275414 WHITE - CITY CLERK
PtNK - FINANCE !�t
CANARY - DEPARTMENT G I TY O F SA I NT �A U L COUflC1I �!�/J (Aj
BL.UE - MAYOR File N�. � ■ j��
Council Resolution
Presented By
Referred To Committee: Date
Out of Committee By Date
WHEREAS, On or about Ma.y 13, 1980, the City of Saint Paul,
with the assistance of Cable Television Information Center (CTIC),
issued invitations for applications (IFA) for a cable communica-
tions franchise in Saint Paul; and
WHEREAS, The deadline for the filing of proposals was 2:00 p.m. ,
August 1, 1980; and
WHEREAS, The City of Saint Paul received proposals from seven
applicants on August 1, 1980 which, in the opinion of the City,
substantially comply with the IFA requirements; now, therefore,
be it
RESOLVED, That the Council of the City of Saint Paul hereby
acknowledges receipt of the seven proposals and forwards said
proposals to Washington, D.C. for evaluation by CTIC; and, be it
FURTHER RESOLVED, That the local distribution of the proposals
is hereby authorized as planned.
COUNCILMEN Requestgd by Department of:
Yeas Nays
Hunt
Levine [n Favor
'�M�iclan �
McMahon
snowaite� __ Against BY
Tedesco
�Ison
Adopted by Council: Date AIIG 7 �980 Form Ap o d by City Atto e
Certified a•se b oun � Se ar BY ' �
By
Approved :Vla r: Date _ Approved by Mayor for Submission to Council
By _ BY
pUG 1 6
fi�tt;LISHED
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���TY �. CITY OF SAINT PAUL
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; ��'�' OFFICE OF THE CITY ATTORNEY
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� ""l�"�" - EDWARD P. STARR, CITY ATTORNEY
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�e,. 647 City Hall, Saint Paul,Minnesota 55102
612-298-5121
GEORGE LATIMER
MAYOR
August 6, 1980 FII.�D
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Councilwoman Joanne Showalter
Seventh Floor City Hall
Saint Paul, MN
Dear Councilwoman Showalter:
On August 4, 1980, you requested this office for its advice
relative to what action the City Council should take regarding
the cable communications franchise proposals which were received
last Friday, August 1, 1980.
FACTUAL BACKGROUND �
On or about Ma.y 13, 1980, the City of Saint Paul, with the
assistance of a consultant, �able Television Information Center,
issued an invitation for applications for a cable communications
franc.Lise in Saint Paul. This invitation for applications (IFA)
provided general instructions to potential applicants concerning
filing of applications as well as other instructions regarding
disclosure forms, minimum required services, and proposed evalua-
tion criteria. It further provided that the City reserves the
right to reject any and all applications and contained a provision
for the consideration of non-substantive amendments to proposals.
(IFA pp. 2,3) .
The IFA sets forth four requirements which related specifically
to filing of the application for franchise. It provided that
by 2:00 p.m. August 1, 1980, that each application conform to
the following:
1. The proposal be notarized.
2. It be accompanied by a certified check for $10,000 payable
to the City of Saint Paul (non-refundable) .
cS. �J
Councilwoman Showalter
Page 'Itao
August 6, 1980
3. The proposal contain a disclosure, on a form provided in
the IFA, of names and addresses of all persons who have
been employed or retained to speak on behalf of the company
or organization ma.king the application.
4. That the applicant provide fifty copies of the proposal.
Seven proposals were received by the City of Saint Paul on
August 1, 1980. Four of the proposals were received by 2:00 p.m.
according to the specifications noted above. Three proposals
varied in some respects from the IFA guidelines. These were
ATC/Heritage, Warner/Amex Cable, and Viacom Cablevision.
, Two proposals, ATC/Heritage and Warner/Amex Cable, did not con-
tain fifty copies by 2:00 p.m. August 1, 1980. ATC/Heritage
supplied forty-eight copies. Warner/Amex delivered seventeen
unbound proposals prior to 2:00 p.in. and followed with fifty plus
bound volumes between 2:45 and 3: 30 p.m.
The second variance noted was that Warner/Amex tendered its check
for .$10,000 at 2:03 p.m. This was three minutes after the 2:00 p.m.
dead�ine, but before any of the �roposals from any applicant had
been opened.
Finally, Viacom Cablevision submitted an application that was
(1) not notarized, and (2) did not contain employee disclosure
information on the form prescribed by the IFA. (Without regard
to the absence of the IFA form, the information required by the
IFA was contained in the proposal) . At 4:30 p.m. on Friday,
August 1, 1980, Viacom Cablevision tendered a notarized appli-
cation and presented the employee disclosure information on the
IFA form.
The proposals are now stored, ready for distribution, except for
that of Warner/Amex. The Warner/Amex proposal is being examined
by the consultant to determine if the unbound volumes that
arrived prior to 2:00 p.m. are identical to the bound volumes
that arrived subsequent to 2:00 p.m.
Councilwoman Showalter
Page Three
August 6, 1980
LEGAL ISSUE
Are the above described variances material deviations from the
Invitation for Applications (IFA) which will allow those appli-
cants deviating from the IFA a substantial advantage or benefit
not enjoyed by other applicants so as to give sound basis for
disqualification?
Based upon the facts as we know them and applying legal principles
established in the analagous area of municipal contract law, we
opine that the variances do not constitute material deviations
from the provisions of the invitation for application.
At the outset, it should be noted that while there are similarities,
the issuance of an invitation f or franchise application is not
synonymous with advertising for bids under municipal contracting
laws. "Acceptance" of these cable applications, for the present,
does nothing more than insure that they will be further examined
by consultants, private citizens and public officials. It is
not contemplated, as in the usual case of soliciting bids for
the provision of materials, that acceptance of the proposals will,
forthwith, create a contractual relationship. However, the
situations are analagous and the legal principles involved in
municipal contracting cases do provide guidance in resolving the
issue at hand.
The purpose of requiring competitive bidding for the sale and
purchase of goods and services by municipalities is to minimize
fraud and benefit governmental units by insuring the best bargain
when spending public money. Nielson v. St. Paul, 252 Minn. 12,
88 N.W.2d 853 (1958) . This same egis ative po icy is furthered
in the process of inviting applications for the cable communica-
tions franchise.
Courts have uniformly held that bids submitted to a municipality
must substantially comply to the specifications of the city in its
solicitation. Coller v. Cit of St. Paul, 223 Minn. 376 .
26 N.W.2d 835 ( ; ie son v• ity, o St. Paul (supra� . Further,
where there is substantiar variance, it i�as e'�en 'held to be the
duty of the public authority to reject bids. Sutton v. Cit of
St. Paul, 234 Minn. 263, 48 N.W. 2d 436 (1951) ; ity o emi � i
v. Ervin, 204 Minn. 90, 282 N.W. 683 ( 1938) .
Councilwoman Showalter
Page Four
August 6, 1980
The test of what is a material variance so as to require
rejection or disqualification of a bid is whether the variance
gives the bidder a substantial advantage or benefit not enjoyed
by other bidders. Coller v. Cit of St. Paul (supra) , 26 N.W.2d
at 840. For example, in t e Co er case i s were solicited for
a purchase for parking meters spec fying the method for their
installation. The court held that a bid which varied the method
of installation for the meters which resulted in a $2, 100 ad-
vantage to the bidder was a material variance and should have
been rejected.
Not every minor technical or procedural defect will justify
rejection of bids that substantially comply with specifications.
While fairness should be afforded to all bidders, the protection
provided by competitive bidding standards is designed for the
benefit of the public, not the bidders. In the case of Fole
Brothers Inc. v. Nlarshall, 266 Minn. 259, 123 N.W.2d 387�7�63) ,
t e ow i er ai e to include a noncollusive affidavit but
provided a certificate which contained much of the same material.
In holding that the Commissioner of Highways erroneously excluded
the low bid on thi� basis, the court said:
"The public should not be denied the benefit of the
lowest bidder for every minor technical defect that
does not affect the substance of the bid." Foley
Brothers, Inc. v. Marshall (supra) , 266 Minn. at 264.
In Nielson v. Cit of St. Paul (supra) , a bid was submitted a
short time a ter t e ea ine set by specifications. A Minnesota
court held this to be an insubstantial variation and quoted with
approval a New Jersey case as follows:
"Mere irregularity of a bid will not justify its
rejection by a municipal body charged with a duty
of awarding a contract to the lowest bidder. � The
form of the bid, not being embodied in the statute,
is a re u ation rescribed b the cit and failure
to tec nica com wit t e orm re uire wi
not defeat t e ri t o t e owest i er to ave
t e contract i a ter t e i s are o ene it a ears
there has een su stantia com iance wit t e re-
uirements an e tenders I—imse ready to execute
t e requisite contract and furnish responsible bondsmen
or good security, as was the fact in this case. . . .
mere irregularities in the form of the bid, or details
Councilwoman Showalter
Page Five
August 6, 1980
of statement which do not in any way mislead
or injure, are not sufficient to justify the
rejection of such a bid. It is in the interest of
the public that the lowest bid, though it be
irregular, be accepted, and, if necessary, that
the bidder have opportunity to correct an irregu-
larity, while not changing the substance of his
bid." Neilson v. Cit of St. Paul (su ra) ,
88 N.W. at , . mp asis a e .
The Neilson case also holds that providing a performance bond
whicFi was not notarized is not a substantial irregularity; it
being a ministerial one that could readily be cured.
It is apparent from the facts in this ma.tter, as we know them,
that no substantial advantage or benefit has been enjoyed by
anyone by reason of the technical and procedural variations in
the applications submitted. None of the variances noted
(assuming no changes between early and late arr�.ving Warner/Amex
proposals) go to the integrity or substance of i.he proposals.
None of them affect rate, service, or design factors. Additional
time to correct the procedural discrepancies has not ma.terially
benefited Viacom, Warner/Amex or ATC/Heritage.
CONCLUSION
In conclusion, under the facts as stated and having analyzed
comparable cases involving situations under municipal contracting
law, we feel that the variances from the IFA by Viacom, ATC/Heritage,
and (conditionally) Warner/Amex do not constitute material
deviations so as to give sound basis for disqualification or
rejection of their applications.
RECOMMENDATION
We recommend that the Council withhold distribution of proposals
pendin the results of the examination by our consultant of the
Warner�Amex documents to determine that the copies arriving
before 2:00 p.m. are identical to those arriving after 2:00 p.m.
Councilwoman Showalter
Page Six
August 6, 1980
Assuming verification of the Warner/Amex documents is forthcoming,
we further recommend that all proposals be forwarded to Washington,
D.C. , for the 90-day evaluation and that copies by distributed
locally as planned.
Finally, in the event the consultant should discover the
Warner/Amex proposals to vary between the early and late arriving
copies, their application should be re-examined for possible
disqualification.
Res ectfully u �tted,
_ / ' ;,,
.�� � "�l U
ED ARD P. STARR
City Attorney
,� .,• � �
.
' i.x f�- ✓ " --
JOHN PAUL MARTIN
: � Deputy City Attorney
JPM:jr
cc: Mayor George Latimer
Members of the City Council