AT&T Corp. v. Mississippi Department of Information Technology Services

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2019-CC-00353-SCT
AT&T CORP.
v.
MISSISSIPPI DEPARTMENT OF INFORMATION
TECHNOLOGY SERVICES
DATE OF JUDGMENT: 02/13/2019
TRIAL JUDGE: HON. DENISE OWENS
TRIAL COURT ATTORNEYS: MICHAEL B. WALLACE
REBECCA L. HAWKINS
MARK F. McINTOSH
PAUL E. BARNES
TOMMY D. GOODWIN
M. PATRICK McDOWELL
COURT FROM WHICH APPEALED: CHANCERY COURT OF THE FIRST
JUDICIAL DISTRICT OF HINDS COUNTY
ATTORNEYS FOR APPELLANT: MICHAEL B. WALLACE
REBECCA HAWKINS
MARK F. McINTOSH
ATTORNEYS FOR APPELLEE: OFFICE OF THE ATTORNEY GENERAL
BY: TOMMY D. GOODWIN
JAMES E. WOODS, JR.
PAUL E. BARNES
NATURE OF THE CASE: CIVIL - STATE BOARDS AND AGENCIES
DISPOSITION: AFFIRMED - 04/16/2020
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE KITCHENS, P.J., COLEMAN AND GRIFFIS, JJ.
KITCHENS, PRESIDING JUSTICE, FOR THE COURT:
¶1. The Mississippi Department of Information Technology Services (ITS) issued a
Request for Proposals (RFP) for telecommunications services. After vendors responded, ITS
selected the proposal submitted by Telepak Networks, Inc., d/b/a C Spire (C Spire) for a
statewide voice and data network. AT&T Corp. (AT&T) protested the award, arguing that
ITS’s award of the contract to C Spire was erroneous because C Spire’s proposal did not
match the specifications set forth in the RFP. ITS denied AT&T’s challenge, and it appealed.
The Chancery Court of the First Judicial District of Hinds County affirmed, finding that
ITS’s award of the contract to C Spire was not arbitrary and capricious or unsupported by
substantial evidence. AT&T appeals. We hold that the ITS decision that C Spire’s proposal
matched the RFP’s specifications was supported by substantial evidence and was not
arbitrary and capricious. Therefore, we affirm.
FACTS
¶2. The Mississippi Legislature established ITS to “provide statewide services that
facilitate cost-effective information processing and telecommunication solutions.” Miss.
Code Ann. § 25-53-1 (Rev. 2018). ITS has authority to purchase telecommunications
services for all of state government. Id. Mississippi Code Section 25-53-101 provides,
The Legislature hereby declares it essential to the creation and maintenance of
an efficient, modern, economically feasible, telecommunications system that
there should be full cooperation and cohesive planning and effort by and
between the several state agencies and that it is the responsibility of the said
Legislature to provide statutory authority therefor. The Legislature, therefore,
declares and determines that the responsibility for these and other related
purposes shall be vested in the Mississippi Department of Information
Technology Services.
Miss. Code. Ann. § 25-53-101 (Rev. 2018). Further,
¶3. The Mississippi Department of Information Technology Services shall
administer the provisions of Sections 25-53-109 through 25-53-125. The
purposes and aims of the Mississippi Department of Information Technology
Services in carrying out said provisions shall be to coordinate and promote
efficiency in the acquisition, operation and maintenance of all
2
telecommunications systems and networks being used by agencies of the state
and further to coordinate the compatibility of systems and networks to the state
with those of governing authorities so as to promote a uniform, compatible
telecommunications system for agencies and governing authorities.
Miss. Code. Ann. § 25-53-105 (Rev. 2018). ITS has statutory authority to enact “rules,
regulations, and procedures governing the acquisition of computer and telecommunications
equipment and services . . . .” Miss. Code Ann. § 25-53-5(d) (Rev. 2018). In fulfilling its
statutory duties, ITS must consider “current information about state telecommunications
activities in relation to the full range of emerging technologies.” Miss. Code Ann. § 25-53-
111(l) (Rev. 2018).
¶4. Mississippi Code Section 25-53-5(o) (Rev. 2018) provides that “[a]ll acquisitions of
computer equipment and services . . . shall be based upon competitive and open
specifications . . . .” When ITS accepts a bid on an RFP, “it shall be that which is the lowest
and best.” Miss. Code Ann. § 25-53-5(o). According to the ITS Procurement Handbook’s
guidance on RFPs,
ITS uses the Request for Proposals (RFP) as the instrument of choice for
obtaining competitive pricing and offerings in compliance with this state
statute. The RFP outlines the functional requirements for the equipment,
software, and services needed, and vendors respond by proposing solutions
and pricing that satisfy these requirements. Proposals and vendors are
evaluated in terms of the ability of the solution to satisfy the stated
requirements and best meet the needs for the purchasing agency over the
expected life of the equipment or system. The evaluation is based on
predefined evaluation criteria in which price is not the only factor. Some of the
criteria for assessing proposals received are necessarily subjective. It is the
responsibility of ITS and the purchasing entity to ensure the evaluation process
is fair and defensible.
3
¶5. On August 9, 2017, ITS published RFP 5000, which requested proposals in eleven
“functional categories” of telecommunications services. RFP 5000 provided a proposed
project implementation start-up date of January 1, 2018, and indicated that the project was
set to go live on June 30, 2019. The State wanted all contracts in place by December 31,
2017. The standard contract for RFP 5000 had an initial term of eight years; after the initial
term, it could be renewed upon the parties’ written agreement “for two (2) additional two (2)
year terms, or such other period of time as is mutually agreed upon.”
¶6. A mandatory vendor conference occurred on August 22, 2017. ITS posted answers
to vendors’ written questions on September 11, 2017. Then, contract negotiation occurred.
On December 13, 2017, ITS published a notice of award for the RFP, and the ITS Board
approved it on December 21, 2017. Category I, Voice and Data Network, was awarded to C
Spire. AT&T’s total proposal for voice and data was $156,574,237, and C Spire’s was
$123,765,555. Therefore, C Spire’s total voice and data proposal was approximately $32.8
million cheaper than AT&T’s. For voice, C Spire’s proposal was $51,035,520, and AT&T’s
was $33,085.312.32. For data, C Spire’s proposal was $65,043,648, and AT&T’s was
$117,752,532.48. C Spire also was awarded Category VI, Hosted Voice over Internet
Protocol (VoIP).
AT&T’s Protest
¶7. AT&T, the incumbent voice and data contract holder, filed a protest against the award
of the contract for Category I to C Spire. In its protest letter, AT&T argued, inter alia, that
4
C Spire’s proposal for Category I did not meet the RFP’s specifications for voice service.
The RFP for Category I provided,
In 2005, RFP 4000 was awarded to BellSouth Communications1 to provide
statewide voice services and data network connectivity. This RFP has been
used by the various logical entities of the State. These logical entities include
state agencies, libraries, institutions of higher learning, community colleges,
K-12 schools, and local governments. It is the State’s intent to replace the
existing contract with a new contract for statewide voice services and data
network connectivity.
AT&T argued that C Spire’s proposal did not match the RFP’s specification for Centrex. The
RFP defined Centrex as follows:
Centrex - A business telephone service offered by the local exchange company
(LEC) from a local central office. The word “Centrex” has become the
industry standard name for this type of service. To accommodate the State
Centrex nodes the Vendor must provide points of presence in similar
geographic locations, as they exist.
The RFP made the provision of Centrex, as defined above, a mandatory requirement.
¶8. The C Spire proposal accepted by ITS offered Centrex Platinum, a voice service that
was described by the chancellor as “a hybrid service that uses fiber to transmit telephone
calls from the C Spire network facility to the customer’s building. The fiber-based telephone
service then converts to a traditional, copper-based telephone service” once it reaches the
building. As the chancellor found, “[t]his type of hybrid telephone service permits for the use
of innovative fiber technology by the telephone service provider on its end (i.e., its
‘platform’) while allowing the customer to still utilize its building’s existing copper-wire
telephone lines and analog telephones.”
1
BellSouth was AT&T’s predecessor. Under the contract negotiated after RFP 4000
in 2005, AT&T was and is the state’s voice and data services provider.
5
¶9. In its protest, AT&T contended that C Spire’s Centrex Platinum did not meet the
RFP’s specifications for Centrex. First, AT&T argued that ITS had specified at the vendor
conference that one of its goals was to maintain the same level of service provided by AT&T,
the incumbent contractor. Because AT&T currently provides the state with TDM-based
Centrex2 and Centrex Platinum is not TDM-based, AT&T contended that Centrex Platinum
was not Centrex as specified in the RFP. Essentially, AT&T argued that, because Centrex
Platinum was not traditional copper-wire telephone service, it was noncompliant with the
RFP specifications. AT&T also argued that Centrex Platinum actually was Hosted VoIP,
which was bid in Category VI, not Category I.
¶10. Finally, AT&T argued that the RFP specified that each vendor must comply with all
mandatory requirements on the date of the vendor’s proposal submission. AT&T argued that
because C Spire would need a lengthy buildout process before completing installation of
Centrex Platinum, it would be unable to offer Centrex Platinum on the day it submitted its
proposal. Therefore, AT&T argued, C Spire’s proposal did not comply with the RFP.
ITS Executive Director’s Decision
¶11. The executive director of ITS, “[a]fter a deliberate and thorough review of the
record,” rejected AT&T’s protest and upheld ITS’s award of the contract for Category I to
C Spire. The executive director recognized the goals that ITS had set forth in RFP 5000,
Section VII, Item 3.2:
2
The executive director’s decision provided the following definition of TDM: “a
technique for transmitting a number of separate data, voice, and/or video signals
simultaneously over one communications medium by interleaving a piece of each signal one
after another.” (quoting TDM, Newton’s Telecom Dictionary (17th ed. 2001)).
6
The current telecommunications contract has served the State well, but the
State must now look at future needs and technologies to ensure that
Mississippi government and public education remain competitive. It is the
desire of ITS to expand and build upon past successes under a new contract
while not accepting less in the technology and the service support model that
the State has worked hard to achieve. The State of Mississippi recognizes and
acknowledges that new competition now exists for many telecommunications
service offerings. The State of Mississippi is committed to taking advantage
of this competition for its benefit. . . . The primary objectives of this RFP are
to obtain high quality, reliable telecommunication services for all State entities
at the lowest possible cost and to expend State funds in such a manner as to
promote enhancements to the State’s telecommunication infrastructure that
will result in better services for the State’s private customers,
business/industry, and citizenry.
The executive director also noted the ITS regulation that provides that a vendor’s protest
attacking the State’s assessment of its own needs will be rejected as without merit.
¶12. Regarding Centrex service, the executive director found that the RFP did not specify
that the Centrex service had to be TDM-based. For that reason, the executive director
rejected AT&T’s argument that the Centrex provided by the winning vendor had to be TDM-
based like the Centrex service currently provided by AT&T. The executive director
recognized that the definition of Centrex in the RFP said it is “telephone service offered by
the local exchange company (LEC) from a local central office” and that this definition has
become industry standard for this type of service. And the executive director found that,
while ITS had said to vendors that it wanted to maintain the same level of service, the
concept of level of service is different from technique of service. Bidders were free to
diverge from TDM-based Centrex as long as they provided the same features currently
7
provided by the State’s current Centrex, such as “three-way calling, caller ID, call
forwarding, etc.”3
¶13. Next, the executive director rejected AT&T’s argument that the Centrex Platinum
service offered by C Spire in Category I really was Hosted VoIP, which was bid in Category
VI. AT&T argued that, if ITS had not wanted a TDM-based solution in Category I, it would
not have needed to include a separate category for Hosted VoIP. The executive director
found that RFP 5000 specified that Category I and Category VI were separate categories. The
executive director found that Category I requested a solution, such as Centrex Platinum, that
would allow the State to continue using its existing equipment for voice services. But
Category VI, Hosted VoIP, would not let the State use its existing equipment, but rather it
would require the State to rewire and replace all existing equipment in its buildings for
delivery of voice services via Hosted VoIP. Thus, Centrex Platinum is not Hosted VoIP.
¶14. The executive director found that C Spire had offered
a Centrex solution comprised of a fiber and copper delivery system. This
solution, called Centrex Platinum by C Spire, plainly meets the definition as
well as the features and services of Centrex as set forth in RFP 5000. This
solution is, in fact, a “business telephone service offered by the local exchange
company (LEC) from a local central office.” Further, and not insignificantly,
C Spire’s solution falls within the aforementioned “full range of emerging
technologies” for which ITS is bound to endeavor.
The executive director found that AT&T’s argument that RFP 5000 had specified a TDM-
based solution was an improper attempt to rewrite RFP 5000 in order to challenge the
procurement process.
3
AT&T does not renew its argument about TDM on appeal.
8
¶15. The executive director also rejected AT&T’s argument that C Spire’s proposal did not
match the readiness specifications of RFP 5000. The readiness requirement was imposed by
the answer to Question 51 of the Questions and Clarifications Memorandum, which said that
“vendors must be able to meet mandatory requirements at the time of the RFP proposal
submission.” The executive director recognized that AT&T interpreted this answer to mean
that RFP 5000 required “vendors to be able to provide the telecommunications services
literally at the time each vendor submitted its proposal.” The executive director further
explained that, “[i]n other words, AT&T asserts that unless a vendor already had in place all
of the cabling, wiring, equipment, etc. necessary to immediately provide service, to, in effect,
flip a switch, then that vendor would be deemed not to ‘be ready’ at the time of the proposal
submission.”
¶16. The executive director rejected this interpretation of the answer to Question 51,
relying on the fact that RFP 5000 included provisions for conversion to a new provider’s
services and finding that a vendor would be ready to meet the mandatory requirements upon
submission of the proposal if ITS found that the vendor “satisfied the technical requirements
for Centrex” at that time. Because C Spire had shown it was capable of providing the
mandatory features at the time of its proposal submission, it met this specification. Further,
the executive director found that
AT&T’s argument is patently disingenuous in light of its intimate knowledge
of the telecommunications industry. AT&T, along with every other
professional telecommunications services provider, understands that no
provider other than the incumbent would be capable of immediately flipping
a switch to provide the service required in RFP 5000. Any provider other than
the incumbent would necessarily have to engage in considerable
9
implementation and conversion activities in order to put in place a system
capable of actually providing services to governmental entities across the
entire State.
¶17. In conclusion, the executive director found that “[t]here is nothing fair and open about
AT&T’s construing, much less ITS’s developing, required specifications that eliminate all
potential vendors save the incumbent. Yet this is what AT&T would have the State do so
that, as AT&T states, AT&T would be ‘the only remaining compliant offeror.’” The
executive director found AT&T’s protest to be without merit. AT&T requested review of the
executive director’s rejection of its protest. The ITS Board unanimously upheld the executive
director’s decision.
Appeal
¶18. AT&T timely filed a notice of appeal and complaint, followed by a corrected notice
of appeal and complaint, in the Circuit Court of the First Judicial District of Hinds County.
By consent of the parties, the action was transferred to the Chancery Court of the First
Judicial District of Hinds County. AT&T filed a corrected notice of appeal and complaint in
chancery court. ITS answered, asserting that all arguments not raised at the administrative
level were waived. The chancery court granted a consent order that sealed the parts of the
appellate record constituting AT&T’s responses to RFP 5000.
¶19. After a hearing, the chancery court affirmed the decision of the ITS Board that upheld
the executive director’s decision. The chancery court found that the definition of Centrex in
RFP 5000 did not refer to traditional, copper-based telephone service. The chancery court
found, “[i]t is clear to the court that ‘Centrex services’ means services that were
10
provided—not the construction of the system itself, i.e., copper wiring.” The chancery court
also found that, given the statutory mandate of ITS to deliver the most efficient and flexible
systems available, AT&T’s offering was not efficient and flexible. AT&T offered an older,
copper-line system, which it admitted would not be supported by the year 2020,4 and its voice
and data proposal was $32.8 million more than C Spire’s. In contrast, C Spire’s Centrex
Platinum would use internet protocol wiring in combination with the customer’s existing
analog telephones and copper-wire telephone lines, saving the state millions of dollars and
acting as a bridge technology to full Hosted VoIP service in the future. The chancery court
found that, if AT&T had believed that the definition of Centrex was unclear, it could have
requested clarification from ITS.
¶20. Further, the chancery court found that, because RFP 5000 provided for conversion to
a new service and requested that vendors provide a “detailed project plan with appropriate
time lines,” ITS did not require that vendors be ready to provide service to all sites on the day
of the vendor’s proposal submission. “It is clear to the court that the creators of the RFP
understand, require, and are statutorily mandated to allow for the flexible installation of any
system, over time, if needed, to be efficient in the long term, particularly if it saves the state
significant amounts of money.” The chancery court recognized that C Spire’s proposal
provided that it could sell access to AT&T’s traditional copper system if the eighteen-month
buildout it anticipated were delayed.
4
On appeal, AT&T asserts that it made clear to ITS that, if selected, it was prepared
to continue providing this service through 2020 and beyond.
11
¶21. The chancery court concluded that ITS’s award of Category I to C Spire was not
arbitrary and capricious. AT&T appealed. C Spire has filed an amicus curiae brief. AT&T
argues that ITS’s award of Catetory I to C Spire was unlawful. It requests that this Court
reverse the decisions of the chancery court and the ITS Board and order ITS to rebid
Category I with revised specifications of the services that vendors must provide. AT&T
represents that, if the Court so orders, then it and other vendors plan to submit revised
proposals.5
STANDARD OF REVIEW
¶22. When reviewing the decision of an administrative agency, this Court determines
whether the decision “(1) [w]as supported by substantial evidence; or (2) [w]as arbitrary or
capricious; or (3) [w]as beyond the power of the lower authority to make; or (4) [v]iolated
some statutory or constitutional right of the complaining party.” Hill Bros. Constr. & Eng’g
Co. v. Miss. Transp. Comm’n, 909 So. 2d 58, 64 (Miss. 2005) (alterations in original)
(internal quotation marks omitted) (quoting Landmark Structures, Inc. v. City Council for
Meridian, 826 So. 2d 746, 749 (Miss. 2002)). “[T]he burden of proof is on the party
challenging an agency’s action.” Id. (citing Pub. Emps.’ Ret. Sys. v. Marquez, 774 So. 2d
421, 425 (Miss. 2000)).
5
AT&T has filed an unopposed motion requesting that this Court take judicial notice
of an ITS publication, the Mississippi Statewide Architecture & Infrastructure Plan, which
is available on the ITS website. Because the Court may take judicial notice of facts that “can
be accurately and readily determined from sources whose accuracy cannot reasonably be
questioned” and state government publications are self-authenticating, we grant the motion.
M.R.E. 201(b)(2), 902(5).
12
¶23. “Substantial evidence . . . ‘afford[s] a substantial basis of fact from which the fact in
issue can be reasonably inferred.’” Miss. Div. of Medicaid v. All. Health Ctr., 174 So. 3d
254, 261 (Miss. 2015) (alteration in original) (quoting Elec. Data Sys. Corp. v. Miss. Div.
of Medicaid, 853 So. 2d 1192, 1203 (Miss. 2003)). “If an administrative agency’s decision
is not based on substantial evidence, it necessarily follows that the decision is arbitrary and
capricious.” Pub. Emps.’ Ret. Sys. v. Howard, 905 So. 2d 1279, 1284 (Miss. 2005) (quoting
Marquez, 774 So. 2d at 430).
“An administrative agency’s decision is arbitrary when it is not done according
to reason and judgment, but depending on the will alone.” “An action is
capricious if done without reason, in a whimsical manner, implying either a
lack of understanding of or disregard for the surrounding facts and settled
controlling principles.”
Id. at 1285 (citations omitted). Decisions that may be deemed “fairly debatable” are not
arbitrary or capricious. Elec. Data Sys. Corp., 853 So. 2d at 1203 (quoting Miss. Bureau of
Narcotics v. Stacy, 817 So. 2d 523, 526-27 (Miss. 2002)). And a decision is “fairly
debatable” when reasonable minds could differ on the propriety of the agency’s decision.
Noble v. Sheffler, 529 So. 2d 902, 906 (Miss. 1988).
¶24. AT&T argues that the language of RFP 5000 is contract language that must be
interpreted de novo. It contends that this Court has recognized that language in public
contracts is afforded de novo review. See A&F Props., LLC v. Madison Cty. Bd. of
Supervisors, 933 So. 3d 296, 301 (Miss. 2006) (addressing the Board’s interpretation of a
contract). But, as ITS correctly points out, RFP 5000 was not a public contract; rather, it was
13
a request for proposals. And the vendor with the selected proposal was not guaranteed a
contract.
¶25. AT&T cites J.H. Parker Construction Co. v. Board of Aldermen of Natchez, 721 So.
2d 671, 677 (Miss. Ct. App. 1998), for the proposition that “[a]ny deviation from the bidding
requirements that affects the integrity of the competitive process is beyond the discretionary
power of the [agency].” But that case says also that an agency does possess some discretion
to determine whether a vendor’s proposal matches the agency’s specifications. Id.
Nonetheless, we have held that an agency will be found to have acted arbitrarily and
capriciously if it accepted a bid on terms other than those authorized. Richardson v. Canton
Farm Equip., 608 So. 2d 1240, 1246 (Miss. 1992).
DISCUSSION
Whether ITS’s selection of C Spire’s proposal was arbitrary and
capricious because the proposal did not meet ITS’s specification for
Centrex in Category I, Voice and Data in RFP 5000.
¶26. AT&T contends that Centrex Platinum is not Centrex as defined by RFP 5000, which
provided,
Centrex - A business telephone service offered by the local exchange company
(LEC) from a local central office. The word “Centrex” has become the
industry standard name for this type of service.
AT&T makes several arguments positing that Centrex Platinum does not meet this definition.
¶27. First, it contends that RFP 5000 called for “industry standard” Centrex. It argues that
because RFP 5000 called for industry standard Centrex, Centrex must be defined according
to the telecom industry’s understanding of the term. AT&T relies on Craig v. Southern Bell
14
Telephone & Telegraph Co., 208 Miss. 881, 883, 45 So. 2d 732, 733 (1950), in which the
State Tax Commission argued that cable was taxable under a statute providing for a tax on
conduits. The Court held “that when the words of a statute have reference to a business, trade
or profession, they should be given the meaning as understood by that business or trade . .
. .” Id. (citing Singing River Tire Shop v. Stone, 21 So. 2d 580, 581 (Miss. 1945). In holding
that the cable was not taxable, the Court looked to the telephone industry and reasoned that
“cable” and “conduit” had well-defined meanings such that neither was understood to include
the other. Id. at 733-34.
¶28. We agree with AT&T’s argument that the Court should look to the telecom industry
to discern the meaning of undefined terms in the RFP. In fact, AT&T and ITS agree that
Harry Newton’s Telecom Dictionary, thirty-first edition, is authoritative in the industry, and
both parties rely on its definitions of industry terms; moreover, the dictionary is cited
authoritatively in the executive director’s decision. Accordingly, this Court will rely on this
resource for the definitions of industry terms. But, based on the RFP’s plain language, we
disagree with AT&T that RFP 5000 requested “industry standard Centrex.” As the executive
director recognized in his decision, that is not what RFP 5000 said. Rather, RFP 5000 defined
Centrex as “[a] business telephone service offered by the local exchange company (LEC)
from a local central office” and said that Centrex had “become the industry standard name
for this type of service.” Thus, RFP 5000 said that, for Centrex, the industry standard was “a
business telephone service offered by the local exchange company (LEC) from a local central
office.”
15
¶29. Because RFP 5000 defined Centrex as “a business telephone service offered by the
local exchange company (LEC) from a local central office,” if Centrex Platinum met this
definition, then ITS was not arbitrary and capricious for accepting C Spire’s proposal. AT&T
argues vigorously that, for several reasons, Centrex Platinum is not Centrex.6 We begin by
addressing AT&T’s contention that Centrex Platinum is not delivered from a local central
office.7
A. Whether Centrex Platinum is delivered from a local central office.
¶30. AT&T points to the definition of “central office” in the ITS Telecommunications
Coordinator Handbook, which provides that a central office is “the local switching facility
of a telephone company to which telephones are connected.” The handbook further provides
that “Centrex is central office exchange service” involving “a common carrier switching
center in which trunks and loops are terminated and switched.” AT&T argues that a central
office is a building from which Centrex phone service is provided and that AT&T’s proposal
showed its two hundred such offices across the State from which it offers Centrex. But C
Spire’s proposal did not identify local switching facilities. Instead, C Spire would deliver
Centrex Platinum from the C Spire Network Facility. AT&T argued that, because no other
potential bidder would have known that ITS would accept a proposal that did not include
central offices, the deviation affected the integrity of the bidding process.
6
From this point on, when this opinion refers to “Centrex,” it refers to “a business
telephone service offered by the local exchange company (LEC) from a local central office.”
7
Because AT&T did raise this argument in its protest, although in a cursory manner,
the Court addresses it.
16
¶31. ITS argues that a central office is a telecommunications company’s point of presence
(POP) in a geographic area. It points out that AT&T’s proposal described central offices and
POPs interchangeably: “the Centrex solution provided by AT&T includes the following
fundamental characteristics of a TDM-based solution: Over 200 points of presence or ‘central
offices’ located within the State of Mississippi, each with its own hardware switches to direct
voice traffic.” C Spire presented twenty-three pages listing its POPs in the state of
Mississippi.
¶32. AT&T contends that C Spire never claimed that it was offering Centrex Platinum
from those POPs. AT&T points out that, in fact, C Spire’s proposal acknowledged that
central office buildings are not needed with Centrex Platinum. It says that C Spire’s proposal
does not show that Centrex Platinum is being offered from POPs. AT&T argues that C
Spire’s proposal said that Centrex Platinum is offered from three main network facilities, one
in Jackson, Mississippi, one in Greenwood, Mississippi, and one in Atlanta, Georgia.
¶33. AT&T also argues that these POPs do not meet the ITS handbook definition of central
office, “a local switching facility of a telephone company to which telephones are connected.
Central Office is a common carrier switching center in which trunks and loops are terminated
and switched.” But the ITS handbook definition of “central office” was not included in RFP
5000. AT&T also relies on Newton’s definition of “central office.” And that definition makes
clear that, in the telecom industry, the term “central office” is susceptible of two meanings:
a local carrier-switching system or the building in which the switching system is installed.8
8
Newton’s provides that a “central office” is
17
AT&T argues that RFP 5000 requires that switching must occur in a physical building, and
ITS argues that the meaning of “central office” in RFP 5000 is broader.
¶34. AT&T also argues that because the language requesting Centrex in RFP 5000 was
identical to the language requesting Centrex in RFP 4000 in 2005, ITS was requesting the
same kind of Centrex provided by AT&T in response to the 2005 RFP. ITS responds that
RFP 5000 used generic, broad language that prescribed functions for the Centrex service
desired by the State, such as call forwarding, call hold, etc. Before the chancery court, it
likened its request for Centrex in 2005 to requesting a cell phone in 2005 versus requesting
a cell phone in 2017. The cell phone provided in response to the request would be a very
different product in 2005 than in 2017, but both would constitute cell phones. ITS argues that
the RFP’s definition of Centrex was broad and generic to encourage the vendor community
to “think outside the box.”
¶35. These arguments require further discussion of the nature of Centrex Platinum.
According to the product overview provided by C Spire,
C Spire’s Centrex Platinum offering is a hybrid offering of its Hosted VoIP
deployment powered by BroadSoft’s Broadworks. C Spire’s Hosted VoIP
deployment is an IP-Centrex model where the exchange services reside on a
soft-switch in the C Spire core network. C Spire’s Centrex offering utilizes our
A local exchange carrier switching system for connecting subscriber lines to
subscriber lines, subscriber lines to trunks, and trunks to trunks for the
purpose of originating/terminating calls over the public switched telephone
network. . . . The term “central office” also refers to the building in which the
aforementioned switching system(s) and other equipment are installed,
including, for example, distribution frames, batteries, air conditioning and
heating systems, etc.
Central office, Newton’s Telecom Dictionary (31st ed. 2018).
18
owned core network and SIP9 soft-switch to terminate leased copper pairs in
central offices to owned hardware equipment and then converts the traditional
copper to SIP. The voice services are provisioned and deployed via the same
soft-switch as our Hosted VoIP deployment. This model simplifies the Centrex
deployment, aligns services for all voice offerings available to the state and
provides a logical low impact path to converting Centrex lines to Hosted VoIP
lines.
¶36. The product overview also provided a list of Centrex functions (call waiting, etc.). It
is undisputed that the functions provided by Centrex Platinum are identical to those
requested by ITS in the RFP for Centrex. Thus, no dispute exists that Centrex Platinum meets
the State’s needs. The dispute centers on whether Centrex Platinum meets the RFP’s
technical specifications. Also undisputed is that, as set forth in the product overview and as
discussed at the hearing in chancery court, Centrex Platinum is IP Centrex. It is a hybrid
between traditional analog telephone service and internet protocol (IP) telephone service. As
described very simply in ITS’s brief, “it uses a Hosted VoIP platform on C Spire’s end until
the voice traffic reaches the state office building, at which time it completely converts to a
traditional, copper-based telephone service utilizing the same analog, copper lines and analog
telephones the State has been using for decades.” The conversion from IP to copper wire is
9
SIP is
Session Initiation Protocol. SIP is the most important standard for setting up
telephone calls, multimedia conferencing, instant messaging and other types
of real-time communications on the Internet. SIP can establish sessions for
features such as . . . call forwarding to be deployed over IP networks, thus
enabling service providers to integrate basic IP telephony services with Web,
email, and chat services. . . . An array of network gear including IP phones,
IP PBXs, servers, media gateways and softswitches support SIP.
SIP, Newton’s Telecom Dictionary (31st ed. 2018).
19
accomplished by means of a gateway, not something in a separate physical building. But
unlike pure Hosted VoIP telephone service, Centrex Platinum has lower conversion costs
because it does not require IP wiring and IP-compatible telephones to be installed in every
state building.
¶37. Newton’s Telecom dictionary sets forth the following definition of IP Centrex:
An IP (Internet Protocol) telephony service wherein Centrex service is offered
to a customer over a broadband connection between the telephone company’s
central office and the customer premises. Voice traffic over the broadband link
is carried as packetized voice, i.e. VoIP (voice over IP). The central office has
either a softswitch that switches VoIP traffic natively, or it has a traditional
class 5 end office switch10 that connects to a carrier grade media gateway . . .
that handles the VoIP traffic to and from the customer and does the protocol
conversions necessary to exchange IP traffic with the class 5 switch. . . . If the
customer has traditional analog telephones on its premises and wants to use
them with IP Centrex, then it will need its own analog telephone adaptors
(ATA) or media gateway to carry traffic to/from those phones via the
broadband link. There [is] a variety of equipment, line, and LAN scenarios on
the customer side; the main thing is that the customer will need to send/receive
packetized voice on the broadband link to the CO (central office).
IP Centrex, Newton’s Telecom Dictionary (31st ed. 2018). The definition of IP Centrex
references media gateways, which “handle[] the VoIP traffic to and from the customer and
do[] the protocol conversions necessary to exchange IP traffic with the class 5 switch.”
Newton’s provides the following helpful definition of “media gateway:”
10
Newton’s defines “class 5 office” as “[a]n end office. Your local central office. .
. . A class 5 office is a local central office that serves as a network entry point for station
loops and certain special-service lines.” Class 5 office, Newton’s Telecom Dictionary (31st
ed. 2018).
A “switch” is “[a] mechanical, electrical, electronic or optical device which opens or
closes circuits, completes or breaks an electrical or optical path, or selects paths or circuits.
. . . A switch looks at the incoming data (voice data, or data data) to determine the
destination address.” Switch, Newton’s Telecom Dictionary (31st ed. 2018).
20
A media gateway . . . is a fancy name for the new “central office” of the new
IP-based telecom industry. Think of it as third generation central office. The
first generation was when all phone calls were analog and central offices were
electromechanical. The central office’s job was to connect one phone
conversation through the network to the party at the other end. They called it
circuit switched. And it was all very mechanical.
....
The second generation occurred when the industry turned digital. At some
point in its progress, each phone conversation was converted to a stream of
64,000 bits per second. The central office’s function then became to draw out
one digital conversation from a stream of many and connect that one
conversation to the person at the other end.
....
In the 1990s, the world changed again. The Internet appeared, first as a way
of joining University computers, then as a crude email system, then the world
wide web took hold and everything Internet exploded. And the Internet got
bigger than the traditional Public Switched Telephone Network (PSTN). . . .
As things you could [do] exploded on the Internet and as the price of doing
them plummeted, the thought occurred to the traditional phone industry that it
would make enormous sense if somehow the PSTN morphed into the Internet,
gaining both the Internet’s efficiencies and the PSTN’s ubiquity. But to merge
the two (or at least bits and pieces of the two), you needed a third generation
“switch” that will handle all the various telecom streams—from packet
switched IP (Internet Protocol) to traditional TDM (Time Division
Multiplexed) streams and all those in between. The media gateway controlle[r]
is that switch. It’s also called media gateway, a call agent or a softswitch, to
reflect the fact that its switching is done in software, not hardware as in
previous switching generations.
Media gateway, Newton’s Telecom Dictionary (31st ed. 2018).
¶38. As noted, Centrex Platinum is IP Centrex, a hybrid Centrex solution. This Court finds
that ITS’s decision that Centrex Platinum complies with RFP 5000’s definition of Centrex
as “a business telephone service offered by the local exchange company (LEC) from a local
central office” was supported by substantial evidence and, at the least, was fairly debatable.
Although ITS used the same language for Centrex in RFP 5000 as it had used in RFP 4000,
21
ITS made clear in RFP 5000 that it sought innovative solutions across all eleven functional
categories and wanted proposals that made use of modern technological developments.
Centrex Platinum delivers IP telephone service to a state office building, where it is
converted via a gateway to traditional copper wire telephone service. Newton’s definitions
of “central office,” “IP Centrex,” and “media gateway” make clear that the term “central
office” has evolved with technological advancements and now signifies something broader
than just a physical building where hardware switching occurs. RFP 5000 did not specify
traditional Centrex, legacy Centrex, TDM, copper wire, or otherwise indicate that the voice
services requested in Category I were limited to the same technology that AT&T has been
providing. Accordingly, we hold that ITS’s decision that Centrex Platinum satisfied the
specification for Centrex was supported by substantial evidence and was not arbitrary and
capricious.
B. Whether Centrex Platinum is not Centrex because it is really Hosted
VoIP.
¶39. RFP 5000 requested Hosted VoIP in Category VI. AT&T argues that the Centrex
Platinum proposed by C Spire should not have been selected for Category I because it fit
within Category VI, Hosted VoIP. The RFP for Category VI provided,
The State currently utilizes AT&T’s Hosted Voice Services (HVS) for hosted
Voice over IP (VoIP) telephone service. While this has not been widely rolled
out across the State, there are approximately 2000 seats in use, including one
of the State’s universities.
It is the State’s intent to replace the existing contract with a new contract for
statewide managed and hosted VoIP telephone service. This contract may be
22
leveraged by all of the various logical11 entities in the State which include[]
state agencies, libraries, institutions of higher learning, community colleges,
K-12 schools, and local governments.
AT&T points to the following vendor questions and ITS answers that amended RFP 5000:
Question 55: Please specify how the Centrex service referenced is delivered
today? Would the State consider an option to convert existing Centrex services
to IP?
Response: The Centrex service is delivered to the location by the incumbent
provider over copper facilities. The State is considering a future conversion
from Centrex to a hosted VoIP solution that is being bid in Category VI;
however, on day one of the new contract, Centrex must be available for use.
Question 60: Is there consideration to convert existing Centrex or POTS12
supported location to Hosted VoIP or SIP trunking?
Response: The State is considering a future conversion from Centrex to a
hosted VoIP solution that is being bid in Category VI.
¶40. AT&T argues that because ITS requested Hosted VoIP in a separate category and
made clear in the responses to Questions 55 and 60 that Hosted VoIP was being bid in
Category VI, vendors would not have known they could have proposed a hybrid Centrex
solution in Category I that relied in part on Hosted VoIP. We find that because, as discussed
above, ITS’s decision that a hybrid Centrex solution complied with the specifications for
Category I was at least fairly debatable, its decision was not arbitrary and capricious. As ITS
and the chancery court found, Centrex Platinum is not the pure Hosted VoIP called for in
11
In the telecommunications context, “logical” refers to “the way the software sees
it,” as opposed to how something is physically connected. Logical, Newton’s Telecom
Dictionary (31st ed. 2018). For example, an email address is a logical address because it has
no fixed location in the physical world. Id.
12
POTS is an acronym for “plain old telephone service.” POTS, Newton’s Telecom
Dictionary (31st ed. 2018).
23
Category VI because Centrex Platinum does not require IP wiring and telephones in state
office buildings but instead relies on the state’s existing analog telephones and wiring. ITS’s
decision that Centrex Platinum did not meet the specifications for Hosted VoIP in Category
VI was fairly debatable and not arbitrary and capricious.
¶41. AT&T also argues that Centrex Platinum meets the industry’s definition of Hosted
VoIP because it includes a certain component. Again, resolution of this argument requires
analysis of telecom-industry specific definitions. Because Category VI provides no definition
of Hosted VoIP, the parties rely on the definition in Mississippi Code Section 19-5-303(q),
which provides, in pertinent part, that
Voice over Internet Protocol service, which is service that enables real-time,
two-way voice communications, requires a broadband connection from the
user’s location, requires Internet protocol compatible customer premises
equipment, and allows users to receive calls that originate on the public service
telephone network and to terminate calls to the public switched telephone
network.
Miss. Code Ann. § 19-5-303(q) (Rev. 2012) (emphasis added).
¶42. AT&T argues that Centrex Platinum meets this definition because the gateway that
converts analog to IP constitutes “Internet protocol compatible customer premises
equipment.” At a hearing before the ITS board, C Spire’s attorney discussed the gateway,
saying that
What C Spire’s proposed is one of these. It’s a big converter. On the
back, it’s got a slot. It says “voice.” And then to the voice slot, plugs that thing
right there. Into that big punch down block go all the copper lines that come
in the building. So those Centrex seats don’t have to change phones, they don’t
have to pay for new wire. They get to keep their Centrex service.
24
On the other side, the thing here that says “gig port.” Into that, you plug
an ethernet cord. TDM comes in, IP goes out, you have hybrid Centrex service.
That’s what C Spire provided, that’s what we bid, and that’s what was $33
million cheaper.
AT&T argues that the “big converter” is internet protocol compatible customer services
equipment, meaning that Centrex Platinum meets the definition of Hosted VoIP under
Section 19-5-303(q).
¶43. ITS points out, accurately, that AT&T did not raise its argument about the gateway
in its protest and that the argument was not raised until AT&T’s reply brief in the chancery
court. In the federal arena, the general rule is that courts will not review a question that was
not presented to or passed on by the administrative agency. Myron v. Martin, 670 F.2d 49,
51 (5th Cir. 1982). A court might undertake review of such a question in exceptional
circumstances. Id. This Court has said that
[w]e reserve the right to consider an issue that was not raised before an
administrative agency where . . . the facts are undisputed and the issue is one
that would allow an erroneous application of a statute, and where failure to
address such issue will result in a possible deprivation of substantive rights.
Dean v. Pub. Emps.’ Ret. Sys., 797 So. 2d 830, 837 (Miss. 2000). In Dean, this Court found
that the Public Employees’ Retirement System had violated its governing statutes by allowing
members of the Medical Board to sit as hearing officers in review of the Medical Board, an
argument that was not raised until the appeal to circuit court. Id. at 836-837.
¶44. AT&T’s argument about whether Centrex Platinum’s gateway was customer premises
equipment, making Centrex Platinum Hosted VoIP, requires the resolution of disputed facts
and is precisely the type of issue that should have been presented to ITS for resolution before
25
being raised on appeal. Therefore, the argument is barred. Notwithstanding the fact that the
argument was not raised, we find that it is without merit. AT&T argues that two Federal
Communications Commission (FCC) decisions, one from 2007 and one from 2008, held that
“anywhere a customer must use an internet adapter to have telephone service would
definitely qualify as Interconnected VoIP.” In re Cardinal Broadband, LLC, 23 FCC Rcd.
12224, 12225 (Aug. 15, 2008). In its IP-Enabled Services order, the FCC defined
interconnected VoIP as requiring IP-compatible customer premises equipment, including
“terminal adapters, which contain an IP digital signal processing unit that performs digital-to-
audio and audio-to-digital conversion and have a standard telephone jack connection for
connecting to a conventional analog telephone[.]” In re IP-Enabled Servs., 20 FCC Rcd.
10245, 10257 n.77 (June 3, 2005). AT&T argues that C Spire’s gateway is just such a
terminal adapter, meaning that Centrex Platinum fits within the FCC’s definition of
interconnected VoIP.
¶45. ITS argues that neither RFP 5000 nor Section 19-5-303(q) defines “customer services
premises equipment” as including the gateway. ITS argues that Newton’s Telecom
Dictionary defines “c ustomer-premises equipment” as “CPE. Terminal
equipment—telephones, key systems, PBXs, modems, video conferencing devices, etc.—
connected to the telephone network and residing on the customer’s premises.” Customer
services premises equipment, Newton’s Telecom Dictionary (31st ed. 2018). The definition
of CPE says that the definition has changed from “equipment on the customer’s premises
which had been brought from a vendor who was not the local phone company” to
26
telephone equipment—key systems, PBXs, answering machines, fax machines,
etc.—which live on the customer’s premises. . . . These days the phone
company ends their service and their cable at a box or punchdown block which
they call the demarc point—demarcation point. They’re responsible for
problems to the demarc point. You’re responsible for problems from the
demarc point on—unless you pay them to take care of your CPE wiring and/or
phone equipment.
CPE, Newton’s Telecom Dictionary (31st ed. 2018). ITS argues that the gateway, a/k/a the
“big converter box,” is a “box or punchdown block” on the vendor’s side of the demarcation
point and, thus, is not customer service equipment under the current definition. AT&T’s
argument is barred because it was not raised until the chancery court appeal; notwithstanding
the bar, it is without merit because, as ITS argues, the current industry dictionary definition
of customer services equipment makes it at least fairly debatable that Centrex Platinum does
not classify as VoIP as outlined in Section 19-5-303(q).
C. Whether, by selecting C Spire, ITS did not comply with the timeliness
requirement of Category I.
¶46. AT&T points out that, in response to questions from vendors, ITS told bidders that
“vendors must be able to meet mandatory requirements13 at the time of the RFP proposal
submission,” and “on day one of the new contract, Centrex must be available for use.” AT&T
argues that, with these responses, ITS amended RFP 5000 to require that the vendor selected
for Category I be able to provide Centrex service on the day it submitted its proposal to ITS.14
Because C Spire admitted it could not deliver Centrex Platinum to every customer in its
13
Centrex was a mandatory requirement of RFP 5000.
14
The Questions and Clarifications memorandum indicates that ITS’s responses to
vendor questions became part of RFP 5000’s specifications.
27
network inventory on day one of the contract and because it projected an eighteen-month
buildout, AT&T argues that ITS should have disqualified C Spire’s bid.
¶47. ITS argues that, as the executive director found, the conversion timelines in RFP 5000
show that a vendor has eighteen months to finish implementing statewide service. Indeed,
RFP 5000’s project implementation start-up date was January 1, 2018, and the project go-live
deadline was June 30, 2019. ITS contends that, as the executive director found, the response
requiring a vendor to be able to meet the mandatory requirements on the date of its RFP
proposal submission means that the vendor must have those services available once the
contract is signed. Further, ITS argues that AT&T’s interpretation of the timeliness
requirement would mean that only AT&T, the incumbent, could have had “all of the cabling,
wiring, equipment, etc.” in place to “flip a switch” on the day of its RFP submission,
resulting in a monopoly for AT&T. Finally, it is undisputed that any provider can resell
AT&T’s telephone service, meaning that C Spire actually could provide AT&T’s service on
day one of the contract.15
¶48. In response, AT&T posits that C Spire’s argument is contrary to the plain language
of the RFP response. But AT&T’s argument ignores the conversion timeline of RFP 5000.
15
AT&T argues that, because everyone knows that C Spire can resell AT&T’s
telephone service, the executive director was disingenuous when he found that no provider
other than the incumbent immediately could provide the services requested in RFP 5000. Of
course C Spire could not have resold AT&T’s service on the day the RFP was submitted
because it had no contract with the State to provide any service at all at that point. But it
could have resold AT&T’s service on day one of the contract term. Because the executive
director’s decision focused on AT&T’s argument that Centrex Platinum was not available
on day one, we find no flaw in the executive director’s finding that AT&T essentially argued
it was entitled to a technological monopoly by interpreting the RFP to require all the
provider’s services be available for use by the State on the day of the RFP submission.
28
Although the RFP is not a contract, applying, as AT&T urges, the plain language rule from
contract interpretation does not yield a favorable result for AT&T. The Court’s duty is to read
a contract as written, and the contract must be examined as a whole to determine the parties’
intent. Pursue Energy Corp. v. Perkins, 558 So. 2d 349, 352 (Miss. 1990). Language that
might be susceptible of being construed to conflict must, if possible, be harmonized to
effectuate the parties’ intent. Id. Considering RFP 5000 as a whole, the plain language of the
conversion timeline told vendors that the State allowed an eighteen-month buildout between
the time the contract was signed and the date the project was set to “go live.” ITS was not
arbitrary and capricious in analyzing the responses to vendor questions in light of the
conversion timeline. Moreover, as the executive director recognized, if ITS had interpreted
the responses in a way that only AT&T could have satisfied Category I’s requirements, that
would have defeated the RFP’s purpose of seeking competing proposals from the vendor
community. Further, because it is undisputed that C Spire could, in fact, have resold AT&T’s
telephone service on day one of the contract, even construing the responses in the manner
urged by AT&T avails it nothing.
CONCLUSION
¶49. We hold that ITS’s decision that C Spire’s proposal matched the specifications for
Centrex in Category I of RFP 5000 is at least fairly debatable. Therefore, ITS’s selection of
C Spire’s proposal was not arbitrary and capricious and was supported by substantial
evidence.
¶50. AFFIRMED.
29
KING, P.J., COLEMAN, MAXWELL, BEAM, CHAMBERLIN, ISHEE AND
GRIFFIS, JJ., CONCUR. RANDOLPH, C.J., NOT PARTICIPATING.
30