This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its June 2015 decision in Toshiba Business Solutions (USA), Inc. v. School Board of Broward County, the Florida Division of Administrative Hearings upheld the rejection of a non-compliant counter-offer bid. The case dealt with an Invitation to Bid (ITB) for multi-function devices that required pricing for a three-year and four-year lease option. However, Toshiba Business Solutions (USA) failed to provide pricing for those lease terms and instead bid alternate pricing for a five-year lease. After its bid was disqualified by the School Board of Broward County for failing to offer pricing in the prescribed manner, Toshiba brought a bid protest. However, the Court found the alternate pricing constituted a non-waivable irregularity that rendered the bid materially non-compliant and legally incapable of acceptance:
Because Toshiba’s bid did not provide the information upon which award of the ITB was based (proposals for a 36 or 48-month contract term), its bid was nonresponsive and Toshiba does not have standing to protest because it does not have a substantial interest that is being affected by SBBC’s decision.
Toshiba argues that its failure to follow the specific requirement of the ITB is immaterial and a minor irregularity that SBBC has the discretion to waive. But, the courts have denied the discretion to waive irregularities when one bidder would be placed “in a position of advantage over other bidders.” Robinson Elec. Co. v. Dade Cnty., 417 So. 2d 1034, 1034 (Fla. 3d DCA 1982). See also Liberty Cnty. v. Baxter’s Asphalt & Concrete Inc., 421 So. 2d 505 (Fla. 1982). Minor irregularities do not affect the bid price, give a competitive advantage, or adversely impact the procuring agency’s interests. Toshiba’s bid does all three of these things, and therefore, its noncompliance with the ITB requirements constitutes a substantial, non-waivable irregularity. See Lab. Corp. of Am. v. Dep’t of Health, Case No. 12-3170BID, 2012 WL 6512603, at 2 (DOAH Dec. 10, 2012; DOH Jan. 16, 2013); Qualtech Cleaning, Inc., d/b/a Action Cleaning v. Fla. State Univ., Case No. 00-4420BID, 2001 WL 92108, at 7 (DOAH Feb. 1, 2001; FSU Feb. 21, 2001); NEC Bus. Commc’n Sys. (E.), Inc. v. Seminole Cnty. Sch. Bd., Case No. 95-5038BID, 1995 WL 1053245, at 13 (DOAH Dec. 29, 1995; SCSB Feb. 1, 1996).
Further, the Court ruled that allowing bidders to submit pricing that was outside the scope of the solicitation requirements would undermine the government’s competitive bidding process and would contravene prior legal rulings on point:
Bidders cannot select whatever requirements they decide best suit them regardless of whether the procuring agency establishes and publishes different requirements. Such an approach to government contracting would completely undermine all public procurements and diminish SBBC’s ability to do business with private parties. Accepting Toshiba’s bid would be to ignore this tribunal’s warning that accepting bids that fail to meet requirements that are outlined in addenda “would encourage bidders to submit incomplete bids with artificially low price . . . . This is contrary to the purpose of competitive bidding. It discourages fair competition upon equal terms and eliminates the opportunity for an exact comparison of bids.” David Nixon, Inc. v. Dep’t of Corr., Case No. 90-006278BID (Fla.DOAH Mar. 1, 1991). In David Nixon, Inc., the hearing officer found that when the failure to follow the instructions provided in an addenda provide a “substantial benefit not enjoyed by the other bidders such an irregularity may not be waived” and “would provide no penalty for manipulating the competitive bidding system by submitting incomplete, ‘low-ball’ bids.” Indeed, at the hearing, Toshiba emphasized that its bid included a pricing note stating: [Toshiba] is proposing a 60 month CPC as a response to the [ITB]. Based on the fact the [ITB] has no minimum, cancellation for convenience, ability to upgrade and downgrade with no penalty, it is in the best interest of our organization to bid a term of 60 months. This term allows us to provide the most aggressive price to the [SBBC] and maintain the excellent service and support level in place.
The Court also ruled that accepting Toshiba’s alternate bid would give Toshiba an unfair competitive advantage over other bidders’ pricing and would run contrary to the express instructions contained in the solicitation document:
Acceptance of Toshiba’s bid, in contravention of the ITB’s rules and standards, would permit Toshiba to gain an unfair competitive advantage by allowing it to choose what evaluation standards are in its best interest and because longer term contracts are generally cheaper, at the 60-month term its bid is more appealing than that of the other bidders. Other firms took on risk by providing different prices for different contract term periods. Thus, if the only price submitted by a bidder is for the longer contract term, it is only natural that such bidder will appear to be the lowest bidder. A price proposal for only the 60-month term contract is a material variance from what SBBC specified in its requirements insomuch as it granted Toshiba an unfair competitive advantage and deprived SBBC of the ability to enter into a contract on the critical terms it desired. Toshiba’s proposal was non-responsive and was properly rejected. Further, a material deviation arises if a bid fails to provide the agency the goods, services or benefits sought by the agency under an ITB. In this case, Toshiba failed to offer SBBC its requested prices for 36-month and 48-month contracts for cost-per-copy services despite the plain directions in Addendum Number 2.
The Court therefore upheld the School Board’s decision to reject the alternate price bid and dismissed the bid protest.
