STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

TEST LAB, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 94-2667

) COMMISSION ON MINORITY ECONOMIC ) AND BUSINESS DEVELOPMENT, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in this case in Tampa, Florida on June 2, 1995, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Joe M. Gonzalez, Esquire

500 North Westshore Boulevard, Suite 700 Tampa, Florida 33609

For Respondent: Susan P. Stephens, Esquire

Assistant Attorney General PL 01, The Capitol

Tallahassee, Florida 32399-1050 STATEMENT OF THE ISSUES

The issue for consideration in this case is whether Petitioner, Test Lab, Inc., should be certified by the Commission as a minority business enterprise.

PRELIMINARY MATTERS

By letter dated November 8, 1993, Marsha Nims, Certification Administrator for the Department of Management Services' Bureau of Minority Business Enterprise Assistance, advised Helen Cornwell, President of Test Lab, Inc., (Test Lab), that her request for certification by the Florida Department of Management Services as a minority business enterprise was denied. Thereafter, Petitioner requested an administrative hearing on the denial and this hearing ensued.

At the hearing, Petitioner presented the testimony of Helen Cornwell, President of Test Lab; Joanne Harrelson, vice-president and branch manager of the Central Bank of Tampa; Robert J. Rodriguez, Test Lab's certified public accountant; Martha S. Replogle, a marketing representative for the Department of Labor and Employee Security's Job Services Division; Charles W. Kristech, owner of Pinellas Scales Service; Mark F. Scime, vice-president of Hammon & Howell Commercial Builders; William C. Ward, district test laboratory coordinator for

the Department of Transportation; Vincent P. Gallagher, an employee of the City of Tampa and a general contractor; David M. Carron, an employee of Test Lab, Inc.; Terry L. Posner, technical services manager for Keys Contract Industries; Regina Yordy, bookkeeper, administrative assistant and secretary/treasurer of Test Lab, and Steven C. Knauss, a registered professional engineer and employee of Test Lab, Inc. Petitioner also introduced Petitioner's Exhibits 1 through 13.

Respondent presented the testimony of Mary S. (Polly) Williams, an analyst in the Certification Office of the Governor's Commission or Minority Economic and Business Development. Respondent also introduced Respondent's Exhibits A through C.

A transcript was provided. Subsequent to the hearing, though both counsel agreed to an extension of time to submit proposed findings of fact, only counsel for the Commission did so timely, and those submitted have been ruled upon in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. At all times pertinent to the issues herein, the Florida Department of Management Services, succeeded by the Governor's Commission on Minority Economic and Business Development, was the state agency responsible for the certification of minority or women owned businesses for various state agencies in Florida.

   
   

2. Test Lab, Inc. was started in 1972 by Mrs. Cornwell and her husband with another couple, the Orofinos. Initially, Mrs. Cornwell was the treasurer of the corporation. Her duties included opening the office and laboratory, maintaining all files, billing, typing reports and doing some of the actual tests. In short, she did anything which needed to be done. Over the years, the Cornwells bought out the Orofinos. From the date of the formation of the corporation in 1972, the 400 shares of stock owned by the Cornwells were in Mr. Cornwell's name as agent for Mrs. Cornwell and himself. In 1976, the Cornwells purchased an additional 350 shares of the corporation which gave them a 750 share interest - equal to that of the Orofinos. The money for this purchase came from an inheritance Mrs. Cornwell received from a longtime friend.

   
   

3. When the Orofinos retired in 1986, the corporation purchased their 750 shares which are currently held in the corporation treasury. Before that time, however, in 1990, Mr. Cornwell became seriously ill and could no longer effectively operate the company. Because of her technical experience, knowledge of the business and her administrative abilities, Mrs. Cornwell was elected President and Chief Operating Officer of the corporation and manages it. At the present time Mrs. Cornwell owns 1159 shares of the stock of Test Lab, Inc., which constitutes 93 percent of the outstanding shares. Her daughter, Lori Giese, owns 91 shares of stock, which represents a 7 percent interest.

   
   

4. The lease on the building currently occupied by the company, and all prior leases for the property, were signed by Mrs. Cornwell. The occupational licenses issued by the City of Tampa and Hillsborough County show Mrs. Cornwell as owner of the business. On April 24, 1991, the Cornwells loaned Test Lab

   $8,000 from their joint account. The source of this money, however, came from real estate commissions earned by Mrs. Cornwell and from rental income from the house she received in the estate which was left to her in the inheritance mentioned previously.

5. Mrs. Cornwell, is the individual who purchased most of the equipment utilized by the company. Her daughter, Lori, has authorization to buy some computer eq uipment. Mrs. Cornwell makes all the insurance purchases now, but is teaching her daughter how to do it and ultimately intends to turn this aspect of the business over to her. Only Mrs. Cornwell or Lori have authorization to sign checks.

   
   

6. Mrs. Cornwell has taken numerous courses in construction and construction management. She has reviewed all the same educational tapes that were bought to teach technicians from the laboratory, and she believes she can do most of the same tests as well as her people. One of the courses she took taught her to do estimating, and she is also certified as a concrete field testing technician by the American Concrete Institute.

   
   

7. Test Lab, Inc., under Mrs. Cornwell, has been approved by the Florida Department of Transportation, by Hillsborough County, by the City of Tampa, by the Hillsborough County Aviation Authority, by the Hillsborough County School Board, by Orange County and by the City of Orlando as a disadvantaged business enterprise.

   
   

8. The evidence presented at the hearing indicates that Mrs. Cornwell runs the business. She is the individual who sets the salaries for all employees. She does all the hiring and firing, and determines those among the employees who will be promoted.

   
   

9. Only 10 percent of the work done by Test Lab requires licensed engineers. Most of the work done by the company is the preparation of reports of facts: technical results which do not require the signature of a professional engineer. Approximately 80 percent of the business is repeat business. Most of the work done for these companies does not require the preparation of a contract or the submittal of a proposal. The business is secured by a phone call from a customer soliciting Test Lab, Inc., and the work is done, or a purchase order is telefaxed to Test Lab by the soliciting company.

   
   

10. Mrs. Cornwell handles the major clients and makes the final decision as to what bids are submitted. She often turns work down because of its distance from their location or for reasons based on her concern that Test Lab doesn't have the equipment to do the job properly. She is the individual who prepared all the manuals which are used by employees in the conduct of the company's business.

    
    

11. Tech Lab, Inc. is licensed as a registered engineering firm by the Florida Department of Business and Professional Regulation. In order for this to occur, a professional engineer is required to be on staff to sign that documentation which requires the certification and signature of a professional engineer. Admittedly, Mrs. Cornwell is not an engineer. At this time, she has two registered engineers employed, Mr. Rose and Mr. Knauss.

    
    

12. Over the years, on several occasions, Tech Lab has had to borrow money. Ms. Harrelson, the Vice President and Branch Manager of the Central Bank of Tampa, has known Mrs. Cornwell since August 1982, when Mrs. Cornwell was looking for a line of credit for her business. Mrs. Cornwell at that time indicated she was owner and financial officer of the corporation, and was seeking $75,000 which she and Mr. Cornwell, as an individual, guaranteed. Mrs. Cornwell guaranteed as president of the company and as an individual. The line of credit was issued in the amount requested and since that time has been increased to $100,000. In setting up the line of credit, Ms. Harrelson dealt

    only with Mrs. Cornwell. Documents on file at the bank, and offered into evidence at the hearing, show Mrs. Cornwell as President, principal stockholder, and one of the founders of the corporation.

    
    

13. Mrs. Cornwell also purchased vehicles for Test Lab valued at $84,000, in 1994, which she financed at Central Bank. On this loan, she signed as President of the corporation and guaranteed the loan individually as well. On this occasion, she was the only guarantor. As of the date of the hearing, the loan commitments signed by Mrs. Cornwell on behalf of Test Lab stand at

    $180,000. Mr. Cornwell was never involved in any of the negotiations for this credit. Ms. Harrelson has no doubt that Mrs. Cornwell is chief operating officer of the company based on the dealings she has had with her.

    
    

14. Mr. Rodriguez, a CPA, has worked for the company for approximately 4 to 5 years. He was initially retained by Mrs. Cornwell and does the quarterly financial statements, the year- end tax returns and is a consultant to the company on financial matters. He has, at times, represented the company at IRS audits, and at these audits only Mrs. Cornwell, her daughter and a female employee were present with him and the auditor. Whenever he consults on company business, he deals with Mrs. Cornwell. He sees her approximately 2 or 3 times a quarter on a professional basis. When he receives a request for audit from the IRS, and when he prepares the tax returns, he seeks out Mrs. Cornwell for the information and has always dealt with her.

    
    

15. The current proposal for the pension plan for the company was initiated by Mrs. Cornwell. All decisions on the pension plan details were made by Mrs. Cornwell and her daughter, and Mrs. Cornwell is the administrator of the plan and signed all the documents necessary to implement it. On all matters with which Mr. Rodriguez has dealt with Mrs. Cornwell, she has consistently demonstrated her knowledge of the business operations. She is fully familiar with them and their technical aspects, and in his opinion, she is clearly in control of the company.

    
    

16. Martha Replogle, the marketing representative for the Department of Labor's Job Service Division in the Tampa area, works with leading employers in the community. She has been doing this since 1989, and as a part of her routine work, deals with Test Lab. The relationship was initiated by Mrs. Cornwell in 1989 or 1990, when Ms. Replogle was solicited for assistance in filling some positions available at the company. All references for job placement are sent to Mrs. Cornwell who interviews and who does the hiring. Mrs. Cornwell also sits on the advisory board of the Job Service office in Tampa made up of owners and managers of local businesses. Ms. Replogle has no doubt that Mrs. Cornwell makes the hiring decisions for Test Lab.

    
    

17. Whenever hirings were anticipated, Mrs. Cornwell would call with the list of requirements and would follow up with a report of the specific strengths or faults of those candidates sent over. All dealings that Ms. Replogle had with Test Lab were with Mrs. Cornwell. All decisions on hiring and firing had to be made by Mrs. Cornwell and inquiries to others at the firm were met with referrals to Mrs. Cornwell. Mrs. Cornwell kept regular working hours and was there whenever Ms. Replogle would stop by. Even Mr. Cornwell and the engineers with whom she talked would refer Ms. Replogle to Mrs. Cornwell for hiring and firing decisions.

    
    

18. Charles W. Kristech owns Pinellas Scale Service and repairs, calibrates and certifies weighing instruments. He has been in this business for approximately 8 years and Test Lab has been one of his clients since January

    1993. Mr. Kristech was initially contacted by Mrs. Cornwell who wanted him to check all their equipment and bring it up to state standards. He went to Test Lab's facility and evaluated all the company's scales. Some were beyond repair, some were repairable, and some were OK. He did what he could and gave Mrs.

    Cornwell the certificates. Mrs. Cornwell is the one who showed him what scales to look at. She seemed to know what equipment she had and what tolerances she needed. She corrected the tolerances he originally used and clearly had a technical knowledge of the scales used in the laboratory. She appeared familiar with their proposed use, their capacity and their tolerances, and was quite specific in her requirements and explanations. He never got any technical information from any of the engineers. Since then he has calibrated the company's scales twice a year. Coincidentally, when he purchased a used truck from Test Lab, he negotiated the deal with Mrs. Cornwell, and any dealings he has had with the company have been with her. Decisions on repair or discarding equipment were made by Mrs. Cornwell alone, and she did not have to ask anyone else for permission to do so.

    
    

19. Mark Scime, Vice-president of Hammer and Howell Commercial Builders, has done business with Test Lab for about 8 1/2 years and has known Mrs. Cornwell very well for at least 5 of those years. To his knowledge, she is the President and owner of the company which does tests of concrete and soils for design and construction products of his firm. Whenever there is a question on a report done by Test Lab, he deals with Mrs. Cornwell or she refers him to an engineer in the company. She can deal with his engineers on a technical basis and he has seen her in problem resolution situations. On those occasions, it was very clear to him that Mrs. Cornwell was in charge. He also dealt with the prior management of Test Lab, and the difference in management when Mrs. Cornwell took over was significant and evident. He has been to Test Lab's facility 5 or 6 times, and there is no doubt in his mind that Mrs. Cornwell runs the operation. All the employees with whom he has dealt refer decision-making to her.

    
    

20. By the same token, Mr. Ward, the District Test Lab Coordinator for the Florida Department of Transportation, has observed Mrs. Cornwell as an MBE subcontractor on FDOT contracts. To insure that the subcontractors are qualified to do the work awarded his office goes to Test Lab's laboratory twice a year to inspect for technical competence and compliance. When Mr. Ward debriefs, at the end of the week long inspection, Mrs. Cornwell is always there and appears to know what is going on.

    
    

21. Mr. Ward has been doing this since the 1992 start of the master contract, but he dealt with Mrs. Cornwell on other matters for several years before that. He has always assumed that Mrs. Cornwell was in charge at Test Lab. Whenever he needed to speak with someone there he would call and ask for her, and whenever he did this, she was present to answer the phone. He found her familiar with the technical aspects of laboratory procedures and determined that she seemed to know enough of the technical aspects of her business to satisfy his engineers. The company meets all requirements imposed by the Department of Transportation.

    
    

22. Mr. Gallagher, an engineer for the City of Tampa and an independent general contractor has used Test Lab for do work for him for at least 6 years. This involves the testing of materials, density tests, the coring of concrete and the like for the city and he has also dealt with Mrs. Cornwell in his own business. He also taught her a course in contracting. At that time, she told him she was the owner of Test Lab. Through his contacts with her he found she had a working knowledge of what was going on in her business. She knew the

    terminology related to specific tests and what the tests were designed to disclose, and she has provided him with standards information from her library. In his dealing with Test Lab, Mr. Gallagher can generally get what he wants from the office manager and the laboratory supervisor, but if he runs into any problem, he goes to Mrs. Cornwell for resolution and has to go no further.

    
    

23. David Carron has worked at Test Lab since it was started in 1972. He is a materials engineer but is not registered. At Test Lab, his job is to meet with clients, write proposals, review plans and specifications for specific projects, estimate and do special testing. When Test Lab was started, Mr. Cornwell and Mr. Orofino managed the business, but the wife of each was very much involved from the beginning.

    
    

24. Today, only Mrs. Cornwell is involved. Test Lab has two almost separate divisions. One is the geo-technical division and the other is the construction materials testing division. The former provides services to property owners and other engineers prior to construction. Before the Cornwells took over, this division was run by Mr. Orofino, while Mr. Cornwell was involved in materials testing. This continued until each of the men left the business. In 1988, Mr. Cornwell began having medical problems which made him start to pull out. Mr. Orofino was gone by then and Mrs. Cornwell began to take over, after her husband pulled out entirely, and, from the inside, Mr. Carron knows she now runs the company.

    
    

25. As to the proposal writing process, Mrs. Cornwell's participation is to identify prospective projects from a biweekly source listing of projects to bid on. She then assigns the selected project to a staff member at a weekly staff meeting she chairs to determine if the company can get involved and to report back to her. If the job is one on which the company desires to bid, Mr. Carron will write up the proposal using the standard fee schedule which is given to him by Mrs. Cornwell. The fee schedule was made up when the company started and has been adjusted over the years for rising costs and inflation. The prices on the current schedule were set by Mrs. Cornwell. This process can be used because of the lack of intangibles in the nature of Test Lab's work.

    
    

26. If the amount of the proposal is under $1,500 the engineer is authorized to send it out on his own. Proposals of this size constitute between

    20 and 40 percent of the company's business. If the proposal is for over

    $1,500, it must be approved and signed by Mrs. Cornwell. Mrs. Cornwell has generated a list of subcontractors that the company uses. Before she took over, there was more latitude in choosing subcontractors, but Mrs. Cornwell put the selection process on a more businesslike basis.

    
    

27. Mrs. Cornwell arranges for all businesses used by the company, such as attorneys, CPA's and the like. She is the company business manager and she hires and fires all employees. She interviews all prospective employees and introduces a candidate to the operational supervisor for an evaluation of his or her technical capabilities. The ultimate decision to hire or fire, however, is up to her.

    
    

28. Mrs. Cornwell is the one who instituted a bonus program and a profit- sharing program which never existed before she took over. Mr. Carron is satisfied that Mrs. Cornwell knows exactly what she is doing both from a business and a technical standpoint, and that she runs the company. She is there during all regular business hours and beyond.

29. Historically, the engineering technicians were trained on the job. This practice has changed now. During the first few days of employment, the new technician is put in the video library which Mrs. Cornwell set up to review technical tapes before the start of on-the-job training. More experienced people, whose qualifications are known, need not do the classroom work.

    
    

30. Whereas there was at one time only one registered engineer at Test Labs, now there are two. Neither can purchase equipment without Mrs. Cornwell's approval. She can fire both registered engineers as well as Mr. Thompson, the laboratory supervisor. All vehicles for the past 5 years have been purchased by her, and the same is true for test equipment, computers and office equipment. Mr. Carron is authorized to make relatively small purchases, of no more than

    $25.00 - $35.00, without Mrs. Cornwell's permission but only on an emergency basis, out on a job, when she is not available. This is to insure the work will not be delayed

    
    

31. Terry Posner, the Technical Services Manager for Keys Concrete Industries, sells ready-mix concrete and concrete blocks. His company has done business with Test Lab for 14 years. They have block as well as ready-mix concrete tested. In his current dealings with Test Labs he deals only with Mrs. Cornwell. She runs the business, a fact which he has noticed over the past 3 or

    4 years. Mr. Posner visits the company at least once a month and each time he is there he sees her. He has noted that she directs all employees and delegates responsibility.

    
    

32. Regina Yorty has worked at Test Lab for almost 14 years. Initially she was hired as a general office clerk but now is the company's bookkeeper, Mrs. Cornwell's administrative assistant, and Secretary/Treasurer of the corporation.

    
    

33. Since Mrs. Cornwell started entered full time management of the company in 1991 she has made many changes. She has pushed hard to upscale equipment and vehicles and she has updated the vehicle fleet, bought a new drill rig and purchased a new compaction hammer, scales and small equipment. She changed the prior management philosophy of just repairing and maintaining equipment. She also purchased a new copy machine and both new and used computers. Since Mrs. Cornwell assumed management, she has purchased a new accounting network system with the emphasis on job costing. This enhances the company's ability to bid on jobs and to bill receivables.

    
    

34. Mrs. Cornwell believes in continuing education for all employees. She insists that all technicians become certified. In fact, Mrs. Cornwell is accredited by the American Concrete Industry and by Troxler Corporation for use of the nuclear densometer. Mrs. Cornwell bases the raises personnel receive on their certification level to encourage advanced and multiple certification. Salaries have gone up since Mrs. Cornwell took over and the company's salaries have become more competitive. This has resulted in the ability to retain qualified personnel.

    
    

35. Test Lab now has workers compensation, medical, life, umbrella, professional liability, general liability and auto insurance. All policies were selected by Mrs. Cornwell who started price shopping. Professional liability insurance is a new coverage for the company. Prior management did not believe in it.

    
    

36. Mrs. Cornwell has also implemented a plan for a drug-free workplace. New employees must sign an affidavit of non-use and be screened, and work

    related accidents result in a drug test. The results of this has been a saving on workers compensation insurance costs.

    
    

37. Whereas prior management took money out of the company and paid themselves, Mrs. Cornwell leaves money in the company to promote its growth. Though Ms. Yorty writes out the checks to pay the bills, Mrs. Cornwell signs them. When funds are tight, it is Mrs. Cornwell who decides who to pay and how much is to be paid. The biweekly payroll at Test Lab is approximately $28,000 to $30,000. This is a substantial increase over what it used to be.

    
    

38. Ms. Yorty used to open all incoming mail and route it. Mrs. Cornwell decided this would be a good way to learn about the business, so now she opens and routes it. Training programs are now in place for technicians and clerical personnel, enhanced by Mrs. Cornwell.

    
    

39. In hiring all personnel from the professional consultants such as attorneys and accountants to cleaning personnel, Mrs. Cornwell looks for quality and price. She bears the majority financial risk if Test Lab were to fail since she owns more than 90 percent of the company stock.

    
    

40. When finances were tight, Mrs. Cornwell did not take a paycheck. She was subsequently paid when funds became available. Also, at times she loaned money to the company out of her personal checking account.

    
    

41. Income figures from 1982 to 1995 show that billing for professional engineers accounts for less than 5 percent of the company's total income. Revenue has, however, doubled since Mrs. Cornwell took over management of the company.

    
    

42. Steven Knauss is a registered professional engineer who now works for Test Lab. He has also worked for four engineering firms since getting his Master's degree in 1973. One of these firms was the 35th largest engineering firm in the United States, and the owner is not an engineer. ATEC, another company authorized to do business as an engineering firm in Florida is not owned by an engineer. PSI, an engineering firm, is not owned by a registered engineer, but is owned by a financial holding company and, formerly, a foreign company. In short, there are numerous engineering firms in Florida which are not owned by a registered engineer. Based on Mr. Knauss' experience with the company, he is convinced that Mrs. Cornwell runs the company. She hired him, set his salary and can fire him.

    
    

43. The Commission is not satisfied that Test Lab qualifies for minority business certification. Mary S. Williams is an analyst in the Certification Office of the Commission. She makes recommendations for approval or denial of applications for certification and is the individual who reviewed Test Lab's application submitted in June, 1993. This was the second application by Test Lab.

    
    

44. After reviewing this application Ms. Williams requested additional information from the applicant and thereafter did a telephone audit of the application. Based on the information contained in the application and the other information received by her, Ms. Williams recommended denial of Test Lab's application because, in her opinion, the company did not comply with the rule for small businesses which requires the minority owner exercise daily control. Notwithstanding the testimony and the evidence presented at hearing, all of which Ms. Williams heard, she concluded that Mrs. Cornwell does not have the requisite technical knowledge to run the business. This is because, she claims,

    even if Mrs. Cornwell had the requisite technical knowledge in a few areas, she does not exercise control. The Commission requires that the owner/manager actually be involved in the technical aspects of the business and in this case, according to Ms. Williams, Mrs. Cornwell relys on technicians and engineers to do the work. Her certification is limited and does not cover all areas.

    
    

45. In addition, according to Ms. Williams, in 1995 the law was changed to require minority owners of technical businesses to actually hold the required license. In this case, since Test Lab is registered as an engineer in this state, though two registered engineers are employed by the company and sign those documents requiring their signature, the Commission's position is that since Mrs. Cornwell is not an engineer, she cannot be classified as a minority engineering business enterprise.

    
    

46. The Commission's rules on MBE certification are tighter than those of DOT or other state agencies, Ms. Williams contends. She got the impression from talking with Mrs. Cornwell that Mrs. Cornwell relied to a great degree on the input from her engineers.

    
    

47. Ms. Williams claims she does not agree with her supervisor that the purpose behind the regulations on minority certification is to control fraud. She contends the rules are to prevent non-minorities from getting minority treatment. This would appear to be the same thing said differently.

    
    

48. Ms. Williams believes that Mrs. Cornwell needs no technical knowledge to run Tech Lab profitably and well. Though neither she nor anyone else from the Commission has ever observed Mrs. Cornwell at work or the Test Lab operation, she concludes that because Mrs. Cornwell is not a certified technician in all areas with which the business is concerned, she is dependent upon the abilities of the technicians working in those areas and, therefore, cannot be considered as the controlling manager of the business. In substance, the basis for Ms. William's recommendation for denial was not the statute on registration of the owner, but the lack of Mrs. Cornwell's knowledge and control of the business.

    
    

49. In her deposition taken prior to the hearing, Ms. Williams stated she did not know certain pertinent facts which bore on the issue of certification. At hearing, she claimed she could not remember what she had said. Ms. Williams admits that Mrs. Cornwell exercises dominant control over the company and runs it. Her testimony was inconsistent in that on the one hand she claims the only observable deficiency in Petitioner's application is that Mrs. Cornwell is not a registered engineer or a broadly certified technician, yet on the other hand claims the denial was on the basis of a lack of Mrs. Cornwell's knowledge.

    
    

    CONCLUSIONS OF LAW

    
    

50. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this case. Section 120.57(1), Florida Statutes.

    
    

51. The burden of proof is upon the Petitioner, Test Lab, to establish its entitlement to the requested certification as a minority business enterprise by a preponderance of the evidence. Florida Department of Transportation v. J.W.C. Company, Inc., 396 So.2d 778, (Fla. 1st DCA 1981).

52. A Minority Business Enterprise is defined by Section 288.703, Florida Statutes, as:

    
    

    ... any small business concern as defined in subsection (1) which is organized to engage

    in commercial transactions, which is domiciled in Florida, and which is at least 51 percent owned by minority persons who are members of

    an insular group that is of a particular racial, ethnic, or gender makeup or national origin,

    which has been subjected historically to disparate treatment due to identification in and with that group resulting in an under-representation of commercial enterprises under the group's control and whose management and daily operations are controlled by such persons.

    
    

53. From the evidence presented at the hearing, uncontroverted by any material evidence other than the opinion of Ms. Williams, it is clear that Mrs. Cornwell is a classic example of a woman entrepreneur. She owns by far the majority of the business; she operates it; she manages it and, clearly, makes every material decision, not only managerial but also operational and, for the most part, technical, related to the day to day operation of the business. Taken together, it would appear she is the classical example of the head of a minority owned business enterprise as defined by the statutes.

    
    

54. There is, however, at least one difficulty to be overcome, however. Section 287.0943(1)(e)1, Florida Statutes (1994 Supplement), provides that in assessing the status of ownership and control, certification criteria shall, at a minimum:

    
    

    Link ownership by a minority person, as defined in s. 288.703(3), or as dictated by the legal obligations of a certifying organization, to day-to day-control and financial risk by the qualifying minority owner, and to licensure of a minority owner in any trade or professional

    that the minority business enterprise will offer to the state when certified; however, the minority licenseholder need not be the controlling owner

    of the enterprise, but must hold an ownership interest.

    
    

55. Subsection 287.0943(1)(e), Florida Statutes, mandates that, as a minimum criteria, the minority owner must be licensed in the trade or profession that the MBE will offer to the state when it is certified. Petitioner will offer to the state services which include engineering services, but though the company is properly licensed as an engineering firm by the Department of Business and Professional Regulation; though Test Lab has two full-time registered engineers on staff; and though engineering services make up but a small portion of the company workload, neither of the minority owners are licensed as professional engineers.

    
    

56. There may be some argument made that Subsection 287.0943(1)(e) should not be applied to this application because the statutory requirement for minority licensure became effective subsequent to Test Lab's application for MBE certification. The general rule is that a change in a licensure statute during the pendency of an application for licensure is applicable to the pending

application and, therefore, the statute as changed determines the eligibility for certification. Lavernia v. Department of Professional Regulation, Board of Medicine, 616 So.2d 53 (Fla. 1st DCA 1993). While the instant case involves status certification and not licensure, the same rule applies. Therefore, it must be concluded that Petitioner does not meet the minimum criteria for certification by the Respondent as an MBE, even though it has satisfied the requirements of control and independence enunciated in the pertinent Rule. See also Air X Service Corp. v. Department of Management Services, DOAH Case #94- 3026, RO dated February 23, 1995; T-B Service Corp. v. Department of Management Services, DOAH Case # 94-2938, RO dated May 26, 1995; General Contractors and Construction Mgt. Inc. v. Commission on Minority Economic and Business Development, DOAH Case #94-4690, RO dated July 24, 1995.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:

RECOMMENDED that Petitioner, Test Lab, Inc.'s application for MBE certification be denied.

RECOMMENDED this 8th day of September, 1995, in Tallahassee, Florida.

ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 8th day of September, 1995.

APPENDIX TO RECOMMENDED ORDER

The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case.

FOR THE PETITIONER:

1. - 4. Accepted and incorporated herein.

   1. Accepted.

   2. & 7. Accepted and incorporated except that 7 is more a stipulation to a point of fact rather than a finding.

1. - 10. Accepted and incorporated herein.

   1. More a restatement of evidence than a Finding of Fact.

   2. Accepted.

   3. & 14. Accepted and incorporated herein.

15. - 21. Accepted as statement of Respondent's position.

22. - 39. Accepted and incorporated herein.

FOR THE RESPONDENT:

1. - 12. Accepted and incorporated herein.

   1. Not a Finding of Fact but a Conclusion of Law.

   2. Rejected as not consistent with the weight of the evidence.

   3. & 16. Accepted.

COPIES FURNISHED:

Joe M. Gonzalez, Esquire, P.A.

500 North Westshore Boulevard, #700 Tampa, Florida 33609

Susan P. Stephens, Esquire Office of the Attorney General The Capitol - Suite PL-01 Tallahassee, Florida 32399-1050

Crandall Jones Executive Administrator

Commission on Minority Economic and Business Development

Collins Building - Suite 201

107 West Gaines Street Tallahassee, Florida 32399-2000

Joseph Shields Attorney

Commission on Minority Economic and Business Development

Collins Building - Suite 201

107 West Gaines Street Tallahassee, Florida 32399-2000

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should consult with the agency which will issue the Final Order in this case concerning its rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency which will issue the Final Order in this case.

================================================================= AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

COMMISSION ON MINORITY ECONOMIC AND BUSINESS DEVELOPMENT

TEST LAB, INC.,

Petitioner,

DOAH CASE NO. 94-2667

vs.

COMMISSION ON MINORITY ECONOMIC AND BUSINESS DEVELOPMENT

Respondent.

/

FINAL ORDER

Pursuant to Notice, this Recommended Order of the DOAH hearing officer dated September 8,1995, came before the Governor and Cabinet, sitting as the Commission on Minority Economic and Business Development on November 29,1995. Based on a motion to reject certain conclusions of law and to certify Petitioner as a minority business enterprise, final consideration of the Recommended Order/ Final Order was delayed until December 12,1995. Petitioner filed exceptions to the recommended order but the exceptions are rejected since, based upon the record and the above mentioned motion, they are deemed immaterial and irrelevant.

The hearing officer's Recommended Order is considered to be correct in its findings of fact. As such, the findings of fact, paragraphs 1 thru 49, are hereby adopted.

In the conclusions of law of the Recommended Order, the hearing officer states in paragraph 56 that:

There may be some argument made that Subsection

287.0943 (1)(e) should not be applied to this application because the statutory requirement

for minority licensure became effective subse- quent to Test Lab's application for MBE certification. The general rule is that a change in a licensure statute during the pend- ency of an application for licensure is appli- cable to the pending application and, there- fore, the statute as changed determines the eligibility for certification. Lavernia v.

Department of Professional Regulation. Board of Medicine, 616 So.2d 53 (Fla. 1st DCA

1993). While the instant case involves status certification and not licensure, the same rule applies. Therefore, it must be concluded that Petitioner does not meet the minimum criteria for certification by the Respondent as a MBE, even though it has satisfied the requirements of control and independence enunciated in the pertinent rule. See also Air X Service Corp.

v. Department of Management Services, DOAH case #94-3026, RO dated February 23,1995; T-B Service Corp. v. Department of Management Services, DOAH Case #94-2938, RO dated May 26,1995; General Contractors and Construction Mgt. Inc. v. Commission on Minority Economic and Business Development, DOAH #94- 4690, RO dated July 24,1995.

While it is accepted that Lavernia -- as a matter of law -- is the applicable legal standard, it is also acknowledged that Lavernia recognizes certain "valid exceptions" to its prescribed general rule.

The present case clearly involves a change in the licensure/certification statute during the pendency of Petitioner's application for licensure/certification. Therefore, as stated above, the Lavernia case is applicable. However, rather than the general rule recited in Lavernia, it is the exceptions to the general rule which govern the determination concerning MBE certification in the present case. Accordingly, the Commission rejects that portion of the conclusions of law of the Recommended Order beginning on page 21 and entitled paragraph 56.

In consideration hereof it is ORDERED:

1. That the findings of fact of the hearing officer's Recommended Order -- which is dated September 8,1995-- are hereby accepted and incorporated by reference.

   
   

2. That the conclusions of law, except for paragraph 56, are hereby accepted and incorporated by reference.

   
   

3. That the conclusions of the law stated in paragraph 56 are hereby rejected.

   
   

4. Petitioners filed exceptions to the recommended order are denied based upon the fact that they are immaterial and irrelevant.

   
   

5. The application of Petitioner for certification as a minority business enterprise is granted.

A party which is adversely effected by this final order is entitled to judicial review which may be instituted by filing one copy of notice of appeal with the agency clerk of the Minority Business Advocacy and Assistance office at the address above, and a second copy along with the appropriate filing fees, with the District Court of Appeals in the appellant district where the agency maintains its headquarters or where the effected party resides. Review proceedings shall be conducted in accordance with the Florida Rules of Appellant procedure, Rule 9.110. The notice of appeal must be filed within 30 days of rendition of the final order.

Done and ordered in Tallahassee, Leon County, Florida, this 13th day of December,1995.

Tereasa Stewart, Interim Executive Administrator

Commission on Minority Economic and Business Development

107 West Gaines Street, Suite 201 Collins Building

Tallahassee, Florida 32399-2000

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true copy of the foregoing was furnished by U.S. Mail on the 13th day of December,1995,to Joe M. Gonzalez, Attorney for the Petitioner, at 620 East Twiggs Street, Tampa, Florida 33602.

Joseph L. Shields Senior Attorney

COPIES FURNISHED:

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

Joe M. Gonzalez, P.A. 620 East Twiggs Street Tampa, Florida 33602

Docket for Case No: 94-002667

Orders for Case No: 94-002667