The Issue The issues for determination in this proceeding are: (1) whether the Respondent properly rejected the lowest bid because the bid did not comply with the requirements set forth in the Project Manual, and (2) whether the Respondent properly awarded the bid to the second lowest bidder.
Findings Of Fact Findings Based Upon Stipulation of All Parties The Respondent, Florida Board of Regents, issued a Call For Bids, as published in Vol. 16, No. 7, February 16, 1990, issue of the Florida Administrative Weekly, for project number BR-183, Life Safety and Fire Code Corrective Work, J. Hillis Miller Health Center, University of Florida., Gainesville, Florida. Sealed bids were received on March 15, 1990, at which time they were publicly opened and read aloud. Petitioner, Anglin Construction Co. (hereinafter referred to as "Anglin"), submitted the lowest monetary bid for the project; and Charles R. Perry (hereinafter referred to as "Perry") submitted the second lowest monetary bid on the project. By letter dated March 19, 1990, the University of Florida notified Anglin that its bid proposal, submitted on March 15, 1990, had been found to be in non-compliance with the Project Manual and rejected by the University of Florida. The specific reason for non-compliance was that Anglin's advertisement for Minority Business Enterprise ("MBE") participation, as part of its demonstration of good-faith effort, did not appear in the media at least seven (7) days prior to bid opening. On March 23, 1990, the contract for this project was awarded to Perry by the Chancellor of the Florida Board of Regents. By letter dated March 26, 1990, Anglin filed a notice of protest in regard to the award of this contract to Perry. Anglin timely filed a formal bid protest in regard to this action, which was received by the Florida Board of Regents on April 4, 1990. A representative from Anglin and Perry attended the required pre- solicitation/pre-bid meeting scheduled for March 1, 1990 for this project. Mr. Larry Ellis, Minority Purchasing Coordinator, University of Florida, was present at the pre- solicitation/pre-bid meeting and distributed a handbook entitled "Minority Business Enterprise Requirements for Major and Minor Construction Projects Survival Handbook" to those in attendance. Anglin and Perry obtained or examined the Project Manual for BR-183. By letter dated March 6, 1990, Anglin requested the Gainesville Sun newspaper to run an advertisement for seven (7) consecutive days to solicit bids from qualified MBE/WBE companies for BR-183. The advertisement in the Gainesville Sun was initially published in the March 9, 1990 edition and ran consecutively through the March 15, 1990 edition. The Project Manual, at page L-2 of L-13 pages, Special Conditions section, paragraph 1.7.2.2, provides that advertisements for minority business enterprises must run or be published on a date at least seven (7) days prior to the bid opening. Findings Based Upon Documentary Evidence The Call for Bids provided that at least fifteen percent (15%) of the project contracted amount be expended with minority business enterprises certified by the Department of General Services and if fifteen percent (15%) were not obtainable, the State University System would recognize good- faith efforts by the bidder (Jt. Ex. 1). The Call for Bids (Jt. Ex. 1) provided that all bidders must be qualified at the time of their bid proposal in accordance with the Instructions to Bidders, Article B-2. The Instructions to Bidders, Article B-2, at page 9 of the Project Manual (Jt. Ex. 2) provided, in pertinent part, that in order to be eligible to submit a Bid Proposal, a bidder must meet any special requirements set forth in the Special Conditions section of the Project Manual. The Project Manual, Special Conditions, paragraph 1.1 at page L-1 sets forth the MBE requirements. Paragraph 1.1.2 provides that evidence of good- faith efforts will be required to be submitted to the University Planning Office within two working days after the opening of the bids. Paragraph 1.1.2 further provides that incomplete evidence which does not fully support the good-faith effort requirements shall constitute cause for determining the bid to be non- responsive. Subparagraph 1.7.2.2 of the Special Conditions section in the Project Manual at page L-2 (Jt. Ex. 2) provides that a contractor, as part of meeting the good-faith efforts for this project, should advertise to inform MBEs of contracting and subcontracting opportunities, through minority focus media, through a trade association, or one local newspaper with a minimum circulation of 25,000. Subparagraph 1.7.2.3 provides for required documentation and provides for a copy of the advertisement run by the media and the date thereof. The copy of the tear sheet from The Gainesville Sun for Anglin regarding BR-183 and the affidavit from the Gainesville Sun reflect that Anglin's advertisement ran or was published beginning March 9, 1990, which was six (6) days prior to bid opening, through March 15, 1990 (Jt. Ex. 9 at section 1- 7.2). Anglin's advertisement did not run in the Gainesville Sun seven (7) days prior to the bid opening (Jt. Ex. 9 at section 1-7.2, and Jt. Ex. 8). The Respondent interprets paragraph 1.7.2.2 to require that advertising through minority focus media, through a trade association or one local newspaper with a minimum circulation of 25,000 to be run on at least one day, seven (7) days prior to the day the bids are opened. Anglin ran an otherwise qualifying advertisement for seven (7) consecutive days, the seventh of which was the day the bids were opened. Anglin sent letters to fourteen (14) minority businesses qualified for participation in state contracts inviting participation and providing information about the program. These letters indicated that Anglin would subdivide work to assist in their participation and invited them to inspect the drawings. Anglin sent followup letters to the same fourteen (14) minority businesses. Anglin apparently divided portions of the electrical work between two minority businesses and included their estimates totaling $288,000.00 in the bid which is at issue (see Jt. Ex. 9 at section 1-7.7). A representative of Anglin, Dennis Ramsey, attended the pre- solicitation/pre-bid meeting on March 1, 1990 (Jt. Ex. 4). One of the purposes of the pre-solicitation/pre-bid meeting is to invite MBEs to attend to become familiar with the project specifications and to become acquainted with contractors interested in bidding the project. The Project Manual, Instructions to Bidders, B-23 at page 16 (Jt. Ex. 2) provides that the contract award will be awarded by the Respondent for projects of $500,000.00 or more, to the lowest qualified bidder, provided it is in the best interest of the Respondent to accept it. The award of the contract is subject to the provisions of Section 287.0945, Florida Statutes, and the demonstration of "good-faith effort" by any bidder whose Bid Proposal proposes less than fifteen percent (15%) participation in the contract by MBEs. The contract award will be made to the bidder who submits the lowest responsive aggregate bid within the pre-established construction budget. Sealed bids for BR-183 were opened on March 15, 1990 (Jt. Ex. 1). Anglin's bid of $1,768,400.00 was the lowest monetary bid (Jt. Ex. 5). Perry was the second lowest monetary bidder (Jt. Ex. 5). Anglin submitted its bid proposal (Jt. Ex. 6) and documentation of good-faith efforts for BR-183 (Jt. Ex. 9). Anglin was notified by letter dated March 19, 1990 that its bid proposal had been found to be in noncompliance with the requirements of the Project Manual and was, therefore, rejected. The specific reason for Anglin's noncompliance was that the advertisement for MBE participation did not appear in the media at least seven (7) days prior to the day the bids were opened (Jt. Ex. 10). By letter dated March 19, 1990, the Project Manager from the architectural and planning firm responsible for BR-183 recommended to Respondent that the contract be awarded to Perry (Jt. Ex. 11). By letter dated March 20, 1990, the University of Florida recommended to the Director of Capital Programs for Respondent that Perry be awarded the contract for BR-183 for the base bid and alternates #1 through #5 in the amount of $1,789,400.00 (Jt. Ex. 12). The Respondent awarded the contract to Perry on March 23, 1990 (Jt. Ex. 14). The MBE award to electricians of $288,000.00 is 16.29% of the $1,768,400.00 Anglin bid.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is therefore, RECOMMENDED that the Board of Regents award the contract to Anglin. DONE AND ENTERED this 18th day of July, 1990, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN 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 18th day of July, 1990. APPENDIX "A" TO RECOMMENDED ORDER IN CASE NO. 90-2652BID Anglin and Perry's proposed findings of fact were adopted as paragraphs 1 through 10 of this Recommended Order. The Board of Regents' proposed findings of fact, which duplicated the stipulation, were adopted as paragraphs 1 through 10 of this Recommended Order, and otherwise ruled upon as follows: Adopted as paragraph 11. Adopted as paragraph 12. Adopted as paragraph 20. Rejected as a conclusion of law. Rejected as a conclusion of law. Adopted as paragraph 19. Adopted as paragraph 13. Adopted as paragraph 14. Rejected as a conclusion of law. Adopted as paragraph 21. Adopted as paragraph 22. Adopted as paragraph 15. Adopted as paragraph 23. Adopted as paragraph 24. Adopted as paragraph 25. COPIES FURNISHED: Charles B. Reed Chancellor of Florida State University System 325 W. Gaines Street Suite 1514 Tallahassee, Florida 32399-1950 Gregg Gleason, Esquire General Counsel Board of Regents 107 W. Gaines Street Room 210-D Tallahassee, Florida 32301 Jane Mostoller, Esquire Assistant General Counsel Board of Regents 325 W. Gaines Street Tallahassee, Florida 32399-1950 William B. Watson, III, Esquire Watson, Folds, Steadham, Christmann, Brashear, Tovkach & Walker P.O. Box 1070 Gainesville, Florida 32602 Raymond M. Ivey, Esquire Rakusin, Ivey, Waratuke, Solomon & Koteff, P.A. 703 North Main Street Suite A Gainesville, Florida 32601 =================================================================
Findings Of Fact The Respondent, Department of Management Services (DMS), issued a letter denying Minority Business Enterprise Certification to Sun World Travel, Inc., (Sun) on February 18, 1993. (C. 2-3) Sun appealed the denial of certification and subsequently prevailed in DOAH Case No. 93-1465. Sun requested a formal hearing on the denial, and a formal hearing was conducted, after which, the hearing officer found that Sun was a qualified minority business in a recommended order. The agency adopted that recommended order by final order dated January 10, 1994, and granted minority business enterprise status to Sun. Neither party appealed the final order. Sun is a Florida corporation with fewer than 25 employees and a net worth less than $2 million. Sun seeks attorney's fees and costs totaling $14,052.50 for reasonable attorney's fees in prosecuting Sun's case. The parties have not objected to the reasonableness of these fees and costs. All of the information available to DMS at the time of the issuance of the denial letter is contained in the certification file and the transcript of the onsite tape. These were read and considered. This information did not fully develop Joanne Gamache's involvement with Sun and its predecessors. In his Recommended Order, the hearing officer cited and relied on facts which were not available to the Department of Management Services at the time of the issuance of the denial letter. DMS did not have all of the information the hearing officer recited in Paragraph 3 of the Findings to the Recommended Order, and relied upon in Paragraph 29 of the Conclusion of Laws at the time of the issuance of the denial letter. The hearing officer found that Joanne Gamache worked in Transit Travel and her duties included delivering tickets, making reservations and doing the bookkeeping. In Paragraph 4 of the Findings to the Recommended Order and in Paragraph 29 of the Conclusions of Law, the hearing officer stated that Joanne Gamache sold reservations for Sun World Travel before acquiring her share of ownership. However, she did not list making reservations as one of her duties on either her resume or during the onsite interview. (C. 106. R. 3) Before the formal hearing DMS was not aware of the fact that Joanne Gamache has ever made reservations. In Paragraph 5 of the Findings to the Recommended Order and Paragraph 27 of the Conclusions of Law, the hearing officer found that Joanne Gamache had maintained her employment as a teacher and contributed more to the family's joint savings, and concluded that Joanne Gamache had at least 51 percent of the financial risk in Sun World Travel. DMS did not know that when both Gamaches were teachers that Joanne Gamache earned more than Gilles Gamache and that she invested those greater earnings in either their joint savings account. The information DMS had at the time of denial indicated that the funds for opening Sun World Travel came from the sale of Transit Travel and jointly owned property. (O. 3-4) At the time of denial, DMS did not have knowledge of Joanne Gamache's greater financial contributions to the family's saving which were used to purchase the real property and later provide the start up costs of Sun. At the time of the onsite inspection of Sun, a full-time manager had not been hired by the business. (O. 16) The only employee working full-time was Gilles Gamache. (O. 16) Cindy Cimbora was not hired until after the inspection, and Sun World Travel did not inform DMS of her hiring and the extent of her responsibilities. (C. 61-66) Cimbora's hiring and responsibilities were significant factors in Paragraphs 7, 12 and 16 of the Findings to the Recommended Order and in Conclusions of Law, Paragraphs 23, 24 and 25. Joanne Gamache did not fully explain her role as the prime mover in the purchase of the new business site until after the denial of certification. (O. 6) The DMS did not have this information when the letter was issued. The hearing officer relied upon her role in buying this site for establishing the degree of her control over the business in Paragraph 3 of the Findings to the Recommended Order and in Conclusion of Law, Paragraph 24. Sun World Travel did not inform DMS during the certification review that Joanne Gamache had not negotiated the COVIA contract due to illness in her family, or that Joanne Gamache had negotiated the System One contract. (O. 9- 10) These facts were the basis for Paragraph 13 of the Findings to the Recommended Order. The certification officer and administrator both testified at the hearing. Both had extensive experience, and their assessment, as evidenced in part by the interviews conducted, indicates a careful and reasonable consideration of the application. The certification file shows three separate desk reviews and audits, together with the interview at the business site, mentioned above. The agency's representatives were qualified, and the diligence of the agency's review was not wanting.
The Issue The issue in this proceeding is a formal protest by Sovran Construction Company, Inc. regarding the Florida Board of Regents' intent to award to Indus Construction Company a contract for construction of the student union building at the University of Central Florida. The protest is based on Petitioner's allegation that Indus Construction Company's bid should be rejected as non-responsive for failure to meet minority business enterprise (MBE) participation or good faith effort requirements.
Findings Of Fact These facts stipulated by the parties in their prehearing statement filed on March 5, 1993, are adopted here: A Call For Bids was issued by the Respondent, Florida Board of Regents, for Board of Regents ("BR") project numbered 452, University of Central Florida, Student Union Building, in Florida Administrative Weekly, Vol. 18, No. 44, October 30, 1992. A pre-solicitation/pre-bid meeting was held on November 17, 1992, at 2:00 p.m. at the University of Central Florida. Gregory Toepp and Shahid Nassir from Indus Construction, and Chuck Adair from Sovran Construction attended the meeting. Sealed bids were received on December 1, 1992, at which time they were publicly opened and read aloud. A total of ten construction contractors submitted bid proposals to the University of Central Florida for BR-452. Indus Construction Company was the low apparent bidder, at base bid plus alternates 1 and 2, for a total of $8,265,000.00. Sovran Construction Company was the second low apparent bidder, at base bid plus alternates 1 and 2, for a total of $8,310,900.00. The monetary difference between Indus Construction and Sovran Construction bids for BR-452 is $45,900.00. Indus Construction did not meet the 15% minority business participation requirement for BR-452. Indus did not have any minority business participation at the time of bid opening. Indus Construction timely submitted its good faith efforts documentation to the University of Central Florida on December 31, 1992. The University of Central Florida MBE Advisory Committee reviewed the Indus good faith effort documentation and determined compliance. The University of Central Florida recommended award of the contract for BR-452 to Indus Construction as the low responsive bidder. The Florida Board of Regents reviewed the recommendation of University of Central Florida and the good faith efforts submittal of Indus, concurred with the University, and awarded the contract to Indus Construction Company. The Board of Regents notified by letter dated 1/20/93, all bidders of its award of contract for BR-452 to Indus Construction. Petitioner, Sovran Construction timely filed a notice of protest on January 21, 1993. On January 29, 1993 Petitioner timely filed its Formal Written Protest and Request for Formal Administrative Hearing. In addition, these facts are found from the evidence presented at hearing: The bidding requirements, sample forms, contract conditions and specifications for state project no. BR-452 are compiled in a two-volume project manual. (Joint Exhibit #2) The manual provides: The expenditure of at least 15 percent of the Base Bid with certified Minority Business Enterprises is a requirement of this contract, unless Good Faith Effort, as identified in Paragraph 1-7 can be demonstrated by the Bidder. (Joint Ex. #2, p. I-1.) Of the ten bidders, three met or exceeded the 15 percent MBE goal. Seven failed the goal. Two, Indus and the third lowest bidder, had 0 percent participation; Sovran's bid reflected 14.5 percent participation. Over the last fiscal year the Board of Regents has awarded 21 competitive bid projects; 11 actually had full MBE participation and 10 met good faith effort requirements. Zero MBE participation does not disqualify a bidder so long as good faith effort is established. Good faith effort is described in paragraph 1-7 of the project manual described above. Paragraph 1-7 is broken into several sub-parts specifying eight statutory elements and the implementation and documentation required by the Board of Regents for each of the eight elements. 1/ The good faith documentation from Indus contained a copy of the pre- bid solicitation meeting sign in sheet which indicated that Shahid Nassir, president of Indus attended the meeting on November 17, 1992. At that meeting, representatives from the University of Central Florida discussed the Board of Regents MBE program, handed out instructions and pointed out the requirements of the project manual. The meeting participants were given a packet with the MBE check list, a list of certified MBE's, and a list of minority organizations. Indus immediately placed notices in the Orlando Sentinel and Orlando Times (a minority newspaper) inviting MBE's to participate in their bid on the project. On November 17, 1992 Indus sent letters to the entire list of certified MBE's (over 200) soliciting their participation. Those letters state the project title and number, the bid opening deadline, the places where the specifications or plans may be viewed, and a phone number for inquiries and address for bid submittals. The letters also provide these scopes of work for the project: Clearing Paving Irrigation Cabinets Str/MiscSteel Earthwork Painting Electrical HVAC Alum/Glass Plumbing Carpentry Masonry Roof Trusses Doors/Frames Utilities Flooring Specialties Landscaping Concrete Work Tile Thermal and Moisture Protection Studs/Drywall (Joint Ex. 15) Follow up letters were sent to the same full list of MBE's by Indus on November 23, 1992. In addition to the letters to individual MBE's, similar letters were sent to eight minority business development organizations in the central Florida area and in Tallahassee. Between November 20 and November 30, 1992, Indus received telephone calls or letters from thirteen MBE's stating that they would not be bidding on the project. Three positive responses were received on November 30, 1992, two by telephone message and one by letter. Shahid Nassir spoke to each by telephone, briefly, on November 30, stating generally that Indus would be happy to accept their bids and wishing them good luck. The three sub-contractors did not ask for a meeting nor did Mr. Nassir suggest one at the time of the telephone conversation. Rather, he sent letters dated November 30 to each, inviting them to meet to go over the plans and specifications and answer questions. Since bid opening was December 1st, the following day, typically a hectic, busy time for contractors assembling last minute quotes for their bid submittals, the letters inviting a meeting were a meaningless formality. Indus received approximately eleven responses from MBE's on bid day, quoting figures for various parts of the projects. No MBE quote was low on any scope of work and none was incorporated by Indus in the bid it submitted at the bid deadline. Indus prepared a spread sheet describing the MBE bids received and an explanation why each was rejected, with the low quote included. Evidence of each step in the MBE solicitation process and its rejection of quotes was submitted by Indus to the University of Central Florida. The university's MBE Advisory Committee reviewed Indus' documentation and recommended that the Board of Regents find good faith effort compliance. Patricia Jackson, Projects Administrator with the Board of Regents, a ten-year veteran of the Board of Regents' MBE program, performed her independent review of Indus' documentation. She concurred that the good faith efforts complied with the criteria in the project manual and she recommended award to Indus as the low bidder for the project. In particular, Ms. Jackson considered that Indus properly had a breakdown of scope of work when it sent notice letters to all of the MBE's selected by the university in various categories of work, and it also included a breakdown of scope in its solicitation letter. Ms. Jackson did not have a problem with the fact that the letters suggesting a meeting were mailed one day before bid opening because Indus was contacted by the three MBE's at the last minute, and there was no time left. She did not expect Indus to "negotiate" better quotations from the MBE's as the agency discourages what it terms "bid shopping". That is, the agency expects that an MBE quotation will be rejected if it is not the low quotation. It discourages the practice of approaching an MBE with another firm's lower bid and giving the MBE an opportunity to go lower. As Indus' president, Shahid Nassir, explained, the practice of soliciting a lower bid from an MBE, or giving the MBE the last opportunity to make a lower bid, is considered favoring one subcontractor over another with the negative effect of assuring higher bids from these subcontractors on the next project. That is, when a contractor is known to "shop the number", subcontractors either stop bidding to that contractor or they bid high with the anticipation that they will have to cut their numbers later. The "negotiation" requirement of the statute is not, therefore, interpreted by the Board of Regents to mean negotiation on price. The university staff and the Board of Regents conducted separate thorough reviews of Indus' good faith efforts and reasonably determined that it met the requirements of the MBE program. Although it is always preferable to achieve MBE participation in construction projects, and, even though one step in Indus' process (the letters inviting a meeting) was merely pro forma, there is no evidence in this proceeding that the Respondent acted fraudulently, arbitrarily or illegally in determining the bid should be awarded to the lowest bidder, Indus.
Recommendation Based upon the foregoing, it is hereby RECOMMENDED That the petition of Sovran Construction Company, Inc. be dismissed and a final order entered awarding the bid in project BR-452 to Indus Construction Company, Inc. DONE AND ORDERED this 7th day of May, 1993, in Tallahassee, Florida. MARY CLARK 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 7th day of May, 1993.
Findings Of Fact Anthony Charles Fabian, a journeyman electrician, is the president of Fabian's Electrical Contracting, Inc. (FEC). Mr. Fabian owns 51 percent of the stock in FEC. FEC was incorporated in 1984 and since that time has been continuously engaged in the electrical contracting business. In 1987, FEC applied for and received certification as a minority business enterprise (MBE). Mr. Fabian has at all times maintained he is entitled to MBE status as a Hispanic American. Mr. Fabian was born in Tampa, Florida and lived in a Hispanic neighborhood there until he was six years old. During the time he resided in Tampa, Mr. Fabian's neighbors, family, and friends used Spanish as their predominant language. The family culture was Cuban as was that of the area where the family resided. At age six Mr. Fabian moved from Tampa to Pensacola, Florida. Mr. Fabian later moved from Pensacola to Tallahassee mid-way through his sixth grade. School mates in Pensacola and Tallahassee called him various ethnic nicknames, all related to his Hispanic ancestry. Such names included: "Julio," "Taco," "Spic," "El Cubano," and "Cuban Wheatman." Other than an affection for Cuban food, Mr. Fabian currently has no cultural practices to tie him to his Hispanic heritage. Mr. Fabian does not speak Spanish. Mr. Fabian does not reside in a predominantly Hispanic community. Mr. Fabian does not practice the religious faith of his progenitors. Mr. Fabian does not instruct his child in any Cuban cultural practice. Mr. Fabian does not know of any Spanish cultural aspect that came to him from his family. Mr. Fabian has never been refused work because of his Hispanic heritage. Mr. Fabian's mother has no Hispanic progenitors. Mr. Fabian's father, also born in Tampa, Florida, has the following ancestors: his father (Mr. Fabian's grandfather) was born in Spain, his mother (Mr. Fabian's grandmother) was born in Key West. Mr. Fabian's grandmother, Anna Rodriguez Fabian, who Mr. Fabian spent time with in Tampa spoke Spanish and claimed Cuban heritage as both of her parents had immigrated from there to Key West. For this reason, Mr. Fabian maintains he is a Cuban from Tampa. None of Mr. Fabian's grandparents was born in Mexico, South America, Central America, or the Caribbean. He has never claimed otherwise. Sometime after FEC obtained certification as a MBE, the Department adopted what is now codified as Rule 60A-2.001(8), Florida Administrative Code. Such rule defines "origins" as used in Section 288.703(3)(b), Florida Statutes, to mean that a Hispanic American must substantiate his cultural and geographic derivations by at least one grandparent's birth. In July, 1992, when FEC submitted its recertification affidavit, the Department notified Mr. Fabian that he had failed to establish that at least one of his grandparents was born in one of the applicable geographic locations. Accordingly, Mr. Fabian was advised his request for recertification would be denied. Approximately eleven other persons have been denied minority status because they were unable to substantiate origin by the birth of a grandparent. Of those eleven, none had been previously certified. FEC is the only formerly certified MBE which has been denied recertification because of the rule. However, when FEC was granted certification in 1987 it was not based upon the Department's agreement that Mr. Fabian met the statutory definition of a Hispanic American. Such certification was issued in settlement to the preliminary denial of certification since the word "origins," as used in the statute, had not as yet been defined by rule. Additionally, the recertification of FEC was based upon Department error and not an agreement that Mr. Fabian met the "origins" test. Finally, in 1991, the Department cured the rule deficiencies to create parallel requirements for certification and recertification for MBE status. When FEC submitted its recertification affidavit under the current rule, the request was denied. Mr. Fabian has been aware of the Department's position regarding his requests for recertification from the outset; i.e. since 1987. The Department promulgated the "origins" rule in response to a number of applications for MBE status from persons with distant relations or ancestors within the minority classifications. The necessity for an "origins" rule was demonstrated since the Department needed a clear standard, which staff and the public could recognize as the dividing line for who would and would not qualify as a Hispanic American, and since the purpose of the program is to provide preferences in contracting to businesses run by individuals who have been disadvantaged. In deciding to use the grandparent test, the Department looked to outside sources. Since there was no legislative history resolving the "origins" issue, the Department sought guidance from dictionary definitions and statutory uses in other contexts. In promulgating the rule, the Department gave notice to outside sources, including groups listed in the publication Doing Business in Florida, such as the Department of Commerce, Bureau of Commerce, small business development centers, community development corporations, local minority business certification offices, and the Minority Business Advocate's office. At the public hearing conducted for the purpose of receiving input regarding the grandparent test, no one offered opposition to the "origins" definition. Mr. Fabian is not a black American as defined in Section 288.703(3)(a), Florida Statutes.
Findings Of Fact Petitioner, E. J. Strickland Construction, Inc. (Petitioner), submitted to Respondent, Department of Transportation (Department), a bid on State Project No. 75030- 3518. Petitioner's was the lowest bid received by the Department. Petitioner's bid failed to meet the D.B.E. goals on State Project No. 75030-3518. The D.B.E. goal was 12 percent; under Petitioner's bid, only .04 percent of the contract would be performed by economically disadvantaged business enterprises. The only effort Petitioner made to secure bids of certified D.B.E. contractors to incorporate in its bid to the Department was to run a legal advertisement in the Orlando Sentinel on January 18, 19 and 20, 1986. The Department was scheduled to open all bids on January 22, 1986. Petitioner documented only the advertisements and the fact that it incorporated the only response to the advertisements in its bid in an effort to demonstrate good faith effort to meet the D.B.E. goals. 2/ There is no evidence that Petitioner acted with specific discriminatory intent in preparing its bid on State Project No. 75030-3518. Petitioner proved that it acted in this case precisely as it acted in the only other Department job on which it bid. In that case, Petitioner ordered from the Department plans and specifications and was sent plans, specifications and a bid package and was placed on the Department's list of prospective bidders. In accordance with the custom in the industry, the Florida Transportation Builders Association (FTBA) obtained from the Department the list of prospective bidders as of ten days before the bid letting date and distributed the list to its members. In accordance with the custom in the industry, several DBE and WBE contractors contacted Petitioner, verified that Petitioner was bidding on the project and submitted proposals for inclusion in Petitioner's bid. In that way, Petitioner received enough response from certified DBE and WBE contractors to meet the DBE and WBE goals on the job. In this case, in accordance with the Department's normal practice, the Department only sent Petitioner plans and specifications in response to Petitioner's December 30, 1985 request for plans and specifications. Also, since Petitioner did not specifically request a bid package, the Department did not include Petitioner on its list of prospective bidders. For that reason, no FTBA members, including the certified DBE contractor who bid on Petitioner's previous job with the Department, received notice that Petitioner was a prospective bidder on State Project No. 75030-3518. Had Petitioner been included on the FTBA list, Petitioner probably would have received enough response from certified DBE contractors to meet the DBE goals on this job, too. All four of the other bidders on State Project No. 75030-3518 met the DBE goals. One of them relied entirely on the FTBA list to notify prospective certified DBE contractors. One of them -- including the next lowest bidder, Cone Constructors, Inc. -- also sent a written request for a proposal to Pary, Inc., the same certified DBE contractor who previously had contracted with Petitioner on a Department job that was still ongoing. Another of the bidders on State Project No. 75030-3518 telephoned Pary, Inc., and asked for a proposal. Petitioner is not a member of the FTBA and did not inquire whether it was listed as a prospective bidder on the FTBA list. Petitioner did not make any effort to use the Department's DBE directory to directly contact certified DBE contractors concerning the job. Petitioner did not even contact Pary, Inc., to request a bid although Pary, Inc., was working for Petitioner at the time and had not responded to Petitioner concerning State Project No. 75030-3518. Petitioner's small effort to meet the DBE goals on State Project No. 75030-3518 did not rise to the level of good faith efforts. The evidence that Petitioner acted in this case precisely as it acted in the only other Department job on which it bid does not prove that Petitioner made a good faith effort in this case. To the contrary, it proved only that Petitioner was lucky to meet the DBE goals on the prior contract.
Recommendation Based upon the foregoing Findings Of Fact and Conclusions Of Law, it is RECOMMENDED that Respondent, Department of Transportation, dismiss the bid protest of Petitioner, E. J. Strickland Construction, Inc., and award the contract in State Project No. 75030-3518 to the lowest responsive bidder, Cone Constructors, Inc. RECOMMENDED this 25th day of April, 1986, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 25th day of April, 1986.
The Issue Whether Petitioner's application for certification as a minority business enterprise should be granted.
Findings Of Fact Virginia Valletti, an American woman, within the meaning of Section 288.703, Florida Statutes, holds 75 percent of the stock of Petitioner, Commercial Air Tech, Inc., (Commercial Air). Sam Valletti, the husband of Virginia Valletti, owns 15 percent of the stock of Commercial Air, and the two daughters of the Valetti's each owns five percent of the stock of the business. Sam Valletti is not a minority person as defined in Section 288.703, Florida Statutes. Article II, Section 1 of the bylaws of Commercial Air provides that "All Corporate powers shall be exercised by or under the authority of, and the business affairs of the corporation shall be managed under the direction of, the Board of Directors." The bylaws state that the corporation shall have two directors. Those directors are Virginia and Sam Valletti. Article III, Section 2 of the bylaws of Commercial Air sets out the duties of the President of the company as follows: The President shall be the chief executive officer of the corporation, shall have general and active management of the business and affairs of the corporation subject to the directions of the Board of Directors, and shall preside at all meetings of the shareholders and Board of Directors. Commercial Air provides heating, ventilation, and air conditioning (HVAC) services and is required by Florida statutes to be qualified by a licensed contractor. Sam Valletti holds the contractor's license which qualifies Commercial Air. Virginia Valletti testified that she does not believe that she could pass the contractor's test to become the qualifying agent for the company. Sam Valletti is authorized to sign checks on the account of Commercial Air, but Virginia Valletti signs the majority of the checks for the business. Sam Valletti signed the business lease for Commercial Air. Sam Valletti or a male employee, signs the contracts on behalf of the business. According to Virginia Valletti, the two men sign the contracts for appearance sake because the HVAC business is a male-dominated industry. According to the application submitted to the Respondent, Department of Labor and Employment Security, Minority Business Advocacy and Assistance Office (Department), Virginia Valletti's major responsibilities in the business are as follows: Open and close office Monday through Friday Transact all accounts receivables and payables Answer customer calls and inquiry's [sic] all on customers to insure their needs are being met Dispatch technicians to job sites Compose all company forms and form letters and contract forms Track job costs Analyze profit & loss statement, balance sheet and other financial reports Oversee office personnel - hire, review (all personnel) and fire (office only) Shop and purchase all insurance (workman's comp., liability, bond, etc) Figure payroll and all associated taxes Negotiate credit lines and loans Track truck maintenance and inventory Place orders with vendors and track shipments to job sites The application submitted to the Department lists Sam Valletti's major responsibilities as follows: Estimates jobs in construction and service Troubleshoots equipment problems with technicians Recommends and designs new installations with property managers and owners Keeps up to date on So. Florida code changes, labor laws, and union regulations Finds new resources and seeks out leading edge technological advances Customer liaison for technical questions Hires, reviews, and fires service personnel Purchases company vehicles Sam Valletti receives approximately $16,000 per quarter in wages from Commercial Air, and Virginia Valletti receives approximately $3,000 in wages.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying Commercial Air, Tech Inc.'s request for certification as a minority business enterprise. DONE AND ENTERED this 28th day of April, 1998, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 28th day of April, 1998. COPIES FURNISHED: Joseph L. Shields, Esquire Florida Department of Labor and Employment Security 2012 Capital Circle, Southeast Suite 307, Hartman Building Tallahassee, Florida 32399-2189 Edmond L. Sugar, Esquire 950 South Federal Highway Hollywood, Florida 33020 Douglas L. Jamerson, Secretary Department of Labor and Employment Security Suite 303, Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2189 Edward A. Dion, General Counsel Department of Labor and Employment Security Suite 307, Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2189
The Issue The issue presented is whether the Department acted fraudulently, arbitrarily, illegally, or dishonestly in proposing to award to Intervenor, The Weitz Company, Inc., a contract for Project No. DGS-88114000.
Findings Of Fact On February 18, 1992, Respondent Department of General Services issued its Invitation to Bid on Project No. DGS-88114000, the construction of the Fort Pierce Regional Service Center. The bid package contained a copy of the Department's Advertisement for Bids, together with the bid specifications, evaluation criteria, and criteria for award of the contract. The Department's Advertisement for Bids identified the project, advised that sealed bids would be received and opened at 2:00 p.m. on March 12, 1992, stated that the Bid Tabulation and Notice of Award Recommendation would be posted at 4:00 p.m. on that same date, and contained the following language: MINORITY PROGRAM: In accordance with Florida Statute 287.057(6), at least 21 percent of the project contracted amount will be expended with DGS certified minority business enterprises. If 21 percent is not attainable, the Division of Building Construction will recognize Good Faith Efforts by the Bidder. The Bidder is advised to review these requirements in the Section B-13B "Employment of and Reporting of DGS Certified Minority Business Enterprises Participation" immediately, in order to schedule the necessary tasks to accomplish Good Faith Efforts. Page 2 of the bid package was the Invitation to Bid form letter which contained the identical language as that quoted above. Section B-13B found on page 14 of the bid package under Instructions to Bidders provides as follows: B-13B EMPLOYMENT OF AND REPORTING OF DGS CERTIFIED MINORITY BUSINESS ENTERPRISE PARTICIPATION Florida Statute 287.042 and the Department of General Services Rules 13-8 and 13-9, encourages the employment of and requires the reporting of DGS Certified Minority Business Enterprise (MBE) participation in state contracting. The Department has as its goal to spend twenty-one percent (21 percent) of construction contracts with DGS certified minority business enterprises. The overall goal for construction contracts are as follows: 4 percent Black Americans 6 percent Hispanic Americans and 11 percent American Women The Division Director of the Division of Building Construction recognizes the need to take affirmative actions to insure that Minority and Women business enterprises and minority and women employees are given the opportunity to participate in the performance of the Division of Building Constructions' construction programs. This opportunity for full participation in our free enterprise system by traditionally, socially and economically disadvantaged persons is essential to obtain social nd [sic] economic equality and improve the functioning of the State economy. Accordingly, it is the policy of the Division of Building Construction to foster and promote the full participation of such individuals and business firms in the State's building construction program. The Contractor, by bidding on this Contract, acknowledges his understanding and support for the social policy herein stated and pledges to fully cooperate with the State in the implementation of this policy, and further to exert a good faith effort to solicit and obtain the participation of such individuals and firms as subcontractors, suppliers and employees on this Contract. Prior to the execution of a contract, the bidder shall provide the following information on his contract or subcontracts for all DGS certified minority business firms to be utilized on the project: * * * Contractor's Schedules of Values and Requests for Partial Payments shall also reflect the payments made to each MBE subcontractor, using the name, minority vendor code, type of business and amounts. The contractor shall make a good faith effort to use services or commodities of minority business enterprises by: Attending any presolicitation or prebid meetings that were scheduled by the division to inform minority business enterprises of contracting and subcontracting opportunities; Advertising in general circulation, trade association, and/or minority-focus media concerning the subcontracting opportunities; Providing written notice to a reasonable number of specific minority business enterprises that their interest in the contract was being solicited in sufficient time to allow the minority business enterprises to participate effectively; Following up initial solicitations of interest by contacting minority business enterprises or minority persons to determine with certainty whether the minority business enterprises or minority persons were interested; Selecting portions of the work to be performed by minority business enterprises in order to increase the likelihood of meeting the minority business enterprise goals, including, where appropriate, breaking down contracts into economically feasible units to facilitate minority business enterprise participation; Providing interested minority business enterprises or minority persons with adequate information about the plans, specifications, and requirements of the contract or the availability of jobs; Negotiating in good faith with interested minority business enterprises or minority persons, not rejecting minority business enterprises or minority persons as unqualified without sound reasons based on a through [sic] investigation of their capabilities; and Effectively using services of available minority community organizations; minority contractors' groups; local, state, and federal minority business assistance offices; and other organizations that provide assistance in the recruitment and placement of minority business enterprises or minority persons. Prior to the issuance of the Invitation to Bid, the St. Lucie County Democratic Executive Committee directed a letter to Governor Lawton Chiles concerning the high rate of unemployment in the construction industry in the Fort Pierce and St. Lucie County area. That letter requested that language be included in the invitation for bids for the Fort Pierce Regional Service Center specifying that priority be given to the available resident work force, first, from within the city of Fort Pierce and, second, from within St. Lucie County. That correspondence reached the Department of General Services, with the result that the following language was included within the bid specifications on page 14a: B-13C EMPLOYMENT OF LOCAL LABOR, SUBCONTRACTORS AND MATERIAL SUPPLIERS The procurement by General Contractors and Sub- contractors of persons for skilled and unskilled worker positions, the sub-contracting by General Contractors for Sub-contractor services and the purchase by General Contractors and Sub-contractors of materials, equipment, supplies and services is highly encouraged to the maximum extent possible, to be from persons residing within or businesses located within Ft. Pierce and St. Lucie County. A Pre-bid Conference was conducted on February 28, 1992. The Minutes from the Pre-bid Conference reflect that Addendum No. 1 to the bid specifications provided to potential bidders a copy of the Department's Minority Business Enterprise Construction Directory listing DGS-certified minority business enterprises as of December 1991. Those Minutes also contain the following entry: Highlights of front-end of Project Manual * * * Page 14, Paragraph B-13B for reporting minority participation stipulates 21 percent goal: 4 percent Black 6 percent Hispanic 11 percent American Women Contractors must thoroughly document their good effort. Procedure for documenting good effort can be obtained from Susan Hodge. * * * K. Page 89 - Post Bid Qualifications: Form is to be completed and submitted within 7 days after Bid Opening. A few of the lowest Bidders will probably be required to submit this form. At 2:00 p.m. on March 12, 1992, the Department received and opened eleven bids for the construction of the Fort Pierce Regional Service Center. Two of those bids were from Petitioner D. I. C. Commercial Construction Corp. (hereinafter "D.I.C.") and from Intervenor The Weitz Company, Inc., (hereinafter "Weitz"). At 3:00 p.m. on March 12 the Department posted its Bid Tabulation and Notice of Award Recommendation. That Bid Tabulation reflected that The Weitz Company of West Palm Beach submitted the lowest bid, in the amount of $5,545,800, and that D.I.C. Commercial Construction of Fort Pierce submitted the second lowest bid, in the amount of $5,553,600. The Bid Tabulation and Notice of Award Recommendation further provided as follows: This is to advise you that the Division of Building Construction, Department of General Services, State of Florida, Has recommended that the contract for the referenced project be awarded to the firm of: THE WEITZ COMPANY, INC. in the amount of $5,545,800.00, accepting the BASE BID AND ALTERNATE #1 AND #2, determined to be the lowest acceptable qualified bid. Any bidder disputing the contract award recommendation must file . . . . Written notice of protest within seventy-two (72) hours after posting of this notice. A formal written protest by petition in compliance with Rule 13-4.12, Florida Administrative Code, and Section 120.53(5), Florida Statutes, within ten (10) days after the date on which he filed the notice of protest. * * * The Executive Director of the Department of General Services, State of Florida plans to act on the above recommendation after expiration of the seventy-two (72) hour notice period. That proposed bid award took into consideration only the amount bid by each of the eleven bidders. In making its proposed bid award, the Department gave no consideration to its bid specifications that required the inclusion of at least 21 percent participation by subcontractors who were DGS-certified minority business enterprises (hereinafter "MBEs"), and which "highly encouraged to the maximum extent possible" the use of "persons residing within or businesses located within Ft. Pierce and St. Lucie County." On March 16, 1992, D.I.C. timely filed its Notice of Protest to the proposed award of the contract to Weitz. On March 26, 1992, D.I.C. timely filed its Formal Notice of Protest to that proposed bid award. Since the Weitz bid did not achieve the required 21 percent MBE participation, Weitz was required to submit documentation of its "good faith effort" to the Department along with other post-award qualification documentation. Weitz submitted its "good faith effort" documentation on March 16, 1992. Although the Department was aware that a Notice of Protest had been filed on March 16, the Department commenced its "good faith effort" review on March 17, 1992. Weitz's good faith submittal recited that it had achieved a total DGS- certified MBE participation of 13.6 percent in its attempt to reach the goal of at least 21 percent. Of the required classes of 4 percent Black Americans, 6 percent Hispanic Americans, and 11 percent American Women, Weitz reported it had achieved 3.2 percent, 8.9 percent, and 1.5 percent respectively. One of the MBEs included within the percentage of Hispanic Americans was improperly included since that minority subcontractor is an Asian subcontractor, which is a different certification classification and not one of the types of minorities specifically required to be included in this project. That Asian subcontractor represented almost one-half of the Hispanic participation claimed by Weitz. Accordingly, Weitz failed to achieve the required overall percentage and failed to achieve the required percentage in any of the three categories. Weitz's submittal also showed that it had included within its achieved percentages of participation subcontractors who were not yet DGS-certified, by listing three of those subcontractors under the heading of "pending minority certification." Although one of those did become certified by the time of the formal hearing in this cause, the other two have never applied for certification. Although the bid specifications use the language DGS-certified MBE subcontractors for inclusion in the 21 percent participation requirement, it is clear that D.I.C., Weitz, and the Department believed that the bid specifications meant certified or certifiable. The Department's policy is that the MBE must be certified by DGS, not on the date of bid submittal, but by the time that the Department enters into the construction contract with the prime contractor. It is also clear that the Department began tracking the efforts of Weitz's subcontractors to become certified by DGS and became involved in the certification process for Weitz's subcontractors who were not yet DGS-certified. Although Weitz had received 21 bids from DGS-certified MBEs, it chose to use the bids of only five. The bids of the others were rejected because Weitz had made the prior determination that it would use the bid of a DGS- certified MBE only if that subcontractor submitted the low bid for that particular portion of the work. In other words, Weitz's focus was on submitting the lowest possible bid rather than on submitting a bid which included the required MBE participation goal. On the other hand, when D.I.C. received and reviewed its bid package, it made the determination that the Department's requirement of at least 21 percent minority participation was easily achievable. Accordingly, D.I.C. did not prepare any "good faith effort" documentation since the bid specifications clearly stated that the Department would consider good faith efforts only if the 21 percent goal were not attainable. D.I.C. made the decision that it would include the required percentage, both overall and in each individual category, in its bid submittal and that, if it could not, it would simply not submit a bid on this construction project. D.I.C. included in its bid the bids of MBE subcontractors who it believed were either DGS-certified or certifiable for a total participation of 26.5 percent. Included within that overall participation D.I.C. exceeded the required percentage for Black Americans, exceeded the required participation for Hispanic Americans, and fell barely short of meeting the required participation for American Women. After D.I.C. filed its Notice of Protest, although the Department freely communicated with Weitz and Weitz's subcontractors in the Department's efforts to certify those subcontractors to be used by Weitz who were not certified, the Department ceased communication with D.I.C. and D.I.C.'s subcontractors. Further, the Division of Building Construction of the Department commenced and continued in its efforts to review Weitz's "good faith" submittal. The Department further rejected communication from the supervisor in its own Minority Business Enterprise Assistance Office regarding the Department's good faith efforts review. When conducting its good faith review, the Department looked only at the documentation submitted by Weitz. It made no effort to ascertain if there were things that Weitz could have done that Weitz chose not to do. Further, in conducting its good faith effort review, the Department reviewed Weitz's documentation under the belief that there was no specific MBE goal for this project. The Department's belief that there was no required MBE participation for this project, contrary to the bid specifications, was based upon the fact that the Legislature had given the Department a goal of at least 21 percent minority participation with the breakdown for the three categories of MBEs listed in the bid specifications as an overall Department goal. Although not disclosed in the bid specifications, the Department looked to meet its goal through the totality of its construction contracts and not pursuant to any individual contract. By March of 1992, the Department had already exceeded its statutorily-imposed goal by 140 percent for that fiscal year. Further, it was the Department's policy and practice to include in its reports to the Legislature concerning whether the Department had met its own statutorily- imposed MBE participation goal the participation of all minority subcontractors in all of the Department's construction contracts without regard to whether those subcontractors were DGS-certified by the time that the Department entered into those construction contracts with the prime contractors. In reviewing Weitz's good faith efforts, the Department utilized the criteria set forth in the bid specifications. It looked at each of the eight criteria listed in the bid specifications and then looked at the documentation submitted by Weitz to ascertain if there had been an effort to comply. The first criterion considers whether the contractor attended presolicitation meetings scheduled by the agency to inform minority business enterprises of the subcontracting opportunity. Since the Department held no such meeting regarding this construction project, none of the bidders could have met this criterion. The second criterion relates to advertising in general circulation, trade association, and/or minority-focus media. Weitz ran an ad one time only on Sunday, March 1, in the Palm Beach Post and in the Fort Lauderdale News/Sun- Sentinel. Weitz placed no other ads. The third criterion requires providing written notice to a reasonable number of specific minority business enterprises that their interest is being solicited in sufficient time to allow them to participate effectively. Weitz sent 98 letters throughout the state of Florida to MBEs listed in the Department's December 1991 directory. That letter was dated February 25, 1992. The fourth criterion requires following up initial solicitations by contacting MBEs or minority persons to determine with certainty whether they are interested. Weitz sent a follow-up letter dated March 4 to the same 98 addressees as its prior letter. The fifth criterion requires selecting portions of the work to be performed by MBEs to increase the likelihood of meeting the MBE goals, including, where appropriate, breaking down contracts into economically feasible units to facilitate MBE participation. Weitz's documentation reflected that the work of several trades had been broken down into smaller units. The sixth criterion requires providing interested MBEs or minority persons with adequate information about the plans, specifications, and requirements of the contract or the availability of jobs. The advertisement placed by Weitz gave no information other than that it was seeking bids from certified MBEs for construction of the Regional Service Center in Fort Pierce, that the bid deadline was March 12, and that plans were available for review at Weitz's office in West Palm Beach. The first letter sent by Weitz advised the recipient of the square footage of the project, that Weitz might assist subcontractors on their bonding requirement, and that plans were available for review at Weitz's office in West Palm Beach and at local plan rooms, or full sets of plans and specifications could be purchased from Weitz at a price of $300 a set. The letter further gave the names of two persons at Weitz's office who could be contacted. The follow-up letter sent by Weitz contained the same information. The seventh criterion requires negotiating in good faith with interested minority business enterprises or minority persons and not rejecting them as unqualified without sound reasons based upon a thorough investigation of their capabilities. The Weitz documentation contained a statement saying that it had not rejected any minorities as being unqualified. The eighth criterion requires effectively using services of available community organizations; minority contractors' groups; local, state, and federal minority business assistance offices; and other organizations that provide assistance in the recruitment and placement of minority business enterprises or minority persons. Weitz sent letters to six organizations in the state of Florida stating that it was seeking proposals for the Fort Pierce Regional Service Center, that it had contacted those companies listed in the December 1991 directory, that plans were available for review at Weitz's office in West Palm Beach and at local plan rooms, and that the recipients should refer any known interested persons to Weitz. It is clear that Weitz made an effort to obtain minority participation. It did not, however, use its "best ability and effort" to obtain minority participation. Weitz's efforts did result in the receipt of a substantial number of bids from DGS-certified MBEs. It does not, however, appear that Weitz used its best effort to assist interested MBEs to participate in the construction project since it did not use any subcontractor's bid unless it was the low bid. Weitz's documentation contains a copy of each of the letters sent to the 98 businesses in the state of Florida and also contains some notations of telephone contact between Weitz and some MBEs. The documentation does not support the proposition, however, that Weitz used its best efforts to work with individual MBEs to solicit their interest; to ascertain with certainty their level of interest; to make the plans and bid specifications available to them; to organize the scope of work into smaller units, if necessary, to enable MBEs to effectively participate in the bidding process; and, most importantly, to utilize bids received by those MBEs. Although the bid specifications specifically stated that the minority participation was to be at least 21 percent and, if that 21 percent was not attainable, the Department would consider good faith efforts, the Department made no independent determination of whether 21 percent DGS-certified MBE participation on this project was attainable. Contrary to the language of the bid specifications, the Department interpreted the criteria to be a requirement that the bidder either attain 21 percent or submit good faith efforts. Since Weitz was the apparent low bidder by price, and since Weitz did not achieve the 21 percent participation, the Department assumed that such level of participation could not be attained and that Weitz could instead submit its "good faith effort." Although a provision was specifically written into the bid specifications for this project that the bidders were encouraged to use local labor from the Fort Pierce and St. Lucie County areas, the Department developed no criteria by which to judge whether the bidders attempted to comply with that bid specification. Additionally, the Department failed to review the bids received for this construction project to see if efforts had been made to include local labor. In essence, this bid specification was ignored by the Department. Although Weitz included in its "good faith effort" submittal a statement that it would utilize local labor by using its own employees, Weitz is located in West Palm Beach, not in St. Lucie County or in Fort Pierce. Although Weitz further included a statement that it might utilize up to twelve companies located in that area, the Department made no determination as to the number of qualified companies located there. The Department was not aware of the fact that Weitz had solicited only by letter two DGS-certified subcontractors in St. Lucie County and only three DGS-certified subcontractors in surrounding counties. On the other hand, D.I.C. had expended extensive efforts to involve businesses in the Fort Pierce and St. Lucie County area. Although Weitz attached to its Petition to Intervene in this proceeding a list of St. Lucie County firms which were encouraged to submit bids and a list of other firms who employ a majority of St. Lucie County employees on projects located in Fort Pierce which were encouraged to submit bids, those documents were never presented to, or considered by, the Department when it evaluated Weitz's bid. Section B-21 of the bid specifications provides, in essence, that the contract would be awarded to the bidder submitting the lowest bid. Weitz's bid was slightly lower than that of D.I.C.--a difference of $7,800 on bids of over five and a half million dollars. D.I.C.'s bid could have been $60,000 lower if it had not sought to comply with the 21 percent MBE requirement set forth in the bid specifications. Its bid would have been lower if it had, like Weitz, rejected all bids from DGS-certified MBE subcontractors who were not also the lowest bidder in that particular trade. D.I.C.'s belief that the Department would require compliance with all provisions in the bid specifications caused D.I.C.'s bid to be higher than that of Weitz, which placed emphasis on the lowest price rather than the lowest price plus effective effort at meeting the MBE participation specification. By focusing on one bid specification and not on all of the bid specifications, the Department gave Weitz an unfair advantage over other bidders. By allowing Weitz to submit "good faith effort" rather than comply with the 21 percent minimum participation requirement, the Department, in essence, allowed Weitz to make a subjective determination that the 21 percent requirement was not attainable. It was the Department's duty under the bid specifications to make its own objective determination that the 21 percent bid specification was not attainable before the alternative consideration of "good faith effort" became relevant to the bid award recommendation. The Department could have, for example, looked at the other bids submitted to see if the other bidders had attained the 21 percent participation requirement. Under the Department's approach, i.e., relying solely on Weitz's representation and considering only Weitz's bid, it is possible that the other bidders attained the 21 percent requirement and that only Weitz did not comply with that bid specification. The Department's procedure rendered the 21 percent bid specification meaningless, which fact was not known in advance by all of the bidders. By failing to determine whether the goal for MBE participation set forth as a bid specification was attainable, the Department failed to determine whether Weitz had complied with all bid specification requirements. Accordingly, the Department did not in fact make a determination that Weitz was a responsive bidder by meeting all bid specifications. Further, the Department made no determination in fact as to whether any of the other bidders, including D.I.C., were responsive to the Department's own bid specifications. Accordingly, there has been no determination that Weitz, or any other bidder, is the lowest responsive bidder. Similarly, the Department made no determination as to whether Weitz had complied with Section B-13C of the bid specifications which provided that bidders were "highly encouraged to the maximum extent possible" to utilize persons residing within or businesses located within Fort Pierce and St. Lucie County. D.I.C., with offices in Fort Pierce, submitted a bid which included 67 percent local participation. Weitz, with offices in West Palm Beach, submitted a bid representing that it would utilize its own employees for 15 percent of the contract (a different bid specification) and represented that it would probably utilize up to a dozen local companies. Since it is clear that Weitz solicited subcontractors from all over the state of Florida, Weitz made no showing that it had attempted "to the maximum extent possible" to utilize persons and businesses from Fort Pierce and St. Lucie County. Additionally, Weitz's single advertisement in the two newspapers chosen by it does not show an intent to obtain local participation since the Fort Lauderdale News/Sun-Sentinel is not sold in either Fort Pierce or St. Lucie County and the Palm Beach Post is obtainable in Fort Pierce only at 7-11 convenience stores and in newspaper vending machines. The Department made no determination as to whether Weitz, or any other bidder, was responsive to this bid specification. Further, the Department did not advise bidders that it might not enforce this bid specification in the same manner that the Department did not advise all bidders that it might not enforce the 21 percent bid specification. In short, the procedures utilized by the Department in evaluating the bids submitted for this project did not afford fair and equal review of all bids submitted. Further, Weitz was given a competitive advantage by the Department's determination that Weitz should be given the bid award based solely on the Weitz bid being the lowest submitted.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered rejecting all bids on Project No. DGS- 88114000 for the Fort Pierce Regional Service Center. RECOMMENDED this 25th day of June, 1992, at Tallahassee, Florida. LINDA M. RIGOT 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 25th day of June, 1992. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-2370BID Petitioner's proposed findings of fact numbered 1-4, 7-14, 17, 20, 29, 30, 33, 35, 36, 39, 43, 45-48, and 55 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed findings of fact numbered 5, 6, 15, and 18 have been rejected as not being supported by the weight of the competent evidence in this cause. Petitioner's proposed findings of fact numbered 16, 21-28, 34, 37, 38, 40, 42, 49-52, and 54 have been rejected as being unnecessary to the issues involved herein. Petitioner's proposed findings of fact numbered 19 and 53 have been rejected as being irrelevant to the issues under consideration in this cause. Petitioner's proposed findings of fact numbered 31, 32, 41, and 44 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Respondent's proposed findings of fact numbered 1, 2, 4, 7, 8, 11, 17, 19, 21, 22, 24-28, and 37 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed findings of fact numbered 3, 5, 6, 20, 29, 31, 33, 35, 36, and 38-41 have been rejected as not being supported by the weight of the competent evidence in this cause. Respondent's proposed findings of fact numbered 9, 10, 12-14, and 34 have been rejected as being unnecessary to the issues involved herein. Respondent's proposed findings of fact numbered 15, 16, 18, 30, and 32 have been rejected as being irrelevant to the issues under consideration in this cause. Respondent's proposed finding of fact numbered 23 has been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Intervenor's proposed findings of fact numbered 1 and 10 have been adopted either verbatim or in substance in this Recommended Order. Intervenor's proposed findings of fact numbered 2, 3, 7, 12, 15, and 16 have been rejected as not being supported by the weight of the competent evidence in this cause. Intervenor's proposed findings of fact numbered 4-6, 8, 9, 11, 13, and 14 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. COPIES FURNISHED: Melinda S. Gentile, Esquire Ruden, Barnett, McClosky, Smith, Schuster & Russell, P.A. 200 East Broward Boulevard Post Office Box 1900 Fort Lauderdale, Florida 33302 Stephen S. Mathues, Esquire Department of General Services Knight Building, Suite 309 2737 Centerview Drive Tallahassee, Florida 32399-0950 Bruce G. Alexander, Esquire Boose Casey Ciklin Lubitz Martens McBane & O'Connell Suite 1900 515 North Flagler Drive Post Office Box 024626 West Palm Beach, Florida 33402 Neil H. Butler, Esquire Butler & Long, P.A. Post Office Box 839 Tallahassee, Florida 32302 Ronald W. Thomas Executive Director Department of General Services Knight Building, Suite 307 2737 Centerview Drive Tallahassee, Florida 32399-0950 Susan Kirkland, General Counsel Department of General Services Knight Building, Suite 309 2737 Centerview Drive Tallahassee, Florida 32399-0950
Findings Of Fact The DOT, as a state agency, is charged with developing a DBE program for contractors dealing with the Department. Burkett is a Florida corporation whose sole stockholder is a white female American. She meets the criteria of a socially and economically disadvantaged individual. Burkett applied for certification as a DBE on July 12, 1991, and was denied by the Department on October 1, 1991. Burkett submitted additional information and made changes to its internal organization to better conform to the Department's requirements; however, the Department has denied Burkett DBE status on the basis of the owner's alleged lack of expertise in the critical areas of the firm's operation, to wit; she does not possess education or training in engineering. The DOT interprets "critical areas of operation" to mean the technical area in which the DBE certification is being sought. Management limited to the day-to-day normal business operations is not considered to be a "critical area of operations." Evidence of expertise is dependent upon the nature of the business; however, the DOT expects to see education or experience on the part of the disadvantaged owner in the technical area of operations of the business. The DOT denied the Petitioner because the disadvantaged owner did not possess engineering experience or education. The disadvantaged owner is the widow of the founder of the business who died of a form of multiple sclerosis. As her husband lost the ability to direct the operations of the company, the owner assumed more and more responsibility for the day to day operations of the company. Professional engineers were hired to handle the technical aspects of the business; however, she clearly directed the hiring and firing of engineering staff. In this regard, her son and son-in- law, who are both trained engineers, came into the business. Her son-in-law left when the owner limited his participation in the business. Her son remains in the business as head of the engineering operation; however, she actively participates in the assessment of projects and preparation and presentation of bids. She is in overall control of the company, and, although she does not make direct assignments of tasks to engineers and draftsman, she does oversee their work. She has pointed out to her son draftsmen who are under utilized, and given directions to assign the men more work and terminate them. The owner does not have any formal engineering training or experience in technical engineering work.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Transportation deny the Petitioner's request for Disadvantaged Business Enterprise (DBE) status. DONE AND ENTERED this 17th day of November, 1992, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of November, 1992. Appendix A to Recommended Order 92-896 The parties submitted supplemental proposed findings which were read and considered. The following states which findings were adopted and which were rejected and why. Petitioner' Proposed Findings: Paragraph 1 True, but rejected in favor of discussion of son-in-law's leaving business. Paragraph 2 Irrelevant. Paragraph 3 True; but rejected in favor of Para 5 in RO. Respondent's Proposed Findings: Paragraph 1-3 Rejected as argument, and conclusions of law. Paragraph 4,5 Irrelevant. Paragraph 6 Irrelevant. The Department based its determination on the owner's lack of education and experience and not lack of participation. Paragraph 7 Irrelevant. She was afforded the opportunity to present her case at the hearing. COPIES FURNISHED: Theodore E. Mack, Esquire Cobb, Cole, and Bell 131 North Gadsden Street Tallahassee, FL 32301 Pamela S. Leslie, Esquire Pamela A. Arthur, Esquire Department of Transportation 605 Suwannee Street, MS # 58 Tallahassee, FL 32399-0458 Ben G. Watts, Secretary Department of Transportation Haydon Burns Building, M.S.-58 605 Suwannee Street Tallahassee, FL 32399-0458
Findings Of Fact On July 15, 1993, the School Board issued an invitation to bid for certain construction work on Bair Middle School, which was designated Project Number 2611-88-01. Responses to the invitation were due by 2:00 p.m. on August 26, 1993. Hewett-Kier, Pirtle, and six other contractors timely submitted bids for the project. The bids were opened on August 26, 1993, and Pirtle was the apparent low bidder with a bid of $1,150,000. Hewett-Kier was the second low bidder with a bid of $1,167,000. On September 2, 1993, the bids were posted. The Bid Tabulation Form indicated the intent of the School Board's Facilities Department to recommend that the School Board award the subject contract to Pirtle. Article 10 of the Special Conditions to the invitation pertains to MBE subcontractor participation goals and requirements. Article 10, Paragraph 1 sets forth the following MBE participation requirement for the subject bid: The School Board of Broward County, Florida is committed to affirmatively ensuring a substantial increase in the awarding of construction subcontracts to Minority Businesses. School Board Policy . . . requires all projects estimated to cost $1 million or more must have MBE subcontracting goals and that Contractors awarded work on such projects fully participate in the MBE Program. Compliance with the requirements of this article is mandatory. The total MBE Contract Goal for this project is 6 percent. This total MBE Goal will be comprised of the sum of the following categories: Black: 2 percent. Hispanic: 2 percent. Woman: 2 percent. Other: 0 percent. Article 10, Paragraph 3(A) of the Special Conditions provides, in pertinent part, as follows: Failure to Comply: Failure on the part of the Bidder to comply with the requirements of this Article shall be cause for finding the bidder Non-responsive, unless every reasonable effort to utilize MBE subcontractors is demonstrated to The School Board of Broward County, Florida. In the event a bid is deemed non-responsive, award may then be made to the next lowest bidder, or all remaining bids may be rejected and the project readvertised. Article 10, Paragraph 4(A) of the Special Conditions pertains to bidding requirements and procedures prior to contract award and provides, in pertinent part, as follows: Submittals Within seven (7) calendar days after bid opening, the low Bidder . . . as a condition of contract award, shall submit to the Owner the following documents . . . concerning MBE Contractor and Subcontractor participation in the contract: * * * 3. Unavailability Certification-MBE Subcontractor Participation: If the Low Bidder is unable to commit adequate MBE Subcontractor Participation to meet the Contract Goal, he/she should request execution of this document for each MBE Subcontractor he/she has solicited, but who cannot participate for reasons of their own. This is necessary to show good faith efforts on the Bidder's part to meet the Contract Goal. Failure to submit the requested Documents within the allotted time will render a bid non-responsive, unless it is determined that the contract goal cannot be met. Article 10, Paragraph 4(B) of the Special Conditions pertains to good faith efforts required of bidders to meet the MBE subcontracting goals and provides, in pertinent part, as follows: Good Faith Efforts: If the information submitted in response to the previous paragraph demonstrates a Bidder does not meet the MBE Subcontractor Goal, information sufficient to satisfy The School Board of Broward County, Florida that the bidder has made good faith efforts must be submitted. Efforts to obtain MBE Subcontractor participation are good faith efforts to meet the goal, if they are sincerely motivated, if, given all relevant circumstances, they could not reasonably be expected to produce a level of MBE Subcontractor participation sufficient to meet the goal. In order to award a contract to a Bidder that has failed to meet the MBE Subcontracting Goal, The School Board of Broward County, Florida must determine that the Bidder's efforts were those that a bidder actively and aggressively seeking the goal would make given all relevant circumstances. In making the required judgment, The School Board of Broward County, Florida may consider the kinds of efforts listed below. This is not a mandatory checklist. The School Board of Broward County, Florida does not insist the Bidder do any one or any particular combination of things on the list, nor is the list exclusive or exhaustive. Other factors or types of efforts may be relevant in appropriate cases. In determining whether or not a bidder has made good faith efforts, the School Board of Broward County, Florida will look not only at the different kinds of efforts that a Bidder has made, but also the quantity and intensity of these efforts. Good Faith Efforts are as follows: The Bidder attended pre-bid meetings if advertised and scheduled by The School Board of Broward County, Florida to inform MBE Subcontractors of subcontracting opportunities; The Bidder provided written notice to a reasonable number of specific MBE Subcontractors that their interest in the contract is being solicited in sufficient time to allow MBE Subcontractors to participate effectively; The Bidder, in order to increase the likelihood of meeting the goal, selected portions of the work to be performed by MBE Subcontractors that could be broken down into economically feasible units to facilitate MBE Subcontractor participation; The Bidder provided interested MBE Subcontractors with adequate information about the plans, specifications and requirements of the contract; The Bidder negotiated in good faith with interested MBE Subcontractors, not rejecting MBE Subcontractors as unqualified without sound reasons based on a thorough knowledge of their capabilities; The Bidder contacted the MBE Coordinator for direct referral of certified MBE Subcontractors; The Bidder maintained records listing name, address, type of trade, and describe (sic) results of contact of each MBE Subcontractor with regard to each prospective contract opportunity; The Bidder notified the MBE Coordinator whenever he cannot successfully locate qualified MBE Subcontractors; The Bidder actively maintains a file with the names and addresses of MBE subcontractors. (List may be obtained from MBE Coordinators Office) The Bidder engaged in specific and continuing personal recruitment efforts directed at Minority contractor's organizations, Minority recruitment organizations, and Minority Business Assistance Centers. Meeting the goal or making good faith efforts to do so is a condition of being awarded this contract. Claudia Williams is the MBE Contract Compliance Administrator for the School Board. Ms. Williams has the responsibility to assign minority goals to each project and to determine on behalf of the School Board whether bidders have complied with the School Board's policy pertaining to minority subcontractor participation. Ms. Williams has made this compliance determination on behalf of the School Board on over a 100 occasions. Ms. Williams is familiar with the good faith effort requirements contained in the School Board's bid documents and she is familiar with the availability of black-owned MBE subcontractors to perform work on School Board construction projects. There are fewer black-owned MBE subcontractors certified by the School Board than there are female or Hispanic-owned MBE subcontractors. It is more difficult for a contractor to meet the black-owned MBE subcontractor goal of 2 percent than it is to meet the other MBE subcontractor goals. Pirtle's bid had a total of 24 percent MBE participation comprised of female or Hispanic-owned MBEs. Initially, there were no black-owned MBE subcontractors. The MBE goals are not intended to be rigid or inflexible requirements, but the general contractor is expected to make good faith efforts to secure the participation of MBE subcontractors. Pirtle met (and greatly exceeded) the MBE goals set forth in the bid documents for total MBE participation. Consequently, Pirtle is required to show nothing further in this proceeding as to the total goal. It is the second goal, pertaining to MBE distribution based on the gender or the ethnicity of the subcontractor, that was not met. Specifically, Pirtle did not meet the MBE goal of 2 percent for participation by black-owned MBE subcontractors. On September 2, 1993, Pirtle submitted minority business enterprise (MBE) participation documentation pursuant to Article 10 of the invitation, which established that Pirtle had received responses to bid solicitations from three black-owned MBE subcontractors and that it had received noncompetitive bids from two of those black-owned MBE subcontractors. Pirtle also provided the School Board with a copy of the solicitation letter it sent to black-owned MBE subcontractors. Ms. Williams reviewed this documentation, taking into consideration the nature of the project, her knowledge of the availability of black-owned subcontractors, and the criteria for judging good faith efforts contained in the bid documents. Ms. Williams was satisfied after reviewing the information furnished to her by Pirtle on September 2, 1993, that Pirtle had satisfied the good faith efforts requirement to secure the 2 percent black-owned MBE subcontractor participation. Petitioner failed to establish that the Ms. Williams, on behalf of the School Board, acted fraudulently, arbitrarily, illegally, or dishonestly in making the determination that Pirtle's efforts to secure black-owned MBE subcontractors met the good faith efforts requirements contained in Article 10 of the Special Conditions to the invitation. Ms. Williams was nevertheless concerned that Pirtle had secured the participation of no black-owned MBE subcontractor, and so informed Pirtle. On September 7, 1993, Pirtle informed Ms. Williams that it had secured the participation of a black-owned MBE subcontractor to perform work valued at $5,700.00, which represented 0.5 percent of the value of the contract. This additional information was provided pursuant to Article 10, Paragraph (4)(D)1 of the Special Conditions of the bid, which provides for a pre-conciliation conference process as follows: If the MBE Coordinator questions the acceptability of the Low Bidder's MBE Subcontractor submissions, the Bidder shall, upon at least three (3) calendar days notice given by the MBE Coordinator, meet with the MBE Coordinator to present information and arguments pertinent to his compliance with the applicable requirements. At the formal hearing, Pirtle established that it had made good faith efforts to secure black-owned MBE subcontractors to participate in the project. Pirtle solicited bids from 47 black-owned subcontractors, only three of which filed any response to the solicitation. Hewett-Kier argued that Pirtle should have given black-owned MBE subcontractors the opportunity to undercut the bid of other subcontractors after the bidding was closed in order to obtain the ethnic distribution goal. This contention is rejected because this questionable tactic was not shown to be necessary, reasonable, or appropriate.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the School Board of Broward County, Florida, enter a Final Order which denies the bid protest of Hewett-Kier and which awards the subject bid to Pirtle. DONE AND ENTERED this 28th day of February, 1994, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 28th day of February, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-6449BID The following rulings are made on the proposed findings of fact submitted by Petitioner. The proposed findings of fact contained in the section designated "General Factual Background" are adopted in material part by the Recommended Order. The proposed findings of fact contained in the section designated "Intervenor is a Non-Responsive Bidder" are adopted in part by the Recommended Order. The proposed findings that Hewett-Kier was a responsive bidder is rejected as being unnecessary to the conclusions reached. The conclusion that Pirtle is a non-responsive bidder is rejected as being contrary to the conclusions reached. The proposed findings of fact contained in the section designated "The School Board's Determination of Good Faith Efforts is Arbitrary and Capricious" are adopted in material part by the Recommended Order, but the conclusions intertwined with those proposed findings are rejected as being contrary to the conclusions reached. The following rulings are made on the proposed findings of fact submitted by Respondent. The proposed findings of fact in paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, and 14 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraphs 15, 16 and 17 are rejected as being unnecessary to the conclusions reached. The following rulings are made on the proposed findings of fact submitted by Intervenor. The proposed findings of fact contained in the section designated "Testimony of Claudia Williams" are adopted in material part or are subordinate to findings made. The proposed findings of fact contained in the section designated "Testimony of Francisco Flores" are subordinate to the findings made. The proposed findings of fact contained in the section designated "Testimony of James Hewett" are subordinate to the findings made. The proposed findings of fact contained in the section designated "Testimony of Michael Geary" are subordinate to the findings made. COPIES FURNISHED: Robert E. Ferencik, Esquire David Valdini, Esquire LIEBY, FERENCIK, LIBANOFF & BRANDT Penthouse 2, 290 Northwest 165 Street Miami, Florida 33169-6457 Edward J. Marko, Esquire MARKO & STEPHANY Post Office Box 4369 Fort Lauderdale, Florida 33338 John B. DiChiara, Esquire 507 South East 11th Court Fort Lauderdale, Florida 33316 Virgil L. Morgan, Superintendent School Board of Broward County 600 Southeast Third Avenue Fort Lauderdale, Florida 33301-3125
Findings Of Fact The Respondent, Oglesby Construction, Inc., (Oglesby) is a company with its ownership controlled by members of a protected minority. Its home office is in Norwalk, Ohio, and it also has an office in Sanford, Florida. It has been certified as a "disadvantaged business enterprise" (DBE) under pertinent regulations of the U.S. Department of Transportation, as well as State Transportation Departments in twelve or thirteen states, including Florida. Prior to 1986, the company was engaged in various types of concrete work and pavement marking jobs. Although Oglesby typically maintained several hundred contracts or ongoing jobs on its books, each job would be of relatively small dollar value and performance time. Recently, however, Oglesby has been working toward becoming a "prime" contractor, successfully bidding on larger jobs. It was successful bidding on four such projects in 1986 and 1987 which had been reserved for bidding on by minority controlled companies. Oglesby has been certified as a DBE in Florida since 1983. On January 26, 1987, Oglesby was advised by the Florida Department of Transportation that its certification "will expire" on February 18, 1987. Oglesby, in fact, because it was aware that certification had to be renewed or reapplied for annually, had already submitted its application on January 2, 1987. It included in that application indication of its gross receipts for the years 1983, 1984, and 1985. Those numbers, when averaged together, produced an average gross revenue figure of $10,491,778. Oglesby maintains that it did not know its 1986 gross revenue figure, for purposes of the three year average gross revenue, for the most recent three years, required to be shown on the application by the Department's rules, because its fiscal year ended January 31, 1987. On March 26, 1987, Oglesby's application for recertification was rejected by the Department because it did not meet the definition of a "specialty contractor" or "small business concern," for purposes of Rule 14- 78.05, Florida Administrative Code. A hearing was requested by Oglesby to contest this denial of certification. Then, on May 8, 1987, the Department circulated a memorandum to all DBE contractors stating generally that the effect of the Surface Transportation Act of 1987 (Sturra) required several changes to the Disadvantaged Business Enterprise program. Thus, contractors were asked to certify their firms' receipts for the last three years. Oglesby did so and showed receipts totaling $44,320,469 for the years 1984, 1985, and 1986. These gross receipts for the three years thus averaged $14,773,049. The Department, upon receiving this information, and after passage of the Sturra Act and a statute by the Florida Legislature incorporating those standards by reference, together with a related rule by the Department, moved to amend the basis for its denial to include, as a reason for decertification, or failure to certify, that the Respondent had exceeded the new $14,000,000 average revenue size standards incorporated in the more recent legislation. Prior to this legislative change and at the time Oglesby applied for recertification in January, 1987, the standard had been $17,000,000 average three year gross revenue receipts, instead of $14,000,000. The Department, by pleading dated August 24, 1987, had withdrawn its original grounds for denial and amended the grounds to the above-mentioned size issue of $14,000,000. Because the parties did not wish to go to hearing until January 1988, and ample time remained for Oglesby to conform its proof to the new allegations in the amended pleading, the Motion for Leave to Amend was granted. Thus the amended ground on which the Department maintains that Oglesby's application for recertification should be denied is that the company, for purposes of DBE certification, is no longer a small business concern, as defined by the Department's rule and state and federal law incorporated by reference. On April 2, 1987, when the size limit for DBE firms was lowered from $17,000,000 to $14,000,000, the new standard was immediately adopted by the Florida Legislature and, in turn, by the Department's rule. When Oglesby applied to the Department in early 1987, it did not include its 1986 gross receipts revenue figure of $18,516,598. Although Oglesby's fiscal records are computerized, Oglesby maintained that it did not yet, at the time of application in January 1987, have a complete 1986 revenue figure so instead listed the 1985 revenue receipt figure of $18,037,348. The 1984 receipts and 1983 receipts were $8,338,017 and $5,099,060 respectively. The inclusion of the significantly lower 1983 revenue receipts brought the three year average for Oglesby down to $10,491,778. In any event, although Oglesby may not have had the 1986 revenue figure immediately available upon application date, it was on notice that its revenue receipts for the year prior to that, 1985, exceeded even the $17,000,000 size limit for DBE contracting firms and thus was on notice that it might be approaching the end of its DBE status even had not the revenue size limits been lowered in the spring and summer of 1987. In any event, Oglesby's audited financial statements submitted indicate that Oglesby received $18,037,348 in construction revenue in 1985. The 1986 figures were supplied to the department due to a request made to all certified DBE's when the Department learned that the size limits were being revised downward by federal and state legislation in May of 1987. That audited financial statement figure for 1986 showed a gross revenue received of $18,399,844 in construction income, and $116,754 in equipment rental, totaling $18,516,598 gross revenues for 1986. When these amounts are averaged with the gross revenue figure listed in Oglesby's application for 1984 of $8,338,017, the average gross revenue receipts for the company for the preceding three fiscal years before application, is $14,963,987. Each year Oglesby was advised by the Department in the "certification notice," by which Oglesby was informed by the Department that its certification needed to be renewed, that its certification was "subject to continued eligibility" and further that its certification was "subject to actions of any other governmental agencies which may affect the minority status" of the company. Thus each year when Oglesby applied for and received DBE certification, it was on notice of these conditions on that certification, both by advisement of the Department's notices and by existing law. Oglesby is the only previously certified DBE which, at the time of hearing, exceeding the $14,000,000 average gross revenue size limit. Under the new federal law referenced above, incorporated by reference by the Florida Legislature and the State Department of Transportation rule at issue, an adjustment for inflation is allowed, to be made by the U.S. Secretary of Transportation. The Department, at the request of Oglesby, inquired of the federal government whether any such adjustment for inflation had been made. No such adjustments had been made by the U.S. Department of Transportation Secretary as of January 5, 1988. On November 4, 1987, a memorandum, (in evidence as Respondent's Exhibit 11) from the Federal Highway Administrator, affirmed that the inflation adjustment had not been defined as yet and would not apply until a method for arriving at an inflation adjustment is developed. The Department also contacted the Federal Highway Administration in order to determine whether an exception on the size limits required by the federal statute and pertinent regulation could be made in Oglesby's case. This was because Oglesby had made certain contractual obligations to buy out the white minority shareholders and purchase or lease a new facility supposedly based on, in part, its reliance on continued DBE status. The Department referenced these concerns of Oglesby in its request to the Federal Highway Administration for an interpretation regarding the applicability of the $14,000,000 revenue limit, but was advised, in effect, that the $14,000,000 limit was strictly interpreted because the response to the request merely amounted to a recitation of the statute and pertinent federal rule providing for that limit and how to calculate it. (See Respondent's Exhibits 9 and 10.) Additionally, Respondent's Exhibit 11, a memorandum of November 4, 1987, from the Federal Highway Administration signed by one R. A. Barnhart, in a like vein, merely indicated a strict interpretation of the federal rule cited below providing for the $14,000,000 average gross revenue limit on DBE status. This federal policy of strictly interpreting the $14,000,000 limit is somewhat borne out by the fact that the example in the federal rule itself, concerning how to apply that limit, with the result that the example firm is not entitled to DBE status, involved an average three year gross income of more than $14,000,000, but less than the three year average gross revenue of Oglesby, found above. The Department has a policy of strictly enforcing the certification requirements. The failure to comply with the federal regulations regarding DBE certification could subject the Department to withdrawal of federal funds from road building projects. Last year the Department received about $600,000,000 in federal funds and the federal government independently audits and reviews the Department's DBE certification decisions. The Department thus has not made any exception from the certification requirements for any firms. Indeed, in analogous circumstances, there have been Department-certified DBE specialty contractor firms who have outgrown their 2.5 million dollar revenue size standards which are applicable to firms in that category. These firms have not had their certifications renewed, that is, they have "graduated" from the Department's DBE program without exception and without dispute. It is the intent of the Disadvantaged Business Enterprise Program that firms participating in that program, will, as they acquire and perform contracting jobs for the Department, grow in size in terms of annual revenues and grow in expertise and competence in public contracting, eventually "graduate" in terms of revenue volume and contracting expertise to prime contractor status and will no longer be disadvantaged business enterprises. In this connection, Oglesby has recently entered into four prime contracts which are not affected by the result of these proceedings. In fact, no work already undertaken by Oglesby under contract will be affected. Even if it is not certified as a DBE, Oglesby may continue to contract with the Department as a subcontractor or a prime contractor. Mr. Mason P. Oglesby, the Petitioner's president, is a competent concrete construction contractor and has been in that business for some thirty years. He is also president of North Coast Eighty-Eight, Inc. Prior to any association with the DBE program, he managed the largest construction project his company has engaged in, which was a project involving construction at the Cincinnati, Ohio, Airport. His firm achieved DBE certification in Ohio in the early 1980's and has been so certified ever since. Oglesby has been certified in twelve or thirteen different states and has utilized 700 to 1000 part-time and full-time employees in a given year. The company does a high volume of work, including many large contracting jobs, and is large enough so that its president does not maintain personal familiarity with the nature of all its jobs contracted for in Ohio, Florida, and other states, but rather maintains a computerized listing of projects which describes the nature of work involved. The company currently has jobs in progress in Pennsylvania, Georgia, Ohio, North Carolina, South Carolina, and West Virginia and in twenty-four counties in Florida simultaneously. Mr. Oglesby closely monitors the dollar volume of work his company contracts for in an intentional effort to keep his firm within the gross revenue guidelines of the DBE program. One of the bases for Oglesby's seeking an exception to those size rules, through this proceeding, is based upon the fact that it entered into a contract to relocate its offices because, for several years, Oglesby has had problems with DBE certification with some states, related to Oglesby renting office space from the white minority owners of Oglesby. Thus the new offices are rented from North Coast Eighty-Eight, Inc., whose president is Mason Oglesby himself. The rental lease for those premises was executed on June 1, 1987, after Oglesby had already been advised by the Department that it no longer met the requirements for DBE certification. Thus, it has not been established that Oglesby underwent any additional expense or other form of detriment involved in the relocation of its offices in justifiable reliance on continued DBE certification. Oglesby also maintains that it made the related business decision to buy out the white minority shareholders in reliance on its continued DBE certification by the Florida DOT. Oglesby, however, made the business decision to undertake that buy-out and the relocation of its offices with full knowledge that its revenues for past two consecutive years were over $18,000,000 each year. Thus it was on notice that, due to a growth in its business, it would soon exceed even the former $17,000,000 gross revenue size standard and, with the advent of its 1986 gross revenues in excess of $18,000,000, was already in excess of the existing new $14,000,000 standard. Thus Oglesby Construction, Inc., entered into these arrangements with the knowledge that the company would soon be ineligible for the DBE program anyway. In fact, Oglesby currently is successful as a prime contractor in obtaining jobs which are not DBE related and has developed considerable concrete and construction expertise in operating its construction business as a public works contractor.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore RECOMMENDED that the application of Oglesby Construction, Inc., for certification as a disadvantaged business enterprise by the Florida Department of Transportation be denied. DONE AND ENTERED this 3rd day of August, 1988, in Tallahassee, Leon County, Florida. P. MICHAEL RUFF, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of August, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-1956 Petitioners Proposed Findings of Fact Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Rejected; subordinate to Hearing Officer's findings. Accepted. Rejected, Immaterial. Accepted. Accepted. Rejected, immaterial. Accepted. Accepted. Rejected; subordinate to Hearing Officer's findings. Rejected, immaterial. Accepted. Rejected; subordinate to Hearing Officer's findings. Accepted. Accepted. Accented. Accepted. Accepted. Accepted. Accepted. Accepted. Respondent's Proposed Findings of Fact Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted, but not dispositive. Rejected; subordinate to Hearing Officer's findings. Rejected; Irrelevant. COPIES FURNISHED: Kaye N. Henderson, P.E., Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0450 Judy Rice, Esquire Senior Attorney State of Florida Department of Transportation Haydon Burns Building, Mail Station 58 605 Suwannee Street Tallahassee, Florida 32399-0458 Robert L. Sabo, Esquire MILLISOR & NOBIL The Huntington Center 41 South High Street, Suite 2195 Columbus, Ohio 43215
