The Issue Whether Petitioner is entitled to be certified as a minority business enterprise.
Findings Of Fact West Construction, Inc., is a Florida corporation that is engaged in the construction business. The focus of the business is the renovation and new construction of commercial buildings. Petitioner has been certified as a minority business enterprise by several local governmental entities. Petitioner regularly bids on governmental contracts. Petitioner's application to the Respondent for certification as a minority business enterprise was denied. Petitioner is a "small business" as that term is defined by Section 288.703(1), Florida Statutes. 1/ At the time of the formal hearing, Martha A. Morgan owned 51 percent of the issued shares of stock in West Construction, Inc., served as one of two members of the Board of Directors, and was the President, Treasurer, and Assistant Secretary of the corporation. Ms. Morgan is an American woman. 2/ At the time of the formal hearing, Donald West owned the remaining 49 percent of the authorized and issued shares of stock, served as the other member of the Board of Directors, and was Vice-President and Secretary of the corporation. Mr. West is not a "minority person". Ms. Morgan and Donald West have been married to each other since 1985. West Construction, Inc. was incorporated by Donald West and his father in 1977 after they had operated as a partnership for several years. The corporation is authorized to issue 1,000 shares of common stock. When it was incorporated, a total of 200 shares of stock were issued, with Donald West and his father each being issued 100 shares of stock. When Donald West's father retired in 1984, the corporation repurchased his 100 shares of stock and distributed to him an amount equal to 50 percent of the assets of the business. This distribution adversely impacted the corporation's ability to secure performance bonds for projects. After that repurchase, the only issued shares of stock were the 100 shares that had been issued to Donald West in 1977. Prior to her marriage to Mr. West in 1985, Ms. Morgan had her own separate assets. She contributed these assets to the marriage. The marital assets were thereafter used to obtain performance bonds for the corporation and served as security for other obligations of the company. Ms. Morgan is a college graduate with a degree in Business Administration. Her experience includes working as a certified legal assistant for a land development company. In 1985, Ms. Morgan started working for West Construction doing accounting, posting, and general record keeping. In 1989, she began to take a more active role in the affairs of West Construction in that she did more of the day to day bookkeeping, including payroll and accounting. Since December 1992, Ms. Morgan has been licensed by the State of Florida as a certified building contractor. Ms. Morgan became the majority owner of the company on January 1, 1993, when Donald West transferred to her 51 of his 100 shares of stock in the corporation. Donald West remained the only other stockholder with 49 shares of stock. Effective January 1, 1993, Ms. Morgan became the President, Treasurer, and Assistant Secretary of the corporation. Ms. Morgan and Mr. West became the only two members of the board of directors of the corporation. One of the reasons for the transfer of stock was to qualify the corporation for certification as a minority business enterprise. The consideration for the transfer of the stock to Ms. Morgan was the contribution she had made to the marital assets and the work she had done on behalf of the corporation. There was no separate payment of money by Ms. Morgan for this stock. Donald West has been in the construction business all of his adult life. He has a degree from the University of Florida in building construction and has a general contractor's license and a building contractor's licensed from the State of Florida. Mr. West's construction licenses were used to qualify the firm for construction work between 1977 and December 1992, when Ms. Morgan obtained her building contractor's license. Ms. Morgan's license has been used to qualify the corporation since she obtained it. Ms. Morgan is in charge of managing the finances of the company. Ms. Morgan keeps the company books, pays the bills, and invests any profits. She is responsible for payroll, insurance, bonding, accounts receivables, and billings. Both Ms. Morgan and Mr. West have the authority to sign checks, make withdrawals and deposits on company accounts, and execute bank documents. Both have the authority to draw on a line of credit that has been established by the company, but neither has had the need to do so. Mr. West has the authority to sign company checks, but he seldom does so. Ms. Morgan and Mr. West are jointly and severally liable as indemnitors on the company's bond, and their personal assets, including the jointly owned marital assets, act as security for this risk. Both serve as guarantor's on the company's line of credit. At the time of her application for certification, Mr. West and Ms. Morgan were paid the same salary. Between that time and the formal hearing, Ms. Morgan had increased her salary so that she was being paid $3,000 per month and Mr. West was being paid $2,000 per month. Ms. Morgan testified that she determined her own salary without consulting Mr. West. Ms. Morgan arranged for the financing of the latest vehicle purchased by the company, she determined that the building out of which the company operates should be financed. She made the decision as to how the company's idle capital would be invested. In addition to Mr. West and Ms. Morgan, the company has two other full time employees who were employed by Mr. West before Ms. Morgan became an owner, officer and director of the company. One of these employees is a carpenter and the other is a general laborer. Mr. West is the direct supervisor for these two employees. Ms. Morgan reviews submittals from subcontractors and works as the liaison between subcontractors and the project architect. Mr. West supervises the work of subcontractors. Ms. Morgan is also responsible for finding projects for the company to bid upon. The company subscribes to two services that provide information to potential bidders as to public works projects. Ms. Morgan reviews that information and determines the projects upon which the company will bid. Ms. Morgan obtains and reviews the bid packages, secures any other information she deems necessary by communicating with the contract letting agency or architect, and attends the pre-bid meeting. Both Mr. West and Ms. Morgan work on the company's bid. Mr. West's role is to prepare quantitative takeoffs from the bid plans. Ms. Morgan determines the overhead by factoring in the amount of current business undertaken by the company, the complexity of the project, and the difficulty of the project. Both Mr. West and Ms. Morgan attend pre-construction meetings. Ms. Morgan usually signs the company bids and any resulting contracts as its president and uses her license to qualify the company. Both Ms. Morgan and Mr. West develop the company's work schedule. Despite being licensed as a certified building contractor, Ms. Morgan has never supervised a construction project from beginning to conclusion. The actual construction projects undertaken by the company are supervised and managed by Mr. West. Both Ms. Morgan and Mr. West order materials and supplies for construction projects. Ms. Morgan would have to hire someone to manage the construction projects if Mr. West were not available. The management of this family run company is divided between Ms. Morgan and Mr. West. Petitioner established that Ms. Morgan takes a meaningful role in the management of the affairs of the corporation, but it is also clear that Mr. West takes a meaningful role. The managerial functions performed by both stockholders are essential to the operation of the company. One was not established to be more important than the other. It is found that Petitioner failed to establish that Ms. Morgan exercises dominate control of the affairs of the business.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission on Minority Economic and Business Development enter a final order that denies West Construction, Inc.'s application for certification as a minority business enterprise. DONE AND ENTERED this 16th day of June, 1995, 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 16th day of June, 1995.
The Issue Whether Mr. Wareh's business qualifies for certification as a disadvantaged business enterprise?
Findings Of Fact Mr. Wareh was born Mohammad Faiz Wareh in Damascus, Syria. He is now a citizen and permanent resident of the United States. Mr. Wareh is the president and majority owner of Wareh Construction Company, which is located in Jacksonville, Florida. Mr. Wareh owns 51% of the stock of Wareh Construction Company and his wife owns the remaining 49%. Wareh Construction Company is located in Jacksonville, Florida. From September 20, 1983 to September 20, 1984, Wareh Construction Company was certified by the Department as a minority business enterprise under Rule 14-78, Florida Administrative Code, as it existed at that time. Mr. Wareh was recognized as an Asian American for this classification. The certification of Wareh Construction Company as a minority business enterprise in September, 1983, was for 1 year. This certification expired in September, 1984, because Mr. Wareh did not reapply for certification in 1984. On or about May 28, 1987, Mr. Wareh mailed a Florida Department of Transportation D/WBE Certification and Recertification Schedule A to the Department seeking certification as a disadvantaged business enterprise. By letter dated June 16, 1987, the Department denied the application for certification as a disadvantaged business enterprise filed by Mr. Wareh. The Department based its denial upon its conclusion that the requirements of Rule 14-78.05(3)(b)1, Florida Administrative Code, had not been met. Mr. Wareh has not applied to the Small Business Administration for certification as a socially and disadvantaged individual.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the application of Wareh Construction Company for certification by the Department as a disadvantaged business enterprise be denied. DONE and ENTERED this 4th day of February, 1988, in Tallahassee, Florida. LARRY J. SARTIN 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 4th day of February, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-2878 The Department has submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Department's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 and 2. Hereby accepted. 3 4. 5 and 6. 7 and 8. Primarily conclusions of law. To the extent that facts are included in this proposed paragraph, they are hereby accepted. Conclusion of Law. 8-9 Irrelevant. 10 9. Irrelevant. Conclusion of law. COPIES FURNISHED: Fred Wares Wareh Construction Company 6048 Chester Circle Jacksonville, Florida 32217 Judy Rice Senior Attorney Department of Transportation Haydon Burns Building 605 Suwannee Street, MS 58 Tallahassee, Florida 32399-0458 Kaye N. Henderson, P.E., Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street, MS 58 Tallahassee, Florida 32399-0458 Attn: Eleanor F. Turner, M.D. 58 Thomas H. Bateman, III General Counsel 562 Haydon Burns Building 605 Suwannee Street, MS 58 Tallahassee, Florida 32399-0458
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application of JEDI Enterprises, Inc., for certification as a minority business enterprise be APPROVED. DONE and ENTERED this 27th day of August, 1984, in Tallahassee, Florida. DONALD R. ALEXANDER 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 27th day of August, 1984. COPIES FURNISHED: Paul A. Pappas, Secretary Department of Transportation Haydon Burns Bldg. Tallahassee, Florida 32301 Thomas G. Brown, Esquire Florida National Bank Bldg. 301 First Street West Palm Beach, Florida 33401 Mark A. Linsky, Esquire Haydon Burns Bldg., M.S. 58 Tallahassee, Florida 32301-8064
The Issue The issue in this case is whether the Petitioner, Transport Analysis Professionals, Inc. (hereinafter sometimes referred to as "TAP"), is eligible for certification as a Minority Business Enterprise. TAP contends that its application for such certification should be granted, asserting that it is in compliance with all lawful requirements for such certification. The Department of Transportation contends that the application should be denied on the grounds that the women owners of TAP do not exercise actual control of the affairs of the company.
Findings Of Fact Based on the relevant testimony of the witnesses and on the relevant exhibits admitted into evidence, I make the following findings of fact. 1/ Introduction Transport Analysis Professionals, Inc., is a Florida corporation which was incorporated on September 1, 1983. The moving forces behind TAP are three married couples; Mary J. and Kenneth J. Bynum, Gloria J. and Douglas R. Campion, and Carol L. and David C. Rhinard. All of the 990 authorized shares of stock of TAP have been issued to these three couples and each couple is the holder of 330 shares of TAP stock. The Board of Directors of TAP is composed of six directors who are now, and always have been, the six individuals who make up the three married couples described above. Each of these six individuals is a "founding principal" of TAP. Although TAP will embark upon just about any type of business project its principals feel it has the qualifications to perform, the primary nature of its business, as described in its application form is: "engineering consulting services, including traffic and transportation planning and design, environmental analysis, roadway and mass transit operational analysis and contract administration services." (T.25-27; JNT.EX. 1) Because TAP is a new company, up to this point the majority of its activity has been the preparation of proposals and various marketing activities. In other words, TAP's principal activity has been trying to find work rather than actually doing the type of work for which the company was created. (T.84) The "credentials" of the male principals of TAP Douglas R. Campion has a Master of Science degree in Transportation Planning and Engineering and a Bachelor of Science degree in Civil Engineering, both from the Polytechnic Institute of Brooklyn. He also has certificates from the Highway and Transportation Management Institute, University of Mississippi, and the American Association of State Highway and Transportation Officials. (JNT.Ex. 1, resume) Douglas R. Campion has over sixteen years of progressively responsible and successful executive management, administration, engineering and planning experience in the public sector and private industry. He was formerly the appointed Regional Administrator (six and one-half years) for the Federal Urban Mass Transportation Administration (UMTA). He managed the design, contracting, and engineering services for construction on a new $960 million urban rapid rail system. He has extensive background in mass transit, transportation systems planning, traffic engineering, economic/financial analysis, and procurement management. (JNT.EX. 1, resume) Kenneth J. Bynum has a Bachelor of Science degree in Civil Engineering from the University of Arkansas and has done post graduate work towards a Master of Science degree in Civil Engineering at West Virginia University. He is currently enrolled in a Master of Business Administration program at Florida International University. He has completed continuing education courses on traffic operations and design at the University of Florida and Georgia Institute of Technology and on area and indoor lighting by the Lighting Systems Institute of the General Electric Company. He is registered as a professional engineer in the States of Florida and Michigan. (JNT.EX. 1, resume) Kenneth J. Bynum has over sixteen years of professional experience in progressively more responsible charge of planning, design, implementation, and maintenance of public and private transportation systems, with particular emphasis in roadways, mass transit, traffic operations, and traffic control devices. He has been practicing his profession since 1972 in Florida, working in the public sector and with private consultants. (JNT.EX. 1, resume) David C. Rhinard has a Master of Science degree in Transportation from Purdue University and a Bachelor of Science degree in Civil Engineering from Pennsylvania State University. Since graduation he has participated in numerous technical, management, and professional development seminars and non-credit courses nationwide and abroad, including Certificates in: Highway Engineering and Administration, Advanced Technical Topics in Urban Transportation, Effective Speaking and Human Relations, U.S. Department of Transportation Highway Engineering, Highway Finance, and Professional Program in Urban Transportation (by Carnegie-Mellon University with on-site investigation of urban transportation systems in selected American, Canadian, and European cities). He is registered as a professional engineer in the State of Florida and Michigan. (JNT.EX. 1, resume) David C. Rhinard has been continuously involved in transportation engineering for over fifteen years and has been in responsible charge of numerous public and private sector transportation projects and programs in South Florida for the last thirteen years. His experience ranges from traffic and transit system planning to financing, preliminary engineering, construction, traffic operations and parking. (JNT.Ex. 1, resume) The "credentials" of the female principals of TAP Gloria J. Campion has a Master of Science degree in Mathematics from Montclair State College and a Bachelor's degree in Mathematics and Business from the same college. She has obtained certificates in Computer Literacy from the Florida International University and in Adult Education Teaching Strategies from the University of Georgia. She has participated in special studies in mathematics and statistics at Chicago Circle Campus, University of Illinois. (JNT.EX. 1, resume) Gloria J. Campion has over thirteen years of experience as a teacher of mathematics and computers and as an educational consultant in the field of mathematics. (JNT.Ex. 1, resume) Carol L. Rhinard has a Bachelor of Science degree in Education from Bloomsburg University of Pennsylvania. She has taken courses in mathematics, statistics, and sampling theory at the University of Miami. (JNT.EX. 1, resume) 2/ Carol L. Rhinard has taught high school off and on over the past seventeen years. (JNT.Ex. 1, resume; T. 33) Mary J. Bynum has attended Miami Dade Junior College, but has not earned any academic degrees. (JNT.Ex. 1, resume) Mary J. Bynum has eighteen years experience as an airline stewardess and as an airline stewardess supervisor, or lead flight attendant. (JNT.EX. 1; T. 22) The "blood, sweat, and tears" contributed to TAP by the male principals All three of the male principals of TAP gave up professional positions in the fields of traffic and engineering consulting in order to devote their full-time efforts towards trying to start a new company of their own. All three of the male principals of TAP work full-time for TAP. None of them receive a salary from TAP. Two of them (Messrs. Rhinard and Bynum) have no other regular employment. In order to have at least some income, Mr. Campion also works nights as a hotel manager. (JNT.EX. 1, T. 13, 17, 42) The "blood, sweat, and tears" contributed to TAP by the female principals All three of the female principals of TAP have other full-time or substantially full-time employment. Of the three, Gloria R. Campion does substantially more for TAP than either of the other two. Gloria Campion devotes about thirty hours per week to work for TAP. She spends about an equal amount of time as a teacher at a private school. (T. 69, 102-104) Carol Rhinard started out working full-time for TAP, but that did not last very long. She now teaches school full-time and devotes, at most, about eight hours per week to work for TAP. Of those eight hours per week, often only two of them are hours actually spent at the TAP office. (T. 40-41) 3/ Mary Bynum is employed full-time as an airline stewardess or lead flight attendant. Her work for TAP is probably about the same as or less than that of Carol Rhinard. 4/ Capital contributions to TAP--Who paid how much for what There is no credible, competent, substantial evidence in this record upon which to make a finding as to how TAP was capitalized. The various shortcomings in the evidence on this subject are discussed at length in the comments at the conclusion of these findings of fact. 5/ How things really get decided and done at TAP The individuals who possess the power to direct or cause the direction of the management and policies of TAP in the areas of policy making, financial decisions, and dismissal of management personnel are the six individual principals/owners acting in their capacities as members of the TAP Board of Directors. As a newly formed small business enterprise, wherein each member of the Board of Directors is a principal in the firm, most of the decisions on matters of policy making, financial decisions, and dismissal of management personnel are matters of Board discussion and involvement. Policy making originates with the President and is finalized at a Board meeting or through Board Member consent. Financial decisions, with the exception of small purchases and regular business expenses, rest with the Board of Directors. The Board of Directors, acting as a body, addresses all issues of management of the business and manager accountability. It is expected that in the future the roles of the President, Treasurer, and other officers will be vested with the authority customary to those offices. (JNT.EX. 1, Supplement to Schedule A) The individuals who make the day-to-day decisions on matters of management, policy, and operations of TAP are the same as those who possess the power to handle the matters described immediately above. The day-to-day decisions on matters of management, policy, and operations are made by the President and Board of Directors in the manner described immediately above. Depending on the type of project involved, one or more of the principals of the firm is asked by the President to lead the developmental efforts and to prepare a recommended course of action for review by the President and final decision by the Board of Directors. (JNT.EX. 1, Supplement to Schedule A) The language of the bylaws regarding the powers of the company president notwithstanding, in reality the President does not exercise any managerial authority on any matter of importance. The minutes of the TAP Board of Directors meetings reflect that even the most routine management decisions are submitted to the Board of Directors for final decisions. (See especially the minutes of the meeting of January 22, 1984, under the captions "OFFICE SPACE," "OFFICE RELATED MATTERS," and "WBE STATUS." This is consistent with the provisions of Article III, Section 2, of the TAP bylaws, which provides: 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. (Emphasis added) Article VIII, of the Articles of Incorporation of TAP provides: 8. The officers of this corporation shall be a Chairman, Vice Chairman, Secretary, Treasurer, President and such other officers, agents, and factors as may be deemed necessary. All officers, agents, and factors shall be chosen in such manner, hold their offices for such terms, and have such powers and duties as may be prescribed by the by-laws or determined by the Board of Directors. Article III, Section 3, of the TAP bylaws provides that the Board of Directors can remove any officer and fill any vacancy in office. Article II, Section 1, of the TAP bylaws provides: All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be managed under the direction of, the Board of Directors. Article II, Section 8, of the TAP bylaws provides: At a meeting of shareholders called expressly for that purpose, any director or the entire Board of Directors may be removed, with or without cause, by a vote of the holders of 67 percent of the shares then entitled to vote at an election of directors. Article II, Section 9, of the TAP bylaws provides that five directors constitutes a quorum. That section also provides: "The act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors." Article II, Section 10, of the TAP bylaws also provides for certain other actions to be taken by a "majority" of the full Board of Directors. At the Board of Directors meeting of November 11, 1983, all of the principals/owners of TAP, acting in their capacities as Directors, took the following action: By unanimous vote the Board ratified action taken by the President in the proper use of her powers and authority in those business decisions of the Corporation pertaining to representation of the Corporation on engineering consulting services: In fulfillment of her day-to-day decision making duties, the President directed that the Corporation be represented by those Principals of the firm who are engineers on matters which pertain to engineering services of the firm. Further discussion ensued on the matter. By unanimous vote the Board directed that as a policy of the firm, the President should continue to direct engineers who are principals of the firm to represent the firm on engineering and related matters as a general rule; but the President could direct otherwise in specific situations which may arise from time to time that she decides should be treated and the firm represented differently. The duties of the office of Treasurer of TAP, which office is held by Carol Rhinard, are ceremonial rather than substantive; the Treasurer does not independently make any decisions or take any action on any matter of significance relating to the finances of TAP. (See minutes of Board of Directors meeting of November 11, 1983; T. 51-53) In sum, pursuant to the Articles of Incorporation and the bylaws of TAP, the real management power is vested in the Board of Directors and the male principals control 50 percent of the voting power on the Board of Directors. And as a result of the Board of Directors meeting of November 11, 1983, the male principals have, for all practical purposes, full control of all decision-making with regard to the most important decisions in an engineering consulting firm -- i.e., the engineering decisions. 6/ Explication of why certain findings of fact were not made and how conflicts in the evidence were resolved In making these findings of fact I have not made a number of findings of fact proposed by the parties and I have made some findings essentially the opposite of those proposed by the parties. Thus, this explication is required so that the parties will know what I found to be irrelevant, what I found to be insufficient to support a finding of fact, and how I resolved some of the blatant conflicts in the evidence. In making these findings of fact I have not based any findings on the copies of documents reflecting post-hearing changes to Article II, Section 2, and Article II, Section 9 of the TAP bylaws. I am constrained by the provisions of the Administrative Procedure Act to base my findings solely upon testimony and exhibits received in evidence at the formal hearing in this case. Similarly, I have not based any of my findings of fact on the answers to the post-hearing interrogatories which were served on TAP and are referred to at several places in the post-hearing memorandum submitted by DOT. The extent, if any, to which the post-hearing changes in the bylaws of TAP may change the extent of the management control of TAP exercised by the women owners is a matter which will have to wait for another day to be addressed -- perhaps when TAP files a new application for MBE certification based on new facts. But my recommended order in this case must be based on the facts as they existed at the time of the hearing. In the formulation of the foregoing findings of fact I have given little weight to the testimony of Carol L. Rhinard other than those portions of her testimony which constitute admissions against interest. My reason for giving little weight to this testimony is because, on the whole, Ms. Rhinard was not a very credible witness. She was both evasive and hostile on cross- examination. Throughout much of her testimony, particularly on cross- examination, she appeared to be trying to formulate what she thought would be the answer most beneficial to her cause rather than the answer which most nearly corresponded to her recollection of objective fact. Her obvious emotional involvement in the matter at issue appeared to color her testimony on any matter that involved value judgment or comparison of one thing to another. Finally, she displayed either a poor memory of, or limited knowledge of, the business affairs of TAP. I have not based any findings of fact on the testimony of Mr. Frank DeLuca for two reasons. First, it is irrelevant. Nothing in the applicable rules requires the women owners of a Minority Business Enterprise to be good or talented managers --they are just required to be the real managers. Second, even if it were relevant, the level of expertise that Mr. DeLuca purported to measure with his examination was that of ". . . someone who purported to be a traffic or transportation engineer . . . " (T. 196) The quoted standard is higher than the "working knowledge" standard in the U.S.D.O.T. training manual. Finally, I am not convinced of either the accuracy or fairness of the "examination" questions prepared by Mr. DeLuca. While I have no doubts about Mr. DeLuca's sincerity, nor any doubts about his competence as an engineer, there is no showing that Mr. DeLuca has any training or experience in the separate science of testing the knowledge of others. Further, the circumstances under which the "examination" was administered were far from ideal testing circumstances; the "examination" was unannounced, was unexpected, was administered by an adversary, and was administered at a time when the witness' attention was certainly distracted by other matters. With regard to the matter of why each of the individual principals of TAP received different numbers of shares of stock and the related matter of who contributed what in the way of expertise, effort, and cash in exchange for the shares of stock that were issued, I have found none of the evidence worthy of belief; first because too many conflicting versions have been given at different times and, second, because important details have been omitted. The omissions are perhaps more critical than the conflicts when note is taken of the proposition that the failure of a party in possession of material evidence to come forward with that evidence gives rise to an inference that the unproduced evidence would have been adverse to the party who failed to produce it. If one were to give credence to the evidence in the record on this subject, one could only conclude that the allocation of the shares of stock has all of the earmarks of a subterfuge designed to create the appearance of female control of the corporate management, when in fact the real intent of the parties was to divide control of the corporation along family lines, with each family having a voice in corporate affairs equal to that of each other family. This is evidenced by the fact that each family unit was issued 330 shares of stock. Further, the evidence in this case, even when giving the Petitioner the benefit of an abundance of doubts, fails to demonstrate any rational basis for the disparate distribution of the shares of stock. The testimony indicates that Douglas Campion contributed approximately $1,500 to TAP's capitalization and received 30 shares of stock. Thus, he paid approximately $50 per share for his stock. Gloria J. Campion is asserted to have contributed approximately $3,000 to TAP's capitalization and to have received 300 shares of stock. Thus, she paid approximately $10 per share. The Bynum family unit is asserted to have contributed more money to TAP's capitalization than did either of the other two family units, but the Bynum family unit received the same number of shares as the other two family units. These unexplained discrepancies lead only to the conclusion that the share distribution was contrived in an effort to create the appearance of eligibility under the MBE program. The one alternative explanation which was tendered is unpersuasive because, like the foregoing, it is lacking in fundamental logic. There is testimony in the record that the distribution of shares of stock took into consideration the individual talents of the several principals, as well as their contributions of time and effort to the success of TAP. Yet this explanation fails because although all three male principals appear to have substantially similar training, experience, and talent, and although all three of the male members are contributing a full-time effort to TAP, two of the males received 160 shares of stock and one received only 30. Similarly, as valuable as Gloria Campion's talents and experience in mathematics and computers may be to the future success of TAP, it can hardly be argued that her contribution of expertise and effort to TAP is ten times greater than that of Douglas Campion -- yet she received ten times as many shares of stock as he did.
Recommendation For all of the reasons discussed above, it is recommended that the Department of Transportation issue a Final Order denying the application of Transport Analysis Professionals, Inc., for certification as a Minority Business Enterprise. DONE and ORDERED this 10th day of August, 1984, at Tallahassee, Florida. MICHAEL M. PARRISH 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 10th day of August, 1984.
The Issue The central issue in this case is whether the Petitioner is entitled to certification as a minority business enterprise.
Findings Of Fact Iris Reed and her husband, Mark Reed, own and operate a business known as Reed Landscaping, Inc., the Petitioner in this cause. Mrs. Reed is an American woman and owns 60 percent of the subject business. Her husband owns the remaining 40 percent. The Reeds previously owned a lawn maintenance business in New York but moved to Florida several years ago and started doing business as "Landscaping and Lawn Maintenance by Mark." Eventually, approximately 1992, "Landscaping and Lawn Maintenance by Mark" changed its name to Reed Landscaping, Inc. As to Petitioner and all former entities, Mrs. Reed has held an office position with the company while Mr. Reed has operated the field crew or crews. Mr. Reed has the experience and expertise necessary to handle the work at each site for the business. On the other hand, Mrs. Reed has the office and management skills to direct the "paperwork" side of the business. This includes insurance matters and personnel for the office. Mrs. Reed is particularly active in this business since she put up the capital that largely funded the business enterprise. Although her personal financial investment is primarily at risk, creditors and bonding companies require both Reeds to sign for the company and to be individually obligated as well. Mrs. Reed serves as President/Treasurer of the Petitioner and Mr. Reed is Vice-President/Secretary. Both are authorized to sign bank checks for the company. Mr. Reed has formal training and education in landscape architecture and horticulture as well as extensive experience in this field. Mrs. Reed is responsible for many decisions for the company but relies on the opinions of others and delegates, where appropriate, duties to others as well. Among the delegated duties are: all field work for the company (delegated to Mr. Reed, another foreman, or to crews working a job); estimating or preparing bids (an estimator helps with bids); bookkeeping; contract review; and purchasing (some of which she does herself with input from others). As to each delegated area, however, the Reeds stress teamwork; that they are all working together for the common good of the company.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Petitioner's application for certification as a minority business enterprise be denied. DONE AND ENTERED this 16th day of May, 1996, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH, 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 16th day of May, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-5684 Rulings on the proposed findings of fact submitted by Petitioner: None submitted. Iris Reed on behalf of Petitioner submitted a letter summary of her position concerning the hearing which, if intended to be a presentation of fact, is rejected as argument or comment not in a form readily reviewable for either acceptance or rejection as required by rule. Rulings on the proposed findings of fact submitted by Respondent: Paragraphs 1 and 2 are accepted. Paragraph 3 is rejected as contrary to the weight of the credible evidence. Paragraphs 4 and 5 are accepted. COPIES FURNISHED: Joseph L. Shields Senior Attorney Commission on Minority Economic & Business Development 107 West Gaines Street 201 Collins Building Tallahassee, Florida 32399-2005 Iris F. Reed, Pro se 951 Southwest 121st Avenue Fort Lauderdale, Florida 33325 Veronica Anderson Executive Administrator Commission on Minority Economic & Business Development 107 West Gaines Street 201 Collins Building Tallahassee, Florida 32399-2005
The Issue Whether Petitioner is eligible for certification as a "minority business enterprise" in the area of landscape contracting?
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Petitioner is a Florida corporation that was formed and incorporated by Margaret Gordon, who is the corporation's sole shareholder and its lone officer and director. Gordon is an American woman. Before forming Petitioner, Gordon held various jobs. Among her former employers are Florida Maintenance Contractors and Scenico, Inc. She worked for the former from 1984 to 1991, and for the latter from 1984 to 1990. As an employee of Florida Maintenance Contractors and Scenico, Inc., Gordon supervised landscaping projects. As a result of this work experience, Gordon has the managerial and technical knowledge and capability to run a landscape contracting business. Petitioner is such a landscape contracting business, although it has not undertaken any landscaping projects recently. Its last project was completed two years prior to the final hearing in this case. Since that time, the business has been inactive. Gordon's two sons, working as subcontractors under Gordon's general supervision, have performed the physical labor and the actual landscaping involved in the previous jobs Petitioner has performed. Gordon herself has never done such work and she has no intention to do so in the future. Instead, she will, on behalf of Petitioner, as she has done in the past, use subcontractors (albeit not her sons inasmuch as they are no longer available to perform such work.) Petitioner filed its application for "minority business enterprise" certification in the area of landscape contracting in March of 1994.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that Respondent issue a final order denying Petitioner's application for certification as a "minority business enterprise" in the area of landscape contracting. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 9th day of October, 1995. STUART M. LERNER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of October, 1995.
The Issue Whether Expedient Services, Inc. should be certified as a minority business enterprise by the Respondent, pursuant to Section 288.703(1) and (2), Florida Statutes and the applicable rules implementing the statute.
Findings Of Fact Petitioner is a Florida corporation founded prior to 1978 by five minority owners who purchased all of the stock originally issued. The primary business of the corporation was to provide janitorial services for corporate and governmental clients. In 1978, Harvey Hughes was hired as president and CEO. As part of his compensation package, Hughes purchased a minority interest in the corporation at par value. Hughes continues to serve in that capacity to the present day. Beginning after 1983, the five original stockholders, on separate occasions, sold their shares back to the corporation leaving Hughes as the sole stockholder with 833 shares outstanding. In the late 1980's, Hughes' son, Carl Hughes, joined the company as Vice-President and began the process of changing the type of services the corporation provided. He became a minority shareholder in 1991. Sherry Hughes has served as a member of the Board of Directors and Secretary/Treasurer to the Corporation for many years. In addition, she is employed by the Corporation as its Human Resources Director. In 1992, for past services rendered and no additional consideration, Horace Hughes transferred 450 shares, or 54 percent of the outstanding shares, to Sherry Hughes, his wife. Fifty-Four percent of the Petitioner/applicant is presently owned by Sherry Hughes, a woman. The Petitioner's current business is the repair and sales of computers and peripheral equipment. The majority owner, Sherry Hughes, is not a computer technician. She cannot diagnose a computer which needs repairs. The corporation hires computer technicians. Sherry Hughes does not hire technicians, as that duty has been delegated to the Service Manager, Vincent Schneider. Additionally, Schneider usually does the firing when needed. Payroll for Petitioner is done by an employee, Kathy Levann. Mrs. Hughes purchases office supplies and leaves the purchasing of technical supplies to a buyer. The company presently has three male Directors and two women Directors, including Sherry Hughes. All the Directors are authorized to sign corporate checks. For their work, Sherry Hughes is paid $5.00 hourly; Horace Hughes is paid $12-14 hourly and Carl Hughes is paid $12-15 hourly. All are stockholders. Horace Hughes, as President, signed the lease for the business location. Horace Hughes signed the affidavit for insurance on the business vehicles. Horace Hughes signed for a business loan in the financed amount of $70,302.71, both as President and Guarantor at SunTrust Bank. Horace Hughes is authorized by corporate resolution to borrow money on behalf of the corporation. Carl Hughes entered into the agreements with various computer dealers on behalf of the Petitioner. Sherry Hughes does not handle invitations to bid. Carl Hughes handles all invitations to bid, cost estimating and negotiations. Applicant has not established by competent evidence that Sherry Hughes exercises a real, substantial continuing ownership and control of the applicant corporation. Other than her salary, no evidence was introduced to establish that Sherry Hughes receives income commensurate with the percentage of her ownership in the company. Sherry Hughes failed to establish that she shares in all of the risk through her role in decision-making, negotiations, and execution of documents as either an individual or officer of the corporation.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application for Minority Business Certification filed by Expedient Services, Inc. on April 7, 1995, be DENIED. DONE and ENTERED this 12th day of June, 1996, in Tallahassee, Florida. DANIEL M. KILBRIDE, 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 12th day of June, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-5067 The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on proposed findings of fact submitted by the parties. Proposed findings of fact submitted by Petitioner. Petitioner did not submit proposed findings of fact. Proposed findings of fact submitted by Respondent. Accepted in substance: paragraphs 1-18. COPIES FURNISHED: Horace Hughes, President Expedient Services, Inc. Post Office Box 5400 Titusville, Florida 32783-5400 Joseph L. Shields General Counsel Commission on Minority Economic and Business Development 107 West Gaines Street 201 Collins Building Tallahassee, Florida 32399-2000 Veronica Anderson Executive Administrator Commission on Minority Economic and Business Development Collins Building, Suite 201 107 West Gaines Street Tallahassee, Florida 32399-2000
The Issue Are Rules 60A-2.001(10) and 60A-2.005(7), Florida Administrative Code, valid exercises of delegated legislative authority?
Findings Of Fact On December 22, 1991, the Respondents made amendments to Rules 60A- 2.001 and 60A-2.005, Florida Administrative Code, related to the certification of a "minority business enterprise" to engage in business with the State of Florida. With the amendments, a definition for the term "regular dealer" was created, which states in pertinent part: 60A-2.001 Definitions. . . . (10) 'Regular dealer' means a firm that owns, operates or maintains a store, warehouse, or other establishment in which the material or supplies required for the performance of the contract are bought, kept in stock, and regularly sold to the public in the usual course of business. To be a regular dealer, the firm must engage in, as its principal business and in its own name, the purchase and sale of products. . . . The amendments included other requirements that a "minority business enterprise", as defined at Section 288.703(2), Florida Statutes, must meet to be certified to participate in the Respondents' Minority Business Program. (The definition of "minority business enterprise" was changed by Section 288.703(2), Florida Statutes (1994 Supp.). The change does not effect the outcome in the case.) As promulgated December 22, 1991, Rule 60A-2.005(7), Florida Administrative Code states in pertinent part: The applicant business shall establish that it is currently performing a useful business function in each specialty area requested by the applicant. For purposes of this rule, "currently" means as of the date of the office's receipt of the application for certification. The applicant business is considered to be per- forming a useful business function when it is responsible for the execution of a distinct element of the work of a contract and carrying out its responsibilities in actually performing, managing, and supervising the work involved. The useful business function of an applicant business shall be determined in reference to the products or services for which the applicant business requested certification on Form PUR 7500. When the applicant business is required by law to hold a license, other than an occupational license in order to undertake its business activity, the applicant business shall not be considered to be performing a useful business function unless it has the required license(s). In determining if an applicant business is acting as a regular dealer and that it is not acting as a conduit to transfer funds to a non- minority business, the Office shall consider the applicant's business role as agent or negotiator between buyer and seller or contractor. Though an applicant business may sell products through a variety of means, the Office shall consider the customary and usual method by which the majority of sales are made in its analysis of the applicability of the regular dealer require- ments. Sales shall be made regularly from stock on a recurring basis constituting the usual operations of the applicant business. The proportions of sales from stock and the amount of stock to be maintained by the applicant business in order to satisfy these rule requirements will depend on the business' gross receipts, the types of commodities sold, and the nature of the business's operations. The stock maintained shall be a true inventory from which sales are made, rather than by a stock of sample, display, or surplus goods remaining from prior orders or by a stock main- tained primarily for the purpose of token compliance with this rule. Consideration shall be given to the applicant's provision of dispensable services or pass-through operations which do not add economic value, except where characterized as common industry practice or customary marketing procedures for a given product. An applicant business acting as broker or packager shall not be regarded as a regular dealer absent a showing that brokering or packaging is the normal practice in the applicant business industry. Manufacturer's representatives, sales representatives and non-stocking distributors shall not be considered regular dealers for purposes of these rules. In passing the rules amendments, the Respondents relied upon authority set forth in Sections 287.0943(5) and 287.0945(3), Florida Statutes. Those statutory sections are now found at Sections 287.0943(7) and 287.0945(6), Florida Statutes (1994 Supp.). Those provisions create the general and specific authority for the Minority Business Advocacy and Assistance Office to effectuate the purposes set forth in Section 287.0943, Florida Statutes, by engaging in rule promulgation. As it relates to this case, the law implemented by the challenged rules is set forth at Section 287.0943(1)(e)3, Florida Statutes (1994 Supp.), which establishes criteria for certification of minority business enterprises who wish to participate in the Minority Business Program contemplated by Chapter 287, Florida Statutes. That provision on certification was formerly Section 287.0943(1), Florida Statutes. In assessing a minority business enterprise application for certification, the Respondents, through that statutory provision: [R]equire that prospective certified minority business enterprises be currently performing a useful business function. A 'useful business function' is defined as a business function which results in the provision of materials, supplies, equipment, or services to customers other than state or local government. Acting as a conduit to transfer funds to a non-minority business does not constitute a useful business function unless it is done so in a normal industry practice. Petitioners, Expertech and Mechanical, had been certified to participate in the Respondents' Minority Business Program, but were denied re- certification through the application of Rules 60A-2.001(10) and 60A-2.005(7), Florida Administrative Code. Marsha Nims is the Director of Certification for the Commission on Minority Economic and Business Development, Minority Business Advocacy and Assistance Office. In her position, she develops policy on minority business enterprise certification. As such, she was principally responsible for developing the subject rules. In particular, as Ms. Nims describes, the purpose in developing the rules was to address the meaning of a "conduit" set forth at Section 287.0943(1), Florida Statutes, in an attempt to insure that improper advantage was not taken by persons using certified minority businesses to enter into contractual opportunities with the State of Florida. In promulgating the rule, the Respondents spoke to representatives who were involved with unrelated minority business enterprise certification programs. One person from whom the Respondents had obtained ideas was Hershel Jackson, who processed certifications for the Small Business Administration in its Jacksonville, Florida office. This individual indicated that the Small Business Administration had developed a "regular dealer rule" that required individuals who sought minority certification from the Small Business Administration to make sales from existing inventory. This conversation led to the utilization of federal law as a guide to establishing the rules in question. At 41 CFR 50-201.101(a)(2), the term "regular dealer" is defined as: A regular dealer is a person who owns, operates, or maintains a store, warehouse, or other estab- lishment in which the materials, supplies, articles, or equipment of the general character described by the specifications and required under the contract are bought, kept in stock, and sold to the public in the usual course of business. It can be seen that the definition of "regular dealer" set forth in Rule 60A-2.001(10), Florida Administrative Code, is very similar to the federal definition. In addition, the Respondents used the Walsh Healey Public Contracts Act Interpretations at 41 CFR 50-206 for guidance. The provision within the Walsh Healey Public Contracts Act that was utilized was 41 CFR 50-206.53(a). It states: Regular Dealer. A bidder may qualify as a regular dealer under 40 CFR, 50-201.101(b), if it owns, operates, or maintains a store, warehouse, or other estab- lishment in which the commodities or goods of the general character described by the specifi- cations and required under the contract are bought, kept in stock, and sold to the public in the usual course of business. . . . The Petitioners presented witnesses who established the manner in which their respective industries carried out normal industry practices involving fund transfers to non-minority businesses from minority and non- minority businesses. Joseph H. Anderson is the President of Suntec Paint, Inc. (Suntec), which does business in Florida. Suntec is a non-minority corporation. It manufactures architectural coatings (house paints). Suntec sells and distributes its paint products through its own stores, through other dealers who have stores, and through sales agents. The sales agents would also be considered as manufacturers' representatives. Suntec's relationship with its manufacturer's representatives is one in which Suntec has an agreement with the representatives to sell the paint products to the representatives at negotiated prices which may be discounted based upon volume of sales. The representatives then sell the products to end users at a price that may be higher than the price between Suntec and the representatives. The representatives are responsible for marketing the product to customers. The products manufactured by Suntec are inventoried for distribution, or in some instances, made to order for distribution. The maintenance of inventory is principally for the benefit of the retail outlets controlled by Suntec. Suntec prefers not to maintain inventory because it ties up raw materials, warehousing space, and requires personnel to be engaged in the management and shipment of those products. If the product is "picked up" more than once in the process, it costs more money. Therefore, Suntec distributes inventory through the representatives by direct shipping from the manufacturer to the end user. Suntec's arrangement with its representatives is one in which the customer pays the representative for the product and the representative then pays Suntec. The representatives for Suntec do not ordinarily maintain inventory of the paint products, because this avoids having the representatives handle the product and then reship the product to the end user. By the representative handling the product, it would add expense to the transaction. Suntec, in selling its products through representatives and shipping directly from the manufacturer to the end user, is pursuing a practice which is normal in its industry. Suntec's arrangement with dealers unaffiliated with Suntec who have stores, provides the independent dealers with inventory. Nonetheless, there are occasions in which the independent dealer will place a large order with Suntec; and Suntec will ship the product directly to the end user. That practice is a frequent practice and one that is standard in the industry. Suntec has two minority businesses who serve as manufacturers' representatives and other manufacturers' representatives who are non-minorities. The minority representatives are Expertech, located in Gainesville, Florida, and All In One Paint and Supply, Inc. (All In One), also located in Gainesville. The two minority representatives for Suntec maintain some stock of paint. The inventory amount which All In One maintains was not identified. Within a few months before the hearing, Expertech had purchased 60 gallons of paint from Suntec. It was not clear what the intended disposition was for the paint. Thomas Rollie Steele, the Branch Manager for Bearings and Drives, serves as Sales Manager for that company in its Florida operations. Bearings and Drives has its corporate offices in Macon, Georgia. The company has thirty locations throughout the southern United States, with five different divisions. It specializes in industrial maintenance products and some services. Bearings and Drives is a non-minority firm. In its business Bearings and Drives has manufacturing arrangements or agreements to represent other manufacturers. As representative for other companies who manufacture the products which Bearings and Drives markets, Bearings and Drives is expected to solicit sales. The agreements with the manufacturers which Bearings and Drives has, establish price structures, terms and conditions, and shipping arrangements. Bearings and Drives serves as representatives for the manufacturers in a distinct service area. Bearings and Drives buys products from the manufacturers and resells the products to Bearings and Drives' customers. Bearings and Drives derives compensation by selling to customers at a price higher than the product was sold to them. The price at which products are resold by Bearings and Drives is controlled by market conditions. Bearings and Drives maintains some product inventory; however, in excess of 50 percent of the products sold are shipped directly from the manufacturer to the customer. The direct shipment improves the profit margin for Bearings and Drives by not maintaining an inventory and saving on additional freight expenses, taxes paid on existing inventory and labor costs to be paid warehouse personnel. Bearings and Drives uses a direct delivery system to its customers that is scheduled around the time at which the customer would need the product sold by Bearings and Drives. This arrangement is a standard industry practice. Aileen Schumacher is the founder, President, and sole owner of Expertech. This Petitioner had been certified through the Minority Business Program prior to the rule amendments in December, 1991. When the Petitioner, Expertech sought to be re-certified, it was denied certification in some business areas for failure to maintain sufficient levels of inventory. Expertech sells and distributes technical supplies, such as pollution- control equipment, laboratory equipment, hand tools, and other technical supplies. It specializes in the sale and distribution of safety equipment. Expertech does not provide services. The areas in which Expertech has been denied re-certification relate to the sale of laboratory supplies, paint, and pollution-control equipment. In marketing products Expertech buys directly from manufacturers, except in the instance where they cannot access the manufacturer directly and must operate through a distributor. Expertech tries to maintain as little inventory as possible and to have the commodities it sells shipped directly from the manufacturer to the end user. In addition to ordinary sales, Expertech takes custom orders for products not maintained in inventory by the manufacturer, which are directly shipped from the manufacturer to the customer. In Expertech's business dealings as a manufacturer's representative, wherein it arranges for direct shipments, it is performing in a manner which is standard in the industries in which it is engaged. Otto Lawrenz is the sole proprietor of Mechanical. Prior to the rules changes in December, 1991, Mechanical had been certified as a minority business enterprise. The attempt to re-certify was denied based upon the fact that Mechanical did not stock products and was serving as a manufacturer's representative in selling heating and ventilation equipment. Mechanical sells to mechanical contractors and sheet-metal contractors as a representative for the manufacturer. Mechanical bids on construction jobs and "takes off" the amount of equipment needed in setting its price quotes. If the submission of the price quotation is successful, Mechanical receives a purchasing order from the contractor, as approved by the project engineer. The equipment is then ordered by Mechanical, and delivered by the manufacturer to the job site or the contractor's home office. Mechanical does not maintain a warehouse or a store. The end user pays Mechanical within 30-60 days from the time that the equipment is delivered to the end user. Mechanical then pays the original manufacturer an agreed upon price. Generally, Mechanical sells special-order equipment. This type of equipment would be difficult to inventory since it is being custom-ordered and the units that are ordered are large in size. In addition, the variety of parts involved in these projects makes it difficult to stock them.
Findings Of Fact Vedder and Associates Incorporated's (VAI's) application for minority certification dated January 22, 1992 was received by the Department of Management Services on January 27, 1992. Petitioner's application for minority certification was denied by the Department of Management Services in a letter dated May 22, 1992. VAI was established in October of 1991 and offers as its principal service "land surveying." VAI is licensed to do business in Florida and is fifty-one percent (51 percent) owned by Kathleen Vedder, a Caucasian female, and forty-nine percent (49 percent) owned by John Vedder her husband, a Caucasian male. Kathleen A. Vedder and John F. Vedder were the sole directors of the corporation at the time of certification denial, with Kathleen A. Vedder serving as president/secretary and John F. Vedder serving as vice-president/treasurer. On September 16, 1992, after the denial of certification, John Vedder resigned as a director of VAI. No business reason was offered for this decision. Kathleen Vedder, the minority owner, is presently the sole director of the corporation. As sole director, she represents a majority of the board of directors. She continues to serve as president and secretary. John Vedder continues to serve as treasurer. It is not clear if he still serves as vice- president. (See Findings of Fact 5-11 and 28-29). At all times material, Kathleen Vedder has owned 51 percent of the stock through a greater monetary investment than John Vedder, who owns 49 percent of the stock. At all times material, Kathleen Vedder has served as the principal officers, president and secretary. At all times material, Kathleen Vedder has made up at least 50 percent of the board of directors. Since September 16, 1992, she has made up 100 percent of the board of directors. At all times material, John Vedder has served as a principal officer, treasurer. Up until September 16, 1992, John Vedder made up 50 percent of the board of directors. Thereafter, he did not serve on the board. At all times material, Article VII of VAI's Articles of Incorporation have permitted an increase or decrease in the board of directors as permitted by the bylaws, but never less than one director. At all times material, Item III of VAI's bylaws have provided that corporate officers hold office at the "satisfaction" of the board of directors; that the president shall be the chief executive officer; and that subject to any specific assignment of duties by the board of directors, the vice-president, the secretary, and the treasurer act under the direction of the president. VAI was formed by the purchase of assets from the Perry C. McGriff Company, which had employed Kathleen and John Vedder. Kathleen Vedder began her career with the surveying firm of Keith & Schnars, P.A., in Fort Lauderdale in 1976. She was the administrative assistant to the President. In 1981 she and John Vedder moved to Gainesville to manage the Perry C. McGriff Company, a wholly owned subsidiary of Keith & Schnars. John Vedder handled the surveying aspects of the business, and Kathleen Vedder handled most of the management of the company other than the surveying portion, including purchasing, handling business accounts and financial affairs, client relations, insurance, and correspondence. This continued until 1991 when the assets of the Perry C. McGriff Company were sold to VAI. Kathleen Vedder now performs for VAI basically the same functions as she did for the predecessor company with certain additions. John Vedder served as the director of survey for the Perry C. McGriff Company which employed both Mr. and Mrs. Vedder prior to the formation of VAI. In his position as director of survey at Perry C. McGriff Company, he was responsible for all contracts and negotiations and coordination of personnel to ensure timely completion of contracts. His background by education, training, and experience is extensive in the technical applications to perform land surveying. The business of VAI essentially began on December 6, 1991. Prior to that date, husband and wife had discussed the purchase of the McGriff assets. Kathleen Vedder discussed the purchase of the business with her husband and informed him that she wanted to run the business. He accepted this relationship and her role as "boss" because he hated working in the office and wanted nothing to do with running the business. Kathleen Vedder contacted the old Perry C. McGriff clients and facilitated the transition from the old company to the new company. The Perry C. McGriff Company was purchased for $100,000 with a $15,000 down payment and the remainder to be paid over 7 years. Funds for the original purchase price of the assets were obtained by cashing Kathleen Vedder's 401K plan, two IRA's, and by loans against her life insurance policies for an investment of $57,185.62 by Kathleen Vedder and $25,682.25 of marital assets held with her husband, John Vedder. John Vedder participated in the negotiations to buy Perry C. McGriff Company. John Vedder provided input and expertise regarding the assets of Perry C. McGriff Company which were to be purchased, whether survey equipment was acceptable, and the vehicles to be purchased. John Vedder discussed and consulted with Kathleen Vedder regarding the financial aspects of the purchase of Perry C. McGriff Company. He discussed with her the starting salaries of employees to be hired/transferred to VAI, and the leasing and location of business premises for VAI and purchase of furniture. Kathleen Vedder established the corporate policies, the accounting procedures, the job costing, and the standard management practices of the new company. Kathleen Vedder, as VAI president, made all of the final decisions regarding implementation of the new business such as renting the office, moving the assets purchased from the old Perry C. McGriff Company, establishing lines of insurance, determining the manner and location of the survey records purchased, and hiring the staff. Kathleen Vedder and John Vedder made it clear to all of the employees from the beginning of the company that she was the "boss". The takeover of Perry C. McGriff Company by VAI was explained to former employees during a field visit by John Vedder. His explanation was made at Kathleen Vedder's direction and took place while these employees were already in the field, during a time of transition, in a spirit of damage control when Kathleen and John Vedder were concerned that rumors might affect the new company's ability to retain good personnel from the old company and over concern that some might have trouble working for a woman. Kathleen Vedder hired six employees initially from the old Perry C. McGriff Company. Kathleen Vedder set the initial pay scale for the employees of the company and maintained the documentation relevant to this function. The additional four persons hired by the company since it began were Robert Henderson, Tom Crossman, George Gruner, and Doug Zimmerman, each of whom were hired by Kathleen Vedder who interviewed them, who set their wages and benefits, and who described their job functions to them as new employees. VAI has a business license posted on its premises issued by the City of Gainesville, Florida, in the name of John Vedder, authorizing the performance of land survey services. VAI currently employs eight permanent employees and the qualifying agent is John F. Vedder, who serves as a principal officer, treasurer. He holds a land survey license issued by the State of Florida, Department of Professional Regulation, Land Surveying Board. In order to be qualified as a licensed land surveying corporation, a principal officer must be a licensed land surveyor. The participation of John Vedder or another duly-licensed land surveyor is required to satisfy the requirements of Chapter 472 F.S., for a qualifying agent. Under that statute, the qualifying agent must have a license as a land surveyor and hold a position as a principal officer in VAI. If John Vedder were to lose his professional land surveyor license, there would be three licensed land surveyors remaining with the company, and it would be possible for VAI to continue if one of these were designated as a principal officer. Kathleen Vedder holds no license or certification other than a notary public. In terms of any special needs or requests, such as medical needs, all employees are required to report to Kathleen Vedder. Kathleen Vedder earns $14.50 per hour. The survey party chiefs, including John Vedder, now earn $13.00 per hour. These amounts are commensurate with Kathleen Vedder's percentage of VAI ownership of fifty-one percent (51 percent). The evidence is conflicting as to whether another crew chief earned more than John Vedder in one year due to a higher rate of pay or more hours worked in that period. No one in the company draws any bonus, commission or has any particular insurance coverage as a benefit of employment. The company has not posted any dividends or distributed any proceeds from business investments or engaged in any profit sharing. The corporation has, as a risk of doing business, the liability connected with its $85,000.00 promissory note to Keith & Schnars, P.A. It also has the risk associated with premises liability, with motor vehicle liability, with general errors and omissions liability, and with professional liability. Kathleen Vedder has procured insurance to cover all these risks. These premiums are paid by the corporation. There has been no additional ownership interest acquired by anyone since the inception of the corporation. There are no third party agreements. There are no bonding applications. The company has not at any time entered into an agreement, option, scheme, or created any rights of conversion which, when exercised, would result in less than fifty-one percent (51 percent) minority ownership and minority control of the business by Kathleen Vedder. Kathleen Vedder controls the purchase of the goods, equipment, business inventory and services needed in the day-to-day-operation of the business. Kathleen Vedder expressly controls the investments, loans to and from stockholders, bonding, payment of general business loans, and payments and establishment of lines of credit. The corporate business account of VAI contains the signatures of John Vedder and Kathleen Vedder on the bank signature card. Only one signature is required to transact business. Of the 823 checks issued by VAI since it began, John Vedder signed one at Kathleen Vedder's direction when it was not possible for her to be in two places at once, and Kathleen Vedder signed 822 checks. Although he is treasurer, John Vedder professed to know nothing of VAI's finances and deferred to Kathleen Vedder in all matters of financing from the very beginning. Nonetheless, the corporate documents list the treasurer as the chief financial officer in ultimate charge of all funds. Kathleen Vedder has knowledge of only the minimum technical standards required for a survey. In her certification interviews, Mrs. Vedder did not know how to establish true north or how a line survey would establish true north. She lacks basic survey knowledge and could not identify Polaris as the north star or state the standard measurement (length of a chain) for a surveyor. Identifying Polaris is not particularly important in modern surveying. Kathleen Vedder is capable of doing the necessary paper search and telephone call regarding underground utilities for surveyors in the field. Kathleen Vedder has extensive experience in the production of a surveying product and is able to manage the surveyors who perform the technical aspects of the business. Upon acquisition of the assets and formation of the new company, Kathleen Vedder began directing the two field crews newly employed by VAI to the various projects and work which she had scheduled. This direction has primarily been in the timing and coordination of projects and is commensurate with some of the work previously done by John Vedder when he was director of survey for the predecessor company, Perry C. McGriff Company. (See Finding of Fact 14). Technical problems involving a particular site do not arise very often so as to require a discussion among the land surveyors of the company but if they do, the professional land surveyors jointly or singly make all technical surveying decisions. Surveys must be signed by a registered land surveyor pursuant to Chapter 472 F.S. John Vedder provides Kathleen Vedder technical advice, coordinates field crews' work, makes decisions pertaining to technical work which is not within Kathleen Vedder's abilities, consults with Kathleen Vedder once a week concerning the general financial picture of VAI, and does some job estimating and quality control. Kathleen Vedder rarely visits work sites in the field. Employees in the field report to John Vedder whenever they have a problem and report to Kathleen Vedder if the problem is in the nature of project coordination. John Vedder is responsible for training and working with employees and providing technical training required for the performance of land surveys. He does computer aided drafting (CAD) and provides technical assistance to the CAD operator, which Kathleen Vedder cannot do, however she works it afterward on her computer. Kathleen Vedder does not work in the field, and of the two, John Vedder performs the majority of work in the field. Kathleen Vedder defers to John Vedder to handle technical matters because he has more experience. Party Chief John Vedder supervises his crew. Party Chief Louis Crosier supervises his crew. Kathleen Vedder supervises Louis Crosier and John Vedder and a third crew chief when one is used, usually Robert Henderson. Kathleen Vedder established a fee schedule for the company and a method of formulating the estimates and bids which the company would propose to prospective clients. John Vedder is not knowledgeable in this area. When a job comes in, the prospective client initially contacts Kathleen Vedder. If a client calls requesting a survey, Kathleen Vedder does the research and provides the estimate or bid without further input from any surveyor if the survey requested is a standard routine survey. If the job is complex, Kathleen Vedder requires man hour estimates from two land surveyors, one of whom is often John Vedder. She takes these estimates and applies previous histories, experience, and adjustments in order to prepare the final bid or survey estimate. Once she has received the man-hour estimate, Kathleen Vedder reviews it, compares it with previous surveys, applies a job costs analysis to it, applies any other known costs to it, and presents the final estimate or bid. There is a difference between compiling the work hours necessary for the estimate and compiling the estimate itself. Kathleen Vedder has the ultimate responsibility for finalizing complex estimates and bids. Kathleen Vedder makes presentations as a part of her function which involve technical presentations of the survey services rendered by VAI. In the fourteen month period since the business began, Kathleen Vedder has given approximately eight presentations of a technical nature to prospective clients, including the Florida Department of Transportation (DOT). Kathleen Vedder is capable of complying with DOT bid specifications to submit material on a DOS disc. DOT has qualified VAI under its Disadvantaged Business Enterprise program. Petitioner's witnesses skilled in land surveying consistently testified that without Kathleen Vedder's skilled contributions to the firm, technical land surveying could be accomplished but the firm would not show a profit. Rule 13A-2.005(3)(d)(4), requires minority owners to have managerial, technical capability, knowledge, training, education and experience to make decisions regarding the business. In interpreting this rule, the Respondent agency relies on Barton S. Amey v. Department of General Services, DOAH Case No. 86-3954, (RO 3/5/87; FO 4/21/87), aff'd Fla. DCA February 11, 1988, No. 87-235. The agency has no further refinement by way of rule or policy which applies specifically to the land surveying industry. It does not require the minority owner to have a land surveying license per se. It does not require the minority business owner to have an extensive knowledge of surveying.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended that a final order be entered certifying Vedder Associates, Incorporated as a Minority Business Enterprise. RECOMMENDED this 7th day of June, 1993, at Tallahassee, Florida. ELLA JANE P. DAVIS 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 June, 1993. APPENDIX TO RECOMMENDED ORDER 92-3763 The following constitute specific rulings, pursuant to S120.59(2), F.S., upon the parties' respective proposed findings of fact (PFOF). Petitioner's PFOF: The so-called "stipulated facts" is accepted, as stipulated, but not as to the inserted conclusion of law/argument. 1-19 Accepted except to the degree it is unnecessary, subordinate, or cumulative. 20-21 Accepted, but not dispositive, subordinate. Rejected as a conclusion of law or argument. Accepted, but not dispositive, subordinate. Rejected as a conclusion of law or argument. 25-33 Accepted as modified to more closely conform to the record, and to eliminate mere leal argument, conclusions of law, and unnecessary, subordinate, or cumulative material. Also testimony was to 823 checks. Rejected as stated as not supported by the greater weight of the credible evidence. Accepted, except to the degree it is unnecessary, subordinate or cumulative. Rejected as out of context, a conclusion of law, or argument. 37-46 Accepted, as modified, except to the degree it is unnecessary, subordinate, or cumulative. 47-48 Rejected as out of context, a conclusion of law, or argument. 49-53 Covered to the degree necessary in Finding of Fact 65, otherwise irrelevant and immaterial to a de novo proceeding under Section 120.57(1) F.S. 54-56 Accepted except to the degree unnecessary, subordinate, or cumulative. 57 Rejected as out of context, a conclusion of law, or argument. 58-60 Accepted except to the degree unnecessary, subordinate, or cumulative. Petitioner's "factual conclusions" are rejected as proposed conclusions of law not proposed findings of fact. Respondent's PFOF: 1-10 Accepted except to the degree unnecessary or cumulative. 11 Rejected as subordinate. 12-14 Rejected as stated as argument. Covered in Findings of Fact 27-30, absent argument, conclusions of law, and erroneous statements not supported by the greater weight of the credible competent evidence. Rejected as argument. Mostly accepted except to the degree it is unnecessary, subordinate or cumulative. However, the job estimating as stated is not supported by the record nor the argument of "day-to-day business." 17-19 Accepted as modified to conform to the record evidence, and except to the degree it is unnecessary, subordinate, or cumulative. 20 Rejected as argument. 21-22 Accepted but incomplete, irrelevant and immaterial in a de novo Section 120.57(1) F.S. proceeding. Also, the footnote is rejected as mere argument. 23-24 Rejected as argument. Accepted, but not complete or dispositive; unnecessary and cumulative. Accepted to the degree stated except to the degree unnecessary, subordinate, or cumulative. She also did more. Rejected as partially not supported by the record; other parts are rejected as unnecessary, subordinate, or cumulative. Accepted except to the degree unnecessary, subordinate, or cumulative or not supported by the record. Accepted in part and rejected in part upon the greater weight of the credible, competent record evidence. Rejected as argument. Rejected as stated as not supported by the greater weight of the credible, competent record evidence, also unnecessary, subordinate, or cumulative. Accepted except to the degree it is unnecessary, subordinate, or cumulative. Rejected as argument 34-35 Accepted in part. Remainder rejected as stated as not supported by the greater weight of the credible, competent record evidence, and as a conclusion of law contrary to Mid State Industries, Inc. v. Department of General Services, DOAH Case No. 92-2110 (RO 9/14/92). 36 Rejected as argument. 37-38 Accepted in part, and rejected in part because not proven as stated. Rejected as argument. Rejected as stated because out of context or not supported as stated by the greater weight of the credible, competent record evidence. Rejected as argument. Accepted, except to the degree unnecessary, subordinate or cumulative. Rejected as argument. 44-46 Rejected as subordinate. 47,(No #48),49 Accepted except to the degree unnecessary, subordinate, or cumulative. 50-55 Rejected as subordinate or unnecessary or as conclusions of law or argument. COPIES FURNISHED: Peter C. K. Enwall, Esquire Post Office Box 23879 Gainesville, FL 32602 Terry A. Stepp, Esquire Department of Management Services Koger Executive Center Suite 309, Knight Building 2737 Centerview Drive Tallahassee, FL 32399-0950 William H. Lindner, Secretary Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950 Susan B. Kirkland, Esquire Department of Management Services Koger Executive Center Suite 309, Knight Building 2737 Centerview Drive Tallahassee, FL 32399-0950
Findings Of Fact Petitioner is a Florida corporation, for which all of the outstanding stock is owned by Ms. Linda Nunez. Petitioner is operated as an electrical supply business. Ms. Nunez operated Petitioner with the assistance of Mr. James Ellis. Mr. Ellis has extensive experience in the electrical supply business. Petitioner sells exclusively to the U.S. Department of Defense. Petitioner's owner failed to establish any experience beyond sales to the U.S. Department of Defense. Ms. Nunez has no experience or training in the electrical supply business except that which she has gained from the formation and operation of Petitioner. Ms. Nunez has experience in her father's construction business as a tractor operator. Her father subcontracted his electrical work. Ms. Nunez has experience as a home renovator. Ms. Nunez presented no evidence of any electrical work in this capacity other than basic home repairs. The only relevant experience Petitioner's owner has in the electrical supply business is that of its president, Ms. Nunez. Ms. Nunez established the business in July, 1992. She has had one year of experience working in the business. Ms. Nunez has not gained sufficient experience since July, 1992, to warrant certification as an MBE. Ms. Nunez' primary duties include "outside sales," deliveries, and bookkeeping. Mr. Ellis has the primary responsibility for "inside sales." Ninety percent of Petitioner's sales are through inside sales. Mr. Ellis has no ownership interest in or control of Petitioner. The inside sales person takes product orders from customers and contacts suppliers regarding customer orders. This is the position in which product knowledge is crucial. Ms. Nunez delegates this function to Mr. Ellis. The outside salesperson makes customer contacts, informs them of the company's existence, and reminds customers of Petitioner's continuing presence as a resource. Extensive product knowledge is not required for the function performed by Ms. Nunez. Ms. Nunez failed to establish the product knowledge necessary for MBE certification. She could not answer standard technical questions typically asked of other electrical supply firms. During her deposition and testimony, she failed to answer questions regarding items in her own inventory. When asked what she would do when confronted with an order for which she had no product knowledge, she testified that she would research the product by reference to its manufacturer's part number. The State of Florida purchases goods by invitations to bid and purchase orders. For both methods of purchases, a standardized commodities description is used. The commodities description does not contain any reference to a manufacturer's part number. Vendors must have sufficient knowledge to discern what products the bid calls for solely by reference to standardized commodity descriptions. Petitioner does business only with the U.S. Department of Defense. The U.S. Department of Defense orders by reference to manufacturer's part numbers. Ms. Nunez can look up the number used by the U. S. Department of Defense in a catalog in order to fill the order. She does not use state standardized descriptions to complete her orders for the federal government. Her inability to identify her own inventory by reference to state standard descriptions evidenced the lack of suppliers knowledge for State certification as an MBE.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be issued denying Petitioner's request for certification as a minority business enterprise. DONE AND ENTERED this 10th day of December, 1993, at Tallahassee, Florida. DANIEL MANRY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of December, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-4001 Petitioner did not submit proposed findings of fact. Respondent's paragraphs 1, 9, 10 and 12-15 were rejected as irrelevant, immaterial, or cumulative. The remainder of Respondent's proposed findings of fact were accepted in substance. COPIES FURNISHED: William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307 2737 Centerview Drive Tallahassee, Florida 32399-0950 Sylvan Strickland, General Counsel Department of Management Services Knight Building, Suite 309 2737 Centerview Drive Tallahassee, Florida 32399-0950 Linda Nunez President of Vector Intra National, Inc. 2716 Forsyth Road, Suite 116 Orlando, Florida 32792-8845 Cindy Horne Office of the General Counsel Department of Management Services Knight Building, Suite 309 2737 Centerview Drive Tallahassee, Florida 32399-0950
