The Alaska Tourism Marketing Council [ATMC] issued RFP No.
98-0015, calling for proposals "to receive and respond to
requests for information on Alaska that have been generated
as a result of the ATMC's marketing program, and to manage
the resulting database." [RFP at 6]
The RFP generated five responses, from AKA Business
Service [AKA] (the existing contractor), Manus Direct
Response Marketing [Manus], Alaska Archives, Kendrick
Business Services/Intermedia JV [Kendrick], and Rapid
Action Mailing Service, Inc. [Rapid Action] The proposals
were given numerical ratings by a five member proposal
evaluation committee. The maximum number of points
available was 100. 70 points were based on the evaluators'
independent subjective judgment as to three factors:
(1) Methodology and Management Plan (25 points); (2)
Proposer's Organization, Experience, Performance
Record and Resources (25 points); and (3) Project
Manager/Key Personnel (20 points). The remaining 30
points for Cost (20 points) and Alaska Bidder preference
(10 points) were awarded by formula. All five of the
evaluators ranked AKA first and Kendrick last.
Kendrick protested the notice of intent to award
the contract to AKA. The procurement officer denied
the protest and Kendrick appealed. Kendrick argues
on appeal that each of the other proposals was
nonresponsive, [App. at 2] for a variety of reasons.1
[App. at 30] [1] At a prehearing conference, it was agreed
that there are no material facts at issue and that the
matter can be determined on the existing record.
A. Applicable Legal Standards.
A proposal is non-responsive if it "materially"
varies from the request for proposals. See, e.g.,
King v. Alaska State Housing Authority, 512 P.2d 887,
892 (Alaska 1973). [2] A variance is material "if it
gives the [proposer] a substantial advantage over
other [proposers], and thereby restricts or stifles
competition." Id., quoting, 10 E. McQuillin, The
Law of Municipal Corporations, Sec. 29.65, at 397
(3rd ed. 1966). "The determination by a public
agency of the responsiveness of a [proposal] is
within the agency's discretion..." Chris Berg,
Inc. v. State, Department of Transportation and
Public Facilities, 680 P.2d 93, 94 (Alaska 1984).
B. The Competing Bids Were Not All Nonresponsive.
Kendrick argues that the other proposals were all
nonresponsive due to their failure to provide certain
information requested in the portion of the RFP
headed "Proposal Submission Content in Response
to the RFP". [RFP at 26-29] This portion of the
RFP states, "All proposals submitted in response
to the RFP must use the following outline format
for their proposal(s)", and "The proposer MUST
address ALL the items and IN THE ORDER reflected
below." [RFP at 26] Kendrick contends that the
failure of a proposal to provide all of the
information called for in this portion of the RFP
makes the proposal nonresponsive. [3]
Kendrick is mistaken. This portion of the RFP
establishes a uniform format and content for the
submissions to assist the evaluators in rating and
comparing the proposals. It does not establish
specifications for the equipment, minimum qualifications,
or other substantive requirements that must be met by
proposers. The fact that this portion of the RFP
generally provides that the information requested "must"
be provided does not establish that all of the
requested information was material or that the failure
to include any particular portion of it would render
the proposal nonresponsive. This portion of the RFP
specifically provides that the failure to include a
"grand total", or overall cost, will result in the
proposal being declared nonresponsive. [RFP at 29]
The specific statement that the failure to include
a particular item will result in the proposal being
deemed nonresponsive suggests that failure to provide
other items in this portion of the RFP would not
necessarily result in a determination of nonresponsiveness.
I conclude that the agency had discretion to accept
proposals lacking particular items requested in this
portion of the RFP, other than a "grand total", so
long as the proposal did not materially vary from
the RFP. In this case, Kendrick has not established
that any of the other proposers gained a substantial
or unfair competitive advantage as a result of the
various alleged deficiencies in their proposals.
I find that the various alleged deficiencies were
nonexistent or immaterial, both individually and
in the aggregate. [4] The agency did not abuse its
discretion in declaring all the proposals responsive.
B. Failure of AKA and Rapid Action to Include Cost Item #6.
The RFP required each proposal, "Using the RFP Cost
Schedule,... to list the fees and/or rates for each
type of service listed based on actual rates".
[RFP at 29] It added: "A TOTAL COST of the proposal
must be included, and is required for evaluation purposes
only. Proposals without a grand total will be declared
nonresponsive." [Id.] The RFP cost schedule included
separate quotes for a total of twenty-two items as well
as a grand total. Twenty points were to be awarded to the
"lowest cost proposal", and the remaining proposals were
to be awarded points based on the formula established in
2 AAC 12.260(d). [RFP at 34]
Addendum No. 3 to the RFP, issued on June 4, 1997,
required the addition of a new item, Item #6, to the
cost schedule in the original RFP, for "Reader Service
Reply Cards". Proposals were due no later than 4:30
p.m. on Monday, June 9. Two of the proposals, from
AKA and Rapid Action, did not include a price for
Item #6 but did show a total cost. ATMC deducted
the cost of Item #6 from the total cost of the three
proposals that included it. The reductions totaled
1%, 2.5% and 3.5% of the total cost on the three
proposals, respectively. [5] It then applied the
formula to the recalculated total cost. This
resulted in the award of 20 points to Rapid Action,
18 to Alaska Archives, 17 to AKA and Manus, and 6
to Kendrick.
Inclusion of Item #6 was mandatory by the terms
of the RFP, Kendrick argues, and by omitting it,
AKA and Rapid Action "could not tabulate a grand
total". [App. at 13] For these reasons, Kendrick
argues, their bids were nonresponsive. In addition,
Kendrick argues that the adjustment method used by
ATMC was "capricious and arbitrary" and in violation
of its obligation to consider all proposals honestly
and fairly. [App. at 13]
Kendrick's argument that the AKA and Rapid Action
were nonresponsive because the RFP made inclusion
of Item #6 mandatory is essentially the same argument
rejected above: that each and every element that the
RFP called for at pages 26-29 was mandatory, and
that the failure to provide any of those items
rendered the proposal nonresponsive. Only if the
proposals omitted a total cost, however, was a
determination of nonresponsiveness required, and
both AKA and Rapid Action provided a total cost.
The responsiveness of a bid containing an error
in a particular bid item or a discrepancy between
the individual items and the total cost has been
addressed by the Alaska Supreme Court on a number
of occasions. While the decisions reflect a
vigorous debate as to the precise methodology to
be used in such cases, they clearly indicate that
an agency has substantial discretion to either
accept or reject a bid that contains an error of
this nature in order to obtain the most favorable
result for the state. [6]
In this case, unlike those cases, the proposal does
not contain an error with respect to a particular
item; rather, it lacks any price for an item.
Whatever impact this distinction would have in the
context of a competitively bid contract, this case
concerns competitive proposals, not competitive bids.
The distinction is critical for a number of reasons.
First, in the case of competitive proposals, cost is
not the sole criterion used to select the winning
contractor. Second, although the RFP in this case
requires an offer of "actual" prices by the proposer,
the state was not obligated to enter into a contract
at the offered price. See, Dick Fisher Development
No. 2 v. Department of Administration, 778 P.2d 1153,
1155 (Alaska 1989). Third, post-submission clarification
and other discussions between the state and proposers
are authorized by statute, and the applicable
regulations specifically provide that prices may
be adjusted as a result of these discussions.
See AS 36.20.240; 2 AAC 12.290(a). Fourth, in
Gunderson v. University of Alaska, Fairbanks, 922
P.2d 229, 236 (Alaska 1996), the Alaska Supreme
Court found that an adjustment in the price of a
competitively bid proposal after the closing date
was not contrary to the applicable procurement
statutes and regulations. For all these reasons,
I conclude that the ATMC did not abuse its
discretion in deeming the AKA and Rapid Action
proposals responsive. [7]
DATED this 1st day of October, 1997.
______________________________
Andrew M. Hemenway
Hearing Officer
Decisions
