new one, regardless of the stage of the acquisition. (f) Oral notices may be used when time is of the essence. The contracting officer shall document the contract file and formalize the notice with an amendment (see subpart 4.5, Electronic Commerce in Contracting). r (g) At a minimum, the following information should be included in each amendment: (1) Name and address of issuing activity. (2) Solicitation number and date. WESTLAW O 2016 Thomson Reuters. No claim to original U.S. Government Works. 1 ■ 15.206 Amending the solicitation., 48 C.F.R. 15.206 submitted into the on. -- City Clerk (3) Amendment number and date. (4) Number of pages. (5) Description of the change being made. (6) Government point of contact and phone number (and electronic or facsimile address, if appropriate). (7) Revision to solicitation closing date, if applicable. SOURCE: 62 FR 51230, Sept. 30, 1997; 69 FR 8313, Feb. 23, 2004; 69 FR 17769, April 5, 2004; 69 FR 25275, May 5, 2004; 69 FR 59702, Oct. 5, 2004; 69 FR 76345, 76351, Dec. 20, 2004; 70 FR 14954, March 23, 2005; 70 FR 33657, 33660, June 8, 2005; 77 FR 56743, Sept. 13, 2012; 78 FR 37692, June 21, 2013; 79 FR 43582, July 25, 2014, unless otherwise noted. AUTHORITY: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113. Notes of Decisions (44) Current through July 7, 2016; 81 FR 44482. End of Document -0 2016 Thomson Reuters. No claim to original L.S. Government Works. ' WESTLAW @ 2016 Thomson Reuters. No claim to original US. Government Works. 2 Ja CITY OF MIAMI DEPARTMENT OF REAL ESTATE AND ASSES' MANAGEMENT . REQUEST FOR PROPOSALS (RFP) NO. 12-14-077 LEASE OF CITY -OWNED WATERFRONT PROPERTY FOR N ARINA'SIDE TAUR T/SHIP'S STORE USES LOCATED AT Subrrlilted ituo the p 'Ii1i►1I KEY reeErc9 �eii it _ MIAMI FLORIDA on cily CIA ISSUE, DATE: JUNE 15, 201 PROPOSAL DUE DATE.- SEPTE '1HER 2 , 2015 Al 1` ' Submitted into the pini is ''♦ iEcr «F� ,'.- recordr it 4s� ,t,, nu �p on City Clerl, June 15, 2015 The City of Miami ("City"), by the issuance of this Request for Proposals ("RFP"), invites interested proposers ("Proposers") to submit proposals for the lease of prime waterfront property located in Virginia Key, Florida. The goal of this RFP is to create a vibrant recreational marina and restaurant destination with an ancillary ship's store facility for City residents and tourists alike. As described herein, the vision of this RFP is to help implement major components of the Virginia Key Master Plan. The Successful Proposer will be entering into a long-term lease with the City for approximately 26.65 acres (including uplands and submerged land) of waterfront property located at 3301, 3605, 3501, 3311, & 3511 Rickenbacker Causeway, Miami, Florida, and more specifically shown in the survey and legal description included as Exhibit A ("Property"). This RFP contains information regarding the Property, the project, proposal submission requirement, and selection criteria. Proposals must comply with all submission requirements to be eligible for consideration. All information and materials submitted will be thoroughly analyzed and independently verified. Proposals must present a definitive proposal responding to all requirements of the RFP. ' The City will conduct a Pre -Proposal Submission Conference and Site Visit (respectively "Pre - Proposal Submission Conference" and "Site Visit") on July 8, 2015 at the Miami Rowing Club, 3601 Rickenbacker Causeway, Miami, FL 33149 to answer questions and/or clarify the statements ' and requirements contained in this RFP. Attendance at the Pre -Proposal Submission Conference and Site Visit is optional, but highly recommended. ' Proposals must be received by no later than September 28, 2015 by 2:00 PM and must be delivered to the Office of the City Clerk (First Floor Counter), City Hall, 3500 Pan American Drive, Miami, Florida 33133. The City will not consider late, incorrectly delivered, or incomplete proposals. A list of all Proposers will be made public the following business day. The successful Proposer will be subject to the requirements of the Charter of the City ("City Charter") and Code of the City, as amended ("City Code"). On behalf of the Mayor and City Commissioners, I welcome responsive project proposals which will realize the full potential of this prime real estate location. Sincerely, Daniel J. Alfonso City Manager I. EXECUTIVE SUMMARY Submitted into the I e `, record f r it m(s) I � J\ . L on .. -7 P City Clerk Location 3301, 3605, 3501, 3311, & 3511 Rickenbacker Causeway, Miami, Florida, shown respectively as Parcels 1, 2, and 3 on the survey shown in Exhibit A, which shall be included by way of addendum. Project Opportunity To plan, redesign, renovate or redevelop, lease, manage and operate a mixed-use waterfront facility including, but not limited to, two marinas, a boatyard, dock master's office, ship's store, dry storage, wetslip docks, and at least one restaurant ("Project"). Required Uses Marina/boat yard with dry rack storage, new dock master's office, ship's store, fuel stations; and wetslip dockage facilities and a restaurant ("Required Uses"). Public Boat Ramp The successful Proposer shall be required to plan, design, permit and construct a public boat ramp and floating dock on the Property to the northwest of Miami Marine Stadium as an additional component of the Virginia Key Master Plan. Marina Restrictions Vessels moored at wetslips shall be limited in size as per applicable regulatory requirements. Marina shall provide for a minimum of 648 dry storage racks. Marina shall maintain the existing 190 wetslips and build approximately 300 additional wetslips. The size and number of any and all additional wetslips shall be subject to all applicable rules and regulations, including, but not limited to, zoning, permitting, aquatic preserve limitations, and other regulatory requirements. The successful Proposer shall allow the NMMA boat show event ("Boat Show") access and use of the Property annually during the seven (7) days of the Boat Show, inclusive of President's Day weekend. The successful Proposer shall also accommodate the Boat Show during the three (3) week set up period and the two (2) week tear down period for a total not to exceed six (6) weeks. This restriction shall be coterminous with the Lease. The successful Proposer shall enter into a cross - access agreement with Specialty Restaurants Corporation d/b/a Rusty Pelican Restaurant ("Rusty Pelican"), allowing Rusty Pelican, their agents, J. Flood Zone A preliminary review of the Property shows that the entire Property is classified as falling within Coastal A Zone, under Flood Zone AE. A Flood Zone Map is included in Exhibit D. All structures constructed at the Property must conform to the appropriate Flood Zone requirements. K. Impact Fees The successful Proposer must pay for any Impact Fees related to its improvements to the Property. Impact fees by Code requirement must be paid prior to issuance of a building permit. L. Design Review The design of the Project shall be subject to review and approval by appropriate City departments and/or agencies, including but not limited to certain County agencies such as Shoreline Review Committee and the Shoreline Review Manual as set forth in the Miami -Dade County Code. I M. Background Check Proposers shall be required to perform, at the Proposer's sole cost, a complete background and credit check of the Proposer, the proposing entity, related entities or assigns, and its principals as well as reference checks on the principals of every member of the proposing entity, and or its assigns. This shall include any and all checks that would reveal any of the information requested in subsection N below, Disqualification. The background and credit check provided by the Proposers shall be in a sealed envelope from an independent and impartial third -party company, and directed to Submitted into the puvic record f r ite (s) b' o SP, on City Clerk This information is intended to help the Proposer determine the applicable requirements and is not meant to be an exhaustive summary of all permits, licenses and approvals required. I. Zoning Pursuant to the City's Miami 21 Zoning Code, the overall Property is zoned CS, Civic Space, which is included as Exhibit B. Any details provided herein regarding the zoning process is for convenience only and Proposers should not rely upon them. Proposers are responsible for obtaining information directly from the appropriate City Planning and Zoning departments as it relates to their specific plans for redevelopment of the Property, as applicable. Any meetings with City staff regarding specific plans shall be considered outside the Cone of Silence. Proposers are responsible for pursuing any zoning changes and/or board or City Commission approvals necessary to implement the concept proposed in their response to this RFP so long as they are supported by the City as property owner and the Virginia Key Master Plan. Proposers should not consider zoning approvals as permit approvals, the latter which Proposer must obtain separately for each aspect of the Project. Whenever possible, the City agrees to assist the successful Proposer with its permitting process, providing that municipal permit fees will not be waived or reduced. J. Flood Zone A preliminary review of the Property shows that the entire Property is classified as falling within Coastal A Zone, under Flood Zone AE. A Flood Zone Map is included in Exhibit D. All structures constructed at the Property must conform to the appropriate Flood Zone requirements. K. Impact Fees The successful Proposer must pay for any Impact Fees related to its improvements to the Property. Impact fees by Code requirement must be paid prior to issuance of a building permit. L. Design Review The design of the Project shall be subject to review and approval by appropriate City departments and/or agencies, including but not limited to certain County agencies such as Shoreline Review Committee and the Shoreline Review Manual as set forth in the Miami -Dade County Code. I M. Background Check Proposers shall be required to perform, at the Proposer's sole cost, a complete background and credit check of the Proposer, the proposing entity, related entities or assigns, and its principals as well as reference checks on the principals of every member of the proposing entity, and or its assigns. This shall include any and all checks that would reveal any of the information requested in subsection N below, Disqualification. The background and credit check provided by the Proposers shall be in a sealed envelope from an independent and impartial third -party company, and directed to 11 Submitted into the public c 1n record f r ite (s) y 4 , � , Z on City Clerk Additionally, pursuant to Section 7.1.2.7 of the rami 21 Zoning Code, any new development (or redevelopment) in a CS Transect Zone may be allowed to apply for a "Variance." However, the City as owner will not approve the request for a Variance for this Property. Depending on the scope of renovation or redevelopment, architectural components may be subject to approval by the City's Planning and Zoning Department, the PZAB and the City Commission. IV. PROPOSAL OBJECTIVES This RFP seeks to identify the proposal deemed most advantageous to the City. The City's evaluation and review of proposals shall include, but not be limited to: the financial returns to the City, the Proposer's experience and management history, the Proposer's and consultant'(s) capability, the Proposer's financial ability & qualifications, the overall design of the proposed Project, and local participation. A. Economic Objectives ■ Increase the financial return to the City. ■ Improve the revenue-producing capacity of the marina/boatyard, restaurant and ship's store facilities. ■ Improve the marina, restaurant and any ancillary waterfront uses and enhance their destination market appeal to locals and tourists alike. ■ Ensure that any proposed (optional) ancillary or complementary uses further enhance the destination market appeal of the wider Miami and Virginia Key community. ■ Utilize the available Property to maximize its economic potential. B. Planning and Land Use Objectives ■ To convert the existing facility into a modern world-class facility using state- of-the-art technology and including ancillary uses that complement the Property's setting and geographical location, aimed to stimulate widespread interest in the waterfront Property. ■ To provide for the development of a mixed-use marina/restaurant and waterfront destination, portraying a unified and integrated marina that seamlessly interacts with adjacent restaurants and facilities. ■ To allow for easy access to and throughout the Property, including the development of a full -width bay walk that matches the design east of Marine Stadium, and a clear walking passage from Marine Stadium to Rusty Pelican. ■ To promote various active, public uses of the site that will enhance the overall public benefit derived from the property in terms of use, visibility and financial return. ■ To provide marina/restaurant facilities that represent flexible designs and iconic attention -grabbing buildings that function year-round for daily and nightly activities. ■ To develop an array of recreational waterfront uses operated by management experienced in waterfront programming in order to attract increasing and varied segments of the local, regional and visitor population. 22 (7) Submitted into the pu lic record f rite s) S@, on 1 City Clerk elements/features, parking, open spaces, expanded baywalk and signage. Required Redevelopment: (a) Marina Redevelopment: The Proposer must include a detailed redevelopment plan for the individual marina/boatyard, restaurant and ship's store components of the Property. The successful Proposer shall include the following improvements to maximize boating access and transient dockage participation reflecting concepts in the Master Plan and all applicable government regulations and agencies: i) Reconstruct the two (2) marinas to provide for best utilization of available space for dry rack storage, dockage and/or other uses. ii) Construct a new, multi -story dock master's office, consolidating the dock master's facility in both marinas. iii) Design, refurbish or reconstruct the marina pavement to meet applicable design criteria for appropriate vehicles and loads to result from the proposed marina use in visually appealing manner. iv) Construct and install approximately 300 additional wetslips and renovate the bulkhead alongside these wetslips, subject to all applicable rules and regulations. v) Maintain the existing 648 dry racks on-site and 190 existing wetslips during the Lease Term. vi) Provide an 11 foot wide baywalk in accordance with the Virginia Key Master Plan. vii) Plan, design, permit and construct a public boat ramp and floating dock, which shall be to the northwest of Miami Marine Stadium, and shall comply with the Virginia Key Master Plan. The successful Proposer must maintain the dock/bulkhead wall in good condition and repair for the duration of the Lease. The successful Proposer is encouraged to contact the State of Florida Board of Trustees of the Internal Improvement Trust Fund ("TIITF") should it wish to secure additional submerged lands for dockage. Proposer shall bear all costs or payments to the State in association with state approval process. Failure to pay and/or renew the lease, if applicable, of any additional submerged lands 30 process. (12) Threshold Qualification Standards: Each Proposer shall meet the following five (5) minimum requirements: (a) Either a member of the Project Team or staff must have a minimum of ten (10) years' experience with a marina of similar size and complexity; a minimum of ten (10) years active experience and responsibility for daily operations of the restaurant, as well as a minimum of five (5) years' experience for each additional business use proposed to be operated by the successful Proposer. (b) Either a member of the Project Team and the Proposer (the latter as applicable) or its staff must have played a leading role with principal responsibility for the design of a project(s) of similar size, complexity and constraints as the facilities and uses proposed. (c) Any of the principals or Project Team members must have successfully developed and obtained financing for at least one project of similar size, complexity with similar uses and constraints. For the purpose of this RFP "Project Team" is defined as the group of persons managing and operating the marina and restaurant facility, including the principal(s) submitting the proposal and with whom the City would enter into a Lease for the Property, if awarded. The Project Team or any of its principals must have secured or provided, at minimum, twenty million dollars $20 million or more in financing for at least one (1) single project. VP (d) The Minimum Level of Investment associated with the improvements (buildings, facilities, Parking facility, docks and equipment) shall be twenty five million dollars ($25,000,000), which 33 S& Submitted into the pulalic record fi ite L (s) , on b City Clerk 11 ( )Pro oser's Organizational Chart: The Proposer must provide an organizational chart and detailed information about the Proposer, related entities, and members of its operations and management team who will manage and operate the marina, restaurant and other business facilities ("Project Team") and the Proposer's team of architects, engineers and/or general contractors ("Development Team") who shall renovate or redevelop the Property. The organizational chart shall graphically depict the Proposer's relationship with any parent organization(s) and/or affiliate organizations or entities, if any, as well as the respective operations, management and construction roles (e.g. architect, engineer, general contractor) played by each team member or entity comprising the Project Team or Development Team. Proposers that include as part of their team foreign nationals or foreign entities must fully comply with all of the requirements of the Patriot Act. Those Proposers who do not comply shall be automatically disqualified from further consideration in this RFP process. (12) Threshold Qualification Standards: Each Proposer shall meet the following five (5) minimum requirements: (a) Either a member of the Project Team or staff must have a minimum of ten (10) years' experience with a marina of similar size and complexity; a minimum of ten (10) years active experience and responsibility for daily operations of the restaurant, as well as a minimum of five (5) years' experience for each additional business use proposed to be operated by the successful Proposer. (b) Either a member of the Project Team and the Proposer (the latter as applicable) or its staff must have played a leading role with principal responsibility for the design of a project(s) of similar size, complexity and constraints as the facilities and uses proposed. (c) Any of the principals or Project Team members must have successfully developed and obtained financing for at least one project of similar size, complexity with similar uses and constraints. For the purpose of this RFP "Project Team" is defined as the group of persons managing and operating the marina and restaurant facility, including the principal(s) submitting the proposal and with whom the City would enter into a Lease for the Property, if awarded. The Project Team or any of its principals must have secured or provided, at minimum, twenty million dollars $20 million or more in financing for at least one (1) single project. VP (d) The Minimum Level of Investment associated with the improvements (buildings, facilities, Parking facility, docks and equipment) shall be twenty five million dollars ($25,000,000), which 33 S& Submitted into the puie S(�' record fpr ite s) on 1 City Clerk The Management/Operations Team as a whole must have the requisite expertise, financial and management capability to develop a marina/restaurant destination facility of similar scope and complexity as identified in the project objectives. (c) Project Team Experience Forms (Attachment 5): On Attachment 5, list the key personnel comprising the Project Team who will be utilized in each project component (e.g. marina, restaurant, ship's store, etc.). Provide their positions or titles on the Project Team Experience Forms attached and incorporated herein as Attachment 5. For each member of the Proposer, the Proposer shall complete and provide a list of completed representative projects according to the following criteria: i. current project function or role, i.e., restaurant operator, restaurant manager, restaurant owner; marina management, marina operation, etc.; ii. years of experience gained working on representative projects; iii. dollar ($) sales volume of business operations for these representative projects (specifying which type of project component, e.g. marina, restaurant, ship's store, etc.). Unless the City Manager specifically authorizes it, Proposers may not make any additions or modifications to the proposal responses, nor the Project or Development Team, subsequent to the RFP submission deadline. (14) Development Team Composition: Proposers shall submit evidence ofthe qualifications of the professional team of architect(s), engineer(s), general contractor(s), landscape architect(s) and consultant(s) who will undertake and complete the renovation or development of the proposed project. The Proposer and/or its consultant(s) shall, at minimum demonstrate professional expertise in the disciplines outlined below. (a) Architect: The Proposer shall have at least one (1) architect licensed and registered in the State of Florida as required by Chapter 481, Part I, Florida Statutes, Architecture and shall have substantial experience I, in the design and renovation of the specified Required Uses. (b) Landscape Architect: The Proposer shall have at least one (1) landscape architect licensed and registered in the State of Florida as required by Chapter 481, Part II, Florida Statutes, Landscape Architecture and shall have substantial experience in the design and renovation of the specified required uses. (c) Engineer: The Proposer shall have at least one (1) engineer, licensed and registered in the State of Florida as required by Chapter 471, Florida Statutes. 35 01 � I I I � I � I � I � I I " M c r Cnttu of ffliami July 1, 2015 Submitted into thep u lic record f r ite s) l -T11, on City Clerk DANIEL J. ALFONSO City Manager RE: Addendum II, Request for Proposals ("RFP") No. 12-14-077 for Lease of Virginia Key Marina, City -owned Waterfront Property for Marinas/Restaurant/Ship's Store Uses Attention Registered Proposers: This mailing is "Addendum Il" and becomes an official addendum to the RFP document. All future questions will be answered in this same manner and forwarded as Addenda until the proposal due date, September 28, 2015. Enclosed please find the following items: • RFP Questions and Answers • RFP Revisions Any written questions received will be answered within fifteen (15) days of their receipt. When sending correspondence, please address the original to CBRE I Marina Services, the City's broker for this project, with a copy to the attention of the project designee at the City of Miami. Failure to follow these requirements may result in your question not being answered or replied to. Should you have any questions, please do not hesitate to write: Broker Jason Spalding CBRE I Marina Services 200 East Las Blvd, Suite 1620 Fort Lauderdale, FL 33301 Jason. spalding,La cbre.corn c: Todd B. Hannon, City Clerk Project Designee Jacqueline Lorenzo City of Miami Real Estate & Asset Management 444 SW 2"d Avenue, 3`d Floor Miami, FL 33130 i 1 orenzonmiamigov. c om ("Lli#i of 'Wia rti Submitted into the public record f r it (s) la�L_�_ 1, Z on t City Clerk DANIEL J. ALFONSO City Manager ADDENDUM II REQUEST FOR PROPOSALS 12-14-077 For Lease of Virginia Key Marina City -owned Waterfront Property for Marinas/Restaurant/Ship's Store Uses Question 1: Is Marine Stadium Marina currently operated by the City of Miami? Answer 1: Yes. Marine Stadium Marina is currently operated by the City of Miami ("City"). The City will cease operation of the Marina once the Selected Proposer executes the Lease and begins the process for construction. Question 2: Is there a copy of the current lease with Rickenbacker Marina Inc. available? Answer 2: Yes. The Rickenbacker Marina Inc. Lease Agreement is available for review at the Department of Real Estate and Asset Management for the City at the Miami Riverside Center, 444 SW 2nd Avenue, Suite 325, Miami, Florida 33130. To make an appointment to view the referenced documents, you may contact the City of Miami Project Designee specified above. Question 3: Has any of the permitting been started for the approximately 300 additional wet slips to be constructed? Answer 3: No. The Selected Proposer will be required to comply with all permitting requirements and approval requirements once they have determined the location of the additional wet slips to be constructed. Question 4: What is the current depth of water for the anticipated location for the approximately 300 additional wet slips to be constructed? Answer 4: There is no anticipated location for the additional boat slips as this will be determined at the Selected Proposer's discretion, subject to the restrictions set forth in the RFP, the Virginia Key Master Plan (included as Exhibit E), and all other applicable restrictions, rules, and regulations. There is a depth of four (4) feet at the seawall at Marina Stadium Marina at mean low water. Question 5: Are there any conceptual plans that have been completed for the approximately 300 additional wet slips to be constructed? If so can we obtain a copy? Answer 5: No conceptual plans have been completed for the additional wet slips to be constructed. The Selected Proposer shall have the discretion to design the area subject to the restrictions set forth in the RFP, the Virginia Key Master Plan (included as Exhibit E), and all other applicable restrictions, rules, and regulations. 4, Ll 11 11 II 11 � I 60 (ILT11t#ir of ffliami August 6, 2015 Submitted into the pu lic record f r ite (s) �j J�t Z on City Clerk DANIEL J. ALFONSO City Manager RE: Addendum VIII, Request for Proposals ("RFP") No. 12-14-077 for Lease of Virginia Key Marina, City -owned Waterfront Property for Marinas/Restaurant/Ship's Store Uses. Attention Registered Proposers: This mailing is "Addendum VIII" and becomes an official addendum to the RFP document. All future questions will be answered in this same manner and forwarded as Addenda until the proposal due date, September 28, 2015. Enclosed please find the following items: • RFP Questions & Answers Any written questions received will be answered within fifteen (15) days of their receipt. When sending correspondence, please address the original to CBRE I Marina Services, the City's broker for this project, with a copy to the attention of the project designee at the City of Miami. Failure to follow these requirements may result in your question not being answered or replied to. Should you have any questions, please do not hesitate to write: Broker Project Designee Jason Spalding Jacqueline Lorenzo CBRE I Marina Services City of Miami 200 East Las Blvd, Suite 1620 Real Estate & Asset Management Fort Lauderdale, FL 33301 444 SW 2"d Avenue, 3`d Floor Jason. spalding(a?cbre.com Miami, FL 33130 ilorenzo@miamijzov.com cc: Todd B. Hannon, City Clerk 1 1 11 I � I (111ttv of Miami Submitted into the pul is �. record fill- itel (S) on - City Clerk DANIEL J. ALFONSO City Manager t }.dom. h xSr_� assurances that the litigation will not extend the term of the lease; however, the same is not currently anticipated. Question 19: The RFP requires the proposers to provide approximately 300 additional wet slips. Given that the current configuration of the existing 190 wet slips occupies substantially all of the submerged lands within the RFP Property how will the City address the fact that there is insufficient submerged land area to accommodate the RFP required additional wet slips? As the Property falls within the Biscayne Bay Aquatic preserve it requires that any use to be "in the public interest" and only the upland riparian owner can apply for or hold a submerged land lease from the TIFF. Will the City apply for be the tenant and hold any submerged land lease reasonably necessary to accommodate the required additional wet slips? Answer 19: It is intended that the Selected Proposer build approximately 300 additional wet slips. The additional number of slips is an approximation intended to maximize the number of slips, which will vary and will be subject to restrictions imposed by the RFP, building, zoning, and any and all other City, County, State, and Federal limitations and regulations, as applicable. The City will not permit the selected proposer to include additional submerged lands because such would be a material change to the land offered by the RFP. Question 20: Is there a current submerged land lease for any portion of the RFP Property and if so is it in good standing and what is its current expiration date? Please provide a copy. Answer 20: There is currently no submerged land lease for any portion of the property included in the RFP. The submerged lands included in the RFP are owned by the City of Miami as per State Deed 18030, recorded in Miami Dade County Official Records Book 1325, Page 248. IOctober 9, 2015 ■• 4h (11r#u of 4ffia i Submitted into the public f record r iter (s} Ssv, � 1, 2 on City Clerk DANIEL J. ALFONSO City Manager RE: Addendum XV, Request for Proposals ("RFP") No. 12-14-077 for Lease of Virginia Key Marina, City -owned Waterfront Property for Marinas/Restaurant/Ship's Store Uses. Attention Registered Proposers: This mailing is "Addendum XV" and becomes an official addendum to the RFP document. All future questions must be provided prior to the deadline for questions on November 11, 2015 pursuant to revised Section Il A. of the RFP and shall be answered in this same manner and forwarded as Addenda. Proposals shall be due by 2:00 PM on December 14, 2015. Enclosed please find the following items: • RFP Questions & Answers • RFP Revisions Any written questions received will be answered within fifteen (15) days of their receipt. When sending correspondence, please address the original to CBRE I Marina Services, the City's broker for this project, with a copy to the attention of the project designee at the City of Miami. Failure to follow these requirements may result in your question not being answered or replied to. Should you have any questions, please do not hesitate to write: Broker Jason Spalding CBRE I Marina Services 200 East Las Blvd, Suite 1620 Fort Lauderdale, FL 33301 Jason.spalding@cbre.com cc: Todd B. Hannon, City Clerk Project Designee Jacqueline Lorenzo City of Miami Real Estate & Asset Management 444 SW 2"d Avenue, Yd Floor Miami, FL 33130 i 1 oren zo n.m i am igov. co m Submitted into the pu c (} record r it m(s) S�, � k �k, t ` on 71, City City Clerk C�t#v cif 'mT-zt ret DANIEL J. ALFONSO City Manager .-�� near a�, • {i �, r i• ��: F O. ADDENDUM XV REQUEST FOR PROPOSALS 12-14-077 For Lease of Virginia Key Marina City -owned Waterfront Property for Marinas/Restaurant/Ship's Store Uses Question 1: "Can the proposal include uses that are not allowed as of right under the Miami 21 Zoning Code but are allowed by Warrant or Exception?" Answer 1: Yes, proposals may include those uses that are allowed by warrant or exception under the Miami 21 Zoning Code so long as the proposal clearly identifies the method by which the proposer intends to obtain approval for the proposed use. In other words, if the proposed use would be allowed by exception, the proposal must, for instance, clearly state that the use would be subject to approval through the exception process and indicate the amount of time, investment, and other relevant information concerning the intended process for obtaining such approval; similarly, if the proposed use would only be allowed by the implementation of a Special Area Plan ("SAP"), the proposal must clearly state that the use would be subject to approval through the SAP process and indicate the amount of time, investment, and other relevant information concerning the intended process for obtaining the approval. Question 2: "In the event that the selected proposer elects to obtain subtenants for the operation of retail space, will the City consider a percentage rent structure for retail spaces that is based on ■ sublease income as opposed to Gross Revenues of the subtenant(s)?" Answer 2: Yes, the City will consider a percentage rent structure for retail spaces based on a percentage P' of sublease income. Please see Addendum V, which contains revisions to RFP Section VI (F)(12)(e) regarding percentage rent of restaurant income. Question 3: "If the successful proposer is not able to secure approval from regulatory agencies for the additional space needed to accommodate the number of slips projected in the RFP, will the City adjust the base rent to account for the resulting adverse impact on Gross Revenues?" Answer 3: The base rent of two million one hundred and fifty thousand dollars ($2,150,000) is a minimum that may not be reduced. Please be advised that the survey of the subject Lease area shall be revised to include additional submerged land within the basin. The dimensions of the area to be included, which were mentioned during the second Pre -Proposal Submission Conference, were based on incorrect information, and the exact amount of submerged land to be included has not yet been determined. Nevertheless, the correct addition of submerged land offered by this RFP will be included within the revised survey as soon as it is available. The selected proposer shall be required to comply with all applicable restrictions and stipulations, and must obtain all required permits and approvals, including, if necessary, approval from the Historic and Environmental Preservation Board. ow 1 11 C�itV 0f M i a M T - Submitted into the pu lic c(� record f r it 7y - DANIEL ) ��, �,.Z on City Clerk J. ALFONSO City Manager The minimum base rent shall also be revised to include an additional amount based upon the inclusion of submerged land that will be utilized by the selected proposer. In the event the applicable regulatory agencies do not approve the inclusion of some or all of the submerged lands, the minimum base rent shall be revised accordingly based on the reduced square footage available. Question 4: "The RFP requires that each proposer submit a background check. It is our understanding that the provision requires a background check of the entity and all its members, including both natural and legal persons. Is this interpretation correct?" Answer 4: Yes, the background check submitted by proposers must provide background and credit checks of both natural and legal persons. Question 5: "The RFP requires each proposer to provide at least a three-year financial history. How should this be approached if the proposal is submitted through a newly formed entity?" Answer 5: If the proposer is a newly formed entity, the proposal should provide the three year financial history of each of the members of the newly formed entity. Question 6: "If rent payment commences upon the execution of the lease, the successful proposer will likely incur prohibitive losses during the initial years of the term. The City has indicated a willingness to consider a rent abatement period that would equitably share this risk between the City and the successful proposer. However, the City has not defined the extent of the rent abatement period. Without concrete assurances regarding the rent abatement period, it is difficult to analyze the investment opportunity. As a result, those bidders that propose only minimal changes to the current operations will be rewarded, while those anticipating to make larger investments and contemplating wholesale changes, will assume significantly more risk. We would respectfully request that the City consider providing for a specific rent abatement period tied to the amount of the investment committed to by the successful proposer." Answer 6: Payment of base rent shall commence upon execution of the lease, and the amount of base rent shall not be abated during that time. Notwithstanding the above, Proposers may provide alternatives within their proposals indicating different plans to defer payment during the construction period ("Construction Rent"). Please also see RFP revisions below. One suggested scenario would be that the Construction Rent would be adjusted in the following manner: fifty percent (50%) of the base rent would be due on a monthly basis; the remaining fifty percent (50%) would be deferred, and would become due and payable upon the issuance of a certificate of occupancy, but in no event would payment of the remaining Construction Rent commence later than five (5) years from execution of the lease. The City may elect to extend the deadline to commence payment of the remaining Construction Rent; however, in that event, the Selected Proposer shall be required to pay a compounded interest rate of five percent (5%) of the remaining Construction Rent due for every year that payment has not commenced. 1 Submitted into the puis record f r ite s} `jIV, ) � �" L on City Clerk 1 2 CITY OF MIAMI 3 City Hall 3500 Pan American Drive 4 Miami Florida 33133 www.miamigov.com 5 6 RFP NO. 12-14-077 7 REQUEST FOR PROPOSAL 8 VIRGINIA KEY MARINA LEASE OF CITY -OWNED WATERFRONT PROPERTY 9 FOR MARINAS/RESTAURANT/SHIP'S STORE USES LOCATED AT 10 VIRGINIA KEY MIAMI FLORIDA 11 12 13 14 15 PROCEEDING: SECOND PRE -PROPOSAL SUBMISSION CONFERENCE 16 17 DATE: OCTOBER 2, 2015 18 TIME: 1:00 P.M. - 1:58 P.M. 19 20 PLACE: MIAMI CITY HALL CHAMBERS 3500 Pan American Drive 21 Miami, Florida 33133 22 REPORTED BY: I. IRIS COOPER, CSR 23 Notary Public State of Florida 24 25 5 n 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Submitted into the p lic record f r it s) on City Clerk that and it's a relative or pertinent question, we can always go over the time limit. Before we start, though, I wanted to just make aware that we are going to plan to add to the RFP another 800 linear feet on the northeast side of the marina, so it would be used as part of the land. The appraisals will be adjusted accordingly. And as a second part of what we're going to add on, we're going to allow or we're going to make available an option going forward for the period of construction. We're going to either -- not either. We're going to abate half of the rent that's going to be due during that period of time during construction or allow for other alternatives that are offered. That money that is abated will be paid back to us within a five-year period after the money, full rent kicks in. If it goes past that five-year point, we're going to start charging compounded interest at a rate of 5 percent a year. With those two items, I guess we can open up the floor and we can start taking questions. MS. LORENZO: Before we begin, I just wanted to make an announcement that for purposes of the code of silence, it is lifted for this meeting. � I I ik 1 t 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Submitted into the pu lic (� record fpr ite�j s) s0, S1 i 2 on City Clerk Carter McDowell. I'm with Bilzin Sumberg. I happen to represent RCI. I'm confused about the additional land. If I may ask for you to clarify a little bit more. You said it's 893 feet on the northeast side. I just am visually not understanding. MR. ROTENBERG: 800 linear feet out. We're going to push the boundary from -- I wish we had a picture here. MR. MCDOWELL: It would really help. You're saying you're going to take western -- MS. LORENZO: Into the basin. MR. ROTENBERG: If you want to come up and take a look, I'll show it here. And then you can pass it around. We're going to include 800 feet out here, and the proposers are going to tell us where they're going to start and stop. MR. MCDOWELL: (Inaudible. Stepped away from the microphone.) Directly to the north? MR. SUAREZ-RIVAS: When we refer to that reference, was that from our packet, our materials that are available? MR. MCDOWELL: Not yet. That's why I asked the question. MR. SUAREZ-RIVAS: So in that particular 25 C 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Submitted into the p licD T'r record iter(s) S, S` on City Clerk own that land, the submerged lands? MR. ROTENBERG: The City does own the submerged lands, yes. MR. MCDOWELL: But it would now be within the footprint of the historic designation of the stadium; is that correct? MR. SUAREZ-RIVAS: That's a matter of record that you can get from the historic resolution. MR. MCDOWELL: There was a response that said it was the full 4,000 foot basin, and this is in the basin. MR. SUAREZ-RIVAS: I believe the historic designation includes the basin. MS. LORENZO: It's Resolution HEPB 2008.56, so it does include the basin, yes. MR. MCDOWELL: On the land use and zoning issues, and I don't mean to be argumentive, but I want to put this in context. You have said you will work with the successful bidder, proposer, to resolve the zoning issues. And there is no doubt that once you select someone, you're both on the same side of the issue, certainly accepted. But you have said that you won't be able to do that until the lease is signed. The lease cannot be signed until after the referendum. So you have 26 Submitted into the pu�{is record f ite (s) SY. on City Clerk 1 a situation where you're going to go to the public 2 with a referendum with whatever the proposal is 3 prior to the lease being signed and prior to the 4 zoning being clarified because you've said you 5 can't clarify it until the lease is signed. 6 My concern -- and we've asked the question 7 once before, this property is zoned CS. There are 8 no development regulations for CS. It references, 9 quote, unquote, the closest abutting transect. By 10 my view of the zoning map of the city of Miami, the 11 closest abutting transect is to east, and it's T1. 12 T1 would prohibit that which you are requiring 13 in this. So we're going to go through a public 14 referendum with third -party challenges seeking a 15 proposal that is absolutely contradictory to the 16 Miami2l regulations unless someone can answer it 17 otherwise. 18 We posed the question, and the answer we got 19 back was wait, we'll work with you after the 20 referendum. But at the time of the referendum, 21 it's going to be contrary to the zoning. I would 22 also suggest, and I will read you the language from 23 Miami2l. 24 Marine -related industrial establishment -- I 25 won't read the first sentence. The second i 27 i di Submitted into the public record fr ite (S) , S�, L on City Clerk 1 sentence, all work on vessels which exceed 8 feet 2 in width, all vessel paint and body work, major 3 engine work, shall be considered marine -related 4 industrial activity, including but not limited to 5 shipping boat yards, marinas, commercial fishing, 6 et cetera. 7 MR. MC SHEA: I'm going to give you one more 8 minute. What I would like to suggest -- excuse me 9 for just a second. Excuse me for just a moment. 10 We want questions. We encourage those. But what 11 is happening here is you all are making statements 12 about whether the RFP is something that you intend 13 to respond to or not and all the reasons that you 14 may or may not want to bid. 15 MR. MCDOWELL: I'm trying to get -- the 16 purpose of the statements is so that everybody, us 17 and every other potential bidder, has a level 18 playing field and knows what the rules of the game 19 are. 20 MR. MC SHEA: Everybody does have a level 21 playing field. 22 MR. MCDOWELL: Respectfully, if you're asking 23 us to spend hundreds of thousands of dollars on 24 responding and running through a referendum, if 25 we're in the situation, all of us in the room, Submitted into the puIic record f r ite (S) �j1 on City Clerk u 31 1 Knight. The first one is just to make sure because 2 there's a bunch of different -- the RFP seems to go 3 in a couple of different places, and we just want 4 to make sure we understand it. 5 The RFP asks for this mixed use restaurant and 6 waterfront destination, and the City has made 7 abundantly clear that you're willing to consider 8 different alternatives, including a special area 9 plan. But there is a couple of provisions in there 10 that say, for example, only the uses permitted in 11 the CS will be permitted in the consideration for 12 the RFP. ' 13 I don't think that's your intent. We read the 14 RFP in the addendums to mean that the CS zoning 15 category is not necessarily a limitation, that we 16 can go through an SAP process, and that you will is 17 consider things other than what necessarily 18 permitted in the CS. That's the clarification. 19 MR. SUAREZ-RIVAS: In short, yes. 20 MR. PEREZ: And then considering that most of 21 the uses other than marina, commercial, the ' 22 commercial uses, the restaurant uses, and the 23 additional uses that may be approved through an SAP 24 processes, for example, all of those are contingent 25 on future zoning. 41 � I I I Submitted into the puW�c s record f r ite s on 1 City Clerk 1 mindful of not wanting to delay the delivery of 2 possession too long if it's related to these 3 deposits or you may find the deposits delayed. 4 MR. ROTENBERG: We'll look at the policy for 5 the deposits, and we'll issue something, a probable 6 change. 7 MR. PEREZ: Appreciate it. Thank you very 8 much. 9 MS. LORENZO: I also wanted to state that 10 there are some questions that we have received, and 11 we will be posting the addendums to those 12 questions. 13 MR. MC SHEA: More questions? 14 MR. FILLER: My name is David Filler. I'm 15 with Suntex. We own and operate 20 marinas around 16 the country. I concur with a lot of the statements 17 that were made by Mr. Christoph and his son and 18 their counsel regarding the area for which we're 19 trying to basically redesign 300 new wet slips, so 20 I won't go into any further discussion of that. I 21 think it's been clearly stated. 22 One concern that we have is the issue relating 23 to the election and the referendum. I think it's 24 currently slated that you expect the applicant to 25 pay $1 million I think for an election in August; 1 1 Submitted into the pu tic n record f r ite (s) ° SP,1 42 on ( City Clerk 1 is that correct? 2 MS. LORENZO: No. No. That's in the event 3 that you want a special election. If you are 4 piggybacking off an election that is already taking 5 place, then it's a minimal amount. 6 MR. FILLER: Because to call a special 7 election -- there's currently a program going 8 throughout Key Biscayne to appose this program, so 9 there's a bunch of people signing documents to 10 basically contest the building of this. Are you 11 suggesting that the election could take place in 12 the November election, which would actually be a 13 Presidential election? 14 MS. LORENZO: Yes, it could. 15 MR. FILLER: Because that would obviously be a 16 big difference for someone actually spending all 17 this money and then having a special election, and 18 the only people that show up are the people in the 19 buses that want to vote no. 20 MS. LORENZO: No. It would be on an election 21 date that would be agreed on between the selected 22 proposer and the City. 23 MR. ROTENBERG: That is the intent. We're not 24 looking to have somebody go ahead and pay $1 25 million or $1.2 million to have a special election. 1 1 10 IOctober 22, 2015 a W i I Submitted into the p,iAlic f record r ite (s) SP,_� '(fltla of ffliami on City Clerk DANIEL J. ALFONSO City Manager RE: Addendum XVIII, Request for Proposals ("RFP") No. 12-14-077 for Lease of Virginia Key Marina, City -owned Waterfront Property for Marinas/Restaurant/Ship's Store Uses. Attention Registered Proposers: This mailing is "Addendum XVIII" and becomes an official addendum to the RFP document. All future questions must be provided prior to the deadline for questions on November H, 2015 pursuant to revised Section II A. of the RFP and shall'be answered in this same manner and forwarded as Addenda. Proposals shall be due by 2:00 PM on December 14, 2015. Enclosed please find the following items: • RFP Questions & Answers • RFP Revisions Any written questions received will be answered within fifteen (15) days of their receipt. When sending correspondence, please address the original to CBRE ( Marina Services, the City's broker for this project, with a copy to the attention of the project designee at the City of Miami. Failure to follow these requirements may result in your question not being answered or. replied to. Should you have any questions, please do not hesitate to write: Broker Jason Spalding CBRE I Marina Services 200 East Las Blvd, Suite 1620 Fort Lauderdale, FL 33301 Jason. spalding�cni cbre.coin cc: Todd B. Hannon, City Clerk Project Designee Jacqueline Lorenzo City of Miami Real Estate & Asset Management 444 SW 2"d Avenue, 3`d Floor Miami, FL 33130 ilorenzo cr,miamigov.com Cit# c 'EaMT Submitted into the pu lic nn record for items) Sl , on ( City Clerk DANIEL J. ALFONSO City Manager � i�tlaa ita�t � q� Question 9: "If one proposer fills the available leasehold but proposes only 100 additional slips, will that proposal be considered responsive and the same as one with approximately 300 slips?" Answer 9: Proposals must provide for the construction and installation of approximately 300 additional wet slips, subject to all compliance with applicable approvals, rules and regulations. However, the number of slips is an approximation, and in the event a proposer provides for only 100 additional slips, the proposal shall not automatically be deemed unresponsive. Nevertheless, please keep in mind that the Selection Committee shall consider within its evaluation the following relevant criteria: Improved efficiencies of marina operation and site utilization (including maximization of slips), and highest projected return to the City. Question 10: "If one proposal provides 150 additional slips and another provides 250 additional slips, will they both be deemed responsive? Answer 10: Please see Answer 9 above. Question 11: "Does the City have a minimum or maximum size vessel requirement for the approximately 300 wet slips?" Answer 11: Vessel size requirements shall be limited per applicable regulatory requirements including zoning, permitting, aquatic preserve limitations, etc. s Question 12: "When will the City include as part of the RFP property additional City -owned submerged land to the north of the current property" Answer 12: Please see Answer 3 on Addendum XV, providing, in part, that the survey of the lease area shall be revised to include additional submerged land. The City is in the process of obtaining the survey revision and currently anticipates receipt of the newly revised survey within approximately two (2) weeks. As soon as the final revised survey is available, it shall be posted as an Addendum to the subject RFP. Question 13: "Can the City provide a diagram of the additional submerged lands area for the approximately 300 wet slips required in the programming outline in the RFP as discussed at October 2, 2015 Pre -Proposal Submission Conference?" Answer 13: A sketch of the additional submerged lands shall be available for review as soon as the final revised survey is available. Please see Answer 12 above for additional information. 1