The Issue The issues are whether Petitioner is entitled to attorney fees and costs pursuant to Section 120.595(3), Florida Statutes, and if so, in what amount.
Findings Of Fact Petitioner was the prevailing party in DOAH Case No. 00-1600RX on one of two challenged rule provisions. In that case, the challenge to Rule 61K1-1.0011(3)(c), Florida Administrative Code, which required all contracts between a manager and a boxer to be filed with Respondent within seven days of execution, was dismissed on its merits. Rule 61K1- 1.0011(3)(g), Florida Administrative Code, and Form BPR-0009451 incorporated therein, were found to be invalid exercises of delegated legislative authority to the following extent: (a) that Rule 61K1-1.0011(3)(c), Florida Administrative Code, deemed contacts between managers and boxers to contain all provisions set forth in Form BPR-0009451; and (b) that Form BRP- 0009451 deemed contracts between managers and boxers to be void if the managers were unlicensed on the date their contracts were executed or if the managers failed to file the contracts with Respondent within seven days of execution. Respondent presented no evidence, testimonial or documentary, in DOAH Case No. 00-1600RX or the instant case, showing that it had a reasonable basis in fact to promulgate Rule 61K1-1.0011(3)(g), Florida Administrative Code, and Form BPR-0009451 incorporated therein, in 1985 or thereafter to amend, enforce, or defend said rule and form. Respondent admits that it has not maintained the pertinent rulemaking record required by Section 120.54(8), Florida Statutes. There is no competent evidence that Respondent in fact conducted the mandatory rule reviews required by Section 9 of Chapter 96-159, Laws of Florida, or Section 3 of Chapter 99-379, Laws of Florida. Respondent did not file post-hearing depositions showing that it ever conducted these rule reviews. Respondent admitted during the hearing of the instant case that it had no written documentation confirming that the rule reviews took place. There is no factual evidence showing the existence of special conditions that would make an award of attorney's fees and costs unjust in this case. There is no evidence showing how to allocate Petitioner's requested attorney's fees and costs between the two challenged rule provisions. The record in DOAH Case No. 00-1600RX does not indicate that the Intervenor Danny Santiago created duplicitous and unnecessary work for Petitioner and Respondent. Two of the depositions taken on December 5, 2000, at the instance of Intervenor Danny Santiago and over Respondent's objections, were filed in DOAH Case No. 00-1600RX, becoming part of the record in that case. Moreover, there is no evidence showing how to allocate a portion of Petitioner's requested attorney's fees and costs to work created exclusively by Intervenor Danny Santiago. Petitioner filed an Affidavit of Attorney Fees and Costs on March 19, 2001. Petitioner seeks to recover $13,235 in fees and costs. Petitioner presented competent evidence that the requested attorney's fees were reasonable based on the number of hours expended (66.175) and the rate charged per hour ($200). Petitioner also presented competent evidence that an expert witness fee in the amount of $1,000 is reasonable in this case. Respondent objected to Petitioner's requested attorney's fees as they relate to the following specific charges: (a) charges pertaining to an unrelated case in which Respondent sought to discipline Petitioner for violating Respondent's rules; (b) charges relating to Petitioner's Motion to Compel Discovery after Petitioner improperly served the original discovery requests and was required to serve the discovery requests a second time; and (c) charges relating to the preparation of the instant motion for fees and costs. Petitioner agreed to reduce his claim for fees and costs by the amount of the disputed charges if Respondent could provide the total amount. After much discussion, the parties agreed to file a post-hearing stipulation as to the amount to be deducted from Petitioner's claim. The parties never filed that stipulation. The undersigned has compared the record in DOAH Case No. 00-1600RX with the list of charges for fees and costs attached to Petitioner's Affidavit of Attorney Fees and Costs. The undersigned has also taken into consideration Respondent's objections to certain charges and Petitioner's acquiescence to those objections. The record reveals that Petitioner is not entitled to recover the following: (a) charges on April 13 and 27, 2000, in the amount of $100 that pertain to a request for and granting of oral argument that did not occur in the underlying case; (b) charges on July 6, 2000, and July 31, 2000, in the amount of $100, relating to review of an unidentified motion to compel and review of an order granting that motion, which did not occur in the underlying case; (c) charges on July 17 and 27, 2000, and August 14, 2000, in the total amount of $320, relating to Petitioner's improper motion to compel discovery after Petitioner incorrectly served the original discovery requests on the Attorney General and was required to serve the discovery requests a second time; (d) a charge on August 24, 2000, in the amount of $200 for attendance at court, which did not occur in the underlying case; (e) a charge on September 11, 2000, in the amount of $50 for review of an order dismissing with prejudice, which did not occur in the underlying case; (f) charges on February 23, 2001, in the amount of $80, relating to the preparation of the instant motion for fees and costs; and (g) charges on October 26, 2000, in the amount of $500 for travel to a deposition. The reduction amount for attorney's fee charges totals $1,350. There are no other identifiable disputes over amounts claimed by Petitioner as recoverable expenses or costs. Therefore, Petitioner is entitled to recover $11,885 in attorney's fees and costs incurred in DOAH Case No. 00-1600RX and an additional $1,000 for expert witness fees in the instant case, for a total recovery in the amount of $12,885. This amount is reasonable under the facts of this case. The record in DOAH Case No. 00-1600RX clearly reflects that Respondent had sufficient and timely notice of Petitioner's intent to seek attorney's fees and costs prior to the entry of the Final Order. In Respondent's meeting on December 6, 2000, Respondent's counsel advised Respondent several times that it would be liable for attorney's fees and costs if the challenged rules or portions thereof were found to lack statutory authority. Counsel for Petitioner and Intervenor Danny Santiago made appearances on behalf of their respective clients at that meeting. Petitioner made his first formal demand for attorney's fees and costs in his Proposed Final Order, which was filed in DOAH Case No. 00-1600RX on January 22, 2001. Respondent filed its Statement of Defenses to Petition for Attorney Fees in the instant case on March 19, 2001. Respondent raised the issue that Petitioner's demand for attorney's fees and cost was untimely for the first time in Respondent's Proposed Final Order filed in the instant case on May 11, 2001.
The Issue Whether or not the Petitioner, Conduces Club, Inc., is entitled to the issuance of a Series 11-C alcoholic beverage license.
Findings Of Fact The Petitioner, Conduces Club, Inc., a nonprofit corporation incorporated in the State of Florida, has applied to the Respondent, State of Florida, Department of Business Regulation, Division of Alcoholic Beverages and Tobacco, for the issuance of a series 11-C alcoholic beverage license. This license is described in Rule 7A-1.13, Florida Administrative Code, as a club license to sell to members and nonresident guests only. The terms and conditions for the issuance of such a license are as set forth in Subsection 561.20(7)(a), Florida Statutes, and Subsection 565.02(4), Florida Statutes. The Director of the Division of Alcoholic Beverages and Tobacco has denied the application of the Petitioner premised upon the assertion that the Petitioner has failed to meet the requirements set out in the aforementioned sections of the Florida Statutes. The Petitioner has disagreed with that interpretation and a Section 120.57, Florida Statutes, hearing was scheduled and held on April 10, 1979. The crucial language to be considered in determining whether or not the Petitioner should be extended the privilege of operating under a Series 11-C alcoholic beverage license is found in the Subsection 561.20(7)(a), Florida Statutes, which reads as follows: "(7)(a) There shall be no limitation as to the number of licenses issued pursuant to 565.02(4). However, any licenses issued under this section shall be limited to: Subordinate lodges or clubs of national fraternal or benevolent associations; Golf clubs and tennis clubs municipally or privately owned or leased; Nonprofit corporations or clubs devoted to promoting community, municipal, or county development or any phase of community, muni- cipal, or county development; Clubs fostering and promoting the general welfare and prosperity of members of showmen and amusement enterprises; Clubs assisting, promoting, and de- veloping subordinate lodges or clubs of national fraternal or benevolent associa- tions; and Clubs promoting, developing, and main- taining cultural relations of people of the same nationality." (Although the introductory phrase in the above-quoted Subsection makes reference to Subsection 565.02(4), Florida Statutes, as being involved in the process of issuing a license, Subsection 565.02(4), Florida Statutes, true function is the establishment of the requirement that chartered or unincorporated clubs pay an annual state license tax of $400.00, and it is this Subsection 561.20(7)(a), -- Florida Statutes, which establishes those categories of candidates who may receive a Series 11-C alcoholic beverage license.) Of the possible categories for licensure, the one which appears to be the focal point of the controversy is that provision found in Subsection 561.20(7)(a)3., Florida Statutes. In support of its request, the Petitioner presented certain witnesses and items of evidence. Among those items was the testimony of Mrs. E. R. Atwater, Social worker Supervisor with the United States Department of Housing and Urban Development, Housing Management Division, assigned to the Blodgett Community in Jacksonville, Florida. The Blodgett Community is a housing development of some 53 acres which contains 628 housing units with a breakdown of that population containing 301 senior citizens and 1,069 juveniles, with cost of the heads of the households being female. Those persons living in the Blodgett development are described as having a poor economic circumstance. Mrs. Atwater indicated that the Conduces Club, Inc., had on occasion sponsored girls softball teams and boys basketball teams for those young persons living in the Blodgett Community and she had expressed her appreciation in the form of correspondence of January 17, 1979, which is the Petitioner's Exhibit No. 1 admitted into evidence. In addition, Mrs. Atwater indicated that the Conduces Club, Inc., had provided transportation for a trip for the residents of the Blodgett Community to Six Gun Territory located near Ocala, Florida. Arrangements were made for three busses; two of the busses which transported residents on July 16, 1977, and the third bus transported them on August 11, 1977. The trips involved both young people and adults as participants. The letters requesting the assistance of the Conduces Club, Inc., and the confirmation of that request may be found as Petitioner's Exhibits Nos. 2 and 3, admitted into evidence consecutively. The president of the Conduces Club, Inc., Mr. Cornell Tarver, testified in support of the petition. He indicated that the club had been originally formed as the Pacesetter Club but its name was changed in September, 1976, because of a conflict concerning the utilization of the name, which had been preempted by another club. The club was chartered as a nonprofit corporation by the State of Florida on September 22, 1976, under the name, "Conduces Club, Inc." A copy of the Articles of Incorporation may be found as Respondent's Exhibit No. 1 admitted into evidence. Mr. Tarver indicated that the purpose of the club was to help the youth and senior citizens and principally the kids of the Blodgett Community, to include organizing softball and baseball and providing uniforms. He also testified that a certain banquet was hold for these young persons and the parents of those children were invited to attend, and enough food was prepared to food cost of the individuals who reside in the Blodgett Community. He produced certain plaques and trophies awarded to the club. The plague was given by the mothers of the children in the sports programs and the trophy was presented by an unaffiliated club that the Conduces Club had helped to organize. The witness, Tarver, indicated that the club was financed by functions such as dances, fish fries, food sales in their club house, dues of the members and fines. The club itself has twenty-seven members. Other projects the club has participated in, were the contribution of money to local churches and the donation of an organ to one of those churches. On December 16, 1977, the club contributed $500.00 to the National Association for the Advancement of Colored People. The club house is open every day and there are certain activities through the week, to include club meetings and entertainment for the benefit of club members. The members run the club without compensation and the club does not maintain any regular employees. The official statement of the club's purposes may be found in the Respondent's Exhibit No. 2 admitted into evidence. This is a composite exhibit which contains part of the application for the license and a copy of the Bylaws. The objectives of the corporation may be found in Article II of the Bylaws and the activities of the corporation may be found in Article VIII of the Bylaws. Article II states: "The objectives of this organization shall be as follows: To unite fraternally all persons who the membership may from time to time take into the club. To promote brotherhood, sportsmanship, friendship and charity for the membership and their families. To strive at all times to promote and protect the welfare of every member. To promote a spirit of cooperation between its members and the public. To honor outstanding individuals in the City of Jacksonville for their achievement. To do anything necessary, including, but not limited to, the ownership of property, real and personal, for the accomplishment of the foregoing objectives, or those which may be recognized as proper and legal objectives of this club, all of which shall be consistent with the laws, the public interest and the interest of its mergers. To sue or to be sued as a natural person. To bear a seal to be placed on all of the club's official correspondence." Article VIII states: "COMMITTEES Section 1. The following standing committees and such other committees as the directors may, from time to time deem necessary, shall be appointed by the president of the association. Social Committee Athletic Committee Scholarship Committee The duties of the standing committee shall include the following, which shall not, however, prelude other activities by such committees. Section 2. The social committee shall be composed of six members. It shall be the duty of this canted to supervise the use of club room and to plan such club meetings of a purely social nature as it may deem necessary. These may include parties, picnics, and other such social or athletic events sponsored by the organization. Section 3. The athletic committee shall be composed of three members. It shall be the duty of this committee to supervise and manage all athletic activities for the association, including but not limited to management of various athletic teams sponsored by the club. Section 4. The scholarships committee shall be composed of six members. It shall be the duty of this committee to screen applicants for scholarships and deserving students in Duval County, Florida, and to make recommendations to the general membership of its findings of worthwhile recipients of scholarships, or awards." It can be seen that the Petitioner's members have a commendable concern for the community in which the club has its principal base of operation and this concern has been expressed through the activities of the club members which have been described in the course of this Recommended Order; however, it appears from an examination of the testimony in this hearing and the official statement, that is, the Bylaws of this corporation, that the principal purpose of the club is as stated by the Article II B. of the Bylaws, which language states, "To promote brotherhood, sportsmanship, friendship and charity for the membership and their families," and this attitude carries over to foster good relations between those members and the members of the general public. Therefore, the Petitioner is not perceived as being a club which meets the criterion, "devoted to promoting community, municipal or county development or any phase of community, municipal or county development." See Subsection 561.20(7)(a)3., Florida Statutes. This conclusion is reached in examining the definition of the word "devoted," as found in Webster's New World Dictionary of the American Language, College Edition. That definition states that to be devoted one must be, "1. vowed; dedicated; consecrated. 2. very loyal; faithful." and although the community concern of the Petitioner is very high, it does not reach the level of devotion. Consequently, the Director of the Division of Alcoholic Beverages and Tobacco was correct in denying the application for a Series 11-C alcoholic beverage license.
Recommendation It is recommended that the Director of the Division of Alcoholic Beverages and Tobacco deny the Petitioner, Conduces Club, Inc.'s request for a Series 11-C alcoholic beverage license. DONE AND ENTERED this 30th day of April, 1979, in Tallahassee, Florida. CHARLES C. ADAMS Hearing Officer Division of Administrative Hearings Room 101, Collins Building MAILING ADDRESS 530 Carlton Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Jennings H. Best, Esquire 3410 North Myrtle Avenue Jacksonville, Florida 32209 Francis Bayley, Esquire Staff Attorney Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 J. M. Ogonowski Richard P. Daniel Building, Room 514 111 East Coast Line Drive Jacksonville, Florida 32202
The Issue The issue is whether Petitioner owes tax, penalty, and interest under Section 212.05(1)(a)2., Florida Statutes,1/ for an aircraft that it allegedly purchased and used in Florida.
Findings Of Fact Petitioner is a national banking and trust company headquartered in Utah. It does not have any operations or personnel in Florida. Petitioner routinely serves as “owner trustee” for non- U.S. citizens who want to register aircraft with the Federal Aviation Administration (FAA). Petitioner charges a fee (typically $4,000) to set up the trust, as well as an annual fee (typically $2,000) for its services as “owner trustee.” Petitioner holds legal title to the aircraft in its capacity as “owner trustee” because the FAA regulations do not allow non-U.S. citizens to register aircraft. Petitioner does not have any operational control over the aircraft even though it holds legal title. The tax assessment at issue in this case relates to a Cessna Citation 650 jet, tail number N385EM (hereafter “the aircraft”), which Petitioner holds legal title to as “owner trustee” pursuant to a Trust Agreement dated April 28, 2007. The trustor and beneficiary under the Trust Agreement is MAW.ZC, LLC, which is a Delaware limited liability company, controlled by a non-U.S. citizen, Nelson Ceballos. The sole purpose of the trust was to “ensure the eligibility of the Aircraft for United States registration with the [FAA].” The aircraft was purchased from Southern Jet Center (SJC) in Sanford, Florida, on May 3, 2007, for $3.74 million. The “purchaser” identified on the Bill of Sale was “Wells Fargo Bank Northwest, NA as Owner Trustee under Trust Agreement dated 4/28/07.” MAW.ZC, LLC, was not mentioned on the Bill of Sale. Petitioner’s witness, Jon Croasman, testified that MAW.ZC, LLC, negotiated the purchase of the aircraft with SJC, and then assigned the purchase right to Petitioner as “owner trustee” so that the aircraft would not lose its tail number and it would be easier to register the aircraft with the FAA. The record does not contain a written purchase agreement between MAW.ZC, LLC, and SJC or a written assignment of the purchase right from MAW.ZC, LLC, to Petitioner. According to Mr. Croasman, SJC was “kind of an unsophisticated seller” and it did not require these documents. Mr. Croasman was the only witness with personal knowledge of the events surrounding the purchase of the aircraft who testified at the final hearing. His testimony was logical and persuasive and is accepted as credible despite the absence of corroborating documentation. Petitioner did not pay anything to SJC for the purchase of the aircraft. The entire $3.74 million purchase price was paid by MAW.ZC, LLC. Petitioner was the purchaser of the aircraft in name only. The real purchaser was MAW.ZC, LLC. On May 4, 2007, Petitioner filed an application to register the aircraft with the FAA. The applicant listed on the application form was “Wells Fargo Bank Northwest, National Association, not in its individual capacity but solely as Owner Trustee under a Trust Agreement dated as of 4/28/07.” On the same day, the FAA issued a certificate of registration for the aircraft. The certificate was issued to “Wells Fargo Bank Northwest NA Trustee.” Registration of an aircraft with the FAA has no bearing on its ownership. Indeed, the official registration document for the aircraft issued by the FAA states: “This certificate is issued for registration purposes only and is not a certificate of title. The Federal Aviation Administration does not determine rights of ownership as between private parties.” On May 7, 2007, Petitioner filed with the Department an Affidavit for Exemption of Aircraft Sold for Removal from the State of Florida by a Nonresident Purchaser (hereafter “the Removal Affidavit”). The affidavit identified the purchaser of the aircraft as “Wells Fargo bank Northwest, NA, not in its individual capacity but solely as Owner Trustee for MAW.ZC, LLC.” The aircraft remained in Florida undergoing repairs at SJC from the date of purchase until July 2, 2007, when it was flown to Venezuela where it was based. It is undisputed that the aircraft left Florida within 20 days after the initial repairs were completed and, therefore, the sale was exempt from the sales tax. The Department informed Petitioner in a letter dated July 13, 2007, that the aircraft could not be brought back into Florida for a period of six months without its becoming subject to Florida’s use tax. Petitioner forwarded this letter to Mr. Ceballos, since he and MAW.ZC, LLC, were responsible for the operation of the aircraft. Petitioner did not exercise any control over the operation of the aircraft after its purchase. In April 2007, prior to the purchase of the aircraft, Petitioner and MAW.ZC, LLC, entered into an Aircraft Operating Agreement. This agreement was executed in conjunction with the Trust Agreement in anticipation of the purchase of the aircraft. The Aircraft Operating Agreement gave MAW.ZC, LLC, “an exclusive right to possess, use and operate the Aircraft.” The agreement required MAW.ZC, LLC, to pay all costs associated with the operation and maintenance of the aircraft. And, with respect to the operation of the aircraft, the agreement required only that MAW.ZC, LLC, cause the Aircraft to be operated by competent personnel in accordance with the manufacturer’s manuals and FAA and other government regulations. On June 15, 2007, Petitioner authorized Captain Alexander Nunez to pilot the aircraft “wherever necessary and specifically including but not limited to Venezuelan air space.” Petitioner interprets the Trust Agreement and the Aircraft Operating Agreement to preclude it from exercising any control over the operation of the aircraft even though Section 9.01(a) of the Trust Agreement gives Petitioner “absolute and complete discretion” in connection with matters involving the ownership and operation of the aircraft so as to protect the interests of the United States. According to Mr. Croasman, the language in Section 9.01 is required verbatim by the FAA for the sole purpose of ensuring that Petitioner, as “owner trustee,” will be able to operate the aircraft without violating its obligations under the Trust Agreement in the unlikely event that the U.S. government needs to use the aircraft for some reason.2/ And, as Mr. Croasman pointed out, Section 9.01(a) requires Petitioner to “exercise this discretion in all matters involving ownership and operation of the Aircraft by the Owner Trustee with due regard for the interests of the Trustor.” The Trust Agreement and the Aircraft Operating Agreement provided that MAW.ZC, LLC, was responsible for keeping records concerning the use of the aircraft. MAW.ZC, LLC, was also responsible for paying any taxes or expenses related to purchase or use of the aircraft. The aircraft crashed in Venezuela on February 18, 2008, killing Mr. Ceballos, Captain Nunez, and the copilot. The original flight records for the aircraft were destroyed in the crash, and no copies of those records were presented at the final hearing. No witness with personal knowledge regarding the operation of the aircraft was presented at the final hearing. The only evidence presented concerning the operation of the aircraft was flight data obtained from two Internet sources, FlightAware and fboweb.com. The FlightAware data was obtained by Department staff as part of their monitoring of the aircraft’s operation during the six-month period after its initial departure from Florida. The fboweb.com data was provided to the Department by David McDonald, the attorney for MAW.ZC, LLC, and Mr. Ceballos, who was acting as Petitioner’s authorized representative during the investigation and protest phase of this case. There is no evidence that Mr. McDonald had any personal knowledge of the information contained in the fboweb.com data, and he did not present it to the Department as his understanding of the aircraft’s operation. Indeed, the letter by which Mr. McDonald transmitted the fboweb.com data to the Department stated that he was “having trouble trying to decipher the information provided by fboweb.com” and that he was providing it to the Department because it appeared to be inconsistent with the FlightAware data conveyed to him by the Department staff. Mr. McDonald never expressly contested the assertion by the Department staff that the aircraft returned to Florida within the six months after it initial departure. His failure to do so was not, under the circumstances, an admission or acquiescence to the Department’s position that the aircraft did return to Florida within that period. Indeed, he informed the Department staff on several occasions that he had not been able to obtain information concerning the aircraft’s operation because the aircraft’s flight records were destroyed in the crash. No credible evidence was presented as to what the FlightAware or fboweb.com services are, or how they obtain the flight data included in their records. For example, when asked to explain her “understanding of what Flight Aware is,” the Department witness used to introduce the data testified only that “[i]t’s a service that the Department subscribes to to track the flights for the aircraft.” The FlightAware data indicates that the aircraft made eleven flights into Florida between September 2007 and January 2008: Flight Date Destination 1 9/22/07 from Arturo Michelena International Airport (Arturo) in Venezuela to Kendall-Tamiami Executive Airport, and then to Simon Bolívar International Airport in Venezuela by way of Ft. Lauderdale Executive Airport on the same day 2 9/29/07 from Arturo to Hollywood International Airport (FLL), and then to Simon Bolivar International Airport the following day 3 10/1/07 from Arturo to FLL, and then back to Arturo the same day 4 10/4/07 from Arturo to FLL, then to Orlando Sanford International Airport (SFB) the following day, with a return to Arturo by way of FLL and Nassau International Airport on October 14 5 10/15/07 from Arturo to FLL, then to SFB on the same day 6 12/16/07 from Arturo to FLL, then to SFB the same day, with a return to Arturo on December 20 7 12/21/07 from Arturo to FLL, and then back to Arturo on the same day 8 12/23/07 from Arturo to FLL, and then back to Arturo on the same day 9 1/3/08 from Punta Cara International Airport to FLL, then to SFB on the same day, with a return to Arturo by way of FLL on January 6 10 1/10/08 from Arturo to FLL, and then back to Arturo on January 12 11 1/13/08 from Arturo to FLL, and then back to Arturo on the same day The fboweb.com data is, as Mr. McDonald noted, difficult to decipher. However, it appears to include most, if not all, of the flights that were listed in the FlightAware data. The fboweb.com data also lists flights on September 8- 9, 2007, between Arturo, FLL, and SFB. Those flights were not listed in the FlightAware data. No findings can be made as to whether the aircraft was indeed in Florida on the dates reflected in the FlightAware or fboweb.com data because that data is uncorroborated hearsay. Even if the FlightAware and fboweb.com data could be relied upon to establish that the aircraft was in Florida on the dates referenced above, only the September 8-9 flights listed in the fboweb.com data and the first eight flights listed in the FlightAware data would be relevant. The other three flights listed in the FlightAware data -– 1/3/08, 1/10/08, and 1/13/08 - – occurred more than six months after the aircraft’s initial departure from Florida on July 2, 2007. Mr. McDonald was able to locate and provide to the Department repair invoices related to only four of the nine relevant flights listed in the FlightAware and fboweb.com data – - 9/8/07, 10/4/07, 10/15/07, and 12/16/07. On each of those occasions, there is documentation showing that the aircraft underwent repairs at SJC in Sanford. There is no evidence that the aircraft underwent repairs in connection with the other five flights listed in the FlightAware data -– 9/22/07, 9/29/07, 10/1/07, 12/21/07, and 12/23/07. Mr. McDonald provided an invoice for a part that was purchased for the aircraft at FLL on September 29, 2007, but there is no evidence that the part was installed in Florida on that trip. No sales or use tax was paid on the aircraft by Petitioner or any other entity or person to Florida or to any other state or country. Petitioner does not dispute the amount of the tax, penalty, or interest calculated by the Department in the Notice of Reconsideration. The tax is $224,400, which is six percent of the sales price of the aircraft; the penalty is $224,400, which is 100 percent of the tax as required by Section 212.05(1)(a)2., Florida Statutes; and interest is accruing at a rate of $67.44 per day, with $27,273.10 of interest having accrued through the date of the Notice of Reconsideration. These amounts were assessed against Petitioner in its capacity as “owner trustee,” not its individual capacity.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department issue a final order rescinding the assessment at issue in this case. DONE AND ENTERED this 19th day of August, 2009, in Tallahassee, Leon County, Florida. S T. KENT WETHERELL, II Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of August, 2009.
Findings Of Fact THE RFP On April 25, 1991 the Department issued RFP No. 91-1011-LOT/TEN/P soliciting sealed proposals from qualified vendors to provide Instant Game Ticket printing and related services. In accordance with Section 1.8 of the RFP questions that were pertinent to an understanding of the RFP or that would be needed to clarify its terms could be addressed in writing to the Issuing Officer for the Department. Per Section 1.9 questions must have been received by 12:00 noon on May 1, 1991 for the prospective proposer to be entitled to answers to the questions. That section to the RFP obligated the Department to give written responses to any questions timely received. There were timely questions. The answers to questions that had been posed by the prospective vendors which included Dittler, Scientific, Webcraft and British American Banknote (BABN) were provided by the deadline of May 3, 1991 which is set forth in Section 1.9 to the RFP. Those questions and answers led to the amendments number 1 and 2 to the RFP issued on May 6 and 9, 1991, respectively. The RFP as amended and questions and answers formed the basis for the prospective proposers' understanding of the RFP and its terms, conditions and specifications. For purposes here, the relevant change in amendment number 1 was associated with the paper weight of recyclable ticket stock in categories of ticket samples to be submitted with the proposals. The second amendment deleted the category of sample known as recyclable coated ticket stock. None of the questions during the opportunity presented to improve the understanding or clarify the terms, conditions and specifications, found in the RFP were directed to the procedures set forth in the RFP describing the process of evaluation of proposals and entry into a contract with the best responsive vendor. Nor did any vendor take advantage of the opportunity within 72 hours of the availability of answers to questions that had been posed by the respective vendors and is provided in Section 1.9 to the RFP to challenge the terms, conditions and specifications of the RFP, especially as they would relate to the process of evaluation of responses to the RFP leading to the selection of the best responsive vendor and entry into a contract. As contemplated by Section 1.9 to the RFP sealed proposals were received from the four vendors by the deadline of 2:00 p.m., May 13, 1991. Section 1.9 called for technical proposals within the responses to the RFP to be opened by 2:00 p.m. on May 13, 1991 with the evaluation of those proposals to begin immediately following the opening. The cost proposals were to be separately opened following completion of the evaluation of technical proposals. The submissions by the vendors were to be ranked in order of preference based upon the evaluation of the technical and cost proposals in accordance with criteria set out in the RFP, followed by Notice of Intent to Negotiate with the higher ranked vendor posted at the Department's headquarters in Tallahassee, Florida. If the negotiations with the higher ranked or best responsive vendor did not prove successful, Section 1.9 called for the Department to negotiate with the other listed firms in descending order of their rank. Following the successful conclusion of negotiations with a responding vendor, a Notice of Award of Contract would be posted at the Department headquarters. The contract would be awarded and executed as soon as lawfully possible after the posting of the Notice of Award of Contract. On May 13, 1991, the ticket samples that were part of the submissions by the vendors were turned over to the Department's security employees and kept in a secure place pending forensic testing called for in the RFP. The members of the evaluation committee who were selected to exercise the evaluation criteria were not afforded immediate access to those tickets pending the forensic testing and a presentation concerning the test results which was to be made to the Evaluation Committee by Department employees who were familiar with test procedures. This presentation of the test results was made on May 16, 1991. Of the vendors who submitted proposals, Dittler had not been qualified by the Secretary of State to do business in Florida at the time it submitted its proposal on May 13, 1991, however, no mention was made of this when the Department made its preliminary agency decision finding Dittler a responsive vendor and ranking its proposal. Concerning the work to be done by the Evaluation Committee, Section 5.3 sets out the Proposal Evaluation criteria where it states: Proposals will be evaluated based on the following criteria: The overall qualifications, experience, abilities of the firm, its participating staff members, and subcontractors, if any, to timely provide the requested commodities and services, and the extent of minority participation. This includes the relative thoroughness and overall professional quality of the firm's proposed plan for providing the requested commodities and services. Value: Not to exceed 20 points The quality and appropriateness of the marketing plan. Value: Not to Exceed 15 points The quality and appropriateness of the Quality Control Plan. Value: Not to Exceed 15 points The overall security plan, including facility and procedures, with respect to whether the production of the game, manufacture of tickets, operation of the game, prize validation, etc., meet the security needs of the Florida Lottery and offer minimum possibilities of fraud, tampering, theft, counterfeiting, ticket alteration, or other security compromises. Value: Not to Exceed 25 points Proposed Compensation. Value: Not to Exceed 25 The proposed compensation for providing the goods and services requested herein shall be evaluated as follows: Column C of Attachment E of the prices bid for aluminized uncoated white ticket stock (10 point or heavier) will be totaled and divided by 200,000 to give an average cost per thousand tickets for this ticket stock. The average cost per thousand tickets for aluminized un-coated white ticket stock will be the price used in the cost comparison. The maximum number of cost evaluation points (M in the formulas below) shall be one-third of the highest cumulative score (H in the formula below) awarded to a Respondent for the criteria set forth in A through D. The lowest average cost per thousand tickets (L in the formula below) as derived in paragraph 1 above shall be awarded the maximum number of cost evaluation points as determined in paragraph 2 above. All other Respondents shall be awarded points based on the ratio of their average cost per thousand tickets (R in the formula) to the lowest average cost per thousand tickets. Maximum Cost Evaluation Points (M) = 1/3 x H Cost Evaluation Points = L/R x M The total value of points is equal to 100. These criteria are associated with the overall Evaluation Review Process identified at Section 5.4 where it states: The Secretary shall appoint an Evaluation Committee which shall prepare technical scores for all Responsive Proposals. The cost proposal will thereafter be publicly opened and evaluated in accordance with the formula set forth in Section 5.3 E above. Based on the technical and cost proposals, the Evaluation Committee shall rank, in order of preference, the Respondents deemed to be most highly qualified to perform the requested services. The Department reserves the right to make site visits at its own expense to the Respondent's facilities before or after the proposals have been ranked in order of preference. Thereafter, the Secretary shall commence negotiations with the most highly ranked firm. Should the Lottery be unable to negotiate a satisfactory Contract with that firm at a price the Lottery deems to be fair, competitive, and reasonable, negotiations with that firm shall be terminated. The Lottery shall then undertake negotiations with the second most highly ranked firm. Failing accord with that firm, the Lottery shall undertake negotiations with the third most highly ranked firm. Should the Lottery be unable to negotiate a satisfactory Contract with that firm, additional firms may be selected to participate in this negotiation process or negotiations may be reinstated following the original order or priority. Negotiations shall continue until an agreement is reached or all proposals are rejected. The Lottery reserves the right to reject all proposals at any time during negotiations. An initial review was made of the responses to the RFP to determine facial compliance or responsiveness. This was done on May 13 and 14, 1991 by Cristina Brochin, counsel to the Department. She discussed her findings with Louisa Warren, a more senior attorney for the Department. In the mind of Ms. Brochin the Dittler proposal was sufficient, while the Scientific proposal had a potential problem in that it did not set forth the amount of bond to be provided to insure performance under the contract called for in the RFP. This refers to the requirement in Section 6.5 of the RFP to give adequate evidence of the ability to post a performance bond. Ms. Brochin thought Scientific had failed to provide a notice on public entity crimes for its subcontractors. This was not a requirement of the RFP. Ms. Brochin found that Webcraft had failed to list its subcontractors, and likewise had failed to provide public entity crime affidavits for its subcontractors and had failed to provide a time line for limiting the ability to compromise its tickets. The Evaluation Committee was convened at the Department on the morning of May 15, 1991. It consisted of Robert McKnight, Assistant Secretary of the Department; Bernie Edwards, Deputy Secretary of Marketing; Don Pribbenow, Questions and Document Examiner for the Florida Department of Law Enforcement; Dr. Arvid Mukes, Assistant Director of Graphic Arts at the Florida A & M University; Frank Carter, Director of Security for the Department and Brian Woods, Vice President of Marketing of Blockbuster Video. Mr. Woods withdrew from the Committee based upon a concern of a potential conflict of interest associated with a business relationship with one of the vendors. No contest was offered to the make up of the Evaluation Committee. On this date the remaining members of the Evaluation Committee were given general instructions by the Department's staff that they were not to talk to other committee members except in public meetings, that they were to read the proposals, to keep notes about the proposals, to make their own individual evaluations and to not score the proposals until the Evaluation Committee public meeting had been completed. An explanation was made concerning the scoring criteria set forth in the RFP and an overview given of the schedule of events associated with the review process. The evaluators were then given the opportunity to review the responses alone. The best part of May 15, 1991 into the evening was devoted to that task. The evaluators took notes as they went forward with that process. On May 16, 1991 the Evaluation Committee met at the Department headquarters and undertook a discussion in a public setting relating to the marketing and overall qualification sections of the proposals. This was followed by a confidential review outside public scrutiny concerning quality control and security measures set forth in the proposals. Although the evaluators had reviewed the BABN materials on May 15, 1991, the BABN proposal was found nonresponsive by the evaluators in the public meeting of May 16, 1991 and did not undergo further consideration. BABN did not challenge the decision finding it nonresponsive. The reason why the BABN proposal was declared nonresponsive was the failure to submit samples of 10 point uncoated aluminized ticket stock. By contrast the Evaluation Committee found the proposals of Dittler, Scientific and Webcraft to be responsive. In doing so, with the knowledge of the impression of counsel Louisa Warren concerning deficiencies found in each proposal, the Evaluation Committee did not deem the Webcraft omission of a statement of time necessary to compromise its tickets; the Dittler omission of its ink product numbers, and Scientific's omission of the bond dollar amount in its bond commitment letter to be material deviations from the terms of the RFP and as such not subject to correction. Deeming these items to be minor irregularities the Department's staff contacted the vendors to clarify that information and the vendors cooperated in that endeavor. There is a Section 4 to the RFP pertaining to Mandatory Requirements in which 4.1 to that Section is entitled Terms and states: the Lottery has established certain mandatory requirements which must be included as part of any proposal. The use of the term "shall" "must" or "will" (except to indicate simple futurity) in this RFP indicate a mandatory requirement or condition. The words "should" or "may" in this RFP indicate desirable attributes or conditions but are permissive in nature. Deviation from, or omission of, such a desirable feature will not by itself cause rejection of a proposal. In Section 1.2 of the Glossary of Terms a responsive proposal is defined as, "means a proposal submitted by a responsive and responsible, or qualified offerer which conforms in all material respects to the Request for Proposals." Section 4 goes on at 4.2 to describe what is meant by nonresponsive proposal where it states: Proposals which do not meet all material requirements of the RFP or which fail to provide all required information, documents, or materials will be rejected as non- responsive. Material requirements of the RFP are those set forth in Section 3.1 and without which an adequate analysis and comparisons of proposals is impossible. The Lottery reserves the right to determine which proposals meet the material requirements of the RFP and to accept proposals which deviate from the requirements of the RFP in a minor or technical fashion as determined by the Lottery. Section 3, within which is found 3.1 entitled General Instructions, identifies information required by the vendors Respondent where it states: General Instructions. Respondents must reference their proposals to the section numbers in this RFP. Respondents must state their agreement with the contractual requirements contained in this RFP. Any additional terms and conditions proposed by a Respondent will be viewed by the Lottery as an exception to the RFP and may cause rejection of the proposal without further evaluation or consideration. Proposals must include the following information and be presented in the following sequence: Identification of Respondent per Section of RFP. Respondent's Affidavit (Attachment A). Sworn Statement on Public Entity Crime (Attachment B). Vendor Information Form (Attachment C). Vendor Information Addendum (Attachment D). List of sub-contractors (if applicable). Statement from vendor saying they will abide by the Code of Ethics Rule 53ER88-79(3), F.A.C. The statement required by Section 1.24. Evidence of ability to provide a performance bond or other security required by Section 6.5. All of the items required in Section 2. All material or information required to be submitted as part of the Cost Proposal enclosed in a separate sealed envelope per Section 1.10 of the RFP. Any other material or information required by this RFP which is not specifically enumerated above. Any other information the Respondent desires to submit to further substantiate its qualifications for providing the goods and services. Another reminder concerning requirements is set forth in Section 5.2, entitled REVIEW CRITERIA which says in relevant part: Any proposal which does not meet all the mandatory material requirements set forth in Section 3.1 will be rejected by the Lottery as non-responsive. As alluded to before, Lawrence Herb, the Department's forensic document examiner and Colin Benton, Chief of Investigations presented the Evaluation Committee with sample tickets that had been tested and the results of those tests. Following this presentation the individual Committee members assigned scores for each vendor in all categories other than the cost proposal, referred to at Section 5.3 as proposed compensation. It was the impression of the committee members that Scientific was the highest ranked responsive vendor in the technical proposal phase. Consequently, by averaging the aggregate scores unrelated to cost proposals Scientific received the most points while Dittler was second and Webcraft third. On the next day, May 17, 1991, the cost proposals were opened by Department staff and the cost scoring accomplished by use of the mathematical formula contemplated by the RFP. The cost formula was based on the prices quoted for aluminized uncoated white ticket stock of 10 points or heavier weight. The technical and cost scores were then added together to determine the final ranking of the vendors. The compiled scores for the vendors were: Dittler: Technical 56.80 Cost 23.13 Total 79.93 Scientific: Technical 69.40 Cost 19.12 Total 88.52 Webcraft: Technical 53.00 Cost 19.55 Total 72.55 Based upon the results achieved in the scoring the Department on May 17, 1991, posted a Notice of Intent to Negotiate with Scientific, being the highest ranked proposer, and identifying that Dittler was running second and Webcraft third. The formal written protest of Dittler mentioned in the Preliminary Statement ensued. THE RESPONSIVENESS OF SCIENTIFIC'S PROPOSAL BOND COMMITMENT LETTER According to Section 3.1(d)9. evidence of the ability of the vendor to provide a performance bond or other security as described in Section 6.5 is a mandatory material requirement. Section 6.5 states: The successful Respondent shall be required, at the time of executing the Contract with the Lottery, to post an appropriate performance bond or other security acceptable to the Lottery in the amount of $1,000,000. The other acceptable forms of security are: irrevocable letter of credit; Certificate of Deposit assigned to the Lottery (which must be obtained from a financial institution having its principal place of business in the State of Florida); U.S. savings bonds, notes and bills; general obligation bonds and notes of any political subdivision of the State of Florida; or corporate bonds of any corporation that is not an affiliate or subsidiary of the Contractor. The aggregate fair market value of securities pursuant to this clause must always exceed the amount stated above. Failure to post an additional bond or security within seven (7) days after notice of an increased Contract value, or notice that the market value of the securities is inadequate, shall be grounds for immediate termination for cause. Respondents must submit with their proposal evidence that they will be able to provide the performance bond or other acceptable security. Such evidence may include, but is not limited to, a letter from an authorized agent of a bonding company or other entity committing to provide the performance bond or other acceptable security or indicating that the bond underwriter or other entity is processing a request to provide the bond or security and stating unequivocally that the bond or security will be available upon execution of the contract. In response to this requirement Scientific submitted a letter from Rollins Burdick Hunter of Illinois, Inc. together with a power of attorney for an amount of up to $20,000,000 bond coverage. This letter from Rollins Burdick Hunter is dated May 13, 1991, the date upon which Scientific submitted its proposal with the letter. In pertinent part the letter states: "RE: THE PRINTING OF INSTANT LOTTERY GAME TICKETS AND RELATED SERVICES FOR THE FLORIDA LOTTERY- Florida Instant RFP (Bid No. 91-011-LOT/TEN/P BID DATE: MAY 13, 1991 OBLIGEE: FLORIDA DEPARTMENT OF THE LOTTERY Letter of Intent We understand that bids are to be taken May 13, 1991 for this project. Please be advised that, subject to our underwriting requirements being met, if Scientific Games, Inc. is the successful bidder on this project and is awarded a contract and enters into said contract, we as surety will write an annual bond for the prosecution of the contract. This Letter of Intent is valid for one hundred eighty (180) days from the bid date, May 13, 1991, and we assume no liability to you if we decide not to issue the referenced bonds beyond this one hundred eighty (180) day period. You understand of course that the relationship between Scientific Games, Inc. and Continental Insurance Company is private, and we assume no liability to you if for any reason we decide not to issue the referenced bond(s). On May 8, 1991 Ken Taylor of Scientific sent the RFP to Rollins Burdick Hunter, the bond broker for Scientific, in the interest of obtaining the letter of May 13, 1991 which letter has been described. The power of attorney for $20,000,000 that was submitted with the proposal by Scientific was from Continental Insurance Company and counsel to Continental Insurance Company James E. Lee signed the Letter of Intent of May 13, 1991 together with William G. Malloy, President and CEO of Scientific. Having considered the evidence presented concerning the adequacy of the bond commitment, the Letter of Intent complies with the requirements stated in Section 6.5 pertaining to a performance bond as the ability to provide that performance bond. The Letter of Intent is not perceived as equivocal. It is not only consistent with the requirement set forth in Section 6.5 to the RFP, it coincides with what the Department has found to be acceptable in a previous RFP related to advertising which had a similar requirement for a statement of commitment to provide a performance bond at the appropriate juncture. In the instance of the advertising RFP certain bond letters by vendors who responded to the advertising RFP failed to state the dollar amount of the bond in the letter of commitment and those vendors were given permission to submit clarifying letters as to the exact amount without a declaration that those vendors were non-responsive. The letter clarifying the bond amount which was submitted by Scientific on May 16, 1991 with permission from the Department is consistent with the prior practice by the Department. This clarification by vendors in the advertising RFP solicitation and in the present solicitation is a minor correction. It is a minor correction which does not afford unfair advantage to Scientific and does not inconvenience the Department. Moreover a strict reading does not lead to the conclusion that the bond commitment letter needed to restate the bond amount of one million dollars. It must only make it evident that the bond commitment letter is addressing the requirement for a one million dollar performance bond. The Scientific Letter of Intent provides ample evidence on that point. The language set forth in the Letter of Intent reminding the reader that the commitment is subject to underwriting requirements being met and the further comment that the commitment does not create liability to the Department if the bond contract is not completed between the private entities does not undermine the fundamental promise to write the bond. It is an adequate response because the RFP did not contemplate a bid bond being provided with the submission of a proposal. It contemplated a commitment to write a performance bond in the future to be available at the place in time where a contract was executed between the vendor and the Department. LOBBYIST DISCLOSURE According to Section 3.1(d)8., which refers to the need to include information concerning Section 1.24, that latter section pertaining to conflict of interest and disclosure and more particularly to the revelation of the affiliation of executive branch lobbyists, as defined by statute or activities by the lobbyist designed to influence the actions of the Department in connection with the RFP, the failure to disclose an executive branch lobbyist would be considered a breach of a mandatory material requirement to the RFP. The consequence would be to cause the submission by a vendor to be declared non- responsive. Dittler alleges that Scientific failed to reveal the name of Barry Horenbein when filling out its proposal in response to Section 1.24 to the RFP. According to Dittler, Barry Horenbein was an executive branch lobbyist for Scientific in the relevant timeframe. That perception is incorrect. The language is Section 1.24 concerning Conflict of Interest and Disclosure states: The award hereunder is subject to the provisions of Chapters 24 and 112, Fla. Stat. Respondents must disclose with their proposals whether any officers, directors, employees or agents are also an officer or an employee of the Lottery, State of Florida, or any of its agencies. All firms must disclose the name of any state officer or employee who owns, directly or indirectly, an interest of five percent (5%) or more in the Respondent's firm or any of its branches or affiliates. All Respondents must also disclose the name of any employee, agent, lobbyist, or other person who has received or in the future will receive compensation of any kind for services related to this RFP, who is a previous employee of the Lottery, or who has or is required to register under Section 112.3215, Fla. Stat., in seeking to influence the actions of the Lottery in connection with this procurement. Respondents must also disclose the amount of compensation paid or to be paid in the future to any person who seeks to influence the actions of the Lottery in connection with this procurement. Respondents must also disclose the existence of any contingency agreements whereby any person will be compensated in any amount or form and the compensation is in any respect dependent on the outcome of this procurement. Each Respondent which has no disclosure to make under Section 1.24 must state affirmatively in its Proposal that it has no such disclosures to make. Failure to make any of the disclosure required by this section, or to make the affirmation required above, will result in rejection of the Proposal. Scientific met the disclosure requirements by listing David Bausch, a former Department employee. Barry Horenbein owns Florida Consultants, Inc. which provides lobbying services. Scientific at relevant times was his client. From December 10, 1986 until November 30, 1990 Horenbein had served as a legislative and executive branch lobbyist for Scientific under a yearly contract. This arrangement was pursuant to the proposal by Horenbein of November 25, 1986 on behalf of his company, Florida Consultants, Inc. in which he offered the services to Scientific in the area of legislative and administrative representation of Scientific as a lobbyist. On December 10, 1986 Gray Bethea, General Counsel to Scientific, confirmed the understanding between Horenbein and Scientific as to services that had been described in the offer of Horenbein dated November 25, 1986. For his work Horenbein received compensation of $5,000.00 per month for the period beginning in 1988 and as recent as November 1, 1991, and, consistently used the same invoice identification of his services as being related to "governmental consulting and lobbying in the State of Florida". Although there was no written documentation which would state any modification or termination of the business relationship between Horenbein and Scientific, there was a change in the position by oral agreement after November 30, 1990. The contract was for month to month to handle legislative lobbying matters for Scientific but not executive branch lobbying. The change in status for Horenbein came about after a November 29, 1990, letter from Horenbein to the president of Scientific explaining that the consulting contract would expire on November 30, 1990. In the course of that correspondence Horenbein pointed out the expected changes that he perceived given the outcome of the gubernatorial elections in which the incumbent lost and a new governor came in. This correspondence of November 29, 1990 expressed the desire by Horenbein to continue on the basis of $5,000.00 a month fee as outlined in Gray Bethea's letter of January 5, 1990, which letter from Bethea spoke of a relationship on the same terms and conditions as the original suggestion of the relationship between the two parties which had been set out on December 10, 1986 by Gray Bethea. The response to this November 29, 1990 letter was the oral agreement to allow representation in the area of legislative branch lobbying. The agreement between Scientific and Horenbein was not renewed in its entirety to include executive branch activities. The reason that Scientific decided to change the duties of Horenbein in representing its interests was based upon the perception that the close association which Horenbein had with the outgoing Governor Martinez and his administration might be harmful to Scientific in the future in that the new administration of Governor Chiles was coming in and Scientific did not wish to have Horenbein continue contact with the Department or the executive branch in connection with Scientific's business in Florida. In 1991, Horenbein registered in Florida as a legislative lobbyist but not as an executive branch lobbyist. Horenbein did provide some services concerning lottery activities to the extent of sending newspaper clippings to Bethea about activities within the Department during the year 1991. This was a continuation of information to include Horenbein's speculation as to the possibility of the change of the head of the Department and the name of a potential candidate to be the Department head discussed in his correspondence of November 29, 1990. On December 24, 1990 the Chairman of the Board of Scientific wrote to Dr. Marcia Mann, the new Department head, expressing, among other things, the common interest which Dr. Mann and the Chairman had in the University of South Florida. A copy of that letter was provided to Horenbein. Related to the letter from the Chairman to Dr. Mann, that letter was prepared based in part on information that had been provided by Horenbein to Scientific. The correspondence from the Chairman to Dr. Mann was prepared not only on newspaper clippings which Horenbein had submitted but on conversations which Horenbein had with his client Scientific. Horenbein provided information to Scientific about the new leadership at the Department with the advent of the Chiles administration to include remarks about Secretary Marcia Mann and Assistant Secretary McKnight. Horenbein considered provision of information as part of consulting services for which he was paid a fee. Although Horenbein had not seen the details of the subject RFP he advised Scientific that Scientific should "sharpen its pencils" and come in with a bid as low as they felt they could to get the contract. Horenbein told top officials within Scientific that he thought that the pricing in the RFP was going to be very important. He related this information in the same manner as he would have to any client under similar circumstances. This was considered by Horenbein to be part of his consulting relationship with his client Scientific. Horenbein was made aware that certain representatives from Scientific were to come to Tallahassee for a meeting with Senator McKnight or Dr. Mann. Horenbein did not attend a meeting between those persons. Horenbein saw Senator McKnight in a Tallahassee restaurant and welcomed him to Tallahassee and chatted with him. He also spoke to Senator McKnight the day the bid in this came out in this procurement. On April 3, 1991 Horenbein attended a Lottery Commission Meeting at the Department headquarters. He was there for his own curiosity to see the new Department administration of Dr. Mann function but acknowledges that it was also an attendance associated with his work for Scientific. Scientific had not asked him to attend this meeting. The topic of the meeting was not related to the present RFP. At the meeting he met Dr. Mann for the first time. Horenbein also saw Senator McKnight at the meeting and spoke with him. The topic of the RFP was not discussed with Dr. Mann or Senator McKnight on this occasion. In fact, Horenbein never discussed the subject RFP with any Department official or employee, nor sought to influence them in connection with the procurement for the advantage of his client Scientific. In his conversation with Senator McKnight on April 3, 1991 Horenbein complemented Senator McKnight concerning the Senator's legislative service in saying that he was "happy to see somebody of my integrity in the administration", referring to Senator McKnight's service in the Department. Following the technical evaluation Scientific asked Horenbein to attend the cost bid opening on May 17, 1991, a session that all vendors were invited to attend. The reason Scientific asked Horenbein to attend was because of the short notice of the cost bid opening and having no other personnel available to Scientific to attend that session. The vendors had been advised of the cost bid opening by one day notice. All evaluations on the technical aspects had been scored prior to the cost bid opening and the scores in the cost bid opening were pursuant to a formula. As part of his attendance at the cost bid opening Horenbein picked up copies of Webcraft and Dittler's proposals and looked at them concerning the bottom line financial quotations by those vendors. He considered this part of his function as a lobbyist for Scientific. Because the petition by Dittler alluded to Horenbein and his activities, Horenbein was provided a copy of material that Scientific had obtained from the Department under a public records request on or about May 24, 1991. The material also included the cost quotes which Horenbein spoke of and evaluators score sheets and the evaluation summary. The decision to send the materials that had been obtained by a request for public information was made by counsel to Scientific, Bethea. In addition to Senator McKnight, one of the other evaluators, Edwards, knew Horenbein before the advent of the RFP, but as stated before, had not discussed the RFP with him. Neither did Edwards nor McKnight know that Horenbein was a lobbyist for Scientific at the time of the RFP. Horenbein did not know the other evaluators Dr. Mukes, Carter or Pribbenow. Horenbein had a conversation with Jack Peeples, an independent contractor to the Governor's office while at a restaurant in Tallahassee. This conversation was not at the instigation of the client Scientific. Peeples held a contract with the Governor's office from February 1, 1991 to June 30, 1991 as advisor to the governor. He was not a state employee as such. In this conversation Horenbein stated that he thought it was, "sinful for Sonny Holtzman to be representing a lottery company in the position he was in" to which Peeples is said to have replied "You're probably right Barry, it shouldn't happen". Sonny Holtzman is mentioned as having an affiliation with Webcraft. Horenbein further stated to Peeples that the RFP disclosure requirement associated with the present case and that of the advertising RFP, as Horenbein stated, "I thought it was ridiculous because I had heard in the RFP that they were supposed to name the lobbyist and how much they made and I told Jack Peeples, I said 'Jack, you know you're going to be in business very shortly, would you want everybody in the world to know how much you were making on a particular client?'" The knowledge which Horenbein had of the disclosure requirements in the advertising and subject RFP came to him through comments from other lobbyists. Horenbein also discussed with Peeples the possibility of the two of them getting together and doing some lobbying. The reason which Horenbein had in mind for opposing the disclosure requirements, especially related to the revelation of compensation was for his own purpose and not that of the client Scientific. Horenbein's specific objection to the RFP disclosure requirement was that he did not want clients to find out how much he was billing each of his clients and that he didn't think it was proper to put such a requirement in a RFP. He told Peeples that the disclosure provision should be changed. This remark was made in the Spring of 1991. When he made the comment Horenbein thought that Peeples was one of the close campaign people to Governor Chiles. He commented to Peeples because he thought that Peeples had substantial influence in the Governor's office. When he had this conversation Horenbein did not know whether the lobbyist disclosure provision was going to be placed in the advertising RFP or the present RFP. He did not know the details of Peeples' payment by the Governor's office as an independent contractor. Horenbein did not discuss the present RFP per se in his conversation with Peeples. Peeples' affiliation with the Governor's office under the terms of his contract was not that of representative of the Governor's office or other department's of state government. Peeples was special counsel to the Governor for legal services. His duties included legal advise to the Governor, working in conjunction with designated staff, agency heads and other persons making available Peeples' full professional knowledge and opinions. He reported to the Governor in this capacity. Senator McKnight established that when he was hired as the Assistant Secretary of the Department by Governor Chiles he had conversation with the Governor's Chief of Staff concerning Senator McKnight's duties as Assistant Secretary. Senator McKnight identified one occasion in which he had a meeting in the Governor's office to discuss the administration's views of the Department. His recollection is that this was held in the office of the Chief of Staff Mr. Krog, with Peeples in attendance. Senator McKnight only knew of Mr. Peeples as being a close, personal friend and advisor to the Governor, to Senator McKnight's understanding of that association. During this meeting in the Governor's office the issue of lobbyist disclosure was emphasized by the Governor's office to Senator McKnight and he was advised that it would mean no contact whatsoever between lobbyists and members of this lottery staff from the point of view of the Governor. Senator McKnight was told that the Lottery operation had to be "squeaky clean". The Governor's office did not discuss the RFP nor influence the drafting of the RFP beyond this conversation with Senator McKnight. Notwithstanding the protestation by Horenbein to Peeples, Section 1.24 to the present RFP contained the disclosure requirements that Horenbein had complained about. FINANCIAL DISCLOSURE AND PENDING LITIGATION As identified in Section 1.1, the project in question is a major procurement as defined in Section 24.103, Florida Statutes. As such, the requirements set forth in Section 24.111(2), Florida Statutes, were incumbent upon the vendors. The RFP also speaks to the matters of financial disclosure at Section 3.1(d). Scientific did the things necessary to comply with those requirements when it submitted its proposal on May 13, 1991. (In this connection Section 1.19 pertaining to the assignment of the contract, if one is entered into, and Section 1.34 pertaining to change of financial conditions which are material adverse circumstances which occur between the time of the submission of the proposal and the award of a contract and continuing during the life of the contract are not items to be considered in this dispute. They are issues which potentially might have to be resolved between the vendor that the Department attempts to contract with and the Department.) Scientific when it submitted its proposal on May 13, 1991, by cover letter, alerted the Department to a potential change in its financial condition and ownership when it alluded to an asset purchase agreement between Scientific and a company formed by members of Scientific's senior management and the firm Centre Capital Investors L.P., an affiliate of Lazard Freres & Co. That asset purchase agreement date is from April 30, 1991. Scientific had this to say about that agreement in its transmittal letter: "On April 30, 1991, a company formed by members of Scientific Games' senior management and Centre Capital Investors L.P., an affiliate of Lazard Freres & Co., entered into an Asset Purchase Agreement with Bally Manufacturing Corporation, Scientific Games, In., and Scientific Games of California, Inc., for the purchase of the instant ticket and video lottery business of Scientific Games. The closing of the transaction is anticipated to take place within several months and is subject to the consents of various state governments and other customary closing conditions. No change in the operation or name of Scientific Games is expected and no interruption of services to customers will occur. As further details become available, Scientific Games will provide information to the Florida Lottery. Notwithstanding the pending asset purchase agreement, it is the Scientific group that submitted the proposal who must comply with the financial disclosure requirements. That is the respondent referred to in the definitional section of the RFP at 1.2 under Glossary of Terms. It is the vendor that is defined in Section 24.104, Florida Statutes. It is the group that submitted the proposal as defined in Section 24.111(2), Florida Statutes. Scientific was not expected under the terms of the RFP and associated requirements of law to submit vendor information forms on the purchasing group. That purchase was not consummated until a closing held on October 1, 1991. At the time that the proposal was submitted by Scientific the purchasers did not control by direct or indirect means the entity Scientific which submitted the proposal. Scientific and the purchaser had different boards of directors. Scientific was controlled by Bally Manufacturing Corporation and the purchasing group was controlled by Centre Capital Investors, L.P. Section 24.111(2), Florida Statutes, requires the Department to investigate the financial responsibility of the vendors who responded. That financial investigation took place to a degree not especially evident when examining the record. Details are sketchy. However, the requirement was responded to. More significantly Section 24.111(2), Florida Statutes, and the RFP present the necessary opportunity to evaluate the implications of the asset purchase before contracting with Scientific. Section 24.111(2)(f), Florida Statutes, makes it necessary for a vendor to provide: a disclosure of the details of any bankruptcy, insolvency, reorganization, or any pending litigation of the vendor. The asset purchase agreement is not such an event. In particular it does not constitute the form of reorganization spoken to in that section. Concerning pending litigation, Scientific did not reveal the existence of the case of Toon Construction Company v. Scientific Games Inc. On May 7, 1991 the parties dismissed an interlocutory appeal before the Supreme Court of the State of Georgia involving that litigation. The litigation had been settled by the parties as of May 13, 1991 when the proposal by Scientific was submitted in response to the RFP. The attorneys for the parties had not dismissed the associated case between those litigants in the Superior Court of the State of Georgia. That dismissal took place on May 14, 1991. Under the circumstances Scientific has not failed to comply with the provision in Section 24.111(2)(f), Florida Statutes, for revealing pending litigation. It did make the Department aware of two other pieces of pending litigation. EVALUATION COMMITTEE AND PROCESS Other than the reference in Section 5.4 to the RFP wherein the Secretary of the Department is required to appoint an Evaluation Committee, no requirement is stated concerning the composition of the Committee or the credentials of its members. The Evaluation Committee was chaired by Robert McKnight, Assistant Secretary of the Department. Committee Member Edwards had been the person most responsible for policy decisions in the development of the RFP document, with assistance in the drafting and in the processing of proposals given by the attorneys Louisa Warren and Cristina Brochin and with assistance by Robert Fiero, then Director of Administrative Services for the Department. In preparing for their participation in the full Committee activities involved in the evaluation process, having considered the criticisms of the amount of time available spoken to by witnesses for Dittler and the remarks of the Committee members concerning the opportunity to review the materials in preparation to carry out the assignment of scores, the evaluators are found to have had an adequate opportunity to prepare themselves to carry forth their duties as Committee members. The committee members indicated that they had sufficient time to evaluate the proposals to the RFP. In this connection Committee Chairman, Senator McKnight, made it clear that the committee members could take as much time as they needed to conclude the evaluation session which all members attended on May 16, 1991. He also asked the committee members during that meeting if they had had enough time for review. Other committee members did not ask the Chairman for additional time to review the materials found within the proposals. ORAL PRESENTATIONS Section 1.1 to the RFP explains that the RFP in the activities which lead to the execution of a contract are associated with the Department policies set out in Rules 53ER87-10 through 53ER87-11, 53ER87-13 through 53ER87-19 and 53ER91-10, Florida Administrative Code together with Chapter 24, Florida Statutes. The vendors were provided copies of those materials. Dittler contends that the RFP by its term required compliance with Rule 53ER87-13(5)(i), Florida Administrative Code. That Section states: (i) When it is considered in the best interest of the State, the Department can acquire goods and services, including major procurement through a competitive negotiation process. A Formal Request for Proposal will be let stating general requirements to be met and that award of the contract will be through a competitive negotiation process. A selection committee appointed by the Secretary or a designee will review all of the proposals and shall select no less than three proposals as finalists deemed to be most highly qualified to perform the required services. The finalists will be notified that they are expected to make a formal presentation to the committee. Based on the presentations, the committee shall select no less than three, whenever possible, proposals in order of preference deemed to be the most highly qualified to perform the requested services. The Secretary or a designee shall negotiate a contract with the most highly qualified firm. Should the Secretary or a designee be unable to negotiate a satisfactory contract with the firm considered to be the most qualified at a price the Department determines to be fair, competitive, and reasonable, negotiations with that firm shall be terminated. The Secretary or a designee shall then undertake negotiations with the second-most qualified firm, the Secretary or a designee shall terminate negotiations with that firm and shall then undertake negotiations with the third-most qualified firm. Should the Secretary or a designee be unable to negotiate a satisfactory contract with any of the selected firms, additional firms may be selected in accordance with this rule, or negotiations may be reinstated following the original order of priority. Negotiations shall continue in accordance with this rule until an agreement is reached or all proposals are rejected. It is this formal presentation which Dittler equates with the need to have an oral presentation. While the RFP through its terms concerning the procedures for selecting a vendor appears to incorporate features under Section 53ER87- 13(5)(i), Florida Administrative Code especially the aforementioned subsections 4 and 5, it also tends to incorporate the alternative procedures for gaining a contract which are set forth in Rule 53ER87-13(5)(b)(c)(d) and (e), Florida Administrative Code, which describe a request for proposal evaluation process where a bid price is quoted when the proposal is submitted. This is as contrasted with subsection (i) where the price is arrived at through negotiations following the ranking of vendors based upon the presentation made to the Evaluation Committee wherein three finalist are selected. The process in this RFP, generally stated, calls for a price quotation, a ranking of vendors based upon a point system that includes points assigned for pricing together with other factors. It does not contemplate under sub (i) a formal presentation to the Evaluation Committee, also referred to as an oral presentation, before entering into a second phase in the process associated with an attempt to negotiate with the best responsive vendor at a price that the Department is satisfied with. Failing the ability to find an acceptable price from the best responsive vendor the Department then attempts to negotiate with the second ranked vendor and then if need be, the third. That corresponds in the hierarchy of rankings to negotiations first with Scientific and then with Dittler and Webcraft if necessary. This hybrid approach to the use of both alternative methods for arriving at a contract as set forth in Rule 53 ER 87-13(5), Florida Administrative Code, is spoken to in Sections 1.1, 1.9, 2.5, 3.1, 4.2, 5.2, 5.3 and 5.4 to the RFP. As stated before, the vendors did not take issue with the blending of concepts set forth in the various provisions of Rule 53 ER 87-13(5), Florida Administrative Code, which deleted any reference to the expectation of the formal presentation to the Committee called for in sub (i). By failing to challenge the procedures for assessment or evaluation within the time allowed in Section 1.25, the parties acquiesced in this arrangement. The process of evaluation described in the RFP is not ambiguous. It does not call for a formal presentation and that requirement may not be inferred. By not reminding the Department that the approach for evaluation employed selected portions from separate alternatives for conducting the process, an approach which the vender might consider contrary to the structure set forth in the rule, within the time frame available for filling a formal written protest, the vendor waived the right to direct the criticism in its petition. That protest should have been filed within 72 hours of the availability of the answers to questions propounded by the vendors to the Department under Section 1.9 to the RFP. That was not done and Dittler and the other vendors must accept the arrangement where formal presentations are not called for and need not be allowed. Concerning the request to present, James Cooney, the Dittler consultant/lobbyist, was aware of the requirements of the RFP when he attended the public session of the evaluation process which took place on May 16, 1991. He requested the opportunity to make an oral presentation from a staff member who was not part of the Evaluation Committee. Cooney was principally interested in being able to respond to the questionable provisions within the response by Dittler to the RFP brought up in discussion by the Evaluation Committee. He did not intend by that request to provide the type formal presentation contemplated by sub (i) to Rule 53 ER 87-13(5), Florida Administrative Code. Neither was Dittler in a position to make that formal presentation on May 16, 1991. Nor did the other vendors come to the evaluation session prepared to make a formal presentation, although Scientific in its cover letter transmitting its proposal stated its willingness to make an oral presentation if requested. Cooney was not allowed to advance his explanations concerning questions about the Dittler proposal. It would have been inappropriate to allow him to do so. The result would have been to give Dittler a competitive advantage. The appropriate arrangement for clarifying minor irregularities technical oversights was upon the impetus by the Department, not the vendors. In any event, these concerns which Cooney intended to address were not disqualifying items in the response to the RFP by Dittler. CONTACTS BETWEEN THE DEPARTMENT AND SCIENTIFIC OUTSIDE THE RFP WHICH MAY HAVE AFFECTED THE DEPARTMENT'S PERCEPTION OF THE RESPONSE BY SCIENTIFIC TO THE RFP. In its proposed fact finding Dittler argues that certain contacts set forth in its Paragraphs 88 through 91 constituted communications outside the RFP process which were improper and intended to disparage the impartiality of the procurement process at issue. That suggestion is not accepted. The contacts which were made did not impair the impartiality of the procurement process. REVIEW STANDARDS USED BY THE EVALUATION COMMITTEE In Paragraphs 92 through 104 of the Dittler proposed fact finding it is suggested that the method of assessment employed by the evaluators, to include the willingness by the Committee to allow the cost formula to be exercised independent of their participation, was not done in a manner consistent with the RFP and was thus unacceptable. The approaches taken were not illegal, dishonest, fraudulent, arbitrary, unreasonable, capricious or done in a manner which is designed to subvert or undermine the purposes and objectives of competitive bidding. Related to the cost proposal, that formula was a mechanical exercise. When the cost results were completed by staff they needed only to be added to the scores which had been assigned by the evaluators for features in the proposal outside the price quotations. The decision by the Committee to rely upon the staff to exercise the formula on cost and add in those scores with the scores arrived at by the evaluators on items other than cost did not violate the spirit and intent set forth in the RFP for assigning overall scores to include the cost component. In this connection the staff that served to support the Evaluation Committee in its activities acted appropriately. CLAIM OF THE USE OF UNARTICULATED CRITERIA PERTAINING TO THE "TIE-IN" OF THE EMPHASIS ON EDUCATION AS PART OF THE MARKETING PLAN Dittler claims that the evaluators acted arbitrarily and in a capricious manner in placing emphasis on an educational "tie-in" in the marketing plan. Dittler complains about giving credit to Scientific for such emphasis in a setting where the RFP did not contemplate the relationship between the educational purposes for which the Florida Lottery was created and the marketing plan prepared by the respective vendors. Dittler goes so far as to assert that this unspoken requirement to promote education in the marketing statement constitutes the use of unarticulated criteria in the evaluation process, in that those criteria concerning education are not found in the RFP. Under Section 2: SPECIFICATIONS, is found the statement of PURPOSE AND OVERVIEW. At Section 2.1 it states: In accordance with Chapter 24, Fla. Stat., the Florida Department of the Lottery has been charged with the responsibility "to operate the state lottery . . . so as to maximize revenues in a manner consonant with the dignity of the state and the welfare of its citizens." The Contractor will support the Lottery in its mission by providing the requisite services identified in Section 2 of the RFP for the Lottery's instant ticket games. The lottery's objective for issuing the RFP is to enter into a Contract with the most highly qualified Respondent who will provide secure gaming products, maximize the sale of instant tickets, and develop game support services which are efficient and assure product knowledge and availability to all lottery retailers and lottery players of Florida. * * * The Lottery is committed to an aggressive marketing plan for instant tickets. It is essential that throughout the Contract period innovative game concepts be developed to assure the growth of instant ticket sales. Further explanations concerning the marketing plan are set forth in Section 2.4.B which states: Between July 1, 1990 and April 1, 1991, the Lottery has released the instant ticket games outlined in Attachment F. Using this information as guidance, Respondents shall provide a detailed strategy and plan for the production of tickets for the fiscal year ending June 30, 1992. This strategy must include projected revenues, game names, ticket quantities, duration, game play, prize structures, and a rationale and plans for advertising, promotion and market research. Respondents shall provide at least five (5) alternative game names for each game included in the plan. The game design and rationale proposed must be creative and directed toward meeting the Lottery's sales goal of $12 million per week with a prize structure of 50%. The plans must include specified methodology for determining game selection, the game break schedule, and supporting market research. The quality and the experience of the Respondent's marketing representative who will be assigned to the Lottery, and the Respondent's marketing, design, advertising and promotional experience with other state lotteries shall be clearly stated. Any offering or proposed feature that is considered by the Respondent as an extra cost item must be fully described as such in the proposal as such. The price for such extra cost items shall be provided separately in the sealed Cost Proposal under "Other Options". As described at 5.3.B the marketing plans were graded on their quality and appropriateness. While the requirement to "tie in" the educational purposes for which the lottery was created is not stated in exact terms, it was not inappropriate for Scientific to place that emphasis and for the evaluators to credit Scientific for its marketing idea. Nor was it inappropriate for the Dittler proposal to be less well received by the absence of such emphasis upon education in its marketing statement. Section 1.1 to the RFP made the vendors aware of that activities involved in the pursuit of a contract are conducted in accordance with Chapter 24, Florida Statutes, among other controlling legal requirements. Section 24.111(1), Florida Statutes, states in part: In all procurement decisions, the department shall take into account the particularly sensitive nature of the state lottery and shall consider the competence, quality of product, experience, and timely performance of the vendors in order to promote and ensure security, honesty, fairness, and integrity in the operation and administration of the lottery and the objective of raising net revenues for the benefit of the public purpose described in this act. Sections 24.102, 24.121 and 24.1215, Florida Statutes, also emphasize the public education purposes of the lottery. Scientific offered its marketing emphasis on education based upon the knowledge of Chapter 24, Florida Statutes, newspaper clippings commenting on the lottery's emphasis on education and past speeches of the Secretary of the Department which placed that emphasis. REQUIREMENTS FOR A MINORITY PROGRAM Section 2.4 A.2. describes the requirements for minority participation expected of vendors responding to the RFP. It states: The Lottery is committed to participation by minorities among its vendors and retailers. The Lottery encourages the use of Minority Business Enterprises as subcontractors whenever the use of such firms is reasonably feasible. Each Respondent should include with its proposal its plans for the use of Minority Business Enterprises as subcontractors, and should set forth any other plans which it has which will positively impact the minority business community. Respondents will receive consideration in the evaluation based on their meaningful use of Minority Business Enterprises. When the RFP calls for the inclusion of a plan for the use of a Minority Business Enterprises as subcontractors, it contemplates a more detailed explanation than was provided by Dittler in its proposal where it said: "As discussed above, Dittler has specific plans to include minority participation if awarded the contract." Dittler also stated concerning minority participation: Dittler is committed to and encourages minority participation in its contracts using Minority Female Loan and Small Businesses. We are proud of out track record and, if awarded this contract, intend to include MBE/WBE participants whereever possible. Concerning the exact intentions in this RFP it was stated: Dittler does not anticipate the use of a subcontractor for any of the date generation, production or support services by the Lottery. As Dittler concedes it did not have a detailed minority participation plan referring to the names of subcontractors it would use with minority ownership certification. Scientific Games and Webcraft's proposals did contain a listing of subcontractors who are minority certified who were proposed to be used if the contract was awarded to one of those vendors. Under the circumstances it was appropriate for the evaluators to mark down Dittler concerning its minority participation. Contrary to Dittler's assertion it was not enough to state the intention to use minority certification without a more detailed statement. Having failed to give a more detailed statement it was not arbitrary and capricious for the evaluators to deduct points from Dittler concerning the requirement for a minority participation plan in that the minority participation plan was part of the evaluation criteria set out at Section 5.3.A. STATEMENTS ON TICKET COMPROMISEABILITY Dittler in its fact proposals at Paragraphs 116 through 119 places emphasis on the misunderstanding by committee member Pribbenow as to distinctions between compromiseability and alterability concerning a statement on compromiseability contained in the Dittler proposal. Dittler also questions a willingness by the Committee to allow Webcraft to amend its proposal to include a statement on the length of time that the Webcraft tickets would withstand compromiseability while not allowing Dittler a chance to explain the statement in the Dittler proposal concerning compromiseability that concerned Pribbenow. Although these criticisms are legitimate they do not pertain to items of such magnitude to demonstrate illegality, dishonestly, fraudulent practice, arbitrariness, unreasonableness, capriciousness or that the actions were done in such a manner as to subvert or undermine the purposes and objectives in competitive bidding. ACCOUNT REPRESENTATIVE At Section 2.4A.1. concerning the vendors organization and credentials, in pertinent part it has this to say about the account representative: The Respondent shall identify the actual persons who will be assigned major roles in the fulfillment of the work obligations outlined on Section 2 herein. The responding firm shall state that each person is available to perform the work if the responding firm is awarded the Contract. In accessing information concerning the account representative that assessment is performed under the criteria set forth at Sections 5.3.A. and 5.4. In carrying out the evaluations concerning the account representative, the evaluators expressed concern that the Dittler account representative had duties in other jurisdictions which would unduly interfere with her ability to meet the needs of the Florida Lottery in servicing the account. It did not appear to have a similar concern about Scientific and its account representative. The Committee also commented on the amount of experience by the designated account representative as an item of concern. There were remarks about the relative placement of the account representative in her organizational hierarchy, that is to say the number of persons in the organizational chain between the account representative and the Chief Executive Officer. The action taken by the evaluation committee concerning the account representatives was not inappropriate. TICKET TESTING Section 2.2B. to the RFP, as amended, called for the submission of the following ticket samples: Aluminized uncoated white card stock, minimum the 10 point or heavier. Aluminized coated white card stock, minimum 10 point or heavier. Recyclable ticket stock, minimum 8 point or heavier. Pursuant to Section 2.4.D.4. . . . each respondent must submit one book of tickets of each type of ticket stock proposed. The tickets will be subjected to testing by the Evaluation Committee to determine whether they meet the criteria set forth in Section 2.3.A5(c). . . . In the question and answer phase of the process BABN had asked the question if the vendors sample tickets could deviate from the requirements for submission of samples and if the Department would extend the time for submitting samples. The answer alluded to the requirements as to types of tickets which were called for up to that point which included categories 1 and 2 under Section 2.2B. BABN was told that they would not be given additional time to submit samples. All vendors were made aware of the question and answer. Prior to the receipt of the proposals on May 13, 1991, a decision was made by the Department, by Evaluation Committee member Carter and one or more other persons employed by the Department to only test 10 point uncoated ticket stock samples. That decision was reached because that was the type of ticket stock currently in use by the Department and the Department was not intending to change the type of ticket stock in this procurement. Dittler submitted four samples of tickets. It had this to say about its uncoated 10 point ticket: A game produced over three years ago for the Vermont Lottery on uncoated 10 point foil. Since the time this game was produced, all of Dittler's customers have requested coded stock. The bar code on this ticket was the first use of a variable bar code for validation of instant tickets in the United States. We submit this particular sample to confirm for the Lottery that Dittler can produce instant tickets on uncoated stock, and not for security evaluations. Dittler made this choice to submit this 10 point uncoated ticket stock realizing that the tickets submitted would be subject to testing. Dittler was not entitled to condition the submission by stating that it was not offered for security evaluations. It was the only aluminized uncoated 10 point stock it submitted. Therefore it had to be offered for all purposes to include security testing. Having failed to meet the requirement to submit a ticket for security testing it was not in compliance with the technical requirements of the RFP. It constituted a failure to meet the requirements set out in Section 3.1(d)10 for providing all items required in Section 2. The failure to comply with the requirement for submission of the ticket for testing made the proposal not responsive under Sections 4.2 and 5.2A in that it failed to meet a mandatory material requirement. The Dittler lack of compliance was similar to the problem with BABN which failed to offer the category of required tickets for testing. Notwithstanding the fact that the RFP called for all categories of tickets submitted to be subjected for testing and only one category was tested, this does not excuse the noncompliance with the requirements of the RFP by Dittler. Under the facts here the decision to test only one category of tickets did not constitute an arbitrary and capricious act on the part of the Department where the RFP calls for the testing of all categories. Lawrence Herb a forensic specialist for the Department with considerable experience as a document examiner tested the tickets which he received on May 13, 1991. He tested only the one category ticket at the instruction of Carter. When Herb tested the one category of ticket he was unaware of the disclaimer in the Dittler proposal concerning its tickets where it was stated that the tickets were not for security purposes. After the decision was reached to test only one category of ticket, Carter did not make persons other than Herb and Colen Benton who were involved with ticket testing aware of that choice. In addition to having been told on May 13, 1991 to only test the 10 point uncoated ticket stock, Carter had told Herb Thursday or Friday the week before the Monday that the proposals were received that only the 10 point uncoated aluminized ticket stock would be tested. Carter did not receive the Dittler proposal for review as an evaluator until May 15, 1991. Consequently, he did not know of the disclaimer in the Dittler proposal concerning the 10 point uncoated ticket stock that Dittler submitted when Carter made the decision to only test that category of ticket and communicated that decision to the testors. None of the vendors were made aware that only the 10 point uncoated ticket stock would be tested before submitting their proposals. In conducting his tests on the 10 point uncoated ticket stock Herb utilized testing methods used by the Department, testing methods that he had seen employed by the current vendor Scientific in its California printing plant and other tests that were not required by the Department standards or the California operation of Scientific. The choice of testing methods, generally described, was not inappropriate nor designed to give advantage to Scientific. Although not in compliance with the requirement to provide tickets for security testing, Dittler's tickets were tested and scores assigned to the test results. The consequence was to treat the Dittler position on security testing of its tickets as being responsive. This was more advantageous treatment than Dittler was entitled to. The ticket testing began on 4:00 p.m. until approximately 10:00 or 11:00 p.m. on May 13, 1991. Work was done from 8:00 a.m. until approximately 11:00 p.m. on May 14, 1991, and on May 15, 1991, work was done from 8:00 a.m. until 11:00 p.m. Some of this time was devoted to generating written reports which were offered to the Evaluation Committee. No test took longer than 24 hours to conclude. Deference need not be paid to the criticisms by Dittler concerning the possibility of a more lengthy testing session. The same test were performed on each vendor's ticket samples. A detailed forensic report based upon the test results, together with a summary of that report commenting on the categories of marketability, compromisability, and alterability and general comments constituted the reporting. Each member received copies of the report and the summary to that report and the actual tickets were made available for examination by the committee members. Under general comments there was a discussion of the appearance of the tickets and other factors. Whether these comments concerning the appearance and associated factors are matters within the parameters of forensic ticket testing, this did not cause any significant disadvantage to Dittler in the criticisms directed under general comments concerned content of construction and security features, matters which Dittler had conceded in its disclaimer. On balance, as Dittler apparently had anticipated, its 10 point uncoated ticket did not perform well when subjected to testing. The other vendors' tickets in this category were acceptable. The presentation by the forensic examiner Herb did not include recommendations as to ranking or scoring and did not promote undue influence in the decision making by the committee members in dealing with security issues. It was appropriate for the evaluators to assign scores under Sections 5.3C and 5.3D of the RFP when taking into account the results of the forensic testing.
Recommendation Upon consideration of the facts found and the conclusions of law reached, it is, RECOMMENDED: That a Final Order be entered which finds that the Scientific proposal is responsive; That Scientific is the best responsive vendor in the hierarchy of ranking, followed by Dittler and Webcraft; That allows the process to proceed to the negotiation phase; and That dismisses the Dittler administrative petition. DONE and ENTERED this 9th day of March, 1992, 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 9th day of March, 1992. APPENDIX Case No. 91-3481BID The following discussion is given concerning the proposed fact finding by the parties. Dittler's Facts: Paragraph 1 is subordinate to facts found. Paragraph 2 is not necessary to the resolution of the dispute. Paragraphs 3 and 4 are subordinate to facts found with the exception of suggesting that Horbein has been an executive branch lobbyist continuously. Paragraphs 5 through 9 are subordinate to facts found. Paragraph 10 is contrary to facts found. Paragraph 11 is recitation of legal argument. Paragraph 12 is subordinate to facts found. Paragraph 13 is a accurate portrayal of the testimony but does not lead to the conclusion that the activities by Hornbein beyond November 19, 1990 constituted any lobbying activities which required disclosure of his name nor did the facts suggested in Paragraphs 14 through 19 fall into that category. Paragraph 20 is subordinate to facts found. Paragraphs 21 and 22, see discussion of Paragraph 13. Paragraph 23, the reference to April 4 is corrected to be April 3, 1991. The second sentence is contrary to facts found. The remaining portion of Paragraph 23 is subordinate to facts found. Paragraphs 24 through 34 are subordinate to facts found. Paragraphs 35 and 36 are contrary to facts found. Paragraphs 37 and 38 are subordinate to facts found. Paragraph 39 is not necessary to the resolution of the dispute. Paragraph 40 is contrary to facts found as is Paragraph 41. Paragraphs 42 through 44 are not necessary to the resolution of the dispute. The first two sentences of Paragraph 45 are subordinate to facts found. The remaining sentences in Paragraph 45 and Paragraph 46 are contrary to facts found. Paragraphs 47 through 49 are subordinate to facts found. Paragraph 50 is subordinate to facts found with the exception of its suggestion that Scientific was undergoing a reorganization. Paragraphs 51 and 52 concerning the buy out as discussed by the evaluators is not considered to have influenced the decision on responsiveness of Scientific nor inappropriately influence the scores assigned to Scientific. Paragraph 53 is not relevant. Paragraph 54 constitutes legal argument. Paragraph 55 is contrary to facts found with the exception of the remarks attributable to evaluation committee members. Their impression did not influence the outcome and to the extent that they believe that the asset purchase was an adverse change, their opinion did not comport with the legal requirement for disclosure. Paragraph 56 is contrary to facts found. Paragraph 57 is not relevant information. Paragraphs 58 through 60 are contrary to facts found. Paragraph 61 is subordinate to facts found. Paragraphs 61 and 62 are subordinate to facts found. The discussion in Paragraphs 63 through 67 concerning the Webcraft proposal is not relevant to the extent that it was not plead and Webcraft has not offered a petition speaking to the relative merits of its proposal. Paragraphs 68 through 71 in its first two sentences are subordinate to facts found. The remainder of Paragraphs 71 through 72 are not necessary to the resolution of the dispute. Paragraphs 73 through 75 are subordinate to facts found. Paragraph 76 is rejected in that the process of review by the trier of fact does not call for an assessment in substitution of the witnesses who testified as to the length of time necessary to read the material. Paragraph 77 is contrary to facts found. Paragraph 78 constitutes recitation of legal argument. Paragraphs 79 and 80 are subordinate to facts found. Paragraph 81 is contrary to facts found in that there are other pertinent provisions of the administrative rule that play a role. Paragraphs 82 and 83 are subordinate to facts found. Paragraphs 84 and 85 are contrary to facts found. Paragraph 86 is subordinate to facts found. Paragraph 87 is contrary to facts found. Paragraphs 88 through 91 in the suggestion of impropriety in the contacts by Scientific with the Department is rejected. Paragraphs 92 through 104 in the suggestion that the evaluators acted inappropriately in their review standard is rejected. Paragraphs 105 through 109 are subordinate to facts found. Paragraph 110 is contrary to facts found. Paragraphs 111 and 112 are subordinate to facts found. Paragraph 113 is an incorrect portrayal by Dittler of the requirements of the RFP. Paragraph 114 is subordinate to facts found. Paragraph 115 is contrary to facts found. Paragraphs 116 through 124 are subordinate to facts found. Concerning paragraphs 125 and 126 the facts do tend to show that criticism was not directed to Scientific about its account representative as contrasted with criticisms of Dittler but this doesn't change the case outcome. Paragraphs 127 through the first sentence of Paragraph 130 are subordinate to facts found. The latter sentence to Paragraph 130 constitutes legal argument. Paragraph 131 is subordinate to facts found. The first sentence of Paragraph 132 is contrary to facts found. The latter sentence is subordinate to facts found. Paragraphs 133 and 134 are not necessary to the resolution of the dispute. Paragraphs 135 through the first sentence of Paragraph 139 are subordinate to facts found. The last sentence in Paragraph 139 and Paragraphs 140 through all sentences save the last sentence in Paragraph 141 are not necessary to the resolution of the dispute. Paragraph 141 in the last sentence is contrary to facts found. Paragraphs 142 through 144 are not necessary to the resolution of the dispute. As to Paragraph 145 it is not incumbent that those matters be attended that are suggested in the first sentence. The second sentence is contrary to facts found. Paragraph 146 is not necessary to the resolution of the dispute. Paragraphs 147 through 149 are subordinate to facts found. Paragraphs 150 through 153 with the exception of the last sentence of Paragraph 153 are not necessary to the resolution of the dispute. The last sentence in Paragraph 153 is contrary to facts found. Paragraphs 154 and 155 are subordinate to facts found as is Paragraph 156 in its first sentence. The last sentence in Paragraph 156 is contrary to facts found. Paragraph 157 is subordinate to facts found as is Paragraph 158 in its first sentence. The last two sentences in Paragraph 158 are rejected in that the vendors are not able to substitute their judgment as to appropriate testing. Paragraph 159 is subordinate to facts found. Paragraphs 160 through 162 are not necessary to the resolution of the dispute. Paragraph 163 is subordinate to facts found. Department's Facts: Paragraphs 1 through 21 are subordinate to facts found. Paragraph 22 is not relevant. Paragraphs 23 through all sentences in Paragraph 28 with the exception of the last sentence are subordinate to facts found. The last sentence in Paragraph 28 is not necessary to the resolution of the dispute. Paragraphs 29 through 34 are subordinate to facts found. Paragraph 35 is not necessary to the resolution of the dispute. Paragraphs 36 through all sentences in Paragraph 51 with the exception of the last sentence are subordinate to facts found. The last sentence is not necessary to the resolution of the dispute. Paragraphs 52 through first sentence in Paragraph 55 are subordinate to facts found. The last sentence in Paragraph 55 is not necessary to the resolution of the dispute. Paragraphs 56 through the first sentence in Paragraph 57 are subordinate to facts found. The last sentence in that Paragraph is not necessary to the resolution of the dispute nor is Paragraph 58 nor the first two sentences of Paragraph 59. The remaining sentences in Paragraph 59 are subordinate to facts found. Paragraph 60 is not necessary to the resolution of the dispute. Paragraph 61 through 66 are subordinate to facts found. NOTE: Scientific employees were not involved in the appropriation of the RFP nor did not make attempts to influence the outcome of the appropriation. Paragraph 67 is not necessary to the resolution of the dispute. Paragraphs 68 through 70 are subordinate to facts found. Scientific's Facts: Paragraph 1 is not necessary to the resolution of the dispute. Paragraphs 2 through 19 are subordinate to facts found. Paragraphs 20 and 21 are not necessary to the resolution of the dispute. Paragraphs 22 through the first two sentences in Paragraph 39 are subordinate to facts found. The last sentence in Paragraph 39 is not necessary to the resolution of the dispute. The first sentence in Paragraph 40 is subordinate to facts found. The last sentence in Paragraph 40 constitutes legal argument. Paragraphs 41 through 48 are subordinate to facts found. Paragraph 49 is not necessary to the resolution of the dispute. Paragraphs 50 through 78 are subordinate to facts found. Paragraph 79 is not necessary to the resolution of the dispute. Paragraph 80 through all sentences in Paragraph 113 are subordinate to facts found with the exception of the last sentence which is not relevant in that it is not part of the proposal. Paragraphs 114 through 116 are subordinate to facts found. Paragraph 117 is not necessary to the resolution of the dispute. Paragraphs 118 through 122 are subordinate to facts found. Paragraph 123 is not relevant in that it was not set out in the proposal concerning use of minorities in other states. Paragraphs 124 through the first sentence in Paragraph 126 is subordinate to facts found. The last sentence in Paragraph 126 is not necessary to the resolution of the dispute. Paragraphs 127 through 135 are subordinate to facts found. Paragraphs 136 through 140 are not necessary to the resolution of the dispute. Paragraphs 141 through 143 are subordinate to facts found. Paragraphs 144 and 145 are contrary to facts found. Paragraph 146 is rejected in that it is not the opinion of the evaluator that matters but the language in the Section. Paragraphs 147 through 152 are subordinate to facts found. Paragraph 153 is not necessary to the resolution of the dispute. Paragraph 154 overlooks the unwillingness of the Department to allow additional time to produce a ticket given the response they made to BABN. Paragraph 155 is not necessary to the resolution of the dispute nor are Paragraphs 156 and 157. Paragraph 158 is subordinate to facts found. COPIES FURNISHED: Marcia Mann, Secretary Department of Lottery 250 Mariot Drive Tallahassee, FL 32301 Betty Steffens, Esquire Frank P. Ranier, Esquire McFarlin, Sternstein, Wiley & Cassedy Post Office Box 2174 Tallahassee, FL 32316-2174 Robert Scanlon, Esquire Department of Legal Affairs The Capitol Tallahassee, FL 32399-1050 Thomas K. Equels, Esquire Holtzman, Krinzman & Equels 1500 San Remo Avenue, Suite 200 Coral Gables, FL 33146 Clifford A. Schulman, Esquire Adrian L. Friesner, Esquire Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel 1221 Brickell Avenue Miami, FL 33131 Jim Trucks BABN Technologies Corporation 129 White Oak Drive Newnan, GA 30265
The Issue The issue in the case is whether the Petitioner qualifies as a “charitable institution” as defined at Section 212.08(7) (o)2.b., Florida Statutes, and is therefore entitled to a consumer certificate of taxation exemption.
Findings Of Fact The Junior League of Tampa, Inc., (League) is a non- profit corporation exempt from federal income tax under Section 501(c)3 of the Internal Revenue Code. The Articles of Incorporation for the League provide that the League is intended to foster member’s interests in local social, economic, educational, cultural, and civic conditions, and to make efficient use of members as volunteers. According to testimony offered at hearing, the purposes of the Junior League of Tampa are to offer social assistance to persons in the community, provide volunteers to various local organizations, and to offer volunteer training to League members. The League provides member education regarding issues of local concern by offering bus tours through area communities, attendance at government meetings (school board, county commission, etc.) and training sessions focusing on the operation and activities of the League. Members of the League pay dues which are used to support the administrative costs of the organization. Members of the League are expected to provide volunteer services to community organizations through the League. No services are provided directly to individuals. In addition to dues the League raises funds through local fund raising activities, including production of a cookbook and a thrift sale. Fund raising revenue is used to support community projects. According to the financial statements for the fiscal year ending May 31, 1995, the League’s total operational expenses (excluding depreciation) were about $400,000. Expenses were allocated between “program services” and “support services.” Total support services costs were approximately $269,000, including $94,576 for fund raising costs. Other costs allocated to support services included $103,827 in “administrative costs,” $11,089 in “association dues,” $20,493 in “membership expense” and almost $39,000 for the League’s membership publication, “The Sandspur.” None of the support services expenditures were directly related to the community or volunteer efforts of the League. Total program services costs were $131,655, including $21,642 for “program research and evaluation,” $25,876 for “association dues,” and $84,137 for “community projects.” “Program research and evaluation” costs include the expenses of the community advisory board which assists the League in determining local needs and evaluating projects. Additional program research costs include expenses related to development and evaluation of League projects, expenses related to sending Tampa League members to meetings of the national League, other membership expenses, expenses of a public relations campaign, expenses related to preparation of a member brochure describing volunteer opportunities, and “ad hoc training.” None of the expenses allocated to “program research and evaluation” are directly provided to recipient organizations through monetary donation or by provision of volunteers. Expenses identified as “program services/association dues” include $25,876 paid to the American Association of Junior Leagues. The national organization offers information related to the anticipated success of specific league projects. None of the expenses allocated to “association dues” are directly provided to recipient organizations through monetary donation or provision of volunteers. The “community projects” total expenditure of $84,137 represents actual funds donated by the League to recipient organizations. In addition to actual donations, members of the League provide hours of free volunteer service to local IRC 501(c)(3) organizations. During fiscal year 1985, League members provided 11,823 hours of volunteer service to local organizations and to the League’s own community projects. The League asserts that many League members providing volunteer services are professionals and that such services should be valued at approximately $10.00 per hour. The evidence fails to establish that the volunteer services provided require professional education or certification or that the volunteer services should be valued at any more than the minimum wage, $5.00 during the time period relevant to this proceeding. The League lists 22 local activities and organizations for which volunteer services were provided. The parties have stipulated that 12 of the 22 (Bereavement Camp, Kids Rights Fund, Child Life Program, Immunization, Ronald McDonald House, Parenting Power, Emergency Shelter, Georgia Flood Relief, Judeo Christian Health, Bay Area Legal Services, WestCoast Golden Services, and McDonald Training) are accepted as “charitable activities.” The Department asserts that the ten remaining activities and organizations do not meet the relevant definition of acceptable charitable services and can not be included in the League’s total charitable effort for purposes of tax exemption. The ten activities include Puppet Troupe, Children’s Museum, McKay Bay Learning Lab, Funbook, Tampa Tickets, Tampa Area Playground, Tampa Museum of Art, Tampa Bay Youth Orchestra, Musicale and Federated Club and H. B. Plant Museum. The “Puppet Troupe” consists of the preparation and performance of a puppet show for residents of nursing homes and for hospitalized children. The evidence fails to establish that the League's participation in Puppet Troupe is an acceptable charitable service for purposes of the tax determination. The Tampa Children’s Museum is an admission-charging, public museum, open to all, designed to provide learning opportunities for children and parents. The evidence fails to establish that the League's participation in Tampa Children's Museum is an acceptable charitable service for purposes of the tax determination. The McKay Bay Learning Lab offers educational programs to children of elementary school ages. The programs are targeted to special needs children, but are open to all. The evidence fails to establish that the League's participation in the McKay Bay Learning Lab is an acceptable charitable service for purposes of the tax determination. “Funbook” is a coloring book focused on Tampa history and distributed to hospitalized children. The evidence fails to establish that the League's participation in Funbook is an acceptable charitable service for purposes of the tax determination. “Tampa Tickets” is a grant of funds to the Tampa Performing Arts Center and is intended to subsidize the cost of admission to cultural events at the Center. The evidence fails to establish that the League's participation in Tampa Tickets is an acceptable charitable service for purposes of the tax determination. The Tampa Area Playground is a public playground which was constructed with funds and volunteer labor contributed by many local organizations including the League. The evidence fails to establish that the League's participation in the Tampa Area Playground is an acceptable charitable service for purposes of the tax determination. The Tampa Museum of Art is a public admission-charging museum for which the League funded a curriculum guide for use in local schools. The evidence fails to establish that the League's participation in the Tampa Museum of Art is an acceptable charitable service for purposes of the tax determination. The Tampa Bay Youth Orchestra received funds from the League directed towards purchasing musical instruments for children who could not afford them. The evidence fails to establish that the League's participation in the Tampa Bay Youth Orchestra is an acceptable charitable service for purposes of the tax determination. The Musicale and Federated Clubs is a performing arts organization. The League provided a grant of funds to cover the costs of termite treatment for the Club facility. The evidence fails to establish that the League's participation in the Musicale and Federated Clubs is an acceptable charitable service for purposes of the tax determination. The H. B. Plant Museum is a public admission-charging museum. The League contributed funds to purchase two computers used in the museum’s membership solicitation program. The evidence fails to establish that the League's participation in the H. B. Plant Museum is an acceptable charitable service for purposes of the tax determination. The evidence establishes that the McKay Bay Learning Lab, the Children’s Museum, the Tampa Museum of Art, and the H. B. Plant Museum are educational institutions, rather than charitable institutions. Expenditures of funds or volunteer time contributed to educational organizations which do not otherwise meet the requirements for qualification as charitable institutions are properly disallowed from the calculation of the League’s charitable effort. The evidence is insufficient to establish that expenditures related to the Puppet Troupe and Funbook projects, the Tampa Tickets program, the Tampa Area Playground, the Tampa bay Youth Orchestra, or the Musicale and Federated Clubs meet applicable requirements for qualification as a charitable expenditures by the League. Such expenditures are properly disallowed from the calculation of the League’s charitable effort. Based on examination of the total acceptable charitable effort of the League, both donations of volunteer time and actual funds, the evidence fails to establish that the sole or primary purpose of the League is to provide such services.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Revenue enter a Final Order denying the Petitioner’s application for renewal of a Consumer Certificate of Exemption. RECOMMENDED this 8th day of January, 1997, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32301-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 8th day of January, 1997. COPIES FURNISHED: Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 Jeremy P. Ross, Esquire Bush, Ross, Gardner, Warren and Rudy, P.A. 220 South Franklin Street Tampa, Florida 33602 Ruth Ann Smith, Esquire Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668
Findings Of Fact The WCHS maintains one checking account. The bookkeeping for the checking account is segregated into a General Account and multiple Internal Accounts. The Internal Accounts represent various interest centers at the school, e.g., athletics, welding class, auto repair, small engine repair and senior class. Each Internal Account and the General Account have separate ledger cards. The General Account is used to receive miscellaneous income such as coke machine receipts or employee reimbursements for long distance calls and to pay non-specific expenses. The Internal Accounts are used to purchase supplies for particular activities and to receive ticket proceeds, monies raised and reimbursements for parts and materials used in repair of the equipment. The bookkeeping is done by the sole bookkeeper, Mrs. Madelyn Crowson, who has been so employed for more than 15 years. Original documentation for receipt of funds includes a receipt, a deposit and a receipts journal. Original documentation for issuance of funds includes a purchase order, a check requisition with supporting documentation attached and checks. Cash on hand is kept in a safe which is normally opened between 8:15 and 5:30 a.m. by Crowson, left "latched" but not locked until late in the day. The Principal is required to prepare a Monthly Report of Internal Accounts from the Internal Account ledger cards and to certify such to the Superintendent. The WCHS is audited annually by external auditors for the WCSB. The WCHS has a Vocational Department which includes an Auto Repair Class, a Small Engine Repair Class and a Welding Class, among others. The Chairman of the department for the 1981-82 school year was Mrs. Helen Whaley, wife of Superintendent Whaley. The Auto Repair, Small Engine Repair and Welding classes all teach by having community members and students bring items which require the attention of the class (cars or small engines needing repair, or items to be welded, etc.), and the items are repaired. Vocational classes such as those noted all charge a shop fee to recover the cost of expendable items. Whether WCHS through an Internal Account acquired the parts necessary for the repair and was later reimbursed by the customer, or whether the customer brought the parts to the shop is subject to the wishes of the individual teacher and the customer. However, both methods were utilized. The financial management of the Athletic Department was the responsibility of the Athletic Director through the Athletic Fund Internal Account. For several years the Assistant Principal served as the Athletic Director. Don Mathews, a guidance counselor, was the Athletic Director for the 1981-82 school year. Income to the athletic account was derived primarily from the sale of tickets to athletic events. Tickets were acquired and controlled by the Athletic Director in rolls of 2,000, with unused tickets being maintained in an unlocked cabinet in a room also used to store the cheerleaders' equipment. Reports of tickets sold were made on a Department of Education (DOE) approved form and the funds received were noted on the DOE form, signed by Mathews and receipted by Crowson to the Athletic Fund Internal Account. Each of the Reports of Tickets Sold or Admissions contained signatures certifying that the information was true and accurate and that the persons depositing the funds were depositing all funds received. At the beginning of the 1981-82 school year, Pelham appointed Mathews to be Athletic Director and advised him that he would be in charge of the funds from athletic ticket sales. He also informed Mathews how ticket sales and funds had been handled in previous years. The normal procedure for football ticket sales was as follows: (1) Mathews would acquire $600.00 for change, divide the change into 3 metal cash boxes and put an adult and student roll of tickets with each box; (2) Mathews would give each of three ticket sellers a box of 2 rolls of tickets at the beginning of the game, collect each box and rolls of tickets at intervals throughout the game, put away the equipment for each gate and deliver the metal boxes to Pelham, who would lock them in the driver's education car trunk until the game was over; (3) Pelham, who was the only person attending the game with both a key to the school office and the combination to the safe, would transfer the contents of the three boxes to one box and lock it in the safe; and (4) on the following Monday morning, Crowson and Mathews would count the money, compare the money to the number of tickets removed from each roll, complete the Report of Tickets Sold or Admissions, and make the deposit. The regular season home games for WCHS were: Blountstown - September 18, 1981 Jefferson County - October 2, 1981 F.A.M.U. - October 9, 1981 Rickards - October 23, 1981 Port St. Joe - November 13, 1981 There were two play-off games played at WCHS following the regular season against Jefferson County and Bolles High School. Because the play-off games are sponsored by the Florida High School Athletics Association, the home team principal is required to be in charge of those ticket sales. Mathews was in charge of ticket sales for the regular season. During the Blountstown, Jefferson County and F.A.M.U. games, the ticket sale proceeds were not counted before Monday morning. In each game the number of tickets missing from the rolls when multiplied by the ticket price did not equal the funds reported on Monday morning. In each game Mathews and Crowson "doctored" the Report of Tickets Sold and Admissions to reflect no discrepancies. Pelham had previously instructed Mathews and Crowson to adjust these reports for the purpose of eliminating minor discrepancies. Neither Mathews nor Crowson advised Pelham of these discrepancies which they adjusted. During the Rickards game, a cash count was performed by the ticket sellers but checks were cashed and funds were intermingled sufficiently to question the accuracy of the count on either Friday night or Monday morning. During the Port St. Joe game, a cash count was conducted, but following the cash count and before the funds were recounted, several persons had access to the funds and all of the ticket sellers had made errors in their counts. Major errors in arithmetic were committed on several occasions by persons counting the money after the games. Therefore, it could not be determined with any degree of certainty that the final counts reflected missing dollars or merely corrections of earlier errors. There were a substantial number of tickets for which there was no accounting. Because of the deficiencies in ticket accounting, it cannot be determined whether there was, in fact, any money missing. None of the Reports of Tickets Sold or Admissions certified by Mathews to be accurate reflect money or tickets missing except for the report on the Port St. Joe game. However, if there was money missing from this game, the evidence is insufficient to determine if it was stolen, and if so, by whom. Pelham brought his lawn/garden tractor to the Small Engine Repair Class during the Spring of 1980 for repair by the class. This tractor is a Sears product and has an Onan engine. In the fall of 1981 the shop teacher provided Pelham with a list of the parts necessary for repair. The parts were provided and installed on the tractor by late January of 1982. However, no battery was available to start and test the equipment. The tractor was removed from WCHS in March or April of 1982 without completion of the repairs. A check requisition and check for $65.71 drawn on WCHS to Sears Roebuck & Co., a copy of a check requisition and a check in the amount of $16.62 drawn on WCHS to Whitehill Equipment Co., and a check requisition for $293.00 to Whitehill Equipment Co. were introduced. However, no positive connection was made between these documents and the associated invoices and parts to be received by Pelham or used for his benefit. In October, 1981, a check requisition and check for $27.85 drawn on WCHS were issued to Whitehill Equipment Co. by Pelham for Onan parts (Petitioner's Exhibit 10, A, B, & C). These parts were picked up at Whitehill and signed for by J. D. Jones, WCHS football coach, at Pelham's request and were delivered to him. Here, Petitioner's documentary evidence and Jones' testimony, which were unrebutted, established that Pelham utilized school funds, which he did not replace, to obtain supplies for his personal use or benefit. In December, 1980, a check requisition and check for $113.31 drawn on WCHS were issued to U.S. Games, Inc. by Pelham for a tennis net (Petitioner's Exhibits 9, A). This tennis net was procured for Pelham's personal use with school funds. Respondent did not make reimbursement of these funds, but offered to do so when presented with the Statement of Charges in February, 1982.
Recommendation From the foregoing, it is RECOMMENDED that Respondent be found guilty of charges set forth in paragraphs 9(1) and 9(4) of the Statement of Charges, and that he be dismissed from his position as teacher under continuing contract with the Wakulla County District School Board. It is further, RECOMMENDED that Respondent be suspended with pay, including back pay from the date of suspension without pay, pending issuance of a Final Order by the Wakulla County School Board. DONE and ENTERED this 13th day of August, 1982, in Tallahassee, Florida. R. T. CARPENTER, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of August, 1982.
Conclusions The failure of the School Board to install metal detectors cannot be a basis for a finding of negligence. The legislative decision of the governmental entity to appropriate funds to build, expand or modernize a facility is immune from liability for negligence. Trianon Park Condominium Ass'n v. City of Hialeah, 468 So. 2d 912 (Fla. 1985). It was not foreseeable that Michael was dangerous because one teacher saw him viewing a website that she did not like, because one thought he was weird, because he talked too much in class sometimes, and because he once punched a girl. The failure of security personnel to effectively bar all access to the school prior to the official start of the school day, absent a showing of actual or constructive knowledge that the boys were sneaking in and that one of them was dangerous, also fails to constitute negligent supervision. The failure of the security guard to respond before the two boys returned to the bathroom, based on the boy's description of the time frame, also fails to demonstrate negligence. Guns, Violence, and Schools: The Results of School Violence--Litigation Against Educators And Students Shedding More Constitutional Rights at The School House Gate, 46 Loy.L.Rev. 389 (Summer 2000). ATTORNEY’S AND LOBBYIST’S FEES: Attorney's fees are set at 25 percent, in compliance with s. 768.28(8), F.S., or $250,000, for a $1,000,000 award. The lobbyist's fee is an additional 6 percent, or $60,000. Costs are not included in the fees. LEGISLATIVE HISTORY: This is the second year that a claim bill has been submitted for Maria Gough and Jorge Gough, as a result of the death of their son, Jaime Gough. RECOMMENDATIONS: For the reasons stated above, I recommend that Senate Bill 40 (2008) be reported UNFAVORABLY. Respectfully submitted, cc: Senator Frederica Wilson Representative Carlos Lopez-Cantera Faye Blanton, Secretary of the Senate Eleanor M. Hunter Senate Special Master House Committee on Constitution and Civil Law Tom Thomas, House Special Master Counsel of Record
The Issue Whether petitioner should take disciplinary action against respondent for the reasons alleged in the administrative complaint.
Findings Of Fact At all pertinent times, Clifton Jerome Locke has held Florida Teacher's Certificate Number 361372 for the areas of psychology, administration and Junior ROTC, and has taught as a Junior Army ROTC instructor at Crestview High School. Major Jordan was the director of army instruction for the Okaloosa County School Board and Sgt. Locke's "superior officer" at all pertinent times. Ever since Sgt. Locke began as a Junior Army ROTC instructor at Crestview High School, in January or February of 1971, Major Clifton D. Jordan's job was "[t]o coordinate and to command, really, if you will, the Army ROTC operations within the county school system." (T. 39-40) TELEPHONE BILLS The Okaloosa County School Board relied on the ROTC program to secure reimbursement from the U. S. Army for long distance charges incurred by ROTC. When the School Board received telephone bills for the ROTC telephone at Crestview High School, the office of the assistant superintendent for finance paid them, and sent copies of the bills to Crestview High School's Junior ROTC program. As the monthly phone bills arrived, Sgt. Locke looked them over, then gave them to a cadet, who prepared DA Form 360 and DA Form 3953, for Major Jordan's signature. Major Jordan signed the Army form to which a copy of the monthly telephone bill was attached, DA Form 3953. This form and attachments were regularly sent to the signal officer at Fort Rucker, Alabama, until the practice ceased in the spring of 1978. Although unsure whether his office, the school principal or Major Jordan received the Army's reimbursement checks, Creel Richardson, Jr., assistant superintendent for finance for the Okaloosa County School Board, testified without contradiction that the U. S. Army had not reimbursed long distance charges incurred by the Junior ROTC program at Crestview High School over a 46-month period beginning in the spring of 1978. During this entire period, Major Jordan was "telephone control officer." Army regulations precluded Sgt. Locke's serving as telephone control officer. (T. 81) Some time in 1978 Sgt. Locke received a note from Mrs. Strauder of the signal office which read: Returning your bill to be corrected. Please mark calls on the phone bill that add up to fifty-three ninety- five ($53.95), all three copies, please. It was about this time that Sgt. Locke and Major Jordan discussed the use of the telephone for other than official long distance calls. Although Major Jordan did not recall this conversation, he did testify at hearing that he had made various personal long distance calls on the ROTC telephone and had sought Army reimbursement for them by failing to delete personal items from the phone bill copies forwarded to Fort Rucker. Without counting calls made in 1982, Major Jordan made more than two hundred personal, long distance calls on the ROTC telephone, between February 14, 1978, and May 26, 1983. See Respondent's Exhibit No. 5. Eventually, the Federal Bureau of Investigation looked into Major Jordan's personal use of the ROTC telephone for long distance calls, but criminal charges were not brought. Other school personnel also made unauthorized use of the ROTC telephone. Major Jordan, who had never delegated any responsibility or duty in connection with telephone bill reimbursement to Sgt. Locke in writing, told him not to be concerned about which of the phone calls were in fact official calls. Sgt. Locke continued for a few months to give phone bills to cadets for preparation of the reimbursement request forms and the forms continued to be prepared. But Major Jordan stopped signing them and Sgt. Locke eventually stopped giving the phone bills to the cadets who prepared the forms. Of the 46 monthly bills for which no reimbursement was sought, 29 had not been opened in March of 1982, at the time Sgt. Locke was transferred from the ROTC department and Major Jordan went through respondent's desk drawers. At some point, Sgt. Locke told Major Jordan he would rather not be involved in preparation of the forms. He told the student cadets responsible for preparing the forms to deal directly with Major Jordan. In or about October of 1982, the signal office inquired about phone call reimbursement and charges for long distance. Phone calls billed to the ROTC number at Crestview High School aggregated $2,974.42 over the 46-month period. How much of this sum reflected official calls was not clear from the record. Another year elapsed after Sgt. Locke's transfer from the ROTC department before Major Jordan signed and transmitted any phone bill reimbursement forms to the signal office, with the result that reimbursement for any official calls was lost to the Okaloosa County School Board for much of that period as well. CANDY SALES Toward the beginning of the 1981-1982 school year, Jerry Pilgrim, a candy salesman from Milton, Florida, spoke to Major Jordan and Sgt. Locke about the ROTC students' selling candy to raise money. In October, it was agreed that a sale would take place later in the fall. Mr. Pilgrim discussed the candy sales with Major Jordan, who told him to deal with Sgt. Locke. Orders for candy to be delivered in November and December were not filled on time, so Sgt. Locke cancelled them, fearful the upcoming Christmas vacation would complicate matters. When Mr. Pilgrim stopped by the school to apologize for his failure to deliver the candy on time, Major Jordan said ROTC might sell candy some other time. In all, Mr. Pilgrim spoke to Major Jordan six to ten times and never got any indication that Major Jordan opposed a candy sale. It was Major Jordan who chose the particular kind of candy (Reese's candy bars) the day Mr. Pilgrim handed out samples. Major Jordan never told respondent not to conduct a candy sale. Major Jordan and Sgt. Stakley's testimony otherwise has not been credited. In January, Sgt. Locke placed another order for candy by telephone and Mr. Pilgrim delivered the candy the third week of January, 1982. He unloaded the trunk of his car at the ROTC office at Crestview High School, and returned two days later with 20 more cases of candy. Two weeks later he again called at the school, but Sgt. Locke told him that the principal was upset and that ROTC would not be ordering more candy. For the 1981-1982 school year and for some time previously, there was a written policy at Crestview High School requiring approval in advance of fund raising projects, and requiring, with respect to sales conducted by students, that a form be filed reflecting beginning inventory, cost per item, closing inventory, profit, total cost and total items sold. Petitioner's Exhibit No. 1. Both Major Jordan and Sgt. Locke knew or should have known of this policy, even though there was no evidence that the ROTC program had followed it in the past. Approval was not obtained for the candy sale in advance, nor was the required form filed. On January 21, 1982, six students turned in a total of $89.50 to Sgt. Locke, money they had been paid for candy. On January 25, 1982, six students turned in more candy sale proceeds to the respondent, aggregating $86.00. On January 26, 1982, Sgt. Locke entered the hospital, having suffered a mild stroke. He had trouble seeing, was unable to change gears driving, and finally fainted, slumping over his typewriter at Crestview High School. In the hospital, he remembered the money in his desk and asked his daughter, Cynthia Faith, who was also a cadet in the ROTC program, to retrieve the cash from his desk drawer. Sgt. Locke could not see well enough to count the money, so his wife, his daughter and his parents, who were visiting at the hospital, counted it for him. His wife drew a check in the amount of $175.50 on a joint account she shared with respondent, and one of the respondent's daughters gave the check, Petitioner's Exhibit No. 6, along with the required "Report of Monies Collected" forms, Petitioner's Exhibit No. 5, to the school bookkeeper, Ms. Earlene Carter, on February 5, 1982. (T. 163) Proceeds from the candy sale totalled at least $1385.86 and there were no complaints about the handling of the rest of the money. Insofar as the evidence shows, all the money the students turned in was ultimately deposited with the school bookkeeper. School policy required that "teachers who receive money from students in a school related activity should . [t]urn the money into the bookkeeper the day it is collected or as soon thereafter as possible." Petitioner's Exhibit No. 2. Pictures were taken of the ROTC students by James L. Davis of Stone Studio in Pensacola. Most of the students showed up with their money at the time pictures were taken in January of 1982. Others, including respondent's two daughters, did not pay for their photographs the day they were taken, but Cynthia Faith Locke later gave Sgt. Stakley $20 for the pictures taken of her sister and herself, and the photographer was eventually paid in full. Major Jordan testified at hearing that he found a "collection voucher" in Sgt. Locke's desk drawer reflecting that four ROTC students had made payments of ten dollars each for photographs, but that no money was attached to the voucher or present elsewhere in the drawer. Two of the students Major Jordan said were listed on the "voucher" were Sgt. Locke's daughters. The evidence was insufficient to show that Sgt. Locke ever received any money from any student for photographs. The "voucher" Major Jordan claimed he found was not produced at hearing. Aside from Major Jordan's testimony, which has not been credited in this regard, no evidence suggested any impropriety in the handling of any moneys respondent may have received in connection with the sale of photographs to ROTC students. APPLICATION LATE Dean Oliver Casey, a student enrolled in the ROTC program at Crestview High School, filled out an application for an ROTC scholarship in December of 1980. Major Jordan and Dean Casey had discussed the scholarship application two or three times between September 1, 1980, and mid-November of that year, and Major Jordan had told him to mail the completed application to Fort Monroe, Virginia, but he missed the December 15, 1980, deadline. Later Dean Casey gave the completed application to Sgt. Locke who asked Major Jordan if he could "pull any strings" to get the application considered, even though the deadline for submission had passed. After Major Jordan "relieved" Sgt. Locke of his ROTC assignment, respondent went to work in Okaloosa County School Board's finance department at the Carver Hill complex. On the assumption that the allegations against him were true, his effectiveness as a ROTC instructor had been impaired, the consensus of the testimony was, but there was no evidence of the impact on his effectiveness on the assumption that the charges were false, even in part; and no evidence as to his effectiveness while employed in the finance department. The parties' proposed findings of fact have been considered in preparation of the foregoing. To the extent they have not been adopted, they have been rejected as unsupported by the weight of the evidence, immaterial, cumulative or subordinate.
Recommendation It is, accordingly, RECOMMENDED: That petitioner dismiss the administrative complaint filed against respondent. DONE and ENTERED this 25th day of May, 1984, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of May, 1984. COPIES FURNISHED: J. David Holder, Esquire Post Office Box 1694 Tallahassee, Florida 32302 Ronald G. Meyer, Esquire Pamela Cooper, Esquire Post Office Box 1547 Tallahassee, Florida 32302 Ralph D. Turlington Commissioner of Education Department of Education The Capitol Tallahassee, Florida 32301 Donald L. Griesheimer Executive Director Department of Education 125 Knott Building Tallahassee, Florida 32301
