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06/24/94 AMTECH SYSTEMS CORPORATION v. ILLINOIS

June 24, 1994

AMTECH SYSTEMS CORPORATION, PLAINTIFF-APPELLANT,
v.
THE ILLINOIS STATE TOLL HIGHWAY AUTHORITY, DEFENDANT-APPELLEE.



APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. HONORABLE JOHN N. HOURIHANE, JUDGE PRESIDING.

McNAMARA, Egan, Giannis

The opinion of the court was delivered by: Mcnamara

JUSTICE McNAMARA delivered the opinion of the court:

Plaintiff Amtech Systems Corporation ("Amtech") filed a complaint in the circuit court of Cook County against defendant The Illinois State Toll Highway Authority ("the Authority"), seeking both a preliminary and permanent injunction to invalidate a request for proposals issued by the Authority in 1992 ("1992 RFP") and to void any contract awarded pursuant to that RFP. Amtech alleged that because the 1992 RFP was a "sole-source" procurement, it violated sections 16 and 16.1 of the Illinois Highway Code (Ill. Rev. Stat. 1991, ch. 121, pars. 100-16, 100-16.1 ), as well as the Authority's own rules and regulations governing purchasing practices.

More specifically, Amtech, a manufacturer of automatic vehicle identification ("AVI") equipment, contended that the 1992 RFP was drafted in such a manner that only one manufacturer, AT/Comm, could meet the requirements of the RFP, effectively denying Amtech and all other manufacturers the opportunity to have their products fairly considered for this multi-million dollar public construction project. On April 6, 1993, the trial court granted the Authority's motions to dismiss with prejudice on the grounds that Amtech lacked standing and that, due to the lack of standing, the complaint failed to state a cause of action. Amtech appeals. The pertinent facts follow.

Amtech alleges that it is the world's leading supplier of products and services utilizing its proprietary radio frequency identification ("RFID") technology for the transportation and intelligent vehicle highway systems ("IVHS") (some of which are referred to as AVI systems) markets. RFID technology permits the remote identification of, and communication with, objects such as vehicles and other transportation equipment through the use of radio signals. Amtech also designs, manufactures, markets, and supports a line of hardware and software products.

In a typical Amtech RFID system, a small transponder device ("tag") is attached to a mobile object. When that tagged object passes through a zone covered by an interrogator ("reader"), an identification code is retrieved electronically from the tag via radio frequency. Amtech alleges that this technology is being utilized in IVHS markets across the United States for non-stop, high-speed, cashless electronic toll and revenue collection on highways and bridges, in tunnels and at airports to enhance motorist convenience and lower operating costs for collecting agencies.

Amtech and its distributors/systems integrators are allegedly the only companies to have successfully implemented non-stop electronic toll collection technology on a large commercial scale in the United States. Amtech claims that over 150 million vehicle revenue transactions per year are currently processed by its IVHS equipment.

The Authority is an instrumentality and administrative agency of the State of Illinois created pursuant to section 1 of the Illinois Highway Code (Ill. Rev. Stat. 1991, ch. 121, par. 100-1) to facilitate vehicular traffic in Illinois by providing convenient, safe and modern highways designed to accommodate the needs of the traveling public. The statute directs the Authority to incorporate into its highway system the benefits of advanced engineering design, skill and experience. The Authority operates a toll highway network of more than 270 miles in northeastern Illinois containing over 300 toll booths. At the time of this complaint, the Authority did not have any toll booth equipped with an IVHS or AVI system.

At the time the Authority was statutorily created, the Illinois legislature also enacted statutes specifically governing the Authority's contracting practices. Section 16 requires open and competitive bidding for all contracts involving construction work in excess of $10,000. Similarly, section 16.1 requires contracts for services or supplies in excess of $7,500 to be subject to open and competitive bidding and further provides that the Authority shall enact rules and regulations governing procurement practices and procedures which shall apply to all purchases or contracts. One such regulation, in particular, provides that: "Invitations to bid will be sent to prospective bidders in sufficient time and in such form to permit full and free competition. Specifications, restrictions or conditions which have the effect of limiting bidding to only one source of supply will be avoided." The Illinois State Toll Highway Authority Purchasing Practices and Procedures and General Provisions (1988), Procedures For Being Placed On Bidders' List and For Sealed Bidding, par. 4(a) at 10 ("Tollway Regulations").

In August 1990, the Authority first submitted a request for proposals ("1990 RFP") for a "pilot test" of equipment on the Illinois Tollway. Only two bidders responded to this RFP, Amtech and IBM, each of which proposed using Amtech equipment. The Authority rejected both proposals without explanation.

On June 10, 1992, the Authority issued another request for proposals for a "pilot test" AVI toll collection system with video surveillance enforcement which was to be added to the existing toll system. The 1992 RFP did not dictate precisely which technology was to be applied but did specify what the AVI and video systems had to be capable of upon implementation as well as under what conditions the systems must perform and to what accuracy. The subject RFP also allowed contractors to submit exceptions and alternatives. It further described the selection process and the evaluation criteria of the equipment and design, contractor qualifications and the overall proposaland costs. The Authority expressly reserved the right to reject proposals for any reason or convenience and to select a system that appeared to meet specifications even if another proposed system seemed superior.

Michael Breslin, Amtech's marketing senior vice president, testified at his deposition hearing to the following. Amtech and the AVI industry in general were aware that the Authority would be issuing the subject RFP. Amtech, however, had decided in 1991 that it would not bid on the RFP as the prime or general contractor. Breslin testified that the AVI industry is a very competitive business. He stated that he was aware weeks before the RFP was issued that it would request a "read write" technology and that when he actually reviewed the RFP, he opined that more than one of the available technologies could comply. After its issuance, Amtech spent considerable time and money, between $50,000 and $100,000, working on a response in an attempt to convince prime contractors to bid Amtech technology as a subcontractor. Breslin stated that the greater the number of technologies proposed, the more indicative it is of the competitiveness of the proposal.

According to the affidavit of Cassandra Mills, the Authority's operations support manager, the vendors of AVI technology at the time of the RFP's issuance included Amtech, AT/Comm, Mark IV/Vapor, AT&T, Premid, Hughes and Micro Design. When the bids were opened on August 20, 1992, prime contractors proposed several AVI technologies from several AVI manufacturers including Amtech, AT/Comm, Mark IV/Vapor, AT&T, Premid and Micro Design. Mills stated that Motorola submitted two responsive bids in the amounts of $4,459,268 and $3,770,473 in response to the RFP, proposing Amtech technology as a sub-contractor. Breslin confirmed at his deposition that Motorola proposed an AVI system that ...


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