The Issue Whether Respondent violated certain provisions within chapter 520, Florida Statutes (2010),1/ as alleged in Petitioner’s Administrative Complaint; and, if so, what penalty should be imposed.
Findings Of Fact Sam’s Car is a motor vehicle retail installment seller based in Pensacola, Florida, and is governed by chapter 520. Mirza Ahmad is the president and 50-percent owner of Sam’s Car. Between January 7, 2009, and December 31, 2010, Sam’s Car held license number MV0902721 enabling it to conduct business as a motor vehicle retail installment seller. In other words, Sam’s Car could offer financing so that its customers could purchase vehicles through installment payments. At some point in 2010, Mr. Ahmad decided to convert the sole proprietorship named Mirza Aftab Ahmad, d/b/a Sam’s Car, into a corporation named Sohail Enterprises, Inc., d/b/a Sam’s Car. If a sole proprietorship licensed as a motor vehicle retail installment seller wishes to convert to a corporation, the new corporation must file a new application to be licensed as a motor vehicle retail installment seller. Accordingly, Mr. Ahmad filed an application in December of 2010 for a motor vehicle retail installment seller’s license on behalf of Sohail Enterprises, Inc., d/b/a Sam’s Car. Mr. Ahmad did not renew license number MV0902721, and the license went into inactive status on December 31, 2010. Sam’s Car could not enter into retail installment contracts with an inactive license. OFR ultimately issued license number MV9905731 to Sohail Enterprises, Inc., d/b/a Sam’s Car, and that license became effective on March 16, 2011. Sam’s Car never moved to re-activate license number MV0902721, and OFR deemed that license to have retroactively expired on December 31, 2010. Sam’s Car was not licensed to enter retail installment sales contracts between January 1, 2011, and March 15, 2011. OFR licenses motor vehicle retail installment sellers such as Sam’s Car and is responsible for ensuring that licensees comply with chapter 520. OFR may conduct examinations and investigations to determine whether any provision of chapter 520 has been violated. In March of 2014, OFR contacted Mr. Ahmad and notified him that OFR would soon be conducting an on-site examination of Sam’s Car. During an on-site examination, OFR examiners visit a motor vehicle retail installment seller’s office, identify themselves, and examine various records in order to verify that the licensee complied with chapter 520 during the time period in question. OFR examiners arrived at Sam’s Car on March 19, 2014, and spent approximately six hours examining and scanning particular records of Sam’s Car. The examiners began by requesting that the office manager of Sam’s Car provide them with all the motor vehicle installment contracts that Sam’s Car had entered into in 2011 and 2012 (“the examination period”). Some of the requested records were at Mr. Ahmad’s home rather than at Sam’s Car. Accordingly, one of the examiners returned to Sam’s Car on April 9, 2014, to scan those documents after they had been retrieved from Mr. Ahmad’s home. The examiners reviewed 20 to 25 records from Sam’s Car and determined that several of the sales contracts utilized by Sam’s Car were not the form contract that had been approved as an industry standard by the Florida Independent Auto Dealer Association. There was a period of time during the examination period when Sam’s Car was utilizing a sales contract that it had essentially created from scratch. The examiners determined that the sales contracts in question did not have several of the items required by chapter 520. On September 5, 2015, OFR issued an Administrative Complaint alleging that Sam’s Car violated four provisions within chapter 520. In Count I, OFR alleged that Sam’s Car violated section 520.07, Florida Statutes, by failing to ensure that all motor vehicle retail installment contracts executed by Sam’s Car during the examination period satisfied all of the requirements of section 520.07. The contracts reviewed by OFR allegedly failed to contain the “Notice to Buyer,” the “total amount of payments,” and a specific statement that liability coverage is not included. OFR further alleged in Count I that several of the contracts failed to ensure that the contract had been signed by the buyer and the seller. Finally, OFR also alleged in Count I that there were two instances in which Sam’s Car failed to ensure that the contract was completed before it was signed. OFR alleged in Count II that several of the reviewed contracts violated section 520.07(6) by enabling Sam’s Car to collect delinquency/collection charges or late fees in excess of five percent of the installment payment due. In Count III, OFR alleged that Sam’s Car violated section 520.07(3), and Florida Administrative Code Rules 69V- 50.001 and 69V-50.002 because there were instances in which Sam’s Car had failed to document that it refunded or credited title charges collected from the buyer that exceeded the actual charges. Finally, OFR alleged in Count IV that Sam’s Car violated section 520.03(1) by selling motor vehicles on installment payments between January 1, 2011, and March 16, 2011, without an active license. The following findings are based on the documentary evidence and testimony received at the final hearing conducted on March 11, 2016. OFR proved by clear and convincing evidence that the retail installment sales contracts in OFR Exhibits 1 through 20 do not have the notice to buyer required by section 520.07(1)(b). OFR proved by clear and convincing evidence that the retail installment sales contracts in OFR Exhibits 1 through 20 do not have the specific statement about liability insurance coverage required by section 520.07(1)(b). OFR proved by clear and convincing evidence that the retail installment sales contracts in OFR Exhibits 1 through 20 do not set forth the “total of payments” as required by section 520.07(2)(c). OFR proved by clear and convincing evidence that the retail installment sales contracts in OFR Exhibits 6 through 8, 11, and 14 through 18 were not signed by the seller as required by section 520.07(1)(a). OFR proved by clear and convincing evidence that the retail installment sales contracts in OFR Exhibits 18 and 20 were not complete prior to being signed as required by section 520.07(1)(a). In sum, OFR proved all of the allegations in Count I of its Administrative Complaint by clear and convincing evidence. With regard to Count II, OFR proved by the clear and convincing evidence set forth in OFR Exhibits 6, 7, and 21 that Sam’s Car violated section 520.07(6) by collecting a delinquency/collection charge in excess of five percent of each installment. As for Count III, OFR proved by the clear and convincing evidence set forth in OFR Exhibits 1 and 14 that there were two occasions during the examination period when Sam’s Car did not refund the overcharges on the estimated title, tag, and registration fees. Accordingly, OFR proved that Sam’s Car violated rule 69V-50. With regard to Count IV, OFR proved by the clear and convincing evidence set forth in OFR Exhibits 22, through 25 that Sam’s Car violated section 520.03(1), by entering into retail installment contracts with four separate buyers during the period when Sam’s Car did not have a motor vehicle retail installment seller’s license (i.e., January 1, 2011, through March 15, 2011). Even though OFR proved the allegations in its Administrative Complaint by clear and convincing evidence, there was no indication that those responsible for Sam’s Car’s operations intentionally committed the aforementioned violations. Instead, the testimony presented at the final hearing demonstrated that the violations resulted from inadvertence and/or an incomplete understanding of chapter 520’s requirements.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Office of Financial Regulation enter a final order imposing a $1,000 administrative fine on Sohail Enterprises, Inc., d/b/a Sam’s Car. DONE AND ENTERED this 16th day of May, 2016, in Tallahassee, Leon County, Florida. S G. W. CHISENHALL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of May, 2016.
Findings Of Fact The Respondent is a licensee holding a 4COP SRX beverage license as a special restaurant licensee. The Respondent originally applied for a 4COP SRX license on January 26, 1977; however, at that time, he received licensure only as a 2COP. On the 2COP application, the Respondent stated that he did not have any partners. The Respondent reapplied for a 4COP SRX license two months later, at which time he was inspected and approved. This application, which was typed by the local beverage office from the original application filed by the Respondent, did not reflect that the Respondent had any partners in this business. The Respondent signed this application, which was brought to the Manhattan Restaurant by the officers conducting the inspection. Between the approval of his original license and application for the 4COP SRX license, the Respondent had entered into a limited partnership agreement with Tommie Battie. Subsequent to obtaining their license as a 4COP SRX, Battie and the Respondent had a disagreement over the financial arrangements in their limited partnership agreement. Battie reported to the local beverage office that he was a limited partner in this business. On the same afternoon that Battie advised the Beverage Department that he was a limited partner, agents of the local office inspected the Respondent's licensed premises at approximately 2:00 p.m. At the time the Respondent was inspected certain alleged deficiencies were reported. The Respondent allegedly did not have sufficient food on hand to serve 150 patrons a full-course meal and allegedly did not have business records on the premises regarding his sales of alcoholic beverages, and food and non- alcoholic beverages. Testimony was received regarding an inventory made of the premises at the time of the inspection. The Division was directed to copy the original inventory report and file this report as a late-filed exhibit. As of this date, this inventory has not been filed with the Hearing Officer, and it is hereby excluded from this record. The testimony revealed that the Respondent had on hand many pounds of chicken and pork chops, two loaves of bread, several large cans of green beans and potato salad, and two heads of lettuce. The Manhattan Restaurant's normal business day was from 5:00 p.m. to 1:00 a.m. The Respondent's sister assisted the Respondent in planning the meals. She made a list of needed grocery items when she arrived at approximately 4:00 to 4:30 p.m., and the Respondent picked up these items at a local grocery. The Respondent was bringing in chicken from a grocery shortly after the inspectors arrived at 2:00 p.m. The Respondent admitted that his business records were not on the premises and that the records which he had kept were deficient; but he stated that in the intervening year since he was inspected, he had improved his record- keeping system and now maintained adequate records on the premises. The Respondent admitted that he had not disclosed his limited partnership with Battie on his second application but had signed the application at the time of the inspection of the premises, not fully realizing that he was required to reveal Battie's interest in the business. Since the filing of this complaint, the Respondent has purchased Battie's interest in the business.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, and facts and mitigation, it is RECOMMENDED that the Division assess a civil penalty in the amount of $350.00 against the Respondent for violation of Rules 7A-3.14 and 7A-2.14, Florida Administrative Code, and Section 561.17, Florida Statutes. DONE and ENTERED this 6th day of February, 1979, in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32304 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of February, 1979. COPIES FURNISHED: Mary J.M. Gallay, Esq. Department of Business Regulation 725 South Bronough Street Tallahassee, FL 32304 Jack William Windt, Esq. 1939 Golf Street Sarasota, FL 33577
Findings Of Fact Based upon the stipulation of the parties, the exhibits received into evidence, and the testimony of the witnesses at hearing, I make the following findings of fact: The Respondent, Teresa Louise Kieffer t/a Knowles General Store, is, and was at all times pertinent hereto, licensed by the Division of Alcoholic Beverages and Tobacco under License Number 52-583, Series 1-APS. The licensed premises, Knowles General Store, is located at 12186 Northwest Highway 27, Ocala, Marion County, Florida. On July 22, 1982, the Respondent, Teresa Louise Kieffer, executed an application for transfer of License Number 52-00583, Series 1-APS. (Petitioner's Exhibit Number 1) On August 9, 1982, the Respondent executed a Personal Questionnaire as part of the application for transfer of License No. 52-00588. (Petitioner's Exhibit Number 2) The application was filed with the Division of Alcoholic Beverages and Tobacco on August 25, 1982. In the application the Respondent revealed that she was leasing the licensed Premises from Lynwood Knowles and Wanda Aytes and, further, that financing in the amount of $13,000.00 was obtained for the purchase of Inventory from Lynwood Knowles. No other persons were indicated as being connected, directly or indirectly, with the business for which the license was sought. The only financing obtained by the Respondent was the $13,000.00 from Mr. Knowles, and the $4,000.00 bank loan described below. On August 17, 1982, the Respondent leased the licensed premises from Lynwood E. Knowles and Wanda F. Aytes for a period of three (3) years. The Respondent agreed to pay Knowles and Aytes, as Lessors, the sum of $842.40 for rent and additionally agreed to pay all charges for utilities used at the leased premises. During the period in question, the only monies paid by the Respondent to Knowles were pursuant to the note and lease agreement, both of which were disclosed to agents of the Petitioner. On July 13, 1982, Terry Joseph Kieffer, the Respondent's husband, was adjudged guilty of possession of marijuana in excess of twenty (20) grams, a third degree felony. (Petitioner's Exhibit Number 5) On December 28, 1982, the Respondent and her husband, Terry Joseph Kieffer, applied for and obtained a loan in the amount of $4,000.00 from The First Marion Bank of Ocala, Florida. (Petitioner's Exhibit Number 6). The proceeds of this loan were deposited in the Knowles General Store Account and the Respondent testified that the loan was subsequently repaid from income from Knowles General Store, the licensed premises. This loan was unsecured. (Petitioner's Exhibit Number 6) It is clear that Terry Joseph Kieffer, a person not qualified to be licensed, did not have an interest in the licensed premises, based upon the following: The loan obtained by the Respondent and Terry Joseph Kieffer was unsecured and repaid from income from the operation of Knowles General Store. The Respondent, Teresa Louise Kieffer, exercised direct control over the operations of Knowles General Store. Although Terry Joseph Kieffer did sign for purchases on behalf of Knowles General Store at Seminole Stores, Inc., he picked up the inventory as a favor to Respondent and otherwise assisted her in the delivery of feed from Seminole Stores, Inc. In all cases, payment for the inventory was made by check drawn on the Knowles General Store Account and signed either by the Respondent or the Respondent's step-daughter, Teresa J. Kieffer, who was an authorized signer on the business account. (Petitioner's Exhibit Number 78 through 7L). Additionally, the account with Seminole Stores, Inc. was C.O.D. and personally guaranteed by the Respondent, Teresa L. Kieffer. (Petitioner's Exhibit Number 7A) Terry Joseph Kieffer did sign a few checks on the Respondent's business account. (Petitioner's Exhibit Numbers 8A through 8C, and 9A through 9D). However, Terry Joseph Kieffer was not an authorized signer on the Respondent's business checking account, had no operational control over the account, and signed those checks without the Respondent's authorization. (Petitioner's Exhibit Number 31) Although Terry Joseph Kieffer charged items at the Respondent's business, all charges to the business by the Respondent's husband or for her husband's farm use, were repaid. (Respondent's Exhibits Number 1 through 14) It is also clear that Teresa Jo Kieffer, the Respondent's step- daughter, did not have a direct or indirect interest in the Respondent's business or the license based upon the following: Although Teresa Jo Kieffer, while assisting her step-mother in the operation of the business, did make payment of numerous bills on Respondent's business checking account, did direct the delivery persons in the receipt of inventory on a recurring basis, however, she did so subject to the direct supervision of the Respondent and at the Respondent's direction. Teresa Jo Kieffer's arrangement with her step-mother was in contemplation of employment, but at the time in question, the store was not earning enough money to pay her a salary. The business did provide gasoline on occasion to her as well as repairs to her motor vehicle on two (2) occasions. (Petitioner's Exhibit Number 25, 26EE-26HH, 28A through 28D and 32) These payments were gifts from the Respondent to her step-daughter. It is also clear that Lynwood E. Knowles did not have a direct or indirect interest in the Respondent's a business or the subject license based upon the following: Although the City of Ocala Utilities records show that as of the date of the Hearing, and at all times pertinent prior thereto, Lynwood E. Knowles was the responsible party for payment of the electric service to the licensed premises, the Lease Agreement and other evidence indicated that the Respondent agreed to pay all utility service. Further, the fact that Mr. Knowles was still held responsible by the City of Ocala Utilities was unknown to either the Respondent or to Lynwood E. Knowles. Additionally, at the direction of the Respondent, her step-daughter went to the City of Ocala Utilities office and requested that service be changed to the Respondent's name. (Petitioner's Exhibit Number 3, 33C, 33D) Although during the period in question Lynwood E. Knowles was responsible to Clardy Oil Company for payment of hills for gasoline received by and sold at the licensed premises, at all times during the period in question, payment for the fuel received by Knowles General Store was made from the Knowles General Store Account. Further, during the period in question, there was in effect a special purpose lease and marketing agreement (Petitioner's Exhibit Numbers 34D and 34E) with Lynwood E. Knowles for the purpose of marketing gasoline at Knowles General Store. From and after October 1982, the date that the license was transferred to the Respondent, the commission payments on gasoline sales were paid to Knowles General Store and deposited in the Knowles General Store account. Mr. Clardy was notified by Mr. Knowles that the marketing agreement and lease should be assigned to the Respondent, but he did not get around to making the assignment until February 17, 1984. Although Lynwood E. Knowles was an authorized signer on the Respondent's business checking account, Mr. Knowles never signed any checks. Mr. Knowles' name was placed on the account merely as a matter of convenience for the Respondent during the period of transition of ownership and operation of the store. Discussion of Proposed Findings of Fact and Reasons for Rejection of Same The foregoing findings of fact include the substance of virtually all of the findings of fact proposed by the Respondent. The foregoing findings of fact also include the substance of the majority of the "basic" facts proposed by the Petitioner. They do not include many of the "conclusional" facts proposed by the Petitioner which are based on inferences or assumptions the Petitioner urges should be drawn from the "basic" facts, because I am convinced that many of the inferences and assumptions urged by the Petitioner are unwarranted when all of the "basic" facts are considered together. Also, many of the Petitioner's proposed findings consist of unnecessary surplus details (See, specifically, most of the language in paragraphs 2, 3, 5, and 6 of Petitioner's proposed findings.) It should also be specifically noted that the preponderance of the competent substantial evidence in this case supports the finding that neither Terry Joseph Kieffer, Teresa Jo Kieffar, nor Lynwood E. Knowles had an interest in the Respondent's business.
Recommendation Based upon all of the foregoing, it is recommended that the Division of Alcoholic Beverages and Tobacco enter a Final Order dismissing all charges against the Respondent. DONE and ORDERED this 15th day of May, 1985, 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 15th day of May, 1985. COPIES FURNISHED: Michael W. Johnson, Esquire 307 Northwest Third Street Ocala, Florida 32670 Thomas A. Klein, Esquire Staff Attorney Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Howard M. Rasmussen, Director Division of Alcoholic Beverages and Tobacco 725 South Bronough Street Tallahassee, Florida 32301
The Issue This is a case in which the Petitioner seeks to impose an administrative fine against the Respondent by reason of statutory violations described in an Administrative Complaint which are alleged to have taken place in the course of the operations of the Respondent's cosmetology salon.
Findings Of Fact At all times material to this case, the Respondent has been licensed as a Cosmetologist, having been issued license number CL205771. The Respondent's last-known business address is 2600 Hammondville Road, Pompano Beach, Florida 33069, at which location he operates a Cosmetology Salon named Cut Creation. At all times material to this case, Cut Creation has been licensed as a Cosmetology Salon, having been issued license number CE53077. On February 5, 2004, the Respondent's business premises were inspected by Norma Fishner, an Investigative Specialist employed by the Department of Business and Professional Regulation. During the course of her inspection on February 5, 2004, Norma Fishner observed Christopher Mason cutting a customer's hair on the premises of Cut Creation. On that date Christopher Mason was not licensed as a Cosmetologist in the State of Florida. On February 5, 2005, Norma Fishner also observed an unidentified male cutting a customer's hair on the premises of Cut Creation. This unidentified male ran out the front door before he could be questioned or identified by Norma Fishner. Norma Fishner questioned the Respondent about the unidentified male who ran out the door and asked the Respondent to provide identifying information about that person. The Respondent refused to provide any information about that person. It was clear that the Respondent knew the identity of the unidentified male who ran out the door and that the Respondent knew that the unidentified male did not have a Cosmetologist license.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered in this case concluding that the Respondent is guilty of the violations alleged in the Administrative Complaint and imposing an administrative fine in the total amount of one thousand dollars ($1,000.00). DONE AND ENTERED this 27th day of July, 2005, in Tallahassee, Leon County, Florida. S MICHAEL M. PARRISH 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 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of July, 2005.
The Issue The issues in this case concern the question of whether Computer Resources, Inc., offered a responsive bid to the invitation from the State of Florida, Department of General Services, and the related question of whether it is entitled to the award of a contract for the provision of items 1 through 9 within the bid apparatus. In determining these issues, the testimony at hearing of Jerry Wensloff and Danielle Stark, witnesses for Computer Resources, Inc., has been considered. The testimony of George Banks and Bill Fox, called by the State of Florida, Department of General Services, has also been considered. Finally, the testimony of Mark Smith and Kent Coykendall, witnesses for Verbatim Corporation, has been considered. Joint Exhibits Nos. 1 through 9, Exhibit No. 1 of the State of Florida, Department of General Services, Verbatim Corporation's Exhibits Nos. 1 through 5 and Computer Resources, Inc.'s, Exhibits Nos. 1 through 4 have been examined. SUMMARY OF THE ARGUMENTS The State of Florida, Department of General Services urges the rejection of the Computer Resources, Inc., bid based upon its belief that the bid was unresponsive due to the fact that technical literature provided by that bidder was for different products than those described as being products offered in response to the bid invitation. Further, the Department believes that the bid was unresponsive because at the time the bid response was made, the products that were being offered by Computer Resources, Inc., were not current models. These alleged failures on the part of Computer Resources, Inc., in the perception of the State of Florida, Department of General Services, constitute material defects or departures from the bid requirements. Computer Resources, Inc., argues that its bid is responsive in terms of technical information provided and asserts that the products offered in response to the bid were current models. Verbatim Corporation has the same concerns expressed by the Department on the topic of the acceptability of Computer Resources, Inc.'s, bid and also asserts that testing done on some of the products which Computer Resources, Inc., would intend to offer pursuant to contract reveals that those products do not meet the bid specifications. Consequently, Verbatim wishes to have the contract for items 1 through 9 awarded to it as the lowest responsive bidder.
Findings Of Fact The State of Florida, Department of General Services ("DGS"), offered for bid its project number 407-250-440-B. This bid involved the purchase of single-sided and double-sided computer diskettes. Among those companies who responded to this invitation to bid were Computer Resources, Inc., ("CRI") and Verbatim Corporation ("Verbatim"). Having examined the bid responses in the subject project, DGS rejected the CRI bid as not responsive. The bid opening occurred on August 1, 1986. Given that CRI had been the low bidder by dollar amount, the rejection of its bid caused the Department to declare its intention to award the contract to Verbatim, the next lowest bidder. When confronted with the declaration of alleged unresponsiveness, CRI offered a timely challenge to that declaration by DGS. By way of relief, CRI requested an informal Section 120.57(2), Florida Statutes, hearing to resolve the dispute. Verbatim was not made aware of this proceeding to resolve the case by an informal hearing until that hearing had been convened by a hearing officer within DGS and conducted. Subsequently, upon the reconvening of the informal proceeding, it was determined that disputed facts existed between the parties and the case was referred to the Division of Administrative Hearings for conduct of a formal hearing in accordance with Section 120.57(1), Florida Statutes. That hearing before the Division of Administrative Hearings was held on June 19, 1987. More particularly, when DGS put the subject bid out by mailing on June 24, 1986, the invitation to bid sought responses for 33 different types of computer diskettes which would be made available for purchase by state agencies in Florida and others entitled or required to participate in the State of Florida's purchasing system administered by DGS. The total annual dollar volume of the contract approximated $800,000. Items 1 through 9, which are the items in contest in this dispute, represent the majority of the contract. CRI had initially protested the declaration of this alleged unresponsiveness on all items, 1 through 33. It subsequently withdrew its protest on items 10 through 33, leaving for consideration items 1 through 9. The invitation to bid specified two sizes of computer diskettes: 5 1/2 inch and 8 inch. Of the remaining items at issue, 1 through 9, an award could be made for all nine items or each of those nine items separately. Twenty-three vendors submitted bids in response to the invitation. Following bid opening on August 1, 1986, and its evaluation, DGS issued the bid tabulation on September 16, 1986. Fourteen bids were found responsive, Verbatim among them. The CRI bid was rejected based upon the Department's concerns that CRI had not provided published specifications for the products that it offered in response to the bid invitation. DGS also rejected the bid because it did not believe that CRI was offering a current model as called for in the bid document. The specific nature of those concerns is discussed in succeeding paragraphs. A substantial requirement within the bid specifications related to the necessity for the diskettes sought for purchase to attain a clipping level of at least 60 per cent. Basically, the clipping level is a measure of the diskettes ability to retain the electronic/magnetic signal originally fed to it. It corresponds to the amount of signal remaining on the diskettes following the initial signal transmittal. This is important because the higher percentage of retention represents better longevity in storage of data applied to the diskettes. In order to identify the retention capacity of the diskette, the diskettes are tested during the manufacturing process to determine their clipping level. DGS had raised the previous requirements which it had for clipping level of diskettes, from 40 per cent to 60 per cent, given the wide range of users who would be utilizing the diskettes and the fact that some of those users were less discriminating in their care of the diskettes and because the higher capacity in clipping level was seen as promoting a greater protection of data storage. The invitation to bid further described technical specifications which mandated that the diskettes provided under contract would achieve a 60 per cent "clipping level" for missing pulse and a 20 per cent "clipping level" for extra pulse. In particular, at paragraph 3.1.8 of the invitation to bid, it was specified that "Diskettes must be individually tested and certified to assure 60 per cent or more of the original clipping signal strength remaining on each bit recorded for retrieval. A copy of the manufacturer's published specifications shall be included in the bid." On the seventh page of the specifications, paragraph 3.1.9(A) set forth that the missing pulse should have no permanent errors on all tracks at 60 per cent clipping level. The invitation to bid contained a special condition which mandated that the bid responses be accompanied by technical literature on the products bid. This special condition stated: Technical literature is a requirement of this bid to accommodate an evaluation to assure that products offered meet or exceed the specifications attached hereto. Failure to provide such data with the bid may result in rejection of the bid. There is also set forth in the general conditions at paragraph 4e, entitled "Conditions and Packaging," as follows: It is understood and agreed that any item offered or shipped as a result of this bid shall be new (current model at the time of this bid). All containers shall be suitable for storage and shipment and all prices shall include standard commercial packaging. The requirement that the bidders submit technical literature to assist in evaluation of the products in their compatibility with bid specifications was critical, made the more so in that DGS was not in a position to test the clipping level. Nor was the end user in a position to determine the clipping level of the product bid. Should the diskettes fail to meet the 60 per cent clipping level, there would ensue a potential problem of the loss of data and the need to reenter that lost data into the system, assuming that there was some other source from which the data could be recaptured. These concerns prompted the requirement of paragraph 3.1.7 in the bid document which mandated that the diskettes must be 100 per cent individually certified or verified to be error free. In summary, the only assurance that DGS and its prospective users have that the diskettes are as billed, is the ability to examine the published specifications of the companies' bids and ascertain whether they are in accordance with bid specifications and upon the promise by the bidders in their responses that current products are being offered. Within its bid response, CRI, in its price sheet for items 1 through 9, describes the brand name of the products bid as being CRI brand. The identifying numbers for the products bid in these items utilized eight digits, the last three digits as to each item being constituted of the numbers 333. By contrast, the product specifications contained within the bid response of CRI in the lead sheet identified the product as CRI Opus and within the product specifications description found on sheets two through four identified the products as Opus brand. In both the lead sheet and sheets describing the particulars of the products it is indicated that these diskettes were manufactured by Computer Resources, Inc., Compared to the numbering system found in the pricing sheets, the first five digits were similar in the product specifications to those found in the pricing sheets; however, the product specification information did not include the suffix numbers, or final three numbers, 333. Given the circumstances set forth in the price listing and the product specifications as offered in CRI's bid response and the explanation of those materials presented at hearing, it is concluded that CRI intended to provide CRI brand products if awarded the contract for items 1 through 9. Nonetheless, in its product specification sheets the Opus brand product was being described. What had transpired, according to the CRI representative who submitted the product specification sheets, was that CRI brand product information was not available for submission with the bid materials tendered by CRI and as a consequence, this individual took product information pertaining to Opus brand products which described a 50 per cent clipping level for missing pulse and changed that 50 per cent to 60 per cent in an attempt to comply with the requirement for 60 per cent clipping level. An Opus brand product at 50 per cent clipping level was not acceptable. In effect, CRI tailored the product specification sheet pertaining to the Opus brand products in an effort to meet the particular requirements of the subject bid invitation. According to its witness, the product specifications or technical data that CRI intended to offer with its bid response was found in Joint Exhibit No. 5, admitted into evidence. It shows a 60 per cent clipping level. Per the employee for CRI involved in the preparation of the bid response in discussion, this is the set of materials that he wished to offer, thereby avoiding the necessity to white out the 50 per cent clipping level and substitute a 60 per cent clipping level. Interestingly, the Joint Exhibit No. 5 is the same as what was submitted with the exception that on the lead sheet of the Joint Exhibit No. 5 there are found the initials OEM, meaning original equipment manufacturer. OEM products which CRI was manufacturing at the relevant time were for the benefit of purchasers who used their own brand names, not the Opus brand name. The impact of the Joint Exhibit No. 5 does not change the difficulty that DGS would have in trying to ascertain whether Opus products or CRI products were being offered in response to the bid. Joint Exhibit No. 5 continues to give the impression that Opus is the brand which is being described, and not CRI. Moreover, given the facts that were adduced at hearing, there is a serious question about whether technical literature existed which showed Opus products at a 60 per cent clipping level, as opposed to a 50 per cent clipping level. Notwithstanding Computer Resources, Inc.'s, protestations to the contrary, while CRI and Opus are names that are associated with Computer Resources, Inc., the manufacturer, the brand names CRI and Opus are separate marketing lines and not synonymous. CRI is a brand name which Computer Resources, Inc., has selected in marketing its products for government purposes, such as under consideration here, and Opus is a brand name employed in the basic marketing of Computer Resources, Inc., products for sale other than in a setting such as found in this dispute. The problems with the CRI bid were made the more bewildering for DGS when review of the submission of Florida Ribbon and Carbon Office Products, another bidder in this project, revealed that it was offering a product manufactured by Computer Resources, Inc., known as Unicopy, which in the details of the product specifications were similar to the offering by CRI and set out a 50 per cent clipping level, which was found to be unacceptable. The Florida Ribbon and Carbon Office Products bid submission carried the same five-digit numbering code in identifying the Unicopy products in describing its product specifications that was found in the CRI product specifications for its Opus brand products. That bid response by Florida Ribbon and Carbon Office Products also attached certain sales information pertaining to Opus brand diskettes. Testimony pointed out that CRI was manufacturing diskettes with 50 per cent clipping level to be sold by Florida Ribbon and Carbon Office Products under the Unicopy brand. DGS, in the face of this information pertaining to Florida Ribbon and Carbon Office Products, was uncertain about the true capacity of the product offered by CRI. Was it 50 per cent or 60 per cent? The bid submission by CRI, in its compatibility sheets related to cross referencing with equipment of other manufacturers, listed Opus as the brand, not CRI. This enhanced the confusion about which products were being offered: Opus or CRI? None of the numbers employed in the system of identification for Computer Resources, Inc., pertaining to the diskettes which are at issue identify the clipping level of the product. The first five digits used in its number identification system describe the basic nature of the diskettes and the use of the suffix or latter three numbers describe packaging or routing information. Consequently, when DGS or its users refer to these numbers, they cannot ascertain what clipping level is found within the diskettes. The bid submission made by CRI did not explain the differing marketing ideas in the use of the CRI or Opus brands, nor did it explain how the numbering system works and whether there was any compatibility between a CRI product and an Opus product. An examination of the facts leads to the conclusion that Computer Resources, Inc., was not selling a product under the CRI brand name on August 1, 1986, bid opening day, which met the 60 per cent clipping level for missing pulse, such that technical specifications or product specifications for CRI brand could have been supplied with Computer Resources, Inc.'s, bid response. Petitioner's Exhibit No. 1 admitted into evidence, correspondence of December 26, 1985, from Jerry E. Wensloff to Tab of Nashville, says that Computer Resources, Inc., was dealing with a 60 per cent clipping level for system houses, software houses, etc. who ask for a 60 per cent clipping level in products which they ordered from Computer Resources, Inc., This does not equate to the manufacture of products under the CRI brand name which carried with them technical specifications describing a 60 per cent clipping level. The provision of the 60 per cent clipping level for these various purchasers was under what the letter describes as Computer Resources, Inc.'s, operation for supplying OEM, or original equipment manufacture. At the time of the correspondence, as stated in that correspondence, approximately 50 per cent of Computer Resources, Inc.'s, business as a manufacturer was OEM accounts wherein some demand of 60 per cent clipping level had been made by purchasers. On August 1, 1986, in the warehouse associated with the manufacturing plant for the type of diskette in question here, Computer Resources, Inc., was holding in inventory products under the Opus brand name. It had no stocks under the CRI brand name. Subsequently, Computer Resources, Inc., gained contracts with two state governments and began to make available diskettes under the CRI brand name. The standard packaging product which Computer Resources, Inc., was manufacturing on August 1, 1986, using the Opus brand name was at a 50 per cent clipping level. A sixty per cent clipping level product under the Opus brand was provided upon request. The Unicopy brand name associated with Florida Ribbon and Carbon Office Products was at a 50 per cent clipping level on August 1, 1986, in accordance with the arrangement between Computer Resources, Inc., and Florida Ribbon and Carbon Office Products. On August 1, 1986, the company known as Ashton Tate had an ongoing arrangement with Computer Resources, Inc., for the manufacture of diskettes with 60 per cent clipping level, which Computer Resources, Inc., described as an OEM account. Computer Resources, Inc., did not have other routine OEM accounts at that time or at the point of final hearing in this case. On August 1, 1986, the time when the bids were opened, the process which Computer Resources, Inc., employed for distinguishing differences in the diskettes in terms of clipping level response was through certification. Once the diskettes' performance was graded, the diskettes were placed in bins with a move ticket. In essence, this was a sorting process by clipping level following the manufacture of the diskettes. In August 1986, the manufacturing plant which produces the diskettes which are marketed by Computer Resources, Inc., did runs of diskettes at 60 per cent clipping level about ten days out of the month. Leftover products following the manufacture of 60 per cent clipping level for Ashton Tate would be used to fill other accounts that made specific request for that clipping level, but the leftover diskettes were not being separately marketed as a 60 per cent clipping level product. CRI had shipped sample diskettes to DGS on August 22, 1986, to demonstrate the nature of its products' appearance to the state. Further request was made by the state for sample products on March 19, 1987, and on March 24, 1987, those products were shipped to DGS. In the March 1987 shipment, the products that were shipped were label led as CRI products and carried with them a five digit model number corresponding to five digit model numbers provided in Computer Resources, Inc., product specifications submitted with the bid response. In addition to the boxes containing the diskettes, the diskettes themselves bore this product numbering system. The boxes and contents did not carry the suffix or last three digits found in the pricing sheet which had been submitted with the bid response of Computer Resources, Inc. On the other hand, a packing list did carry eight digit numbers, with the last three numbers being 353, a suffix which was different from that found in the pricing list of the bid submission by CRI. The suffix change was designed to distinguish the packaging of the CRI product. DGS had been concerned that Computer Resources, Inc., in submission of its CRI brand name, could not meet the 15-day delivery requirement which DGS had for shipment of the products at issue. In both the August 1986 and March 1987 shipments of CRI diskettes, the 15-day threshold was met. While CRI has shown the ability to ship a small amount of products under the CRI label on those two occasions, on August 1, 1986, at the place and time where the bid was opened, Computer Resources, Inc., was not making available any significant amount of 60 per cent clipping level products as called for by the items 1 through 9, either as a CRI brand or an Opus brand. It was stocking Opus products in the 50 per cent clipping level and its principal 60 per cent clipping level account was with Ashton Tate, which merchandise was already spoken for. Any other arrangement for provision of 60 per cent clipping level products was on an "as needed" basis. Verbatim obtained part of the sample diskettes which had been sent to DGS in March 1987. It obtained ten double-sided, double-density diskettes and twenty Single-sided, double-density diskettes. These diskettes had been specifically tested by Computer Resources, Inc., before sending them to the State of Florida and shown to perform, according to this testing, at a 75 per cent clipping level. Testing done by Verbatim in Sunnyvale, California, and Charlotte, North Carolina, revealed a number of failures below the 60 per cent clipping level. The California tests showed four out of ten failures for double-sided diskettes and one out of twenty failures for single-sided diskettes, whereas the North Carolina experience was three of ten of the double- sided diskettes failed and one of twenty single-sided diskettes failed. The equipment utilized by Computer Resources, Inc., for testing prior to shipment and the equipment in testing conducted by Verbatim was different. In addition, handling of the diskettes can adversely affect the performance of the diskettes in terms of signal retention. Conversely, at times testing can enhance that performance. On balance, given the adversarial posture of the private litigants in this cause, no conclusion is reached on the true capacity of the diskettes which were tested by Computer Resources, Inc., and Verbatim. The experiences in testing do point out the efficacy of the requirement that DGS be provided a clear statement of the technical information concerning the products bid by Computer Resources, Inc. In summary, Computer Resources, Inc., did not submit technical information and specifications associated with the brand of product that it intended to offer if the contract was awarded to it. Indeed, the technical information which it would have submitted had it had the time to prepare it was for a product brand different than the brand it had bid on this project. That is to say, the specifications offered at the time the bid was submitted were for Opus products and the specifications which it desired to offer at the time that the bids were submitted were also for Opus products, not CRI. Furthermore, there is some question on whether legitimate specifications existed pertaining to Opus products with a 60 per cent clipping level on August 1, 1986, the date of bid opening. In this circumstance, it is not appropriate that DGS allow the substitution of specifications as envisioned by the Joint Exhibit No. 5 pertaining to the Opus products or any other substitution of specifications. Taking into account the facial appearance of the bid response of Computer Resources, Inc., and the evidence which was presented at the final hearing which attempted to describe the significance of those materials, with particular emphasis on the confusion about brand names, model numbers, the inability to differentiate clipping levels by reference to product numbers provided by Computer Resources, Inc., and the confusion created for DGS as a consequence, the technical information provided by Computer Resources, Inc., is found to be inadequate. Likewise, Computer Resources, Inc., did not have a current model at the time the bids were opened on August 1, 1986, under the brand name CRI, the brand which it chose to operate under for the purpose of this bide which could be provided to DGS. It had the capacity to produce that quality of diskette and was producing it as what it described as OEM for the benefit of Ashton Tate and a few other smaller accounts. This, however, could not be considered a current model of CRI brand. Finally, the fact that the declaration of disqualification of the Computer Resources, Inc., bid causes additional expense to the State is not sufficient reason to declare the Computer Resources, Inc., bid responsive. Such an outcome runs contrary to the weight of the evidence and would be inappropriate.
The Issue Whether the proposal Petitioner submitted in response to Respondent's Invitation to Negotiate No. 03-01/02/C was non- responsive.
Findings Of Fact Stipulated Facts In December of 2001, Petitioner timely responded to ITN Number 03-01/02/C issued by the Department. The ITN sought in part, proposals for the provision of advertising and related services in a category entitled "Spanish Language Hispanic Market Advertising." On March 21, 2002, Petitioner was notified that its proposal was deemed non-responsive for the following reason: "Financial information for Publicis USA Holdings, Inc. was not provided (SEC 4.9)." In determining Petitioner non-responsive to the ITN for failing to submit financial statements for Publicis USA Holdings, Inc., the Department assumed that Publicis, Sanchez & Levitan, LLC, was the product of a merger between Sanchez & Levitan, Inc., and Publicis USA Holdings, Inc., and thus was required under the second paragraph of Section 4.9 of the ITN to submit financial statements or federal income tax returns for pre-merger entities. Petitioner is a Delaware limited liability company authorized to do business in Florida. Petitioner was created on March 14, 2002, under the name Sanchez & Levitan, LLC. At the time of its creation, Petitioner was owned 100% by Sanchez & Levitan, Inc., a Florida corporation. On March 16, 2001, Publicis USA Holdings, Inc., a Delaware corporation, acquired a minority ownership of 49% of Petitioner. The ownership of the controlling majority interest of 51% was retained by Sanchez & Levitan, Inc. On June 18, 2001, Petitioner amended its name from Sanchez & Levitan, LLC, to its current name, Publicis Sanchez & Levitan, LLC. Sanchez & Levitan, Inc., continues to own the controlling majority interest of 51%, while Publicis USA Holdings, Inc., continues to own a minority interest of 49%. For the past several years, Petitioner's parent company, Sanchez & Levitan, Inc., a Florida corporation incorporated on October 10, 1985, was a contractor to the department providing Spanish language Hispanic market advertising and related services. Petitioner is a separate company created in 2001 and is not the product of a merger. Petitioner is a subsidiary of its parent company, Sanchez & Levitan, Inc. Because Petitioner was created in March of 2001, and its response to the ITN was submitted on December 5, 2001, it had neither certified financial statements nor federal income tax returns for the past two years. Similarly, Petitioner's parent company, Sanchez & Levitan, Inc., did not have consolidated financial statements for the past two years because Petitioner, the subsidiary, did not exist for 1999 and 2000. In response to Section 4.9 of the ITN, Petitioner submitted federal income tax returns for calendar years 1999 and 2000 for Petitioner's parent company, Sanchez & Levitan, Inc. Findings of Fact Based on the Evidence of the Record While Petitioner's parent company provided Spanish language Hispanic market advertising to the Department for the past several years, that contract was assigned to Petitioner in August 2001. The Department acknowledged that at the time Petitioner submitted its proposal to the ITN, Petitioner was performing essentially identical services in a successful and financially responsible manner. Section 5.2 of the ITN specifies that the evaluation of responses for each category of the ITN will be conducted in two phases. All responsive proposals will be reviewed in Phase I by an evaluation committee. Those proposers scoring 90% or more of the total possible points for Phase I will be invited to participate in Phase II as a finalist. Thus, this case only involves whether or not Petitioner's proposal should be evaluated in Phase I. Section 2.1 of the ITN specifies that the Department has established certain mandatory requirements which must be included as part of any proposal and that the use of the words "shall", "must", or "will" in the ITN indicates a mandatory requirement. The language of the ITN is clear in informing potential proposers that non-compliance with material requirements will have harsh consequences. Section 2.2 of the ITN provides in pertinent part: 2.2 NON-RESPONSIVE PROPOSALS, NON- RESPONSIBLE RESPONDENTS Proposals which do not meet all material requirements of this ITN or which fail to provide all required information, documents, or materials, or are conditional will be rejected as non-responsive. Material requirements of the ITN are those set forth as mandatory, or without which an adequate analysis and comparison of proposals is impossible, or those which affect the competitiveness of proposals or the cost to the State. The Lottery reserves the right to determine which proposals meet the material requirements of the ITN. The section of the ITN which is at issue in this controversy is Section 4.9 and is a material requirement. As amended,1/ it reads in pertinent part as follows: 4.9 Financial Statements Respondents and substantial subcontractors in all categories will be required to submit certified financial statements in conformity with generally accepted accounting principles for the last two years including an auditor's report for both years and any management letters that have been received, or Federal Income tax returns for the past two years if certified financial statements are unavailable. If financial statements are not yet completed for the most recently completed fiscal year, the entity must submit statements for the two (2) prior years and subsequently submit the most recently completed fiscal year statement immediately upon its issuance. If a Respondent does not have certified financial statements, or if applicable, Federal Income tax returns, as a result of a merger of other entities, each pre-merger entity must submit certified financial statements, or if applicable, Federal Income tax returns, for the two most recent years. Certified financial statements or, if applicable, Federal Income Tax returns for the Respondent that are available must be submitted with its proposal, and any that become available during the procurement process must be submitted immediately upon issuance. Certified financial statements must be the result of an audit of the entity's records in accordance with generally accepted auditing standards by a certified public accountant (CPA). The financial statements must include balance sheets, income statements, statements of cash flows, statements of retained earnings, and notes to the financial statements for both years. Respondents or substantial subcontractors who are CMBE's may provide for the two (2) years most recently completed, the information provided to become a certified minority business enterprise (CMBE) including the supporting documentation used to arrive at the financial information. If the CMBE has not been a CMBE for two (2) years, it must provide the information submitted with its current CMBE application and similar information for the preceding year, as well as any other documentation which may substantiate the CMBE's financial responsibility. If a Respondent submits a consolidated financial statement of its parent corporation, the parent corporation must serve as financial guarantor of Respondent. Parent corporations that serve as financial guarantors of the subsidiary firms shall be held accountable for all terms and conditions of the ITN and resulting Contract and shall execute the Contract as guarantor. The Lottery shall hold all firms jointly and severally responsible for carrying out all activities required by the Contract. * * * Financial statements must be submitted with Respondents' proposals. There is nothing in the record to indicate that Petitioner challenged the terms of Section 4.9 of the ITN as being too restrictive at a time it could have done so. David Faulkenberry, Director of Finance and Budget for the Department, was responsible for determining whether or not proposals were in compliance with Section 4.9 of the ITN. He analyzed each submittal received to determine whether the proposer achieved compliance through any of the methods set forth in Section 4.9 of the ITN. When initially reviewing Petitioner's proposal, he assumed that Petitioner had been the product of a merger and applied the language of the second paragraph of Section 4.9. Petitioner was found to be non-responsive because neither the certified financial statements or federal income tax returns of pre-merger entities had been submitted. This conclusion resulted in the Department's posting of the Notice of Responsiveness and Responsibility that Petitioner was non- responsive because, "financial information for Publicis USA Holdings, Inc. was not provided (Sec.4.9)". After the posting of the Notice of Responsiveness and Responsibility, Mr. Faulkenberry became aware that Petitioner was not the product of a merger. As a result, Mr. Faulkenberry then reviewed the financial information submitted by Petitioner to determine whether it was responsive to Section 4.9. He reviewed the submission of Petitioner in light of each avenue of compliance provided in Section 4.9 of the ITN and determined that the proposal was non-responsive: Q As a result of that understanding, did you go back and review the financial information submitted by Publicis to determine whether indeed it was responsive to Section 4.9? A Yes. I looked at what they submitted and examined each of the avenues in Section 4.9 that a respondent could take. And, again, they did not submit--if you look at route 1, the respondent could submit certified financial statements, or, if they--those aren't available, federal income tax returns. They did not do that. So they were not--they did not pass that test. The next test was the merger outlet. We now understand that it was not a merger, so that outlet was closed. We knew they weren't a CMBE contractor respondent, so that paragraph did not apply. And then the last outlet was a respondent could have their parent submit consolidated financial statements. We did not receive consolidated financial statements of the parent, so that outlet or avenue was not met. And based on those outlets they, again, were found non-responsive. The information submitted by Petitioner in response to Section 4.9 of the ITN did not meet any of the avenues specified in that section. The Department applied Section 4.9 of the ITN to all proposers in the same manner as it did to Petitioner.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED: That the Department of the Lottery enter a final order dismissing Petitioner's protest. DONE AND ENTERED this 18th day of October, 2002, in Tallahassee, Leon County, Florida. BARBARA J. STAROS 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 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of October, 2002.
The Issue The issue for consideration herein is whether the Petitioners, MISSCO, GENERAL, AND INTERSTATE should be placed on the convicted vendor list pursuant to Section 287.133 Florida Statutes (1991).
Findings Of Fact The facts stated in the Joint Stipulations to the extent set forth below are hereby adopted as findings of fact: On April 9, 1993, DMS issued notices of intent pursuant to Section 187.133(3)(e)(1), Florida Statutes. Jt. Stips. Appen. at pp. 72-73. On April 13, 1993, MISSCO filed petitions with DMS for a formal hearing pursuant to Section 120.57(1), Florida Statutes, to determine whether it is in the public interest for MISSCO, GENERAL, or INTERSTATE to be placed on the Florida Convicted Vendor List pursuant to Section 287.133, Florida Statutes. Jt. Stips. Appen. at p. 74-77. Subparagraph 287.133(3)(e)e., Florida Statutes, establishes factors which, if applicable to a convicted vendor, will mitigate against placement of that vendor upon the convicted vendor list. On April 5, 1991, General Equipment Manufacturers, Inc., (hereinafter "General"), a Mississippi corporation, and wholly owned subsidiary of MISSCO Corporation, was convicted of the commission of a public entity crime as defined within subsection 287.133(1)(g), Florida Statutes. Jr. Stips. p. 1, Appen. at pp. 41-43. A criminal information was filed in the United States District Court for the Southern District of Mississippi against General Equipment Manufacturers, Inc., alleging a violation of Section 1001, Title 18, United States Code and applicable Federal Acquisition Regulations which occurred on or about December 2, 1988. Jt. Stips. p. 1, Appen. at p. 40. The criminal information filed in the United States District Court, Southern District of Mississippi charged General with falsely representing on or about December 2, 1988 that the equipment schedule and price list submitted to the General Services Administration (hereinafter GSA) was General's established commercial price list. (Jt. Stips. p. 2, Appen. at p. 40. Upon entry of a plea of guilty, the Court entered a judgement against General which was filed April 5, 1991. The judgement required payment of a special assessment of $200, a fine in the amount of $10,000, without interest, and restitution in the amount of $28,000. Jt. Stips. p. 2, Appen. at pp. 40-48. The GSA issued Solicitation No. FCGS-X8-38010-N for FSC Group 66 Part II, Section P, Laboratory/Pharmacy Furniture. General submitted an offer dated August 18, 1988, and signed by Charles H. Wright, General Manager of General's SystaModules Division. In connection with its offer, General submitted its purported commercial price list dated January 31, 1987. Mr. Wright certified in Section M-FSS-330, M.3, Basis for Price Negotiation, Item (c), Certificate of Established Catalog or Market Price, that: The price(s) quoted in General's proposal is based on established catalog or market prices of commercial items, as defined in FAR 15.804-3(c), in effect on the date of the offer or on the dates of revisions submitted during the course of negotiations. Substantial quantities of the items have been sold to the general public at such prices. All of the data, including sales data, submitted with General's offer are accurate, complete, and current representations of actual transactions to the date when price negotiations are concluded. By letter dated December 2, 1988, Mr. Wright, in his capacity as General Manager of General's SystaModules Division, certified on behalf of General that: . . . all data submitted with General's offer pursuant to the discount schedule ad marketing data sheets and any other data submitted as as part of General's offer on Solicitation FGS-X8-38010-N are current, accurate, and complete a of the conclusion of negotiations, which occurred on December 2, 1988. Jt. Stips. p. 2-3, Appen. at pp. 51-53. On the basis of General's offer on Solicitation No. FGS-X8-38010-N, the GSA awarded General Contract No. GS-00F-06709 on December 13, 1988. The contract was for the period February 1, 1989, through January 31, 1992. Jt. Stips. p. 3-4, Appen. at p. 53. An investigation by the Federal Bureau of Investigation determined that General provided the GSA with fabricated price lists in connection with FGS-X8-38010-N. Jt. Stips. p. 4, Appen. at pp. 53-54. The details of the criminal information against General are discussed in the findings and determination made by the GSA Office of Acquisition Policy, dated May 18, 1992, which are incorporated herein by reference. Jt. Stips. Appen. at pp. 49-71). Particular findings are as follows: Federal debarment was imposed on General and its corporate officials Messrs. Wright and Majure. Jt. Stips. Appen. at p. 50. The debarments were effective throughout the Federal Executive Branch. The debarment precluded the award, renewal, or extension of federal contracts. Jt. Stips. Appen. at p. 50. Debarment proceedings were initiated by separate notices dated November 1, 1990 based on a referral from the Federal General Services Administration (GSA), Office of Inspector General (OIG). Jt. Stips. Appen. at p. 51. General bid on GSA Solicitation No. FGS-X3-36426-N and in connection with its offer General submitted a "dealer retail price list," and certified that: its prices were based on established catalog or market prices, substantial quantities of the items had been sold to the general public at said prices: and that all of the data submitted with its offer was accurate, complete and current representations of actual transactions up to the date when price negotiations were concluded. Jt. Stips. Appen. at p. 51. General's offer on the solicitation was accepted and it was awarded contract number GS-00F-70316 on April 19, 1984. Jt. Stips. Appen. at p. 52. On June 28, 1985 General made the same representations as to GSA Solicitation No. FGS-X8-38000-N for laboratory and pharmacy furniture. The award was made to General on December 9, 1985. Jt. Stips. Appen. at p. 52. Identical representations were made by General in response to GSA Solicitation No. FCGS-X8-38010-N issued on July 7, 1988. The solicitation was for laboratory and pharmacy furniture. The award was made to General on December 13, 1988. Jt. Stips. Appen. at p. 53. Criminal Information Number J90-00080(B) was filed in the U.S. District Court for the Southern District of Mississippi on November 15, 1990. The information was based on the FBI investigation of General's submission of false commercial price lists to GSA. The criminal information charged General with violating Title 18, U.S.C. 1001 in connection with its offer on Solicitation No. FGS-X8-38010-N. It alleged that General knowingly, willfully, and falsely represented to GSA that the equipment schedule and price lists submitted with General's 1988 offer was General's established commercial price list. Jt. Stips. Appen. at p. 54. General pled guilty to Criminal Information No. J90-00080(B) on December 19, 1990 and was ordered to pay a fine of $10,000 and to make just restitution to the GSA in the amount of $28,000. The conviction was also used as the basis for the federal debarment of General. Jt. Stips. Appen. at p. 54. Mr. Wright and Mr. Majure were also debarred by virtue of their conduct in connection with the General conviction. Jt. Stips. Appen. at pp. 54- 59. General and MISSCO are affiliated companies. General is a wholly-owned subsidiary of MISSCO. MISSCO is directed and governed by its executive committee which acts in lieu of the board of directors. Mr. Majure was a director of MISSCO, a member of MISSCO'S executive committee, a senior vice president of MISSCO, and president, director, and general manager of General. Jt. Stips. Appen. at p. 59. Mr. Majure held a position of substantial responsibility in both MISSCO and General, and through MISSCO's control group is accountable for the circumstances of General's crime. Jt. Stips. Appen. at p. 60. A decision not to impose federal debarment on MISSCO was predicated on MISSCO management's decision to ensure that it did not supply the Federal government with the same goods and services formerly provided by General during the period of General's debarment: MISSCO management made a commitment to emphasize ethical business practices: the people responsible for General's crime were no longer employed by MISSCO: the GSA administrative record (with the exception of General) does not indicate a lack of business integrity or poor performance on federal contracts. Jt. Stips. Appen. at pp. 61-63. Federal debarment of General was predicated upon the following: conviction of the crime of making false statements posed a substantial risk to government business dealings: General submitted false information on solicitations over an extended period of time: General fabricated price lists and false certification son two prior solicitations: General's crime posed a substantial danger to the integrity of the Federal government's MAS program: the accountable individuals for the crime were high-ranking officials at General. Jt. Stips. Appen. at pp. 63-66. The federal debarment proceedings found mitigating factors in that: the parties pled guilty and cooperated with the Department of Justice throughout the investigation: the parties cooperated with GSA throughout the debarment proceedings: General was not charged with deliberate overcharges on its federal MAS contracts: General promptly paid its fine and restitution: General has made good faith efforts to undertake remedial action. Jt. Stips. Appen. at pp. 68-69. On April 9, 1993, Respondent issued Notices of Intent pursuant to Section 287.133(3)(e)1, Florida Statutes, which were received by the Petitioners. Jt. Stips. p. 5, Appen. at pp. 72-73. On April 13, 1993, Petitions filed petitions pursuant to Section 287.133(3)(e)2, Florida Statutes, and Section 120.57(1), Florida Statutes, requesting an order determining that it is not in the public interest for Petitioners to be placed on the State of Florida Convicted Vendor List. Jt. Stips. p. 5, Appen. at pp. 74-75. MISSCO is a holding company which has a number of operating divisions and two wholly-owned subsidiary corporations, General Equipment Manufacturers (General) and MISSCO Exports Corporation (Exports). Jt. Stips. p. 2, Appen. at pp. 35-36. Interstate of Florida is a Division of MISSCO and is a dealer (re- seller) of General's products. Jt. Stips. p. 2. General and MISSCO are commercially distinguishable and they do not occupy the same facilities. MISSCO's primary lines of business are distribution of school equipment and supplies, office equipment and supplies, and commercial printing. Jt. Stips. p. 4. MISSCO Exports is an entity formed solely for accounting and tax purposes, has no employees, and does not engage in substantive commercial operations. Jt. Stips. p. 4. MISSCO has extensive dealings with the federal government, as supplier of goods manufactured by other entities. General is the only MISSCO entity that contracts with the government under the Multiple Awards Schedule (MAS) program. General's primary line of business is manufacturing institutional furniture. Jt. Stips. pp. 4-5. In compliance with paragraphs 287.133(3)(a) and (B), Florida Statutes, MISSCO made timely notification to the DMS and provided details of the conviction of General, by letter dated March 24, 1992 and provided copies of the criminal information, judgement and related correspondence. Jt. Stips. p. 5, Appen. at pp. 37048. Payment of the fine in the amount of $10,000 and restitution in the amount of $28,000 imposed by the conviction and judgement entered April 5, 1991 were promptly paid by General on April 15, 1991. Jt. Stips. pp. 5-6, Appen. at pp. 47-48. Subsequent to the criminal information filed in the United States District court, Southern District of Mississippi in November of 1990, General entered a plea of guilty to the charge, thus eliminating the necessity for further investigation and trial. Jt. Stips. p. 6. The GSA in its findings and determination dated May 18, 1992, cited mitigating factors favorable to General and MISSCO. The factors included, cooperation with the Department of Justice throughout its investigation; cooperation with the GSA throughout the debarment proceeding; constructive dealings by counsel for MISSCO and General with the GSA Office of General Counsel on issues relating to the restrictions on MISSCO and General's business relationship with the government and government prime contractors. Jt. Stips. p. 6, Appen. at pp. 68-69. MISSCO fully cooperated with the DMS in connection with its investigation initiated pursuant to Section 287.133, Florida Statutes. Jt. Stips. p. 6. MISSCO formally filed its disclosure pursuant to Section 287.133(3)(b), Florida Statutes with the DMS by letter dated March 24, 1992, together with exhibits attached thereto. The letter specifically referred to the criminal information filed against General and the judgement entered by the Federal District Court. A copy of the criminal information and judgement were enclosed with the letter, together with a copy of correspondence between MISSCO and the GSA. Jt. Stips. pp. 8-9, Appen. at pp. 37-39. In response to a request dated April 15, 1992 from the DMS for additional information, MISSCO promptly furnished all such information. Jt. Stips. p. 9. At its meeting held December 17, 1992, the Board of Directors of MISSCO was convened and all of the offices then held by Mr. James T. Majure, former President of General, were declared vacant and other persons were elected to those positions. Jt. Stips. p. 7, Appen. at pp. 2, 67, 70. Mr. Charles Wright was retired from General under a medical disability prior to 1990. Jt. Stips. p. 7. MISSCO Corporation fully cooperated with the GSA by proposing and implementing remedial measures including the presentation of an Ethics Seminar by Mr. Norman Roberts, past chairman of the American Bar Association's section on government contracting. Jt. Stips. p. 7. MISSCO revised its corporate Code of Ethics, revised its Employee Handbook, installed an 800 hotline telephone number permitting employees to communicate any concerns regarding business ethics, designated a Corporate Vice President as the Ethics Compliance Officer, appointed a committee of three corporate executives to monitor corporate business activities, and revised its internal audit procedures to insure that no cash is unaccounted for which might be used for the purpose of kickbacks. Jt. Stips. pp. 7-8, Appen. at pp. 28-33, 62-63. MISSCO's management undertook prompt and verifiable action to comply with the restrictions imposed on MISSCO's business dealings with the government after notices of proposed debarment. General promptly and voluntarily withdrew from the GSA contract that was tainted by the submission of a fabricated commercial price list during negotiations. Jt. Stips. p. 8. MISSCO had a code of business ethics in place when the circumstances leading to General's conviction arose. The code was amended following the initiation of debarment proceedings to specifically address the importance of truthful certifications and providing accurate information in connection with business transactions with the government. Jt. Stips. p. 8. MISSCO substantially expanded its corporate ethics compliance program and undertook extensive training in business ethics. A detailed "ethics audit" was undertaken by MISSCO, and the results of this audit were provided to the GSA. Jt. Stips. p. 8, Appen. at pp. 10-22, 28-34. General sells its products through a dealer network and not through factory direct sales. General has a dealer agreement with Interstate of Florida for the sale of its products in Florida to private and public entities. Jt. Stips. p. 9. Interstate of Florida, a division of MISSCO Corporation of Jackson, is a dealer (re-seller) of General's products. There are other dealers throughout the United States which also market and sell General's products. Interstate of Florida had gross sales of approximately $6.8 million in fiscal year 1990-91. Approximately 99 percent of those sales were to public entities. Jt. Stips. p. 9. Interstate of Florida is primarily an educational sales company which sells educational contract furnishings such as laboratory casework, auditorium seating, and folding bleachers. It has conducted business with almost every school district in Florida. The largest transactions have been conducted with the school districts of Dade and Orange Counties in Florida. The largest municipal transactions have been conducted with the City of Tallahassee. Jt. Stips. p. 10.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is, RECOMMENDED: That the Department not place the names of the Petitioners on the Florida Convicted Vendor List. DONE and ENTERED this 29th day of July, 1993, in Tallahassee, 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 29th day of July, 1993. COPIES FURNISHED: William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950 Susan B. Kirkland, Esquire Department of Management Services Knight Building, Suite 309 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950 C. Graham Carothers, Esquire Ausley, McMullen, McGehee Carothers & Proctor Post Office Box 391 Tallahassee, FL 32392 Terry A. Stepp, Esquire Department of Management Services Knight Building, Suite 309 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950
