STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

KASPER CORPORATION, )

)

Petitioner, )

)

vs. ) CASE NO. 89-0830

) DEPARTMENT OF TRANSPORTATION,)

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated hearing officer, James E. Bradwell, held a public hearing in this case on March 21, 1990, in Tampa, Florida.

APPEARANCES

For Petitioner: Marianne Deneweth, President/Owner Kasper Corporation

5006 Trouble Creek Road, Suite 215 New Port Richey, Florida 34652

For Respondent: Vernon L. Whittier, Jr., Esquire

Department of Transportation 605 Suwannee Street, M.S. 58

Tallahassee, Florida 32399-0458 STATEMENT OF THE ISSUE

Whether Kasper Corporation should be recertified as a disadvantaged business enterprise pursuant to Chapter 14-78, Florida Administrative Code.

PRELIMINARY STATEMENT

This case arose from Respondent's of Petitioner, Kasper Corporation's application to be recertified as a disadvantaged business enterprise (DBE) pursuant to Chapter 14-78, Florida Administrative Code.

Petitioner's application for DBE certification was formally denied by letter dated January 11, 1989 on the basis that Ms. Deneweth, a minority, did not exercise control of the firm, that Petitioner does not appear to be an independent business entity and the lack of evidence of capital contributions invested by the disadvantaged (minority) owner as required by Respondent's Rule 14-78.5, Florida Administrative Code.

Petitioner was advised that she could contest that denial by requesting a formal administrative hearing. Petitioner timely contested Respondent's denial of recertification by requesting a formal hearing. Thereafter, the matter was

transferred to the Division of Administrative Hearings to conduct a formal hearing.

At hearing, Respondent presented the testimony of Howard Knight, an operations management consultant employed by Respondent in its minority certification office; Teresa Stewart, Respondent's director of administration; and Petitioner's president, Marianne Deneweth, was called as an adverse witness.

Ms. Deneweth testified on her behalf. Respondent's Exhibits 1 through 11 which were received in evidence without objection.

FINDINGS OF FACT

1. Kasper Corporation, a speciality subcontractor, was formed during April 1987, and is engaged in the business of performing concrete gutter work, curb elements, traffic separators, barrier walls, sidewalks, formation of ditch and slope pavement, pipe culverts, and storm sewers. Most of its business activities are conducted in the area of Pasco, Hillsborough, Pinellas, Hernando, Citrus, Manatee and Sarasota counties.

   
   

2. Ms. Deneweth purchased 100% of the stock of Kasper Corporation in September, 1988 for the sum of $10.00.

   
   

3. Ms. Deneweth contends that she has deposited approximately $9,000.00 into the corporation between September and December, 1988 and has withdrawn approximately $6,000.00 as a withdrawal of capital. No documentation was provided to substantiate either the deposit or the withdrawal of funds by Ms. Deneweth.

   
   

4. Prior to Ms. Deneweth's purchase of Kasper Corporation, she had no training or experience in the principal business activities in which Petitioner is engaged, having graduated from high school during June 1981, and having been employed as receptionist/secretary and office manager for a regional medical center, a physician and an engineering firm from 1981 thru 1987.

   
   

5. Kasper Corporation's field supervisor is Steven D. Kasper, a nonminority, whose training and experience includes substantial concrete construction work. Steven Kasper is responsible for preparation of job estimates and the submission of bids to prime contractors. Kasper works in cooperation with Michael R. Knox, a civil engineer who is also a nonminority. Knox is employed by Petitioner as a consultant.

   
   

6. Ms. Deneweth, the only minority involved in the internal operations of Kasper Corporation, has limited experience in the principal operations of Kasper Corporation. Ms. Deneweth has no training or working knowledge of the requirements and procedures for bid preparations, of the type of equipment or materials required to perform the principal activities of Kasper Corporation. Ms. Deneweth lacked familiarity with all significant details of Petitioner's internal operations, field operations, financial operations and the bidding procedures.

   
   

7. All significant bidding, principal construction activities and financial requirements are carried out by the two nonminorities, Messrs. Kasper and Knox.

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this action pursuant to Subsection 120.57(1), Florida Statutes.

   
   

9. The parties were duly noticed pursuant to Chapter 120, Florida Statutes.

   
   

10. The authority of the Petitioner is derived from Chapter 339, Florida Statutes.

    
    

11. Section 339.00805, Florida Statutes, provides in pertinent part that the Department of Transportation has the authority to certify and utilize socially and economically disadvantaged individuals as defined by the Surface Transportation and Uniform Relocation Act of 1987 as disadvantaged business enterprises in the department's construction projects. An applicant's eligibility for certification is reviewed annually. The applicant is required to demonstrate entitlement for certification.

    
    

12. Rule 14-78.005(7), Florida Administrative Code provides in pertinent part:

    
    

    (c) ...the ownership and control exercised by socially and economically disadvantaged shall be real, substantial and continuing and shall go beyond mere pro forma ownership of the firm, as reflected in its ownership documents. The socially and economically disadvantaged owners shall enjoy the customary incidents of ownership and shall share in the risks and profits commiserate with the ownership interests, as demonstrated by an examination of the substance rather than form of financial and managerial arrangements... .

    
    

    1. ...the DBE shall be one in which the socially and economically disadvantaged owner shall also possess the power to direct or cause the direction of the management, policies and operations of the firm and to make day-to-day as well as major business decisions concerning the firm's management, policy and operations... .

       
       

    2. ...the DBE shall be one in which the contributions of capital or expertise invested by the socially and economically disadvantaged individual owners are real and substantial... .

    
    

13. Ms. Deneweth failed to present documents or testimony to show that the firm was functioning as an independent business entity under Respondent's DBE requirements. She failed to establish that her ownership and control was real, substantial and continuing. Additionally, she lacked the requisite experience or training in the principal activities engaged in by Petitioner to independently make day-to-day and major decisions and be in effective control of

    Kasper Corporation. Finally, her contributions of capital or expertise were not demonstrated to be real and substantial.

    
    

14. Petitioner failed to satisfy her burden of establishing entitlement for recertification as required pursuant to Rule Section 14-78.005, Florida Administrative Code. See, Department of Transportation v. J.W.C. Company, Inc. 396 So.2d 778 (Fla. 1st DCA 1981).

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law it is recommended that Respondent enter a Final Order denying Petitioner's application for recertification as a disadvantaged business enterprise pursuant to Chapter 14-78, Florida Administrative Code.

RECOMMENDED this 24th day of April, 1990, in Tallahassee, Leon County, Florida.

JAMES E. BRADWELL

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 24th day of April, 1990.

COPIES FURNISHED:

Vernon L. Whittier, Jr., Esquire Department of Transportation Haydon Burns Building, M.S. 58 605 Suwannee Street

Tallahassee, Florida 32399-0458

Marianne Deneweth, President KASPER CORPORATION

5006 Trouble Creek Road Suite 215

New Port Richey, Florida 34652

Robert Scanlan, III, Esquire General Counsel

Department of Transportation

562 Haydon Burns Building Tallahassee, Florida 32399-0458

Ben G. Watts, Secretary Department of Transportation Haydon Burns Building

605 Suwannee Street

Tallahassee, Florida 32399-0458

Docket for Case No: 89-000830

Orders for Case No: 89-000830