BEFORE THE ALASKA DEPARTMENT OF ADMINISTRATION

 

In the Matter of:                                             )

                                                                        )

TONGASS BUSINESS CENTER, INC.       )

                                                                        )

Appellant.                                                       )   DGS ITB No. 2003-9900-3683

____________________________________)   Dept. of Administration No. 03.11

 

 

RECOMMENDED DECISION

 

            This is a protest appeal.  Tongass Business Center, Inc. [Tongass] filed the appeal on April 22, 2003.  The Division of General Services [DGS] filed its protest report on June 4.  By letter dated July 24, the matter was assigned to a hearing officer.

A prehearing teleconference was conducted on August 25. Ted Fosket participated on behalf of DGS, and Marvin Davis participated on behalf of Tongass.  The hearing officer advised the parties that the record had been supplemented with (1) copies of all three notices of intent; (2) copies of all bids submitted in response to the ITB; and (3) copies of the protests and appeal documents in the other pending protest appeals arising from this ITB.  The parties agreed to submit the matter for decision on the record.

This recommended decision is based on the protest appeal documents, the supplemental materials referenced at the prehearing teleconference, and the original bid documents in the agency file and the tape recorded prebid conference (reviewed by the hearing officer subsequent to the prehearing teleconference).

Issues for Decision

1.         Did DGS abuse its discretion in determining that Xerox bid (Lots 1 & 2) and Imagistics bid (Lots 1, 4 & 5) were responsive?[1]

2.         Did DGS properly interpret and apply the ITB provisions regarding metro response requirements?

Applicable Law

The protestor bears the burden of proof as to all factual matters.  The commissioner determines facts de novo following a hearing and exercises independent judgment on questions of law.  Proper interpretation of the terms of a solicitation is a factual matter.  An ITB is interpreted as a whole in light of all the evidence. 

The commissioner will afford due deference to a purchasing agency's determinations of responsiveness and responsibility.  With respect to the materiality of a provision of the solicitation, the commissioner will review the agency's determination for abuse of discretion.  See generally, Appeal of Waste Management of Alaska, Inc., No. 01.08, at 9-13 (Dept. of Admin., April 25, 2002).

Factual Findings

ITB No. 2003-9900-3683 is a statewide solicitation for copiers to be delivered, installed and serviced by the selected vendors.  The ITB is for a non-mandatory contract: agencies may choose to purchase copiers from any source using their own procurement authority, rather than purchasing them under the contract.

The ITB contains 5 lots, each calling for a different category of copier, with distinct specifications for each lot.  In each lot, bids were to be submitted for one or more of six "Delivery Areas", or "Zones", including the Southeast, Central (i.e., Anchorage), Mat-Su Valley, Northern (i.e., Fairbanks), and Kenai, as well as a Remote Zone (all locations outside the five named zones).  All bids for a Zone applied to all locations within that Zone, except that bidders could submit bids for Specific Locations within the Remote Zone.  For each lot, the ITB calls for the four low bidders to be ranked in order, with purchasing agencies selecting the highest ranked vendor whose product the agency deems to meet its needs.

The ITB requires vendors to provide services, including installation, training, and maintenance, for all copiers offered, wherever the copier is to be delivered.  The ITB requires that vendors employ sales and service personnel (at any location) capable of providing technical assistance and training to agencies for all locations offered, and that they have technicians on staff or under contract (at any location) able to respond to maintenance and service calls at all locations copiers are delivered, within the response time required by the contract.  The required response time is either "Metro" (generally four hours) or "Remote" (two business days).  For copiers located where Remote response applies, travel and per diem is available for post-installation service calls but the cost of delivery, installation, initial training and one preventive maintenance service call per year is included in the bid price.  Metro service areas include the entire Central, Mat-Su, and Northern Zones, plus, within the Southeastern Zone and at Specific Locations in the Remote Zone for each vendor selected in those areas, any city or town where that same vendor maintains a place of business.  Remote service areas for each vendor are all locations that are not a Metro service area for that same vendor.[2]   

The ITB bid format requires bidders to identify in their Bid Schedule the specific brand and model of copier being offered and to identify any additional accessories or options included in the bid price. The ITB does not require bidders to list specific brand names or model numbers for accessories or options.  However, the ITB does strongly urge bidders to include with their bids annotated product literature to establish that the offered copiers and any included accessories and options would meet the ITB copier specifications. 

Both Xerox and Imagistics completed all portions of the bid schedule, including the portion requiring identification of accessories and options.  In that portion of the bid schedule, the Xerox bid for Lots 1 and 2 stated that the standard configuration of the offered copier met all ITB requirements, while the Imagistics bid listed (without model numbers) the types of accessories included in the bid price.

Both bidders also included product literature with their bids.  The Xerox product literature highlighted particular accessories.   The purchasing officer reasonably read the Xerox bid for Lots 1 and 2, coupled with the highlighted product literature, as an offer to provide, as a "standard configuration", the brand and model copier identified in the bid with the specific accessories and options highlighted in the product literature.       

The Imagistics product literature was not highlighted or otherwise annotated, but for Lots 1, 4 and 5 the product literature described only one accessory of each type listed on the bid schedule.  For those lots, it was clearly reasonable to read the Imagistics bid price as including the specific accessories described on the product literature that were of the same type as those listed on the bid schedule.

Analysis

Tongass makes two main points.  First, it argues that under the ITB as written, and as a matter of procurement policy, a bid must identify offered accessories and options by model or part number.  Second, it argues that in the Southeast Zone, as a matter of policy and under the terms of the ITB, DGS should require Metro response times from any selected vendor in, at the least, Juneau.

A.            Xerox and Imagistics Adequately Identified Accessories.

Bid format requirements are within the discretion of the purchasing agency.  The ITB required that bidders "complete" all sections of the ITB; it did not contain an express requirement that accessory numbers be listed in the bid schedule.  Both Xerox and Imagistics "completed" the accessories section, even though they did not list specific numbers: Xerox by stating in that portion of the bid sheet that it was offering a "standard configuration" that satisfied all the ITB specifications; Imagistics by listing the types of accessories included in its bid.  I conclude that the purchasing officer did not abuse his discretion in finding the bids in substantial compliance with the bid format requirements of the ITB.

Nor did the purchasing officer abuse his discretion in finding the bids responsive.  Both Xerox and Imagistics included product literature with their bids. Even though submission of product literature with the bids was not required, by including those materials with their bids both Xerox and Imagistics made them part of the bids, and the purchasing officer properly relied upon them in making a determination regarding responsiveness. 

It was clearly reasonable for the purchasing officer to read the Xerox bid for Lots 1 and 2, coupled with the highlighted product literature, as an offer to provide, as a "standard configuration", the brand and model copier identified in the bid with the specific accessories and options highlighted in the product literature.  (For the Xerox bids on Lots 3, 4 and 5, the highlighted accessories were those listed in the bid schedule, leaving no room for dispute as to what accessories were included in the bid price.)  Similarly, with respect to Imagistics' bid on Lots 1, 4 and 5 there was no ambiguity about which accessories were included in the bid price, because the product literature provided by Imagistics for those bid lots described only one accessory of each general type listed in the bid schedule.  I conclude that the purchasing officer did not abuse his discretion in reading the Xerox and Imagistics bids as offers to include the specific accessories described in the product literature with the copier make and model identified in the bid schedules.   

Tongass argues that only by requiring specific product numbers on the bid can purchasing agencies be assured that they will get what they want.  However, as a review of the product literature submitted with the Xerox and Imagistics bids makes apparent, a bidder may adequately identify the specific accessories being offered by other means than listing specific product numbers in the bid schedule.  What is more, the purchasing agency could have chosen to issue the ITB without even a requirement that bidders specify the model number of the offered copier, let alone of the accessories.  The purchasing agency could have chosen to rely instead upon post-bid inspection of the products offered to determine responsiveness.  Whether to require specific product numbers, for either the basic product or an accessory, is a matter within the purchasing agency's discretion.   

B.        The ITB Does Not Require Metro Site Response for All Vendors.

Tongass' second point on appeal concerns the ITB requirements for vendor servicing and maintenance.  Tongass contends that the ITB should be interpreted to require that a vendor may not submit a bid for the Southeast Zone unless it maintains a place of business, staffed by technicians, within the Southeast Zone, and to require Metro response times for all vendors at every location in the Southeast Zone where any vendor maintains a place of business.  

1.     Vendor Place of Business Requirement.

The ITB states:

Vendors shall have manufacturer-certified technicians on staff or under contract, who are trained and experienced in servicing the brands of equipment offered by the vendor, at all locations, and able to respond as required under the contract.  É

 

Tongass points out that the ITB is not consistent in its use of the term "locations", and argues that in this provision, the reference to "locations" means "Zones".   I agree: it was patently not the intent of DGS to require that a vendor must employ a manufacturer-certified technician at each location within a Zone.  And, indeed, that is precisely how DGS views the matter.  DGS, too, reads the quoted provision to mean that a vendor must employ or retain technicians (at any location within a Zone) who are capable of providing services to all copiers delivered (at all locations within that Zone).

The difference between Tongass' reading and DGS' reading is not that they ascribe different meanings to the term "locations" in the quoted provision.  Rather, it is that Tongass ignores the reference to technicians "under contract".  As DGS reads it, the ITB requires that each vendor must have under contract either employees or independent contractors who are physically located in all Zones bid.  But the ITB at no point requires a vendor to have either a place of business, or technician employees, in any Zone it bids.  

DGS' interpretation of the provision is reasonable, and Tongass has offered no reason why vendors who do not employ technicians within the Southeast Zone (but who do have independent contractors there) should be precluded from bidding on that Zone except that they may not be able to respond to service calls within a reasonable time.  But the quoted provision expressly requires vendors to provide the response called for in the contract.  Furthermore, it appears that all of the bidders who were selected for award in the Southeast Zone do, in fact, employ or retain technicians who are located within that Zone.  I conclude that the appeal on this issue should be denied.

2.         Metro Response Requirement.

The central issue raised by the Tongass protest and appeal concerns whether the ITB was written in a manner that assures an adequate response time in the capital city.  Properly interpreted, Tongass says, the ITB requires Metro response from all vendors for every location in the Southeast Zone in which any vendor maintains a place of business.  This is how the copier contract has been written in the past, Tongass claims, and if the ITB is not so interpreted, says Tongass, then the solicitation should be cancelled because it does not meet the state's actual need for Metro response times, particularly in the capital city, and it does not adequately account for travel costs in the price evaluation.

The ITB provisions concerning response times are not without ambiguity.  In particular, the ITB provision that divides the state into six "Zones" for bidding purposes is not a model of clarity.[3]  That provision, however, does not address the issue Tongass raised in its protest, which concerns the required response time in the Southeast Zone.

Only one provision in the ITB speaks directly to that issue.  It states:

If a vendor is located in the Southeast Zone, any city or town where the vendor maintains a place of business will be considered a metro maintenance area.  For example, if a vendor maintains a place of business in Juneau and Ketchikan and bids the entire Southeast Zone, then Juneau and Ketchikan will be considered "Metro" areas and the rest of the Southeast Zone will be considered "Remote" for maintenance purposes.

 

Tongass would read the first sentence as if it said: "If a vendor is located in the Southeast Zone, any city or town where any vendor maintains a place of business will be considered a metro maintenance area."  DGS, by contrast, reads the provision as if it said: "If a vendor is located in the Southeast Zone, any city or town where that same vendor maintains a place of business will be considered a metro maintenance area." 

Given a choice between these two readings, it is apparent that DGS' reading is the more reasonable one.  The initial reference in the first sentence is to "a" vendor, and the subsequent reference is to "the" vendor.  The use of the definite article "the", rather than the indefinite article "a", indicates that vendor referred to as "the vendor" is a specific vendor, namely, the same vendor previously mentioned in the same sentence.  Thus, DGS' is the grammatically correct reading of the ITB.  Moreover, Tongass wants to require vendors who do not have a place of business in the Southeast Zone to meet Metro response requirements, but the quoted provision expressly limits Metro response requirements in Southeast Zone to vendors who are "located" in that Zone.  In order to read the provision as Tongass does, it is necessary to read "located" as "submitting a bid" or "providing a copier", rather than as "maintaining a business location", or "physically located" (the phrased used by DGS in a similar context elsewhere).  I conclude that Tongass' reading of the relevant ITB provision is unreasonable. 

Tongass also argues that it would be contrary to the state's actual needs to permit a vendor to respond to service calls in the capital city in two business days, rather than within the Metro response time frame, and that to allow Remote response for vendors who do not maintain a business location in the Southeast Zone gives those vendors an unfair competitive advantage. 

However, even if the ITB creates an unfair competitive advantage for vendors who do not maintain a place of business in the Southeast Zone, that is not grounds for relief under the circumstances of this case: all of the bidders ultimately selected for ranking in the Southeast Zone maintain a place of business in Juneau.  For the same reason, it is unnecessary to decide whether it is acceptable to issue an ITB that would force an agency located in Juneau to select a vendor offering Remote response time.  Nonetheless, I have considered these issues. 

First, I note that even a vendor who does not maintain a place of business in the Southeast Zone must have technicians under contract who are physically located in the Southeast Zone.  Thus, for purposes of access by technicians, vendors who do not maintain a place of business in the Southeast Zone are on a substantially equal footing with vendors who do maintain a place of business in the Southeast Zone.  Second, contrary to Tongass' assertion, the evaluated price includes the bulk of the cost of remote services.  Bidders were directed to include in their bid price the full cost of delivery, installation, three hours of training, and one preventive maintenance visit per year at remote sites.  In effect, only the cost of travel for repairs is not included in the bid price.  Repairs on new equipment during the one-year term of the contract are not likely to be common, and in any event the travel cost for such repairs is limited to standard state rates.  Third, while it may be that Remote site response in many cases would be unacceptable, the contract will not be mandatory.  Even under the contract, an agency may pass over Remote vendors in any case where Remote response time will not meet the agency's actual needs.  For many copier functions, even in Juneau, Remote response times may be adequate, and when it is not the purchasing agency has the option of selecting another vendor.  Fourth, as pointed out by the purchasing officer, if (as Tongass requests) all vendors were required to provide metro response at both Juneau and Ketchikan, Tongass would be the only vendor eligible for contract award.  That would unduly restrict competition.

Conclusion

I conclude that DGS did not abuse its discretion in finding the Xerox and Imagistics bids responsive, and that its interpretation of the ITB is sound.  I therefore recommend that this appeal be denied.

 

DATED September 18, 2003.

 

                                    ______________________________

                                                            Andrew M. Hemenway

Hearing Officer