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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 . . �� � `�`�f �' ���TY �. CITY OF SAINT PAUL �� r ;. ; ��'�' OFFICE OF THE CITY ATTORNEY � ���»�um �: � ""l�"�" - EDWARD P. STARR, CITY ATTORNEY � �e,. 647 City Hall, Saint Paul,Minnesota 55102 612-298-5121 GEORGE LATIMER MAYOR August 6, 1980 FII.�D rt'` ���� � ,�, �, ';� 3r� i .. � �:�� _ � CfiY G?_t�'�.'; ��;F�uE ST r AliL, t�;;;�. 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