State phone contract is voided Bidding was flawed, appeals board rules

September 22, 1993|By Michael Dresser | Michael Dresser,Staff Writer

When Maryland officials awarded a $10 million contract to replace the state government's aging telephone systems in May, they did so after a bizarre process that arbitrarily ranked the bidders using such criteria as addresses, telephone numbers and federal identification numbers.

This week, the state Board of Contract Appeals ruled that the process didn't make a lick of sense. Rejecting the argument of the General Services Department's counsel that "arbitrariness, in and of itself, is not a bad thing," the board voided the contract awarded to Bell Atlantic Meridian Systems and told the state to bid the contract again.

The stakes are high. For the state, the voiding of the contract award means a delay -- likely of several months -- in its plan to replace 63 private branch telephone exchanges serving 44,459 telephones in government offices statewide. Some systems are 20 years old and badly need replacement, said Dave Humphrey, a spokesman for the General Services Department.

For Bell Atlantic Meridian Systems, which is controlled by Northern Telecom Ltd. of Canada, the decision means disqualification from a lucrative contract that would have made it the state's sole supplier of private branch telephone exchanges for the next five years.

In rejecting the award, the Board of Contract Appeals ruled that the bid process was flawed on many levels -- from its lack of adherence to the state's specifications to its computation of the bids' monetary value.

But the most obvious errors were several cases in which the General Services Department asked for such fill-in-the-blank information as names, ID numbers and whether the proposals had a table of contents -- then scored the answers as superior, above average, average, below average or none.

State evaluators awarded different scores for different answers -- the equivalent of giving one student an A on a test and another a C on the basis of their Social Security numbers. In the bid process, the scores were used in computing the technical merit of each bid.

"The technical scores for these items have no rational basis and are arbitrary and capricious," the board ruled in a stinging opinion dated Monday and released yesterday.

In May, when the contract award was announced, Gov. William Donald Schaefer hailed it as a move that would save the state $1.3 million over the term of the contract. Martin Walsh, the state's secretary of general services, said the contract was "another example of [the General Services Department] producing big results in tough budget times."

But in ruling on an appeal brought by one of the losing bidders, Fujitsu Business Communications Systems, the appeals board said that the Bell Atlantic Meridian proposal failed to satisfy a crucial requirement in the state government's public request for bids.

Writing for the board, Neal E. Malone found that Bell Atlantic's Telecom Model 61 switch failed to meet the state's demand that it include backup features to take over if elements of the system failed.

Either the state or Bell Atlantic Meridian can appeal the decision to the courts. A spokesman for the company could not be reached, and Mr. Humphrey of the General Services Department said the state had not decided whether to appeal.

Assuming that the order stands, the state will have to revamp its method of scoring the bids.

The board found that the General Services Department failed to adhere to the state's publicly outlined formula of awarding the contract 60 percent on technical merit and 40 percent on price.

"In effect price became as important or more important than technical," Mr. Malone wrote.

The board also ruled that the state's evaluation of the price proposals was seriously flawed and resulted in "unexpected, unpredictable and arbitrary numbers."

Michael Gisriel, one of the lawyers who represented Fujitsu, said it was unusual for the Board of Contract Appeals to overturn a large state contract.

"This case really highlights the procurement woes the state has right now," he said.

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