STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

UNITED TECHNOLOGIES CORPORATION, )

and its Divisions, Subsidiaries ) and Affiliates, )

)

Petitioners, )

)

vs. ) CASE NO. 94-5405CVL

) STATE OF FLORIDA, DEPARTMENT ) OF MANAGEMENT SERVICES, )

)

Respondent. )

)

FINAL ORDER

This case was presented pursuant to a joint stipulation. See Section 287.133(3)(e)2.f, Florida Statutes. Charles C. Adams was the Hearing Officer.

APPEARANCES

For Petitioner: C. Alan Lawson, Esquire

C. Alan Lawson, P.A. Steel, Hector and Davis

215 South Monroe Street, Suite 601 Tallahassee, Florida 32301

For Respondent: Joan Van Arsdall, Staff Attorney

Department of Management Services

309 Knight Building 2737 Centerview Drive

Tallahassee, Florida 32399-0950 STATEMENT OF ISSUES

Should Petitioners be placed on the convicted vendor list maintained by the Respondent? See Section 287.133, Florida Statutes.

PRELIMINARY STATEMENT

By letter dated August 10, 1994, the Respondent (hereinafter referred to as the "Department"), issued a notice to inform the Petitioners (hereinafter referred to as "UTC"), that the Department had determined that good cause existed to place UTC on the State of Florida Convicted Vendor List. UTC received this notice on September 6, 1994. On September 23, 1994, UTC filed a petition for formal administrative hearings with the Department challenging the Department's preliminary decision. On September 28, 1994, the Department notified the Division of Administrative Hearings of the request for formal hearing. On September 29, 1994, a hearing officer was assigned to preside over the proceeding. A formal hearing was scheduled to be conducted on October 31, 1994. In lieu of that formal hearing the parties sought informal disposition of

the case pursuant to Section 120.57(3), Florida Statutes, based upon the joint stipulation. By this agreement the parties waived their right to a formal hearing pursuant to Section 120.57(1), Florida Statutes, having resolved any disputed issues of material fact by entry into the joint stipulation.

The stipulated facts set forth in the joint stipulation are incorporated in this final order, to include the referenced exhibits to the joint stipulation.

On October 31, 1994, a conference was held between the hearing officer and counsel at which time the parties were advised that they would be permitted to submit proposed final orders. On October 31, 1994, counsel for UTC filed a written statement advising that the parties agreed that there was no necessity to submit proposed final orders. Therefore, the parties are deemed to have waived the right to submit proposed final orders.

FINDINGS OF FACT

The Department of Management Services ("Department") and United Technologies Corporation ("UTC"), on behalf of itself and its divisions, subsidiaries and affiliates, hereby enter this Joint Stipulation, through counsel, and stipulate to the following facts:

1. On August 28, 1992, UTC pleaded guilty to a four count criminal information. A copy of the plea agreement and related documents are attached as Exhibit A. The plea was entered in the United State District Court, Eastern District of Virginia, and resulted in the criminal judgment attached as Exhibit

   1. This judgment, under the definitions of subsection 287.133(1)(g), Florida Statutes, was a public entity crime.

      
      

2. UTC's conviction arose from an investigation of defense procurement improprieties, focusing on consultants, known commonly as the "Ill Wind" investigation.

   
   

3. On August 28, 1992, UTC notified the Department by telephone and in writing of the anticipated judgement. A copy of UTC's written notification is attached as Exhibit C. On September 3, 1992, UTC provided the Department with a copy of the plea agreement, the criminal information, and the prosecutor's statement of facts. A copy of the transmittal letter accompanying these documents is attached as Exhibit D.

   
   

4. On August 10, 1994, the Department issued a notice of intent pursuant to subparagraph 287.133(3)(e)1., Florida Statutes. UTC received the notice, a copy of which is attached as Exhibit E, on September 6, 1994.

   
   

5. On September 23, 1994, pursuant to subparagraph 287.133(3)(e)2., Florida Statutes, UTC timely filed a petition for formal administrative hearing in accordance with subsection 120.57(1), Florida Statutes, alleging that it would not be in the public interest to place UTC or any of its divisions, subsidiaries or affiliates on the State of Florida Convicted Vendor List.

   
   

6. Section 287.133(3)(e)3., Florida Statutes, establishes factors which, if applicable, will mitigate against placement on the Convicted Vendor List.

   
   

7. Section 287.133(3)(e)3.d., Florida Statutes, establishes "[p]rompt or voluntary payment of any damages or penalty as a result of the conviction" as a mitigating factor.

8. UTC paid promptly all fines ($2 million), assessments ($800), civil claims ($2.5 million), and the government's costs of investigation ($1.5 million for Department of Justice and $10,000 for Department of Defense). An affidavit attesting to these payments is attached as Exhibit F. The Department does not contest any of the facts set forth in the affidavit.

   
   

9. Section 287.133(3)(e)3.e., Florida Statutes, establishes "[c]ooperation with a state or federal investigation or prosecution of any public entity crime" as a mitigating factor.

   
   

10. UTC cooperated fully in the grand jury investigation conducted by the United States Attorney. As part of the plea agreement, the United States Attorney agreed to advise the Department of Defense that UTC "cooperated fully" with its investigation. A copy of this stipulation is attached as Exhibit G. UTC also cooperated fully with the Florida Department of Management Services in its investigation pursuant to Section 287.133(3)(e)1., Florida Statutes.

    
    

11. Section 287.133(3)(e)3.f., Florida Statutes, establishes "[d]isassociation from any other person or affiliate convicted of the public entity crime" as a mitigating factor.

    
    

12. UTC has disassociated itself from all individuals convicted of the wrongdoing which gave rise to UTC's conviction. Relationships with convicted consultants and employees have been terminated. A more detailed description of these terminations is contained in the affidavits and documents attached as Exhibit H. The Department does not contest any of the facts set forth in Exhibit H.

    
    

13. Section 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.

    
    

14. UTC has comprehensive ethics and government contract compliance programs. These programs are outlined in Annex I to an AGREEMENT BETWEEN THE DEPARTMENT OF DEFENSE AND UNITED TECHNOLOGIES CORPORATION, effective as of September 29, 1992, attached as Exhibit I. UTC's programs are centered on a Code of Ethics and a Policy Statement on government contracting, copies of which are attached as Exhibit J.

    
    

15. Section 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.

    
    

16. The Department of the Navy, acting on behalf of the Department of Defense, entered an administrative agreement with UTC, the sole purpose of which was to evidence that UTC is presently responsible to contract with the federal government notwithstanding UTC's conviction in Ill Wind. The AGREEMENT BETWEEN THE DEPARTMENT OF DEFENSE AND UNITED TECHNOLOGIES CORPORATION, effective as of September 29, 1992, provides --

    
    

    1. paragraph 2: "UTC may use the fact of

       this Agreement as evidence of the Navy's favorable review of the UTC compliance program."

    2. paragraph 14: "In recognition of the actions by and covenants of UTC set forth herein, the Department of Defense will not suspend or debar UTC or any of its divisions or affiliates" based upon UTC's Ill Wind conviction.

       
       

       (A copy of the full agreement is attached as Exhibit K).

       
       

17. Section 287.133(3)(e)3.i., Florida Statutes, establishes compliance with the notification provisions of section 287.133(3)(a) or (b) as a mitigating factor. UTC promptly complied with these provisions.

    
    

18. Section 287.133(3)(e)3.k, Florida Statutes, establishes "any demonstration of good citizenship" as a mitigating factor.

    
    

19. UTC has demonstrated good citizenship through its community affairs programs. This includes both financial contributions and employee volunteers in supporting UTC-sponsored programs. More than 10,000 employees volunteer their time in support of education and other community needs. More detailed information demonstrating UTC's good citizenship is attached as Exhibit L. The Department does not contest any of the facts set forth in Exhibit L.

    
    

20. The Department is aware of no aggravating facts concerning the conviction of UTC.

    
    

21. The UTC divisions and subsidiaries which conduct or currently plan to conduct business in or with the Sate of Florida and/or which are registered to do business in Florida are listed in Exhibit M.

    
    

22. This joint stipulation provides a full and complete factual basis for determining whether UTC should be place don the Convicted Vendor List. In light of the facts and the criteria set forth in section 287.133(3)(e)3.a. through k., Florida Statutes, and the presumptions created by section 287.133(3)(e)4., Florida Statutes, there are no disputed issues of material fact between the Department and UTC which would require a formal hearing.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

24. Sections 287.132 and 287.133, Florida Statutes, grant authority to the Department to investigate and determine whether UTC is guilty of a "public entity crime" and whether it would be "in the public interest" to place UTC on the "convicted vendor list". Such an outcome would prohibit UTC from transacting business with public entities in Florida.

    
    

25. The procedures for determining whether UTC should be placed on the Convicted Vendor List are as set forth in Section 287.133(3)(e)4, Florida Statutes, which states:

    
    

    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.

    
    

26. By their factual stipulation the parties agree that UTC is a "person" which has been "convicted" of a "public entity crime". See Section 287.133(1)(b)(e) and (g), Florida Statutes.

    
    

27. However, the parties have stipulated that UTC promptly paid penalties (fines, assessments, civil claims and costs of investigation), cooperated with the underlying federal investigation and prosecution, terminated UTC employees and terminated relationships with consultants to UTC who were convicted of wrongdoing that lead to the UTC conviction, thus creating a rebuttable presumption that it would not be in the public interest to place UTC on the convicted vendor list.

    
    

28. Under the terms of the joint stipulation, absent other proof, the Department has not overcome the rebuttable presumption that it would not be in the public interest to place UTC on the convicted vendor list.

ORDER

Based upon the facts found and the conclusions of law reached, it is, ORDERED:

That it is not in the public interest to place United Technologies Corporation and its divisions, subsidiaries and affiliates on the convicted vendor list.

DONE and ENTERED this 10th day of November, 1994, in Tallahassee, Florida.

CHARLES C. ADAMS

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 November, 1994.

COPIES FURNISHED:

1. Alan Lawson, Esquire Suite 601

215 South Monroe Street Tallahassee, FL 32301

Joan Van Arsdall, Esquire Department of Management Services

309 Knight Building 2737 Centerview Drive

Tallahassee, FL 32399-0950

William H. Linder, Secretary Department of Management Services

307 Knight Building 2737 Centerview Drive

Tallahassee, FL 32399-0950

Paul A. Rowell, General Counsel Department of Management Services

312 Knight Building 2737 Centerview Drive

Tallahassee, FL 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, 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: 94-005405CVL

Orders for Case No: 94-005405CVL