Judges: K. N. AYERS
Agency: Department of Management Services
Latest Update: Apr. 13, 1988
Summary: Applicant meets control requirements to be classified as minority business enterprise
87-5552STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
AGUIAR DEFENSE, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 87-5552
) DEPARTMENT OF GENERAL SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above- styled cause March 11, 1988, at Clearwater, Florida.
APPEARANCES
For Petitioner: Joe M. Gonzalez, Esquire
1519 North Dale Mabry, Suite 100
Lutz, Florida 33549
For Respondent: Deborah S. Rose, Esquire
Department of General Services Room 452 Larson Building Tallahassee, Florida 32399-0955
By letter dated December 8, 1987, Aguiar Defense, Inc., Petitioner, by its President and Chief Executive Officer, Geny DaSilva Aguiar-Slaughterbeck, requested a formal hearing to contest the denial of its application for certification as a minority business enterprise by the Department of General Services, Respondent. By letter dated December 3, 1987, Respondent denied certification on the alleged grounds that minority owner does not control the management and daily operations of the business.
At the hearing, Petitioner called three witnesses, and ten exhibits were admitted into evidence. Respondent's only evidence was Exhibit 10, the deposition of William S. Slaughterbeck.
Proposed findings have been submitted by the parties. To the extent not specifically rejected in the Appendix attached hereto and made a part hereof, those proposed findings are accepted.
FINDINGS OF FACT
Aguiar Defense, Inc. was incorporated April 14, 1987, in Florida, with Geny DaSilva Aguiar-Slaughterbeck, the President, owning all of the stock. William S. Slaughterbeck was named Vice-President, Secretary, and Treasurer.
Ms. Aguiar- Slaughterbeck subsequently assigned 50 shares (10 percent) of the stock to David E. Knutson when he joined the company. Knutson was made a Vice- President as is William Slaughterbeck.
Geny Aguiar-Slaughterbeck was born in Brazil and holds a BS degree in Business Administration from the University of Southern California. She is married to William S. Slaughterbeck.
William S. Slaughterbeck has had some 20 years experience in obtaining and administering government contracts, principally in the procurement of material phases of these contracts. He acted as consultant to Petitioner in obtaining its first large contract from the U. S. Department of Commerce to provide, install and service eighty computer installations.
David E. Knutson's experience is primarily in aviation; however, he has some financial experience and computer experience.
To finance the formation of Aguiar Defense, Geny Aguiar-Slaughterbeck converted two IRA accounts to cash, borrowed some $5,000 on her automobile, converted two mortgages to cash and used credit cards to purchase office furniture and other pre- incorporation expenses. Her total investment in Petitioner is approximately $24,000.
Before submitting a bid on the Commerce Department computer contract, Geny DaSilva Acquiar-Slaughterbeck consulted with her husband and Donald Sayban who was employed by Tandy Corporation at a Radio Shack outlet. Sayban provided advice on the type of equipment needed to meet the bid specifications, and prices were obtained on the components needed to fulfill the contract. A large portion of the bid was prepared by William Slaughterbeck who was unemployed at the time and is eminently familiar with bidding on contracts to supply government agencies with equipment and materials.
When the Commerce Department contract was awarded to Aguiar Defense, Ms. Aquiar-Slaughterbeck obtained financing from a local bank with the assistance of the owner of the company supplying most of the components needed to assemble the computer stations; Sayban and Knutson traveled to the sites to install and put the computers in operation; and the travel costs for these installations were financed by Knutson who was subsequently reimbursed by Aguiar Defense. Sayban's travel expenses were paid by Aguiar Defense, but his compensation came from the commissions he received on the computer equipment he sold to Aguiar Defense.
Prior to starting Aguiar Defense, Ms. Aguiar- Slaughterbeck served as a part-time school teacher, a distributor for Shaklee Products and a distributor of water treatment equipment and chemical sales. Chemical cleaning products were sold to McDill Air Force Base in Tampa, and door-to-door sales of water treatment equipment were made. When Aguiar Defense was incorporated, these latter two activities were continued as part of the Aguiar Defense operation.
All of Petitioner's witnesses testified that Mrs. Aguiar-Slaughterbeck has final authority in deciding which government contracts to bid on, the hiring and firing of all personnel and all financial decisions. No evidence to contradict this testimony was presented.
Petitioner obtains most of its information on available contracts on which bids are being solicited from Commerce Business Daily which contains a daily list of government procurement invitations, contract awards,
subcontracting leads, sales of surplus property and foreign business opportunities (Exhibit 3).
The By-Laws of Petitioner (Article V, Section 2), provide that the President shall be the chief executive officer of the corporation, shall have general and active management of the business and affairs of the corporation subject to the decisions of the Board of Directors, and shall preside at all meetings of the shareholders and Board of Directors.
Article III, Section 9, of the By-Laws provides that any director may be removed, with or without cause, by a vote of the holders of a majority of the shares entitled to vote at an election of directors.
Article II, Sections 1 and 2 of the By-Laws of Petitioner provide for an annual meeting of the shareholders on May 4 of each year and for special meetings when called by the President, the Board of Directors or when requested in writing by the holders of not less than 10 percent of the shares entitled to vote at the meeting. Directors are elected by the shareholders with each shareholder entitled to one vote for each share of stock held.
Article II, Section 11 of the By Laws provides that any action that may be taken by the shareholders at an annual or special meeting may be taken without a meeting, without prior notice or without a vote, if consent in writing, setting forth the actions so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or to take such action at which all shares entitled to vote thereon were present and voted.
As the holder of ninety percent of the stock, Geny DaSilva Aguiar- Slaughterbeck has control over the Board of Directors by the power to elect or remove any Director by so voting her shares; and the power to effect any corporate decision, even without a meeting of the shareholders or Board of Directors as noted in finding 14 above.
No evidence was submitted to indicate that Geny DaSilva Aguiar- Slaughterbeck is a mere figurehead and that the operations of Petitioner are controlled by one who does not qualify as a minority owner.
Petitioner is a corporation employing less than 25 persons and having a net value of less than $1,000,000.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.
Section 288.703(1), Florida Statutes, defines "small business" to mean any independently owned and operated business concern which employs 25 or fewer employees and has a net worth of not more than $1 million. Section 288.703(2), defines "minority business enterprise" to mean any small business concern as above-defined which is organized to engage in commercial transactions, which is domiciled in Florida, and which is at least 51 percent owned by minority persons and whose management and daily operations are controlled by such persons. Minority persons are defined as a Hispanic American, a person of Spanish or Portuguese culture with origins in Mexico, South American, Central America or the Caribbean; and an American woman. Geny DaSilva Aguiar-Slaughterbeck is a minority person as above- defined.
The only criteria above-noted which is contested by Respondent in these proceedings, is the requirement for management and daily operations to be controlled by the minority person.
The Respondent has promulgated Rule 13-8.005(3), Florida Administrative Code, which sets out certain factors to be considered in determining the control issue involved in this case:
An applicant must establish that the minority owners possess control over the management and daily operations of the business. The Department will consider the following factors:
Whether the minority owners have control over the purchase of goods, equipment, business inventory and services needed in the day-to-day operation of the business.
Whether the minority owners have
the authority to hire and fire employees.
Whether the minority owners have a knowledge of the financial structure of the business and control over all finan- cial affairs.
Whether the minority owners control business accounts -- checking, savings, and other financial affairs.
Whether the minority owners have the capability, knowledge, and experience required to make decisions regarding that particular type of work.
Whether the minority owners have displayed independence and initiative in seeking and negotiating contracts, accepting and rejecting bids and in conducting all major aspects of the business.
Whether the minority owners are current employees of a non-minority business corporation, or individual, or partnership which has a significant ownership interest in the business firm applying for certification.
Whether the directors and/or management of the applicant is sub- stantially the same as an affiliated non-minority firm.
Whether the applicant is a wholly- owned subsidiary or affiliate of a non- minority firm.
From the evidence presented in these proceedings, it is clear that Ms. Aguiar-Slaughterbeck has control over the purchase of goods, equipment, business inventory and services needed in the daily operations of the business. She signed all checks issued by Petitioner from the inception of the corporation
until a short time after she hired Knutson and gave him the power to sign checks during her absence.
All witnesses testified that the ultimate power to hire and fire employees rests with Ms. Aguiar-Slaughterbeck, and that she makes all final decisions regarding financial affairs of the corporation. She is the one who decides which contract to bid on, the bid price to be submitted, the one who signs the bid proposal and the one who arranges for any financing needed to complete the contract.
Further, the evidence is clear that Ms. Aguiar- Slaughterbeck has the capability, knowledge and experience to make decisions regarding the business of Aguiar Defense. Part of the business turned over to Petitioner by Ms. Aguiar- Slaughterbeck was the water treatment business and the chemical sales business run by her before Petitioner was incorporated. While at the inception of the Petitioner, William Slaughterbeck undoubtedly was more experienced in bidding on and supplying governmental contracts than was his wife, Ms. Aguiar-Slaughterbeck has the education and background experience to bid on such projects, and at the time of the hearing she was the one making independent final decisions regarding which contracts to bid on and the bid price to be submitted.
None of these directors or management personnel involved with the applicant were shown to be the same in an affiliated non-minority firm, nor was the applicant shown to be a wholly-owned subsidiary or affiliated with any non- minority firm.
Respondent contends that the By-Laws of Petitioner in giving the Board of Directors the power to manage the business affairs of the corporation precludes such powers being exercised by the minority owner. This position overlooks two very practical considerations. The first is that the daily activities of corporations are run by the chief executive officer of the corporation who is generally the president and not by the Board of Directors. The second consideration is that as 90 percent owner of the shares of the corporation, the minority owner can remove and replace the members of the Board of Directors at will and can ratify by the vote of her majority of the shares any action she may take.
The only basis for holding Ms. Geny DaSilva Aguiar- Slaughterbeck, the owner of 90 percent of the outstanding shares, does not control the management and operation of petitioner would be if evidence as presented to show that she was a mere figurehead, or that someone else (Mr. Slaughterbeck) started the company, transferred a majority of the stock to her, but continued to control the activities of the corporation. No such evidence was presented.
Here the burden is on Petitioner to prove by a preponderance of the evidence that it qualifies as a minority business enterprise. Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977). Petitioner has clearly sustained that burden.
From the foregoing, it is concluded that the majority shareholder of Aguiar Defense is a woman of Spanish or Portuguese culture who exercises control over the management and daily operations of Aguiar Defense, Inc., that the applicant employs less than 25 persons and has a net worth of less than $1 million. It is
Recommended that a Final Order be entered certifying Aguiar Defense, Inc. as a minority business enterprise.
Entered this 13th day of April, 1988, in Tallahassee, Florida.
K. N. AYERS Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 13th day of April, 1988.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-5552
All proposed findings are accepted, except for Petitioner's proposed findings listed below:
12. Rejected insofar as inconsistent with HO #8.
22. Rejected. Neither Slaughterbeck nor Sayban are involved in the day to day operations of Petitioner, and Michael Daley was hired as salesman one or two weeks before this hearing.
25. Partially rejected. Slaughterbeck advanced some funds towards the purchase of furniture and/or equipment, but has been repaid for most of the funds advanced. (See #27.)
30. Rejected. William Slaughterbeck was never an employee of Petitioner.
32. Rejected as unsupported by the evidence.
34. Rejected in part. See HO Conclusions of Law.
Sayban's stock ownership in Tandy Corp. consists of stock received via participation in an employee stock plan.
Second sentence rejected as fact.
40. Rejected. His testimony is that "it would be nice" [to receive compensation for this work].
43-44. Rejected in part. These computers were installed by Sayban and Knutson.
First sentence rejected as contrary to the evidence.
Rejected. See HO #8.
Rejected as contrary to the evidence.
COPIES FURNISHED:
Joe M. Gonzalez, Esquire North Fork Professional
Center
1519 North Dale Mabry, Suite 100
Lutz, Florida 33549
Deborah S. Rose, Esquire Department of General
Services
452 Larson Building Tallahassee, Florida 32399-0955
Susan Kirkland General Counsel Department of General
Services
457 Larson Building Tallahassee, Florida 32399-0955
Ronald W. Thomas Executive Director Department of General
Services
Room 133 Larson Building Tallahassee, Florida 32399-0955
Docket for Case No: 87-005552
Orders for Case No: 87-005552
| Issue Date |
Document |
Summary |
|
Jun. 20, 1988 |
Agency Final Order
|
|
|
Apr. 13, 1988 |
Recommended Order
|
Applicant meets control requirements to be classified as minority business enterprise
|
