STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MARINE STRUCTURES, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 85-0311

)

STATE OF FLORIDA, ) DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

)

FINAL ORDER

Consistent with the Notice of Hearing furnished the parties by the undersigned on March 28, 1985 a hearing was held in this case before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings in Tallahassee, Florida on May 3, 1985. The issue for consideration was whether Petitioner should be declared eligible to contract with Respondent, Department of Transportation.

APPEARANCES

For Petitioner: F. Alan Cummings, Esquire

Holland & Knight

Post Office Drawer 810

Suite 600, Barnett Bank Building Tallahassee, Florida 32302

For Respondent: Reynold Meyer, Esquire

Department of Transportation Haydon Burns Building Tallahassee, Florida 32301

BACKGROUND INFORMATION

At some time prior to December 12, 1984, Petitioner, Marine Structures, Inc. (Marine), filed a petition to determine its eligibility to bid on contracts for the State

of Florida, Department of Transportation (DOT). Thereafter, on December 12, 1984 Petitioner amended its petition and requested that the hearing in the matter be conducted by the Division of Administrative Hearings (DOAH), under the provisions of Section 337.165(2)(d), Florida Statutes. Thereafter, on January 17, 1985, the Respondent, DOT, forwarded the file to DOAH for the appointment of a Hearing Officer. At the hearing, Petitioner presented the testimony of Gerald H. Stanley, owner and president of Marine and introduced Petitioner's Exhibits 1 through 4. Respondent presented no testimony

but introduced Respondent's Exhibit A. The parties entered into a Stipulation of Fact, which, along with its appended exhibit, was introduced as Joint Exhibit 1 by both parties.

The parties have submitted posthearing proposed findings of fact pursuant to Section 120.57(1)(b)4., Florida Statutes. A ruling on each proposed finding of fact has been made either directly or indirectly in this Recommended Order, except where such proposed findings of fact have been rejected as subordinate, cumulative, immaterial or unnecessary.

FINDINGS OF FACT

1. Petitioner is a corporation organized under the laws of Florida with its principal place of business in Tampa, Florida. It was formed in October, 1973 and is in the business of building bridges throughout west/central Florida. It is an independent construction company which specializes solely in bridge and fender construction. Its business relies solely on contracts from public authorities, especially the Respondent herein.

   
   

2. On March 19, 1984, in the United States District Court, Northern District of Florida, Petitioner and its president, Gerald H. Stanley were convicted of violating Title 15, United States Code, Section 1 of the Sherman Antitrust Act, for participating in a conspiracy to rig bids by DOT on June 27, 1979. Petitioner was fined

   $50,000.00 and Mr. Stanley was fined $20,000.00, ordered to perform 200 hours of community service and placed on three years unsupervised probation.

   
   

3. Petitioner did not renew its Certificate of Qualification to bid on Florida bridge projects when it expired on or about April 30, 1984. However, on June 12,

   1984, both Petitioner and Mr. Stanley filed a Petition for a determination that they are eligible to apply for and hold a Certificate of Qualification under the provision of Section 337.165(2)(d), Florida Statutes, alleging such reapplication to be in the public interest.

   
   

4. Marine Structures, Inc. adopted a formal, written antitrust compliance policy in July, 1984, and the record fails to show any instance of bid rigging or antitrust involvement since the one incident in June, 1979. Because of the limited number of companies involved in the road and bridge construction business, the existing companies, who were formerly involved in bidding misconduct, must, of necessity, deal with each other, but there is no indication or reason to assume that such necessary dealings will result in future misconduct.

   
   

5. In addition to the written antitrust compliance policy referenced above, Marine has also taken remedial action to assure that all of its employees conduct their business activities in strict compliance with the law and the rules and regulations of both the state and federal governments.

   
   

6. Due to Marine's inability to bid on DOT contracts, it has suffered and continues to suffer extreme financial hardship. In its past dealings with DOT, it has performed quality work and has cooperated fully with the Department.

   
   

7. DOT indicates it has not been made aware of any particular circumstances involving Marine's or Mr. Stanley's participation in the instant bid rigging incident which would make that incident any more detrimental to DOT than any of the bid rigging conspiracies by the 26 other companies which have been reinstated by the Department. These 26 companies which have been reinstated, submitted themselves to DOT's independent investigations and agreed to comply with the safeguards required in their individual cases to help to assure that contract crimes would not occur on Department projects. Mr. Stanley, on behalf of Marine Structures, Inc., has offered the same assurances.

   
   

8. In a letter dated May 1, 1985, to the Secretary, Department of Transportation, the Honorable Jim Smith, Attorney General of the State of Florida, indicated that though Respondent has, in a confidential sworn statement to attorneys for the State, denied any involvement in bid

   rigging activities other than in connection with that of which he was convicted in federal court, the State investigation, in the opinion of the Attorney General, raises substantial doubt as to the truth of Mr. Stanley's denials of misconduct. The Attorney General indicates that in an effort to resolve this apparent inconsistency, Mr.

   Stanley was asked, through his counsel, to take a polygraph examination which he refused. Mr. Stanley denies having refused to take the polygraph at any time. Further, the Attorney General relates that Marine Structures, Inc. has not offered to pay any amount of damages to the State, yet Mr. Stanley contends that he has never, to this day, been asked to make any reimbursement or restitution to the State.

   
   

9. Mr. Stanley, on behalf of the Petitioner, does not deny that he committed error and that this error constituted an offense against the state and federal governments. He tells a story, however, regarding it which puts it in a somewhat less serious light than is described by the State. According to Mr. Stanley, he gave a bid figure to two other contractors, who he had previously asked to subcontract in his bid, over which they should bid in order to assure Petitioner of having the lowest bid of the three on this particular contract. Both other contractors, Mr. Carroll and Mr. Conner, submitted bids which were higher than that of Petitioner as did a four potential contractor, Square G, and notwithstanding this, Petitioner's bid was lower than the State estimate. In light of this factor he contends that his misconduct, while technically a violation for which he was tried and convicted, did not cost the State one extra cent. He regrets having done it and would not do it again. Both Carroll and Conner, the two other contractors involved with Petitioner in this incident, pleaded guilty and were convicted, but both have been reinstated as eligible bidders on State work.

   
   

10. As to the letter of the Attorney General, Mr. Stanley contends that the comment regarding his veracity relates to a situation involving his testimony before the Attorney General's staff about the Citrus County project. Though he had been advised he would be asked about that specific project, in reality, the questions he was asked related to a different project in Alachua County on which he had bid but which involved no bid rigging on his part. Mr. Stanley contends he told his interrogators what he knew

    but they were not satisfied as to his knowledge regarding another bidder by the name of Hewitt. His denials of any knowledge of Hewitt's bid were not believed and Mr. Stanley feels he was somewhat threatened by members of the Attorney General's staff who reportedly indicated they would keep him off the bidder's list for some time and would "break" him. He contends that he has cooperated fully with state and federal prosecutors not only because of his desire to be reinstated, but also because the terms of his federal probation require him to cooperate fully. He has, in fact, met with state and federal attorneys on two occasions without being subpoenaed, has made his records available to investigative authorities, and has made copies of any documents desired by the investigators.

    
    

11. Other than the one incident involved herein, Mr. Stanley contends that neither he nor his company have ever been involved in any other bid rigging situation. He has given statements to both the Florida Attorney General's office and the Antitrust Division on many occasions other than those referenced in the paragraph above. He has given testimony to a U.S. grand jury and the documents and files which he released to the investigative agencies were released prior to his being granted any immunity from State prosecution by the Attorney General. In short he has cooperated fully with state and federal authorities without holding back any information and will continue to do so even if he is reinstated. He feels, therefore, that it is unnecessary for his reinstatement to be withheld as a threat over his head to coerce testimony from him regarding Mr. Hewitt.

    
    

12. Admittedly, neither his personal fine nor that assessed against the company have been paid. He has not, however, been dunned for payment and this is just as well because having been barred from bidding on State business, he is finding it difficult to meet his monthly bills much less pay $70,000.00 in fines.

    
    

13. As to the purpose behind the State's manner of handling those companies identified as being involved in bid rigging, the Attorney General very clearly established the action philosophy in a statement made to Florida Trend Magazine on May 29, 1984. In the press release in question he stated: "If we forced these companies into bankruptcy we would not be cleaning up the industry, we'd be abolishing it, putting thousands of employees on the

    streets and destroying competition in a multi-million dollar industry in which the State is a major purchaser . .

    . . By obtaining the cooperation of settling defendants we greatly facilitated botch the investigation and the willingness of subsequent defendant to . . . (settle)."

    
    

14. Respondent has not shown by any evidence that Petitioner was any worse in its misconduct than any other bidder which has already been reinstated, nor has it exhibited any justification for treating Petitioner more harshly than others.

    
    

    CONCLUSIONS OF LAW

    
    

15. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of these proceedings.

    
    

16. Under the provisions of Section 337.165(2)(a), Florida Statutes, a contractor is prohibited from being qualified to bid on work let by the Department of Transportation if he has been convicted of violating state or federal antitrust laws with respect to a public contract. The evidence here established that Marine Structures1 Inc. and its president, Mr. Stanley, were both convicted of violating Title 15, U.S.C., Section 1 of the Sherman Antitrust Act and are, therefore, prohibited from being qualified to bid unless it were determined, inter alia, that their reinstatement would be in the public interest.

    
    

17. The criteria for determining whether certification for qualification of a contractor would be in the public interest include without limited to:

    
    

    1. The degree of culpability of the contractor;

    2. His prompt and voluntary payment of damages to the State as a result of the contractor's violation;

    3. Cooperation with any state or federal prosecution or investigation of contract crime;

    4. Disassociation with those involved in a contract crime;

    5. Reinstatement in other state or federal jurisdictions; and

    6. The needs of the department in completing its programs in a timely and cost effective manner.

1. The Attorney General has gone on record publicly stating his agreement with the concept of reinstating those companies involved in the bid rigging activity such as that in which Petitioner was convicted. His magazine statement has clearly established State policy to the effect that wherever possible reinstatement is the appropriate resolution of the situation.

   
   

2. Here, there is no doubt that Mr. Stanley and Marine Structures, Inc. were involved in a bid rigging incident and that it was done intentionally. That Mr. Stanley may not have known it was a violation of the Sherman Antitrust Act is immaterial. Having been in business as long as he has, with almost all of his business coming from State contracts, he undoubtedly knew that bid integrity was necessary to have an effective and viable bid system. It is equally immaterial that this was a relatively small contract. The felony threshold having been met, there is no degree of culpability. Bid rigging is bid rigging and the evidence clearly shows Petitioner's guilt of this reprehensible practice. It is only minimally pertinent that Petitioner's successful rigged bid was, nonetheless, lower than the State estimate on the project.

   
   

3. Here, there has been no prompt and voluntary payment of damages to the State yet there is no showing that the State was damaged or what the quantum of damage was. The evidence clearly shows that Mr. Stanley and the Petitioner have fully cooperated with the state and federal prosecutors. The suspicions of the Attorney General's staff notwithstanding, there has been no showing that Mr. Stanley knows any more than he was told regarding the Hewitt contract and in fact, all the evidence admitted reflects the Petitioner's full cooperation with the authorities.

   
   

4. Petitioner has contended, and there is no evidence to the contrary, that he has disassociated himself from any involvement whatever with either Mr. Carroll or Mr. Conner with whom he was involved in bid rigging activity. There is evidence, and the State admits, that Petitioner has adopted a formal, written antitrust compliance policy and has taken remedial action to insure

   that its employees conduct their business activities in strict compliance with the law. Respondent admits that there is no evidence that Petitioner has been involved in any bid rigging or antitrust violations since the "one incident" in June, 1979.

   
   

5. There is no evidence of reinstatement in other state or federal jurisdictions simply because there is no evidence of suspension in other states or the federal sector.

   
   

6. The needs of the Department have been clearly stated by the Attorney General in his statement referenced above. It is clear that the intent of the State in its portion of the corrective action taken was to rehabilitate the contractors and return them to the fold as productive, viable business concerns capable of rendering service to the public. As to the Department itself, counsel for Respondent has indicated that in this particular issue, it remains passive.

   
   

7. Under the provisions of Section 337.165(2)(d), a contractor whose certificate has been denied or revoked may petition to have a hearing before a Hearing Officer with the Division of Administrative Hearings. In such a case, the Hearing Officer shall, within 30 days after the hearing, complete and submit a Final Order to the Department.

   
   

8. A thorough review of the circumstances here indicates that Petitioner is the only contractor caught up in the net of bid rigging investigations at the time which has not been reinstated. There is scant evidence in the record to justify its disparate treatment in this regard. There has been no showing that its offense was any greater in magnitude than that of others who have been reinstated. There has been no showing that its degree of cooperation was any less than that of other contractors. There has been no showing, in short, that Petitioner has failed to do any of the things asked of it so as to justify maintaining the disbarred status.

In light of the above, therefore, it is ORDERED that:

Petitioner, Marine Structures, Inc., be immediately declared eligible to bid before the Department of Transportation.

DONE and ORDERED this 31st of May, 1985 in Tallahassee Florida.

Hearings

Hearings

ARNOLD H. POLLOCK

Hearing Officer

Division of Administrative

The Oakland Building 2009 Apalachee Parkway

Tallahassee, Florida 32301

(904)488-9675

FILED with the Clerk of the Division of Administrative

this 5th day of June, 1985.

COPIES FURNISHED:

F. Alan Cummings, Esquire Holland and Knight

P. O. Drawer 810

Suite 600, Barnett Bank Building Tallahassee, Florida 32302

Reynold Meyer, Esquire Department of Transportation Haydon Burns Building Tallahassee, Florida 32301

Paul A. Pappas Secretary

Department of Transportation Haydon Burns Building Tallahassee, Florida 32301

Docket for Case No: 85-000311

Orders for Case No: 85-000311