STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, DEPARTMENT OF ) MANAGEMENT SERVICES, )

)

Petitioner, )

)

vs. ) CASE NO. 94-0576CVL

)

BEACON SALES CORPORATION, )

)

Respondent. )

)

FINAL ORDER

This case came before Larry J. Sartin, a duly designated Hearing Officer of the Division of Administrative Hearings, after the parties waived their right to a formal administrative hearing and submitted a stipulated record.

APPEARANCES

For Petitioner: Steven A. Werber, Esquire

200 Laura Street Post Office Box 240

Jacksonville, Florida 32201-0240

For Respondent: Sharon D. Larson, Staff Attorney

Office of General Counsel Department of Management Services Koger Executive Center

Suite 312 Knight Building 2737 Centerview Drive

Tallahassee, Florida 32399-0950 STATEMENT OF THE ISSUES

Whether the Petitioner should be placed on the convicted vendor list maintained by the Respondent pursuant to Section 287.133, Florida Statutes?

PRELIMINARY STATEMENT

By letter dated January 4, 1994, the Respondent, the Department of Management Services (hereinafter referred to as the "Department"), informed the Petitioner, Beacon Sales Corporation (hereinafter referred to as "Beacon"), that the Department had determined that good cause existed to place Beacon on the State of Florida Convicted Vendor List. On or about January 18, 1994, Beacon filed a Petition for Formal Administrative Hearing with the Department challenging the Department's decision. The petition was filed with the Division of Administrative Hearings by letter dated February 1, 1994, from the Department requesting the assignment of a Hearing Officer to conduct a Section 120.57(1), Florida Statutes, proceeding.

A final hearing was scheduled by Notice of Hearing entered February 3, 1994. The final hearing was scheduled for March 4, 1994.

On February 8, 1994 the Department filed a Request that Disposition be Rendered Based Upon Stipulated Facts. Counsel for the Department represented in the Request that Beacon authorized the pleading to be filed on behalf of both parties. Pursuant to the Request, the parties waived any right to a formal hearing and agreed to the disposition of this matter on certain facts stipulated to by the parties in a Joint Stipulation filed with the Request.

The Joint Stipulation contains facts agreed upon by the parties. Those stipulated facts have been incorporated and accepted in this Final Order. The parties also stipulated into evidence certain exhibits, which are hereby accepted.

On February 10, 1994, an Order Granting Request that Disposition be Rendered Based Upon Stipulated Facts and Cancelling Hearing was entered. The final hearing of this case was cancelled. The parties were informed that this Final Order would be rendered within thirty days of the date of the Order. The parties were also informed that they could file proposed final orders within ten days of the date of the Order. No proposed final orders have been filed.

FINDINGS OF FACT

The following findings of fact, stipulated to by the parties, are hereby accepted:

1. On January 7, 1993, Beacon pled guilty to the commission of a public entity crime as defined in subsection 287.133(1)(g), Florida Statutes. The plea was entered in the United States District Court for the Middle District of Florida, Jacksonville Division (Case No. 92-279-CR-J-20). On the basis of such plea, Beacon was convicted by judgment dated April 28, 1993 of making and causing to be made a false statement to a Department of the United States, in violation of 18 U.S.C. Sections 1001 and 1002, and was placed on two years probation. The facts surrounding the conviction are as follows:

   
   

   1. Beacon pled guilty to knowingly making a false statement on a certified payroll report form to the Federal Aviation Administration on August 20, 1987. The plea related to a renovation project at the Daytona Beach Airport funded in part by the U.S. Department of Transportation through the Federal Aviation Administration. Federal regulations required that a portion of the renovation work have minority business participation. On April 3, 1987, R&R construction and Suppliers of Jacksonville, Inc. ("R&R") won an $81,800 contract to do a portion of the lightweight concrete roofing work. R&R, which had been active since February 19874, was qualified as a disadvantaged business enterprise and a minority business enterprise.

      
      

   2. On the same day that R&R won the contract, it subcontracted the work to the Orlando division of beacon, known as "Commercial Roof Decks of Orlando." On August 20, 1987, R&R submitted a false certified payroll report form stating that it was responsible for supervising and paying the employees performing the roof construction work on the Daytona Beach Airport. In fact, employees of Commercial Roof Decks of Orlando aided and abetted R&R in submitting the false payroll form.

   3. Neither the home office of Beacon in Jacksonville nor the executive officers, directors or principal shareholders of Beacon knew about the falsification.

      
      

      Attached as Exhibits 1-1, 1-2, 1-3, and 1-4 are copies of the Plea Agreement, Judgement (including Sentence), Information and Pre-sentence Investigation Report relating to the conviction.

      
      

2. Pursuant to paragraphs 287.133(3)(a) and (b), Florida Statutes, Beacon made timely notification to the Department and provided details of the conviction. On December 9, 1992, prior to the filing of the Plea Agreement with the United States District court for the Middle District of Florida on December 18, 1992, Beacon, through its undersigned attorneys, Foley & Lardner, advised the Department by telephone and by confirming letter of the Plea Agreement and of Beacon's intent to cooperate with the Department in the investigation of Beacon's guilty plea to a public entity crime as defined in Subsection 287.133(1)(g), Florida Statutes. A copy of that letter is attached as Exhibit

   2-1, along with copies of subsequent correspondence dated January 13, 1993 (Exhibit 2-2), February 18, 1993 (Exhibit 2-3), March 15, 1993 (Exhibit 2-4),

   May 7, 1993 (Exhibit 2-5), and June 9, 1993 (Exhibit 2-6) apprising the Department of the course of the proceeding, including pre-sentence investigation, sentencing and judgment, and responding to the Department's requests for additional information.

   
   

3. On January 4, 1994 the Department issued a notice of intent pursuant to Subparagraph 287.133(3)(e)1., Florida Statutes, a copy of which is attached as Exhibit 3.

   
   

4. On January 18, 1994 pursuant to Subparagraph 287.133(e)2., Florida Statutes, Beacon timely filed a petition for formal administrative hearings pursuant to subsection 120.57(1), Florida Statutes, to determine whether it is in the public interest for beacon to be placed on the State of Florida Convicted Vendor List. A copy of Beacon's petition is attached as Exhibit 4.

   
   

5. Subparagraph 287.133(e)3., Florida Statutes, establishes factors which, if applicable to a convicted vendor, will mitigate against placement of that. vendor upon the Convicted Vendor List.

   
   

6. Subparagraph 287.133(e)3.d., Florida Statutes, established [p]rompt or voluntary payment of any damages or penalty as a result of the conviction" as a factor mitigating against placement on the Convicted Vendor List. As part of its Plea Agreement (see paragraph 3 of Exhibit 1-1), Beacon agreed to pay

   $17,480, half of the amount received by R&R on a total of eight projects, including the Daytona Beach Airport project, for which Commercial roof Decks of Orlando actually performed the work although the contracts were in the name of R&R. Such amount was paid on December 9, 1992. A copy of Beach's restitution check is attached as Exhibit 5. The U.S. government did not impose any further financial penalties or fines.

   
   

7. Subparagraph 287.133(3)(e)3.e., Florida Statutes, establishes "[c]ooperation with state or federal investigation or prosecution of any public entity crime" as a mitigating factor. When Beacon learned of the U.S. government's investigation of the wrongdoing described above, it cooperated fully with the investigation. Paragraph 9 of the Pre-sentence Investigation Report attached as Exhibit 1-4 states that Beacon "has voluntarily produced documents and made its personnel available for interviews concerning the instant

   offense." Production of documents and employee interviews all were conducted without subpoenas.

   
   

8. Beacon fully cooperated with the Department of Management Services in connection with its investigation initiated pursuant to Section 287.133, Florida Statutes. See Exhibits 2-1 through 2-6 regarding information Beacon supplied to the Department.

   
   

9. Subparagraph 287.133(3)(e)3.f., Florida Statutes, establishes "[d]isassociation from any other persons or affiliates convicted of the public entity crime" as a mitigating factor. The officer in charge of Beacons Commercial Roof Decks of Orlando division at the time of the Daytona Beach Airport project is no longer employed by Beacon, and the Orlando division has been closed. See Paragraph 6 of the Pre-sentence Investigation Report in Exhibit 1-4.

   
   

10. Subparagraph 287.133(3)(e)3.g., Florida Statutes, establishes "[p]rior or future self-policing by the person or affiliate to prevent public entity crimes" as a mitigating factor. At the time of the illegal conduct that was the subject of Beacon's conviction, each of Beacon's divisions operated relatively autonomously under the direction of its own division manager. Beacon's home office in Jacksonville subsequently realized that too much autonomy had been given to the various divisions of Beacon located outside of Jacksonville. All operations, including those of the former Tampa as well as Orlando divisions, are now centralized in Beacon's home office in Jacksonville, under a revised organizational structure in which senior management can exercise more close supervision over daily business functions.

    
    

11. Subparagraph 287.133(3)(e)3.h., Florida Statutes, establishes "[r]einstatement or clemency in any jurisdiction in relation to the public entity crime at issue in the proceeding" as a mitigating factor. Beacon received a suspended sentence, plus two years probation (see the Judgement in Exhibit 1-2). As part of its Plea Agreement, Beacon agreed to a one year voluntary exclusion under Title 49, Code of Federal Regulations (part 29), from all primary and lower tiered federal contracts and subcontracts beginning January 1, 1993. See Paragraph 6 of the Plea Agreement in Exhibit 1-1. Upon compliance with such one year voluntary exclusion, Beacon will be eligible to enter into federal contracts without any requirement of seeking reinstatement or clemency.

    
    

12. Subparagraph 287.133(3)(e)3.i., Florida Statutes, establishes "[c]ompliance by the person or affiliate with the notification provisions of paragraph (a) or paragraph (b) as a mitigating factor. See paragraph 8 above for information concerning prompt notice given by Beacon to the Department of its plea agreement and the numerous occasions it subsequently contacted the Department and provided it with additional information.

    
    

13. Subparagraph 287.1133(3)(e)3.j., Florida Statutes, establishes "[t]he needs of public entities for additional competition in the procurement of goods and services in their respective markets" as a mitigating factor. Beacon is the sole provider in Florida of certain products that allow it to offer very competitive prices. It is the exclusive provider in Florida of Merchant and Evans metal products and Decrabond roofing tiles. Beacon also is the exclusive agent in the North Florida region offer Loadmaster Roof Deck Systems and American Building Components. As one of the larger competitors in its market, Beacon also is able to achieve efficiencies that it is able to pass on to its customers. Public entities in the State of Florida would be deprived of a

    competitive source of commercial roof and wall systems if Beacon were to be placed on the Florida Convicted Vendors List.

    
    

14. Subparagraph 287.133(3)(e)3.k., Florida Statutes, establishes "any demonstration of good citizenship" as a mitigating factor. Beacon notes the following mitigating factors in this regard:

    
    

    1. Beacon has contributed approximately $28,000 in metal roofing work for the Disney World facility of Give Kids The World, a charitable organization devoted to granting the wishes of terminally ill children. Attached as Exhibit

       6 is a letter dated February 9, 1993 from Welbro Constructors, Inc. regarding Beacon's work on behalf of Given Kids The World. To the extent that its finances permit, Beacon plans to continue its work on behalf of this charitable organization. Beacon is a member of the Jacksonville Chamber of Commerce and is a member and supporter of the local public broadcasting station.

       
       

    2. Beacon also feels a responsibility to its employees, consisting of

       30 salaried individuals and 72 to 100 hourly employees. Beacon has been attempting since 1988 to create an employee stock ownership plan ("ESOP") which would buy the shares of Donald C. Works, Jr., a 50 percent shareholder of Beacon, consummation of the ESOP is subject to receipt of necessary financing and approval of Beacon's bonding companies. The ESOP would provide a mechanism for Mr. Works, one of the original founders of Beacon's business, to obtain liquidity for his investment in the corporation in connection with his retirement while simultaneously furnishing an incentive to Beacon employees by giving them an equity stake in the business. The ESOP would be a tax-qualified plan under the Employee Retirement Income Security Act of 1974. All full time employees of Beacon who meet minimum service requirements (e.g., one year of continuous full time employment) would receive stock under the plan, based on their relative annual compensation. Increases in the value of the business would be reflected in the buy-out price of their stock upon their retirement from the company.

       
       

15. This Joint Stipulation provides a full and complete factual basis for determining whether Beacon should be placed on the convicted vendor list. In light of the facts and the criteria set forth in Subparagraph 187.133(3)(e)3.a. through k., Florida Statutes, there are no disputed issues of material fact between the Department of Management Services and Beacon which would require a formal hearing.

    
    

    CONCLUSIONS OF LAW

    
    

    1. Jurisdiction.

       
       

16. The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Section 120.57(1), Florida Statutes (1993).

    
    

    1. Burden of Proof.

       
       

17. The burden of proof, absent a statutory directive to the contrary, is on the party asserting the affirmative of the issue of the proceeding. Antel v. Department of Professional Regulation, 522 So.2d 1056 (Fla. 5th DCA 1988); Department of Transportation v. J.W.C. Co., Inc. 396 So.2d 778 (Fla. 1st DCA 1981); and Balino v. Department of Health and Rehabilitative Services, 348 So.2d

    249 (Fla. 1st DCA 1977).

18. In this proceeding it is the Department that is asserting the affirmative: that it is "in the public interest" to place Beacon on the convicted vendor list. See Section 287.133(3)(e)4., Florida Statutes.

    
    

    1. The Convicted Vendor List.

    
    

19. Sections 287.132 and 287.133, Florida Statutes, authorize the Department to investigate and determine whether persons transacting business with public entities have been convicted of certain crimes and, if so, whether it would be "in the public interest" to place such persons on a "convicted vendor list." Any person placed on the convicted vendor list is prohibited from transacting business with public entities in Florida.

    
    

20. Section 287.133(3)(e)4., Florida Statutes, governs whether a person should be placed on the convicted vendor list and provides as follows:

    
    

    4. In any proceeding under this section, the department shall be required to prove that it is in the public interest for the person to whom it has given notice under this section to be placed on the convicted vendor list. Proof of a conviction of the person or that one is an affiliate of such person shall constitute a prima facie case that it is in the public interest for the person or affiliate to whom the department has given notice to be put on the convicted vendor list. Prompt payment of damages or posting of a bond, cooperation with investigation, and termination of the employment or other relationship with the employee or other natural person responsible for the public entity crime shall create a rebuttable presumption that it is not in the public interest to place a person or affiliate on the convicted vendor list. Status as an affiliate must be proven by clear and convincing evidence. If the hearing officer determines that the person was not convicted or is not an affiliate of such person, that person or affiliate shall not be placed on the convicted vendor list.

    
    

21. The parties have stipulated that Beacon is a person which has been "convicted" of a "public entity crime." See Sections 287.133(1)(b) and (g), Florida Statutes, and paragraph 1 of the Joint Stipulation.

    
    

22. The parties have stipulated to facts concerning the factors to be considered pursuant to Section 287.133(3)(e), Florida Statutes, which mitigate against placing Beacon should on the convicted vendor list. See findings of fact 5-14.

    
    

23. The parties have stipulated to facts that indicate "[p]rompt payment of damages or posting of a bond, cooperation with investigation, and termination of the employment or other relationship with the employee or other natural person responsible for the public entity crime . . . " by Beacon. Therefore, pursuant to Section 287.133(3)(e)4., Florida Statutes, the parties have

    stipulated to facts which "create a rebuttable presumption that it is not in the public interest to place [Beacon] on the convicted vendor list."

    
    

24. The Department has not suggested that proof exist sufficient to overcome the rebuttable presumption that Beacon should not be placed on the convicted vendor list. The Department has, therefore, failed to prove that it would be in the public interest to place Beacon on the Florida convicted vendor list.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, it is ORDERED that the Department of Management Services has failed to prove that

Beacon Sales Corporation should be placed on the Florida convicted vendor list.

DONE and ORDERED this 10th day of March, 1994, in Tallahassee, Florida.

LARRY J. SARTIN

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 10th day of March, 1994.

COPIES FURNISHED:

Steven A. Werber, Esquire Post Office Box 240

Jacksonville, Florida 32201-0240

Sharon D. Larson Assistant General Counsel

Department of Management Services Suite 312, Knight Building

2737 Centerview Drive

Tallahassee, Florida 32399-0950

William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307

2737 Centerview Drive

Tallahassee, Florida 32399-0950

Paul A. Rowell, Esquire Department of Management Services Knight Building, Suite 309

2737 Centerview Drive

Tallahassee, Florida 32399-0950

NOTICE OF RIGHT TO JUDICIAL REVIEW

ANY 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, 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: 94-000576CVL

Orders for Case No: 94-000576CVL