STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SOUTH FLORIDA WATER )

MANAGEMENT DISTRICT, )

)

Petitioner, )

)

vs. ) Case No. 02-0473

)

CIVIL CONSTRUCTION )

TECHNOLOGIES, INC., )

) *AS PER CORRECTIONS ON

Respondent. ) PAGES 6, 10, AND 14

______________________________)

*CORRECTED RECOMMENDED ORDER

Pursuant to notice, this matter was heard before the Division of Administrative Hearings by its assigned Administrative Law Judge, Donald R. Alexander, on July 15-17, 2002, in West Palm Beach, Florida.

APPEARANCES

For Petitioner: Catherine M. Linton, Esquire

South Florida Water Management District Post Office Box 24680

West Palm Beach, Florida 33416-2480

For Respondent: Bradford J. Beilly, Esquire

Bradford J. Beilly, P.A.

400 Southeast 18th Street

Fort Lauderdale, Florida 33316-2820 STATEMENT OF THE ISSUE

The issue is whether Respondent's certification as a minority business enterprise should be revoked, as proposed by Petitioner in its letter dated December 20, 2001.

PRELIMINARY STATEMENT

This matter began on December 20, 2001, when Petitioner, South Florida Water Management District, advised Respondent, Civil Construction Technologies, Inc., that its certification as a minority business enterprise was being revoked on the grounds that Respondent "provided inaccurate, misleading or incomplete information in its application for certification," and that Respondent did "not meet the criteria for continued eligibility under the certification guidelines as delineated in Section 40E-7.653, Certification Eligibility of the M/WBE Contracting Rule." Thereafter, Respondent filed a Petition to Review Agency Action Initiating Decertification. The matter was referred to the Division of Administrative Hearings on February 7, 2002, with a request that an Administrative Law Judge be assigned to conduct a hearing.

By Notice of Hearing dated March 13, 2002, a final hearing was scheduled on May 22 and 23, 2002, in West Palm Beach, Florida. Respondent's Motion to Continue Hearing was granted, and the matter was rescheduled to June 26-28, 2002. A second request for a continuance was filed by Respondent, and the matter was continued to July 15-17, 2002, at the same location.

At the final hearing, Petitioner presented the testimony of Cledwin R. Weldon, a professional engineer, certified

general contractor, and accepted as an expert; Candice B. Boyer, staff business operations analyst; Daniel Sooker, lead consulting auditor in the Inspector-General's Office; Bonnie

1. Cramer, president of Respondent; Ronald J. Coddington, a professional engineer; Howard L. Searcy, a consulting civil engineer; and Allan Vann, Inspector-General. Also, it offered Petitioner's Exhibits 1-24 and 26-30, which were received in evidence. Respondent presented the testimony of Bonnie S. Cramer, its president; David W. Kirchenbaum, a certified public accountant and accepted as an expert; and Martin Hanson, a civil engineer. Also, it offered Respondent's Exhibits 34-36, 37A and 37B, 38, and 39. All were received except Exhibit 39. Finally, the undersigned took official recognition of Part VI, Chapter 40E-7, Florida Administrative Code.

   The Transcript of the hearing (4 volumes) was filed on August 13, 2002. At the request of the parties, the time for filing proposed findings of fact and conclusions of law was extended to September 10, 2002. The same were filed by Petitioner and Respondent on September 13 and 26, 2002, respectively, and they have been considered by the undersigned in the preparation of this Recommended Order.

   FINDINGS OF FACT

   
   

   Based upon all of the evidence, the following findings of fact are determined:

   1. Background

      
      

      1. Respondent, Civil Construction Technologies, Inc. (CCT), is a corporation engaged in the business of providing earthwork, clearing, canal excavation, and erosion control services for prime contractors. The firm was incorporated on April 6, 2000, and until November 2001, it was located at 1132 Northeast 48th Street, Pompano Beach, Florida. The business was then relocated to 3100 Northwest Boca Raton Boulevard, Boca Raton, Florida. The sole owner and shareholder is Bonnie

         S. Cramer, a female who qualifies as a minority under the Supplier Diversity & Outreach Program (Program) codified in Part VI, Chapter 40E-7, Florida Administrative Code. That Program is administered by Petitioner, South Florida Water Management District (District).

      2. CCT's application for certification as a minority business enterprise (MBE) was filed with the District on December 12, 2000, and was approved on December 15, 2000, in the areas of earthwork, clearing, canal excavation, and erosion control. The certification expires on December 15, 2003. Although the District had "some concerns" regarding Ms. Cramer's knowledge of the business during its review of the

         application, it gave her "the benefit of the doubt on the application because she had worked in the industry."

      3. On August 22, 2001, the District held a "partnering" meeting for all contractors, including CCT, on a pump station project awarded to Beers Stanska, Inc. (the Beers project). CCT was represented at the meeting by Ronald J. Coddington (Ron Coddington), a non-minority professional engineer who had worked on other District projects in the past and owns an earthwork company.

      4. Coddington's attendance on behalf of a minority contractor raised suspicions on the part of a District contract administrator, Jessica Flathmann, who also attended the meeting. Ms. Flathmann, who is now on active duty with the military, prepared a short note the same date requesting that the District's compliance section "[p]lease check out [CCT's] information (minority status) with state on-line info." The "state on-line info" refers to the Department of State's web site for Florida corporations.

      5. A subsequent name search under the Department of State's corporation records revealed that since at least 1987 Ms. Cramer had been an officer and/or director in a number of other corporations, including Team Land Holdings, Inc. (vice- president, secretary, treasurer, and 50 percent owner), Team Environmental Resources, Inc. (owner, president, vice-

         president, and secretary-treasurer), Team Land Development, Inc. (treasurer), Team Offshore Services, Inc. (secretary- treasurer), Team Marine Services, Inc. (director and

         secretary-treasurer), and R.J. Coddington and Associates, P.A. (vice-president). Except for Team Environmental Resources, Inc., Ron Coddington was a principal in, and owner of, all of the other corporations. Because Ms. Cramer had failed to acknowledge a relationship with any other firms on her application, the District decided to conduct an investigation concerning CCT's eligibility for MBE status.

      6. Based on a site visit to Ms. Cramer's office, and an interview with her, the District determined that decertification proceedings were appropriate. By letter dated December 20, 2001, as later clarified during discovery, the District alleged that CCT made a material misrepresentation on its original application for certification in violation of Rule 40E-7.653(2), Florida Administrative Code; that CCT "shared resources with a non-minority person or business in the same or an associated field" in violation of Rule 40E- 7.653(6)(a) and (b), Florida Administrative Code; and that CCT's owner, Ms. Cramer, "does not possess the knowledge and technical expertise to manage the day-to-day activities of her firm." Respondent denies all allegations. It also suggests that the District's real purpose in revoking the certification

         is because of animosity between certain District personnel and Ron Coddington, with whom Ms. Cramer has had a personal relationship and is now engaged to marry.

   2. Material Mispresentation

      
      

      1. The District first alleges that Respondent made a material mispresentation on its application for certification by answering Question 20 in the negative. That question reads as follows:

         ARE ANY OWNERS, PARTNERS OR PRINCIPALS OF YOUR COMPANY AFFILIATED WITH ANY OTHER FIRM(S) AS EMPLOYEES, SHAREHOLDERS, OR

         DIRECTORS? If Yes, please list below, attach a written explanation of the business relationship and provide a financial statement for the affiliate firm(s).

         
         

      2. Ms. Cramer answered Question 20 "No." At the end of the application, she executed a lengthy affidavit acknowledging that all of the statements contained in the application were "true, accurate and complete." When the question was answered, Ms. Cramer was a vice-president, secretary, treasurer, and part-owner of Team Land Holdings, Inc., a corporation which owned the building listed as the business address for CCT and two corporations in which Ron Coddington was a principal. As to Team Environmental Services, Inc. and Team Land Development, Inc., however, the parties disagree on Ms. Cramer's status in those corporations

         at the time the application was filed. The other corporations are not in issue since they are no longer active or Ms. Cramer has resigned as an officer, director, or employee.

      3. Ms. Cramer was president, vice-president, secretary, and treasurer of Team Environmental Services, Inc. and filed the paperwork to incorporate the business. She indicated that the corporation "never did any business," had no income, closed its books in either April or August 2000, and filed its final tax return for calendar year 2000. Even so, Ms. Cramer continued to file annual reports with the Secretary of State for two more years after the corporation allegedly closed its books, and she did not file Articles of Dissolution for the corporation until April 2002, or just before her deposition in this case was taken. Given these circumstances, it is found that Ms. Cramer was still affiliated with an active corporation at the time she filed her application, and this information should have been disclosed.

      4. Beginning in 1987 and continuing until May 2000, Ms. Cramer was a director, officer, and employee of Team Land Development, Inc., a firm engaged in the earthwork business and owned by Ron Coddington. However, Ms. Cramer submitted into evidence a letter to Ron Coddington dated May 10, 2000, tendering her resignation as an officer and director. The authenticity of that letter was not challenged. She also

         testified that she resigned as an employee around March 2000. While the record shows that Ms. Cramer prepared and filed the annual report for the company in 2001, or after she had resigned as an employee, she explained that she was simply helping out by doing some "extra accounting" for the firm even though she was no longer on the payroll. In light of these circumstances, there is less than compelling evidence that

         Ms. Cramer was affiliated with Team Land Development, Inc. at the time she submitted her application for certification, and thus she was not required to disclose her relationship with that entity.

      5. One of the purposes of Question 20 is to determine if an applicant has a parent company, affiliates, or subsidiaries. This information is then used by the District to determine whether the applicant has true management and control over the business or whether another entity has actual control over the applicant. The information is also used to determine whether the applicant meets the size standards for MBEs when combined with the affiliates. This is important because District regulations establish certain size thresholds (in terms of net assets and number of employees) which an applicant cannot exceed. It can be inferred from the evidence that for these reasons, the District considers the information

         in Question 20 to be material since the information is essential in order to properly review a MBE application.

      6. Ms. Cramer, who signed the application, suggested that Question 20 was ambiguous and unclear. However, Ms. Cramer never sought guidance from District personnel to clear up any confusion she might have, nor did she read the MBE rule itself. Rather, she interpreted the question as requiring an affirmative response only if she was affiliated with another firm involved "in [a] similar or same field" as CCT. Because the two corporations in which she was then affiliated did not provide the same or similar services as CCT, she responded in the negative.

      7. Question 20 is clear and unambiguous. It simply requires an applicant to identify any other corporation or entity in which the applicant is affiliated. The question does not mention, or even suggest, that an affirmative answer is required only if the other entity is in the same or similar field as the applicant's business. Respondent's contention that the question was ambiguous and susceptible to more than one interpretation has been rejected.

      8. The only remaining issue is whether the omitted information was "material" so as to constitute a ground for revocation of the certification. As noted above, the District considers the information derived from Question 20 to be

         material since that information is necessary to carry out its responsibility of determining an applicant's eligibility.

         Therefore, the failure by Ms. Cramer to disclose her relationship with two corporations was a material omission, as alleged in the letter of December 20, 2001.

   3. Did CCT share resources with a non-MBE?

      
      

      1. Petitioner next alleges that CCT shared resources with a non-minority person or business which is in the same field of operations in violation of Rule 40E-7.653(6)(a) and (b), Florida Administrative Code. Those provisions require that the minority owner demonstrate its independence and that the business does not share common ownership, directors, or facilities with a non-minority person or business in the same or related field of operations.

      2. Ron Coddington is the owner of Team Land Development, Inc. (TDI), an earthmoving company which performed contract work for the District until January 2002, and for whom CCT was a subcontractor on two District projects. TDI's business address was 1132 Northeast 48th Street, Pompano Beach, which is the same address used by CCT until November 2001. In addition, R.J. Coddington & Associates, Inc., an engineering firm owned by Ron Coddington, also listed that street address as its business address for the years 2000 and 2001. That firm provides engineering services through

         Mr. Coddington's professional engineering license. Thus, the three corporations shared the same address from April 2000 (when CCT was incorporated) until November 2001.

      3. A small office building is located at 1132 Northeast 48th Street and is owned by Team Land Holdings, Inc., a company in which Ron Coddington and Ms. Cramer each owns 50 percent of the stock.

      4. The exact configuration of the offices within the building is not clear although Ms. Cramer testified that the building once had three separate "suites," each with a separate entrance, and that CCT occupied an office in the back of the building with a conference table that was used for all CCT meetings. However, when District investigators visited the building for an interview with Ms. Cramer in October 2001, they entered a common entrance, met her in a "front" office area, and were not invited into a separate office in the back of the building. Likewise, when they interviewed Ron Coddington during the course of this proceeding, he also met them in the same front area and did not invite them into a separate office.

      5. Respondent contended that the three firms only shared a fax machine and a kitchen area used primarily for storage purposes. Even so, the more clear and convincing evidence supports a finding that three corporations, including

         at least one engaged in the same business as CCT, were sharing facilities, as prohibited by the rule. Therefore, it is found that from December 2000 when it was first certified, and until November 2001, CCT shared facilities (offices) with a non-MBE business (Team Land Development, Inc.) which was engaged in the same business (earthmoving) as CCT.

   4. Did Ms. Cramer possess the knowledge and experience to operate her business?

1. Finally, the District alleges that Ms. Cramer "does not possess the knowledge and technical expertise to manage the day-to-day activities of her firm," as required by Rule 40E-7.653(5)(c)4., Florida Administrative Code. That rule requires that Ms. Cramer have "managerial and technical capability, knowledge, training, education and experience required to make decisions regarding that particular type of work." To support this allegation, the District relies upon a report prepared by the District's Inspector-General on December 6, 2001; the results of an interview with Ms. Cramer conducted in January 2002 by a professional engineer; and the deposition of Ms. Cramer taken during the spring of 2002 in preparation for the final hearing.

2. Ms. Cramer's background is in accounting and bookkeeping. She is not an engineer. Indeed, on her personal income tax return for the year 2000, she listed her occupation

   as an accountant. She also admits that she is not an expert in earthmoving, nor does she have experience working at job sites overseeing that type of work.

3. According to the resume attached to her application, and before CCT was incorporated, Ms. Cramer was employed in the following positions, some of which were apparently part- time: (1) bank teller and branch manager of a bank (1972- 1981); (2) bookkeeper for an upholstery firm (1981-1998); (3) owner of a music store (1982-1985); (4) accounting assistant for a general contractor (1985-1987); (5) accounting assistant to a certified public accountant (1987-1998); and (6) treasurer of Team Land Development, Inc. (1987-1999).

4. The same resume represents that CCT's "typical work" includes canal excavation, erosion control and dewatering, and wetland construction. It also indicates that the firm provides "earthwork and construction solutions for prime contractors," as well as "skilled, knowledgeable personnel providing a variety of earthwork, erosion control and site environmental mitigation services."

5. In issuing its proposed agency action, the District relied in part upon an investigation conducted by Mr. Sooker, a certified public accountant in its Inspector-General's Office. Mr. Sooker performed an on-site "audit" of CCT on October 30 and 31, 2001. The audit included an interview with

   Ms. Cramer and the examination of various documentation related to the business. In his report, Mr. Sooker concluded that CCT did not meet eligibility standards for a MBE for several reasons, including an opinion that Ms. Cramer "d[id] not possess the background, experience, and technical expertise to manage and control job site work activities."

6. After the letter of December 20, 2001, was issued, Ms. Cramer requested a meeting with the District to demonstrate that she had the necessary experience to manage the day-to-day operations of an earthmoving company. The meeting was held in January 2002. At that time, a District professional engineer, Mr. Weldon, who has extensive experience in earthmoving, posed a series of questions to Ms. Cramer regarding her knowledge of that business. While

   Respondent contends that Mr. Weldon's interview was flawed in many respects, it is found that the interview was a reasonable and appropriate way in which to test Ms. Cramer's qualifications to operate an earthmoving business.

7. In response to many of the questions, Ms. Cramer simply stated that she would rely on her foreman and project manager to resolve the issues raised by the engineer. As to the remaining inquiries, she failed to demonstrate any technical expertise in the area. Thus, the meeting reconfirmed the District's preliminary conclusion (found in

   Mr. Sooker's report) regarding Ms. Cramer's lack of technical expertise in the area for which CCT was certified.

8. During a deposition taken prior to hearing,

   
   

   Ms. Cramer was also asked a series of questions pertaining to earthmoving to ascertain the degree of experience and competence that she possessed. Again, Ms. Cramer failed to demonstrate that she had the requisite experience necessary to manage her business. For example, Ms. Cramer was unfamiliar with the term "shrinkage," a term commonly used in the business; she could not describe a method for estimating canal excavation or factors necessary to make that estimate; she could not state what type of equipment would be used if the material being excavated had dense sand, weak limestone, or cemented shells; she was unaware that soil borings would indicate the presence of rock in the material being excavated; and she could not describe the process for excavating and constructing a berm "with haul that would affect equipment collection." An experienced person in the field of earthmoving would be expected to correctly answer most, if not all, of these inquiries. Thus, Ms. Cramer did not demonstrate any level of experience or firsthand knowledge in operating an earthwork company. While she was able to respond more accurately to some of these same questions at the final hearing, it is most likely that she could do so only because

   the intervening time between the deposition and final hearing allowed her to consult with experts and prepare her answers.

9. In addition, Ms. Cramer acknowledged that she has never been a project manager for any construction job, including those that CCT has contracted to perform; she has never operated any heavy equipment; she has never personally prepared job estimates involving plans and specifications by herself; she cannot read construction plans and specifications; she has not negotiated any contracts for CCT; and she has never attended any meetings that the District has held for the Beers project.

10. On the Beers project, in which CCT is a subcontractor for the prime contractor, notices of safety violations by CCT employees are sent to Ron Coddington's attention, and the first subcontract agreement between Beers and CCT was also sent to his attention. In fact, in correspondence to CCT, the Beers office manager for the project assumed that Ron Coddington was president of the firm.

11. At the same time, Ms. Cramer relies heavily on her foremen and Ron Coddington (who serves as a $1,600.00 per week consultant) to deal with all technical aspects of her business and to answer questions regarding the Beers project. She further acknowledged that she has delegated a number of tasks on the Beers project to Ron Coddington, such as providing

    estimates and bid takeoffs; providing on-site project management; preparing project schedules and monthly estimates; making on-site inspections; coordinating on-site surveys and quality control with CCT employees; assuming responsibility for owner and prime contractor conduct on the District pump station projects; and representing CCT at all job coordination meetings.

12. Notwithstanding the above, Respondent contends that the Inspector-General's report dated December 6, 2001, is the primary underpinning for the District's case and that the report is flawed in numerous respects. For example, the Inspector-General's Office has an operations manual which spells out the manner in which investigations shall be conducted. Contrary to specific requirements in the operations manual, Mr. Sooker did not prepare, sign, and file a statement of independence, and he did not maintain and preserve working papers, outlines of questions, and interview notes in the investigative file. These deficiencies were confirmed through the testimony of Respondent's expert, Mr. Kirchenbaum, a certified public accountant, as well as the Inspector-General himself.

13. While Mr. Sooker's investigation admittedly did not fully conform with the operations manual, his conclusions regarding Ms. Cramer's experience were independently verified

    and reconfirmed through the interview with Ms. Cramer in January 2002 and the answers given by her in the deposition taken in April 2002. Therefore, even if Mr. Sooker's report is ignored, there is other compelling evidence to support the allegations in the letter of December 20, 2001.

14. For the foregoing reasons, it is found that

    
    

    Ms. Cramer does not have managerial and technical capability, knowledge, training, education, and experience required to make decisions regarding the type of business in which she is certified, as alleged in the letter of December 20, 2001.

    CONCLUSIONS OF LAW

    
    

15. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties hereto pursuant to Sections 120.569 and 120.57(1), Florida Statutes.

16. Because Respondent's certification as a MBE is at risk, Petitioner bears the burden of proving by clear and convincing evidence that the allegations in its letter dated December 20, 2001, are correct. See, e.g., Ferris v. Turlington, 510 So. 2d 292, 294 (Fla. 1987).

17. Part VI, Chapter 40E-7, Florida Administrative Code, governs the District's Program for minority business enterprises. Respondent is required to satisfy all of the requirements in the rules in order to remain eligible for MBE certification.

18. The District has proposed to decertify CCT for three reasons: Respondent made a material misrepresentation on its application; Respondent shared resources with a non-minority in the same field; and the minority owner does not possess the necessary knowledge and technical expertise to manage the day- to-day activities of her firm.

19. Rule 40E-7.653(2), Florida Administrative Code, requires that a MBE applicant use Form No. 0964, which form has been adopted and incorporated by reference. An important part of the form is the affidavit executed by the applicant which provides, among other things, that "any material misrepresentation [on the application] will be grounds for

    . . . de-certification." By clear and convincing evidence, Petitioner has established that Ms. Cramer failed to disclose on her application that she was a part-owner, officer, and director of another corporation, Team Land Holdings, Inc., and that she was the sole owner of Team Environmental Services, Inc. Because these omissions are material in nature, the first allegation has been sustained.

20. Rule 40E-7.653(6)(b), Florida Administrative Code, requires in part that an applicant demonstrate that it does not "share . . . facilities . . . with a non-minority person or business concern which is in the same or an associated field of operation." By clear and convincing evidence,

    Petitioner has established that between April 2000 and November 2001 CCT shared the same facilities (offices) with Team Land Development, Inc., which is engaged in the same business as CCT. Therefore, a violation of the foregoing rule has occurred.

21. Finally, Rule 40E-7.653(5)(c)4., Florida Administrative Code, provides that the minority owner must have "managerial and technical capability, knowledge, training, education and experience required to make decisions regarding that particular type of work." The evidence is clear and convincing that Ms. Cramer lacks the necessary technical capability, knowledge, training, education, and experience required by the rule. While it is true that the rule allows the minority owner to delegate management and technical responsibility to others, as Ms. Cramer has done here, the owner must still demonstrate that she has the knowledge and capability to perform the functions that have been delegated. Therefore, the allegation has been proven.

22. Given the foregoing violations, decertification of CCT's MBE certification is appropriate.

23. Finally, Respondent's Motion for Attorney's Fees under Section 120.595(1)(b), Florida Statutes, is denied.

RECOMMENDATION

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

RECOMMENDED that the South Florida Water Management District enter a final order revoking the MBE certification of Civil Construction Technologies, Inc.

DONE AND ENTERED this 28th day of October, 2002, in Tallahassee, Leon County, Florida.

___________________________________ DONALD R. ALEXANDER

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 28th day of October, 2002.

COPIES FURNISHED:

Henry Dean, Executive Director

South Florida Water Management District Post Office Box 24680

West Palm Beach, Florida 33416-4680

Catherine A. Linton, Esquire

South Florida Water Management District Post Office Box 24680

West Palm Beach, Florida 33416-4680

Bradford J. Beilly, Esquire Bradford J. Beilly, P.A.

400 Southeast 18th Street

Fort Lauderdale, Florida 33316-2820

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days of the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will render a final order in this matter.

Docket for Case No: 02-000473

Orders for Case No: 02-000473