STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF MANAGEMENT SERVICES, )

)

Petitioner, )

)

vs. ) CASE NO. 92-4786CVL

)

KINNETT DAIRIES, INC., )

)

Respondent. )

)

FINAL ORDER

This matter came before the undersigned upon the Petition For Formal Administrative Hearings file herein by Respondent, Kinnett Dairies, Inc., (Kinnett), based on the Department of Management Service's, (Department) notice, pursuant to Section 287.133, Florida Statutes, that it had conducted an investigation and had determined that "good cause" existed to place Kinnett on the State of Florida's convicted vendor's list.

APPEARANCES

For the Petitioner: Joan Van Arsdall, Esquire

Department of General Services Knight Building, Suite 309 2737 Centerview Drive

Tallahassee, Florida 32399-0950

For the Respondent: Daniel S. Dearing, Esquire

1507 Raymond Diehl Road Tallahassee, Florida 32308

STATEMENT OF THE ISSUES

The Issue for consideration is this matter is whether the Respondent, Kinnett Dairies, Inc., should be placed on the State of Florida's convicted vendors list because of its conviction on January 9, 1990 for "making false statements to a federal agency."

PRELIMINARY MATTERS

By letter dated July 8, 1992, Larry Strong, Acting Secretary of the Department of General Services, advised counsel for the Respondent that based on an investigation conducted pursuant to Section 287.133, Florida Statutes, it had been determined that good cause existed to place Kinnett on the state's Convicted Vendors List because of it's January, 1990 conviction of "making false statements to a federal agency." By Petition For Formal Administrative Hearing dated July 30, 1992, and referring to the parties' Joint Stipulation of Fact of even date, Respondent requested a formal hearing on that intended action.

Thereafter, by letter dated August 6, 1992, the matter was forwarded to the

Division of Administrative Hearings for appointment of a Hearing Officer "to conduct the proceedings in accordance with Section 120.57(1), Florida Statutes."

Consistent with that mandate, on August 10, 1992, the undersigned, by Notice of Hearing to the parties, set the matter for hearing in Tallahassee on August 31, 1992. Thereafter, counsel for Respondent telephonically contacted the undersigned's secretary on August 11, 1992, urging that the Joint Stipulation filed with the Petition resolved all factual issues and there were, therefore, no disputed issues of fact requiring the conduct of a formal hearing. In a subsequent telephone call from counsel for Petitioner, the same position was urged by the Department whose counsel contended that the file, as forwarded from the Department, contained all information necessary for the undersigned to enter a Summary Final Order in this matter.

Consequently, no formal hearing was held and this Order is, upon the representations of counsel for both sides, based exclusively upon the matters contained in the Joint Stipulation, the Petition, and the enclosures to both.

FINDINGS OF FACT

1. The Department of General Services is the state agency required, pursuant to Section 287.133(3)(d), Florida Statutes, to maintain a list of the names and addresses of those persons who have been disqualified from the public contracting and purchasing process under that section.

   
   

2. On May 16, 1991, Kinnett, pursuant to a plea agreement with the State of Georgia, entered a plea of nolo contendere to a one count felony charge brought under Section 16-10-22, Official Code of Georgia for conspiracy in restraint of trade.

   
   

3. On July 31, 1991, Kinnett was convicted in federal court of a one count felony charge brought under Section 1 of the Sherman Antitrust Act, for a combination and conspiracy to suppress and eliminate competition by rigging bids.

   
   

4. Pursuant to the requirements of the Florida statute in issue here, Kinnett made timely notification of those convictions to the Florida Department of General Services. Thereafter, based on those convictions, the Department concluded it was in the public interest to place Kinnett on the convicted vendors list.

   
   

5. The parties have stipulated that concurrently with and as a part of the agreement for the entry of the plea of nolo contendere to the state charge, Kinnett entered into an agreement with the State of Georgia whereby it paid a fine of $10,000.00 and costs of an additional $10,000.00. It also cooperated fully with the investigation of the Attorney General of the State of Georgia which led up to the charge.

   
   

6. On the same date, May 16, 1991, Kinnett also entered into an agreement with the United States Department of Justice whereby it plead guilt to one felony count, as alleged in the information, and agreed to pay criminal penalties of $300,000.00 over a four year period and $25,000.00 in civil damages to the United States.

   
   

7. On July 19, 1989, Kinnett entered into a settlement agreement with the State of Florida regarding possible bid rigging of school requirements contracts in Florida by various dairies and paid settlement sums of $150,000.00. All

   penalties and civil liabilities due to the federal and state governments have been paid.

   
   

8. Kinnett fully cooperated with both Florida and Georgia in connection with their investigations into its activities. It also cooperated with the federal Grand Jury investigating its activities, a matter which was confirmed in an October 8, 1991 letter from the federal prosecutor to the Department.

   
   

9. No Kinnett employees were indicted as a result of the investigations by the federal and state governments as noted. No member of Kinnett's top management had knowledge of the alleged conduct of the four employees who were implicated in the misconduct involved herein. None of those four employees are still associated with Kinnett.

   
   

10. Kinnett has implemented an active antitrust and ethics compliance program developed with the advice and assistance of experienced antitrust counsel. Inherent in this program is the adoption of a Code of Ethics and Standards of Conduct regarding antitrust matters; establishment of an ethics committee to monitor compliance; establishment of a reporting "hotline"; adoption of new bidding procedures bringing upper management into the pricing process; implementation of a training program for all personnel; and adoption of a policy and procedure review program to oversee both internal and external review of company ethics, policies and procedures.

    
    

11. Going beyond the minimal requirements, Kinnett has arranged for outside accountants to perform a yearly, in-depth audit of all company books and accounting and pricing practices and has retained an expert in ethics to review existing policies and procedures and make recommendations for improvement.

    
    

12. Kinnett has maintained its long-standing involvement in both civic and charitable activities in and around the Columbus, Georgia area and employs disabled veterans and military retirees, who currently make up 38% of its workers, when possible. It was recognized by the Georgia Department of Labor for its efforts in this area.

    
    

13. Kinnett was one of the first companies in the Columbus, Georgia area to test both employees and job applicants for drug use, and has endorsed the Mayor's Task Force for Drug Free Columbus and consistent therewith has been instrumental in assisting other companies to establish programs to address substance abuse.

    
    

14. Its officers are active as leaders in various civic organizations and it has given generously to numerous public, civic and charitable organizations.

    
    

15. No matters in aggravation, other than the existence of the pleas, the convictions, and the penalties involved herein was presented by the Department.

    
    

16. No evidence was presented relating to a conviction in January, 1990.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

18. Section 287.133(3)(e), Florida Statutes, provides that:

    Upon receiving reasonable information from any source that a person has been convicted, the department shall investigate the information and determine whether good cause exists to place that person ... on the convicted vendor list. If good cause exists, the department shall notify the person ... in writing of its intent to place the name of that person ... on the convicted vendor list, and of the person's ... right to a hearing, the procedure that must be followed, and the applicable time requirements. If the person ... does not request a hearing, the department shall enter a final order placing the name of the person ... on the convicted vendor list.

    
    

19. If a petition for hearing is received by the Department within 21 days of receipt of the notice of intent, within 5 days from the receipt of the petition, the matter shall be referred to the Division of Administrative Hearings who shall assign a Hearing Officer to preside over a Section 120.57(1) proceeding, conducting it within 30 days after being assigned unless otherwise stipulated by the parties. A petition for hearing may not be filed under the provisions of Section 120.57(2), Florida Statutes.

    
    

20. Section 287.133(3)(e)3, Florida Statutes, lists the factors to be considered by the Hearing Officer in determining whether the person should be placed on the convicted vendor list. These include:

    
    

    1. Whether the person or affiliate committed a public entity crime.

    2. The nature and details of the public entity crime.

    3. The degree of culpability of the person or affiliate proposed to be placed on the convicted vendor list.

    4. Prompt or voluntary payment of any damages or penalty as a result of the conviction.

    5. Cooperation with state or federal investigation or prosecution of any public entity crime, ....

    6. Disassociation from any other persons or affiliates convicted of the public entity crime.

    7. Prior or future self-policing by the person or affiliate to prevent public entity crimes.

    8. Reinstatement or clemency in any jurisdiction in relation to the public entity crime at issue in the proceeding.

    9. Compliance by the person or affiliate with the notification provisions of paragraph (a) or paragraph (b).

    10. The needs of public entities for

        additional competition in the procurement of goods or services in their respective markets.

    11. Mitigation based upon any demonstration

        of good citizenship by the person or affiliate.

        
        

21. Sections 287.133(3)(e)4 and 5, Florida Statutes, place upon the Department the responsibility to prove that it is in the public interest for the person to whom it has given notice to be placed on the convicted vendor list. Proof of a conviction of the person shall constitute a prime facie case that it is in the public interest for the person to be placed on the convicted vendor list. Upon establishment of a prima facie case that it is in the public interest for the person to be placed on the convicted vendor list, that person may prove by a preponderance of the evidence that it would not be in the public interest to put him on the convicted vendor list based upon evidence addressing the factors from subparagraph 3, supra. In that regard, prompt payment of damages, cooperation with investigation, and termination of the employment of the person or persons responsible for the public entity crime shall create a rebuttable presumption that it is not in the public interest to place a person on the convicted vendor list.

    
    

22. In the instant case, the Department has presented evidence, by way of the Joint Stipulation, that Kinnett was convicted of various felonies in the courts of both the State of Georgia and the United States for price rigging in the sale of milk to various school boards and districts in Georgia during the years 1985 to 1987. No other particulars of the offenses has been presented. The Department has relied on those two judicial actions to support its determination that it is in the public interest to place Kinnett on the convicted vendor list. Neither relates to a conviction in January, 1990. Kinnett has objected and has requested a formal hearing through the filing of a petition.

    
    

23. Section 287.133(3)(e)2f, Florida Statutes, provides that at any time after the filing of the petition, informal disposition may be made pursuant to section 120.57(3), whereupon the Hearing Officer "...shall enter a Final Order adopting the stipulation, agreed settlement, or consent order." Here, while the parties have agreed upon the terms of a stipulation, that stipulation is evidentiary in nature only and does not agree upon the terms of a resolution of the placement issue. Section 120.57(3) is, therefore, not an appropriate method for the resolution of this particular case.

    
    

24. The Department has indicated its intention to place Kinnett on the convicted vendor list based upon the stipulated convictions which, admittedly, constitute, under the terms of the statute, a prima facie case for placing it there. By the same token, however, the stipulation also constitutes an agreement to the existence of a majority of those factors outlined in subsection 287.133(3)(e)3a - k, several of which, if proven, by the terms of the same statute create a rebuttable presumption that it is in the public interest that Kinnett should not be placed on the list. The Department has presented no evidence to rebut that presumption.

    
    

25. The public interest of this state requires that only bidders with the highest ethical standards and proven ethical performance be allowed to do business with the state. Here, the Department has agreed to a stipulation which makes it clear that placing Kinnett on the convicted vendor list is not in the public interest.

26. The lack of any evidence in rebuttal to the mitigating factors contained in the Joint Stipulation leaves no alternative to the conclusion that, under the terms of the statute pertinent here, Kinnett should not be placed on the convicted vendor list. It is, therefore:

ORDERED THAT

Kinnett Dairies, Inc. not be placed on the convicted vendor list on the basis of its convictions in the courts of Georgia and the United States for the offense of conspiracy in restraint of trade in the rigging of bids for the sale of milk to various school districts and school boards in Georgia during the period 1985 - 1987.

ORDERED in Tallahassee, Florida this 27th day of August, 1992.

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 27th day of August, 1992.

COPIES FURNISHED:

Daniel S. Dearing, Esquire 1507 Raymond Diehl Road Tallahassee, Florida 32308

James H. Wallace, Esquire Wiley, Rein & Fielding 1776 K Street, NW Washington, DC 20006

Joan Van Arsdall, Esquire Department of General Services 2737 Centerview Dr.

Knight Building, Suite 309 Tallahassee, Florida 32399-0950

Larry Strong Acting Secretary

Department of General Services Knight Building, Suite 307 2737 Centerview Dr.

Tallahassee, Florida 32399-0950

Susan Kirkland General Counsel

Knight Building, Suite 309 2737 Centerview Dr.

Tallahassee, Florida 32399-0950

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled to Judicial Review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing one copy of a Notice of Appeal with the Agency Clerk of the Division of Administrative Hearings and a second copy, accompanied by filing fees prescribed by law, or, when appropriate, a certificate of indigence, with the District Court of Appeal, First District, or with the District Court of Appeal in the appellate district where the party resides. The Notice of Appeal must be filed within 30 days of rendition of the Order to be reviewed.

Docket for Case No: 92-004786CVL

Orders for Case No: 92-004786CVL