vs. ) CASE NO. 85-3987
Respondent. )
Final hearing in the above-styled case was held on April 15, 1986, in Pensacola, Florida, before Mary Clark, Hearing Officer of the Division of Administrative Hearings.
For Petitioner: Charles C. Sherrill, Esquire ("Gulf Coast") 435 East Government Street
The primary issue in this proceeding is whether Gulf Coast is entitled to certification as a disadvantaged business enterprise under DOT rule 14-78.05 Florida Administrative Code. Ancillary issues include 1) the sufficiency of proof of Bernard Crooke's membership in a designated group, (i.e. "Hispanic Americans"); and 2) the criteria, if any, that DOT may utilize, other than an individual's membership in a designated group, to determine eligibility of that individual's firm for certification.
The proceeding commenced with Gulf Coast's timely request for a formal hearing after DOT denied its application for certification as a disadvantaged business enterprise. The letter of denial is dated October 31, 1985, and is found in Petitioner's Exhibit #la, as an attachment to the March 17, 1986 deposition of Thaddeus Fortune.
At the final hearing, Petitioner presented fourteen exhibits, all but five of which were admitted without objection. Exhibits #2-6, relating to the Villar family crest and to certain genealogical charts, were admitted over the objection of Respondent. Petitioner's witnesses included Thaddeas Fortune (an adverse party witness), Cameron Villar, Paula Margaret Davidson and Joseph Barke Davidson. Respondent's evidence consisted of the testimony of witnesses Thaddeus Fortune and Bernard E. Crooke (an adverse party witness).
Both parties submitted Proposed Recommended Orders with proposed findings of fact and conclusions of law. These have been carefully considered, and to some extent have been incorporated in this Recommended order. Specific rulings on all proposed findings of fact are found in the Appendix attached hereto and incorporated herein.
Gulf Coast and Traffic Engineers, Inc. is a Florida corporation with its principal place of business in Escambia County, Florida. Its address is 8203 Kipling Street, Pensacola, Florida, 32513. (Stipulation of the parties: Petitioner's Exhibit #la, tab 2) Gulf Coast is a "small business concern" as required by Rule 14-78.05, Florida Administrative Code. (Stipulation of the parties).
The Florida Department of Transportation receives federal highway funds and administers the program for certification of disadvantaged business enterprises. (T-6,92)
Bernard E. Crooke is President of Gulf Coast and sixty- percent owner. He directs the management policies and operations of Gulf Coast. (Stipulation of the parties; Petitioner's Exhibit la, tab 2)
Cameron Villar is a remote blood relative of Bernard E. Crooke. He and a cousin did some genealogical research on the Villar family history. He obtained a list of names of genealogical societies in Spain from the American embassy in Madrid. After contacting all the societies on the list, he retained one, and obtained from it a picture of the Villar family crest and a brief history of the family name. The Villars originated in Galicia, Spain. Cameron Villar also prepared a genealogical chart tracing his family (and Bernard Crooke's) back to one of two brothers who came from Spain to the United States. The brothers, Augustus and Emmanuel, were sons of Don Jose de Villar, who is mentioned in the family history provided by the genealogical society. (T-22-24, 30-35; Petitioner's Exhibits #2-#5)
Paula Margaret Davidson is related to Bernard Crooke through a common great grandmother. She has known Bernard and his family all her life. She also conducted genealogical research and prepared a chart tracing the family back to Spain. (T-45, 6, Petitioner's Exhibit #6)
Joseph Davidson (known as "Buddy" Davidson) was raised by Bernard Crooke's aunt, whom "Buddy's" father married after his first wife died. It was common knowledge in the family and in the Pensacola community that the Villars, including the branch in which "Buddy" and Bernard were raised, were of Spanish heritage. There was a community of Spanish harbor pilots in the Old Warrington Woolsey area. Later the city of Warrington was displaced and was moved to New Warrington. (T-71, 74-75) Bernard's grandfather was one of the bar and harbor pilots.
(T-56).
The Villar family and its various branches celebrated the Bicentennial with their first family reunion. Seven hundred and fifty members participated, including Bernard Crooke. The family was recognized as playing a significant part in the founding of Pensacola, as the two Villar brothers sailed into Pensacola with General Galvez and received land there as a reward from the King of Spain and as an incentive to create a Spanish colony in Pensacola. A booklet was published for the Bicentennial celebration, "Your Heritage," based upon the research of the family members. (T-64, 83, Petitioner's Exhibit #11).
Until the Bicentennial in 1975-76, and the resultant public recognition of the family, being Spanish was not a
subject of pride and there was concern about discrimination in the community. ( T- 6 9, 77, 82).
Neither Bernard Crooke, nor any of the family members who testified on his behalf, could say for certain whether, as an individual, Bernard Crooke was the subject of bias or discrimination by virtue of his Hispanic cultural heritage. (T- 50, 53, 69, 73, 83).
Bernard Crooke was one of nine children in a poor family. He started his construction business approximately twenty years ago with five hundred dollars and two partners. He helped support his business in the early days by delivering papers to rack stands. He put himself through Pensacola Junior College and obtained no further formal education. He eventually bought out the two partners who had other interests and were just helping him get started. (T-80-85). The business has gradually grown to one with gross annual receipts (year ending 9/30/84) of $1,761,117.37. (Petitioner's Exhibits #la, tab 2).
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding pursuant to Section 120.57(1), Florida Statutes.
Rule 14-78.05(3)(b)(1), Florida Administrative Code, cited by DOT as the basis for denial of Gulf Coast's certification provides as follows:
14-78.05 Standards for Certification of DBEs and WBEs.
9
* * *
(3) A firm seeking certification as a DBE or a WBE shall meet the following standards:
* * *
(b) The firm must be at least 51 percent owned and controlled by one or more women or socially and economically disadvantaged individuals, or, in the case of a publicly owned business, at least 51 percent of the stock must be owned and controlled by one or more women or socially and economically disadvantaged individuals.
1. Members of the groups named in Rule 14- 78.02(1) are presumed to be socially and economically disadvantaged; provided, however, this presumption is rebuttable. Membership in those groups shall be established on the basis of the individual's claim that he or she is a member of one of those groups and is so regarded by that particular community. However, the Department is not required to accept this claim if it determines the claim invalid.
* * *
Bernard Crooke claims membership in the group designated" "Hispanic Americans," defined in Rule 14- 78.02(1)(b), Florida Administrative Code as:
" . . . persons of Mexican, Puerto Rican, Cuban, Central or South American or other Spanish culture or origin, regardless of race:
. . ."
The specific authority and law implemented for both rule sections cited above is, among others, section 339.081(4), Florida Statutes. This section was amended and re-codified in 1984 as section 339.0805, Florida Statues. This section designates a percentage of state transportation trust funds to be set aside for contracts with small business concerns owned and controlled by socially and economically disadvantaged individuals. The section also provides for a construction management development program and a bond guarantee program for firms which are certified as a small business concern owned and controlled by socially and economically disadvantaged individuals. The section provides in pertinent part:
"339.0805 State Transportation Trust Fund; specified percentage to be expended with small businesses owned by socially and economically disadvantaged persons; construction management development program; bond guarantee program.
Except to the extent that the head of the department determines otherwise, not less than 10 percent of the amounts expended from the State Transportation Trust Fund shall be expended with small business concerns owned and controlled by socially and economically disadvantaged individuals as defined by s.8(d) of the Small Business Act (15 U.S.C. s. 637(d)) and relevant subcontracting regulations promulgated pursuant thereto. In fulfilling this mandate, the department shall utilize every means available to it, including, but not limited to, goals and set-asides for competitive bidding and contracting only by, between, and among those firms which are certified by the department as socially and economically disadvantaged business enterprises and which are prequalified as may be appropriate. It is the policy of the state to meaningfully assist socially and
economically disadvantaged business enterprises through a program that will provide for the development of skills through business management training, as well as financial assistance in the form of bond guarantees, to primarily remedy the effects of past economic disparity. Such competitive bids may be the result of joint ventures between small business concerns which are owned and controlled by socially and economically disadvantaged individuals and other subcontractors."
The Federal Small Business Act definition referenced above provides as follows:
"d) Performance of contracts by small business concerns; inclusion of required contract clause; subcontracting plans; contract eligibility; incentives; breach of contract; review; report to Congress.
* * *
(c) As used in this contract, the term 'small business concern' shall mean a small business as defined pursuant to section 3 of the Small Business Act [15 USCS Section 632] and relevant regulations promulgated pursuant thereto. The term 'small business concern owned and controlled by socially and economically disadvantaged individuals' shall mean a small business concern-
"(i) which is at least 51 per centum owned by one or more socially and economically disadvantaged individuals; or, in the case of any publicly owned business, at least 51 per centum of the stock of which is owned by one or more socially and economically disadvantaged individuals; and
"(ii) whose management and daily business operations are controlled by one or more of such individuals. The contractor shall presume that socially and economically disadvantaged individuals include Black
Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and other minorities, or any other individual found to be disadvantaged by the Administration pursuant to section 8(a) of the Small Business Act [subsec. (a) of this section].
* * *
The definition above is part of a prescribed clause which must, with few exceptions, be included in all contracts let by any Federal agency. "Contractor," in this case therefore, is the Florida Department of Transportation, and the agency is compelled in its award of subcontracts to carry out the policy of the United States that
" . . . small business concerns, and small business concerns owned and controlled by socially and economically disadvantaged individuals, shall have the maximum practicable opportunity to participate in the performance of contracts let by any Federal agency." 15 USC Section 637(d).
DOT's rule governing certification of disadvantaged business enterprises ("DBE's") therefore effectuates both state and federal policy and the definitions and administrative scheme are by necessity virtually the same at the state and federal level. Individuals may seek to qualify their firms for participation by either claiming membership in one of the classes entitled to a presumption, or by direct certification by the Small-Business Administration under Section 8(a) of the Small Business Act. See 15 USC Section 637(a) and Rule 14- 78.05(3)(b) 2., Florida Administrative Code for reference to the latter method.
Bernard Crooke proved his membership in the group _ "Hispanic Americans." The definition does not limit the group to Latin Americans, to individuals with Spanish surnames, or to individuals who themselves, or whose recent ancestors, immigrated to the United States. The type of evidence he presented, consisting of testimony of family members and a booklet prepared by family members, has long been deemed competent evidence to prove pedigree and ancestry. Cone v. Benjamin, 276 So. 2nd 90, 101-104 (Fla. 1946). Evidence of reputation concerning personal or family history is admissible
as an exception to the hearsay rule. Subsection 90.803(i9), Florida Statutes.
The burden is therefore on DOT to rebut the presumption that Bernard Crooke is socially and economically disadvantaged. No guidance as to how this presumption may be rebutted is found in Rule 14-78, Florida Administrative Code, since there is no definition of "socially and economically disadvantaged" within that rule, nor is a federal definition incorporated by reference. The reference to the Small Business Administration's certification process is as an alternative to the presumption created through membership in a listed class.
Section 339.0805, Florida Statutes incorporates the federal definition only by this sentence: "Except to the extent that the head of the department determines otherwise, not less than 10 percent of the amounts expended from the State Transportation Trust Fund shall be expended with small business concerns owned and controlled by socially and economically disadvantaged individuals as defined by s. 8(d) of the Small Business Act (15 USC s. 637(d)) and relevant subcontracting regulations promulgated pursuant thereto."
While some references have been made by DOT to the federal regulations, these have not been made part of the record in this case. The referenced sub-section of the Small Business Act is set out in pertinent part in paragraph 5 above. As can be seen, this sub-section also creates a presumption or the alternative of direct Small Business Administration certification.
A simple definition is found in 15 USC subsection 637(a), that part of the Small Business Act which relates to certification by the Administration:
"Section 637. Additional powers (a) Procurement contracts; subcontracts to disadvantaged small business concerns; performance bonds; contract negotiations; definitions; eligibility; determinations; publication; recruitment; construction subcontracts; annual estimates.
* * *
Socially disadvantaged individuals are those who have been subjected to racial or
ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.
Economically disadvantaged individuals are those socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged. In determining the degree of diminished credit and capital opportunities the Administration shall consider, but not be limited to, the assets and net worth of such socially disadvantaged individual."
* * *
Assuming, for the sake of argument that DOT can derive guidance from that remotely related reference, DOT still failed to rebut the presumption. In cross examination of Petitioner's witnesses, counsel for DOT failed to elicit a reliable admission that Bernard Crooke was not "disadvantaged." (T-43, 53, 68, 69, 73, 77). In direct testimony of Bernard Crooke, counsel for DOT elicited that his business had grown gradually over the years and that he had been both approved for and denied loans (T-81). The following exchange was the closest that he came to an admission:
(Mr. Hargrove ):
"Q Okay. Do you consider yourself to be a member of a group in Pensacola which has been the subject of prejudice in this area?"
(Mr. Crooke):
"A I was poor when I was coming up, so, I guess that would, you know, being discriminated against.
Q Because of being poor?
A Being poor and this type thing. There was nine kids in my family.
Q Have you every been discriminated against because you were Hispanic?
A No. Because I never really admitted it. You know, I knew it all my life, but I wouldn't just say I was Hispanic in front of people because, you know, you felt like you would be discriminated against." (T 82, 11
6-19)
The latter, when considered with the testimony as a whole, is insufficient to rebut the statutory and regulatory presumption. The inference is that Hispanics are discriminated against; testimony of Petitioner's witnesses established that the family and area where Bernard Crooke was raised was identified with the old Pensacola Hispanic community. (T-59, 68, 71, 72, 74, 75).
Still applying the dubious criteria in the subsection 637 (a) definition, no evidence was presented to compare Bernard Crooke's capital and credit opportunities with others in the same business area who are not socially disadvantaged; nor are the assets and net worth of Bernard Crooke a part of the record in this proceeding.
The gross receipts alone are insufficient to rebut the presumption of disadvantage. Those receipts are still less than the two million dollar threshold for a firm's participation in DOT's construction management development program. Sub-section 339.0805(2), Florida Statutes.
Petitioner proved his membership in the class, Hispanic Americans; Respondent failed to rebut the presumption created in its own rule in favor of that membership. All remaining criteria for certification as a DBE in Rule 14-78.05, Florida Administrative Code have either been stipulated by the parties or simply are not at issue in this proceeding.
That a Final Order be issued finding Petitioner, Gulf Coast, eligible for certification as a Disadvantaged Business Enterprise (DBE).
DONE and RECOMMENDED this 3rd day of June, 1986, in Tallahassee, Florida.
Filed with the Clerk of the Division of Administrative Hearings this 3rd day of June, 1986.
The following constitute 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.
Charles C. Sherrill, Esquire
Brant Hargrove, Esquire Department of Transportation Haydon Burns Building, M.S. 58 605 Suwannee Street
