The Issue Whether Petitioner 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, established in 1988 and is owned by Barbara Pedone (Pedone). Pedone is the corporation's president and sole stockholder. Michael Pedone, who is married to Barbara Pedone, of the applicant company, is not a minority under Florida law. Pedone has been involved in the construction business since the early 1960's in a administrative capacity. Pedone has been a part owner of certain construction businesses with her husband that involved residential insulation, as well as the installation of pipe and duct insulation material. Michael Pedone is employed by the applicant company as its Vice President. He runs the field operation. He does the field work for the applicant company, gathering materials, supervising the workers and working on proposals for new jobs. He consults on these matters with his wife. The applicant company is a family-run business with shared responsibilities between Barbara and Michael Pedone. Both Mr. And Mrs. Pedone make decisions concerning which jobs to bid on, what equipment to buy and whom to hire and fire. Hiring and firing duties are also shared with the field lead, Alex Uzaga. Pedone concentrates on the management end of the business, and Michael Pedone concentrates more on the technical and field work of the applicant company. The applicant is required to have a license in most of the jurisdictions in which it does business. Michael Pedone carries all the necessary licenses and is the qualifier for the applicant company. Barbara Pedone does not have a license and cannot qualify the applicant company. Barbara Pedone writes most, if not all, of the business checks for the applicant company, performs bidding functions, and administrative responsibilities, visits the various job sites, and, in recent months, has signed most of the job proposals. Barbara Pedone has never performed any work of installing or applying insulations or fireproofing materials. Barbara Pedone draws a weekly salary of $100. Michael Pedone draws a weekly salary of $1,000. The reason given for the disparity in salaries is that this allows Michael Pedone to accrue certain social security retirement credits. Barbara Pedone accrues her credits through her other employment. Barbara Pedone is employed full-time by Collier County and works no less than 40 hours weekly there. Other income and dividends of the corporation are deposited in a joint account. Barbara Pedone has full authority to sell the company or to change its corporate existence in any manner she may determine. Applicant has not established by competent evidence that Barbara Pedone exercises a real, substantial continuing ownership and control of the applicant corporation. Other than her minimum salary, no evidence was introduced to establish that Barbara Pedone receives income commensurate with the percentage of her ownership in the company. Barbara Pedone failed to establish that she shares in all of the risk through her role in decision-making, negotiations, or execution of documents and risk capital 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 Fire Stop Systems, Inc., on July 30, 1996, be DENIED. DONE AND ENTERED this 31st day of July 1997, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 31st day of July, 1997. COPIES FURNISHED: David E. Bryant, Esquire 215 Airport Road South Naples, Florida 34104 Joseph L. Shields Senior Attorney Commission on Minority Economic and Business Development Hartman Building, Suite 307 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2189 Douglas L. Jamerson, Secretary Department of Labor and Employment Security 303 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Edward A. Dion, General Counsel Department of Labor and Employment Security 307 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 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 The issue in the case is whether the Petitioner’s certification as a Minority Business Enterprise (MBE) should be granted.
Findings Of Fact Locker Services, Inc., is a business owned by Kimberly Gates and her husband, James Gates. Kimberly Gates is a Caucasian female. There is no evidence that James Gates is within a protected classification under the minority business enterprise certification program. Kimberly Gates is the president of the corporation and owns 60 percent of the stock. James Gates is the vice-president of the corporation and owns the remaining 40 percent of the stock. The bylaws on record for Locker Service, Inc., establish that the Board of Directors directs the corporation’s business affairs. The Board of Directors consists of Kimberly Gates and James Gates. According to the by-laws, both Mrs. and Mr. Gates manage the business. Both Kimberly Gates and James Gates are authorized to sign checks on the corporate checking account. A General Indemnity Agreement underwrites the corporation’s bonding requirements. James Gates is a signatory on the agreement and is personally liable as an Indemnitor.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Florida Department of Labor and Employment Security enter a final order denying the Petitioner’s application for certification as a minority business enterprise. DONE AND ENTERED this 27th day of March, 2000, in Tallahassee, Leon County, Florida. WILLIAM F. QUATTLEBAUM 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 March, 2000. COPIES FURNISHED: Kimberly Gates, President Locker Service, Inc. 2303 Bayshore Drive Belleair Beach, Florida 33786 Joseph L. Shields, Esquire Department of Labor and Employment Security 2012 Capital Circle, Southeast Hartman Building, Suite 307 Tallahassee, Florida 32399-2189 Sheri Wilkes-Cape, General Counsel Department of Labor and Employment Security Hartman Building, Suite 307 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Mary Hooks, Secretary Department of Labor and Employment Security Hartman Building, Suite 303 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152
Findings Of Fact KTT was incorporated in January, 1987, with F. Kay McDougald owning 90 percent of the issued stock and her daughter, Tracy McDougald, owning 10 percent of the issued stock. F. Kay McDougald is president, treasurer, and one director of the Corporation, and Tracy McDougald is secretary and the second of two directors. Paid in capital was $500. At the time KTT was incorporated, F. Kay McDougald held one-third of the outstanding stock in Florida Transport Services (FTS) with the balance of the shares held by her husband. The land upon which FTS has its office and keeps its equipment is owned by the McDougalds jointly. FTS pays monthly rent to the McDougalds. Upon the incorporation of KTT, the latter shared the space with FTS and paid monthly rent to the McDougalds. Since the incorporation of FTS, circa 1974, F. Kay McDougald has worked in the company with her husband. She has generally functioned as office manager, bookkeeper and in charge of all clerical-type functions. In addition, she performed operational functions by dispatching vehicles and making any and all operational decisions during the absence of her husband. By experience, she is fully qualified to operate KTT as an independent business. Since becoming incorporated, KTT has purchased one tractor-trailer, and has obtained lease operator agreements with the owner-drivers of eight vehicles, of which three are miniwheelers, four are tractor trailers, and one a tandem truck. All of these vehicles are capable of, and are used primarily for, hauling road aggregates. In continuing operations during 1987 to date of hearing, the net worth of KTT has increased to approximately $20,000. As a subchapter S corporation, the income of KTT is taxable to the owners. FTS also operates vehicles used in hauling road aggregates; however, most of FTS equipment is tractor trailers. Since KTT began operations, FTS has leased equipment to and from KTT. Due to many years working closely with competitors Mac Asphalt Company and Trans Phos, FTS and Kay McDougald developed a cooperative relationship with those companies, and KTT has been able to lease equipment from those companies when needed. No evidence was presented that Mr. McDougald exercises any control over, or has any interest in, the operation of KTT other than a spousal interest in his wife succeeding in the business. Some three years ago two or more contractors approached Mrs. McDougald to suggest that she form a corporation, obtain minority business certification, and bid to subcontract on DOT road building contracts for the hauling of road aggregates. After considering the concept for about two years, Mrs. McDougald formed KTT and initiated the application for certification here being considered.
The Issue The issue for determination is whether Respondent should certify Petitioner as a minority business enterprise ("MBE").
Findings Of Fact Respondent is the governmental agency responsible for granting or denying applications for MBE certification in accordance with Section 288.703(1), Florida Statutes,1 and Florida Administrative Code Rules 60A-2.001 and 60A-2.005.2 Petitioner is an applicant for MBE certification. Petitioner is engaged in the business of installing traffic signal devices. Petitioner is a closely held Florida corporation that was organized in 1990. Minority Ownership All of Petitioner's stock is owned by Ms. Burita Allen. Ms. Allen is a minority person within the meaning of Section 288.703(3) (the "minority owner" or "minority shareholder"). The minority shareholder is majority shareholder. She owns at least 51 percent of Petitioner's stock within the meaning of Rule 60A-2.005(2)1. Financial Risk And Control The minority ownership of Petitioner is real, substantial, and continuing within the meaning of Rule 60A- 2.005(3)(d)3. The minority owner provided all of the $100,000 used for Petitioner's initial capitalization on April 4, 1995.3 Petitioner was inactive from 1990 until it began its first job on May 11, 1995. Petitioner now has completed or started a total of eight jobs. The minority owner has knowledge and control of Petitioner's financial affairs. She has sole control of the day to day operations of the company and its profit and loss. She contributed all of its initial capital, writes the checks, and contracts with employees, subcontractors, and customers. Operating And Management Control The minority owner has operating control of Petitioner and is technically qualified to manage and operate Petitioner's business. She has generated significant growth for Petitioner. Operating revenues have increased from zero to $170,736.28 in less than two years. Petitioner has another $90,268.08 in work performed but not billed. Petitioner's clients include the Florida Department of Transportation, the United States Navy, and Nassau County, Florida. Petitioner has also performed jobs for private companies such as Georgia Pacific, Target, and Haynes & Sons Inc. Affiliation Petitioner's minority owner gained the knowledge and experience needed to operate Petitioner successfully as an employee of J.W. Buckholz Traffic Engineering, Inc. ("Buckholz Engineering"). Buckholz Engineering is a closely held Florida corporation owned by five individuals. Petitioner's minority owner is the majority shareholder in Buckholz Engineering. She owns 52 percent of the stock of Buckholz Engineering. Petitioner shares office space, equipment, and staff with Buckholz Engineering. Petitioner's minority owner allocates approximately 40 percent of the 70 to 102 hours she works each week to Petitioner. The remainder of her work week is allocated to Buckholz Engineering. The affiliation between Petitioner, its minority owner, and Buckholz Engineering does not impair the minority owner's ownership and control of Petitioner. Petitioner's minority owner is the majority shareholder in Buckholz Engineering. Petitioner's minority owner has an unimpeded legal right to share Petitioner's income, earnings, and other benefits in proportion to her stock ownership within the meaning of Rule 60A-2.005(2)(b). Neither the exercise of discretion by Petitioner's minority owner, her financial risk, nor her equity position in Petitioner is subject to any formal or informal restrictions within the meaning of Rule 60A-2.005(3)(a). There are no provisions in any purchase agreement, employment agreement, voting rights agreement, or the corporate by-laws that vary or usurp the minority owner's discretion. Buckholz Engineering assisted Petitioner in obtaining greater bonding limits than Petitioner could obtain on its own. Petitioner was capable of obtaining bonding on its own but increased the amount of bonding by adding Buckholz Engineering as co-applicant. Petitioner's minority owner is the majority shareholder in Buckholz Engineering. Buckholz Engineering is a professional service corporation that provides design services by licensed professional engineers. Buckholz Engineering utilizes professional liability insurance. It is not a construction company and has no need to be bonded. Petitioner derived its name in part to benefit from the goodwill of Buckholz Engineering. However, the two companies are not engaged in the same business. Buckholz Engineering is a professional engineering firm that performs professional services including the design of traffic control systems. Petitioner installs traffic signal devices. Unlike Buckholz Engineering, Petitioner does not need a professional engineering license to conduct its business. Electrical License Petitioner does not offer a trade or profession to the state which requires a trade or professional license within the meaning Section 287.0943(1)(3)1.4 Unlike the professional engineers in Buckholz Engineering, no state statute requires the minority owner to be licensed in a particular trade or profession in order for Petitioner to install traffic signals. Petitioner's minority owner satisfies all certification requirements that are generally required for Petitioner to conduct its business. The minority owner is certified by the International Municipal Signal Association ("IMSA") and by the American Traffic and Safety Association ("ATSA"). In a particular job, Petitioner's customer may require that a licensed electrician pull the necessary permits for the job or that a licensed electrician approve the job. This customer requirement comprises only a de minimis portion of Petitioner's business. Of the eight jobs contracted by Petitioner, only one customer has required the permit to be pulled by a licensed electrician. Petitioner can satisfy these occasional customer requirements by subcontracting with a licensed electrician at a cost that is a small portion of the job cost.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a Final Order and therein GRANT Petitioner's application for MBE certification. RECOMMENDED this 18th day of February, 1997, in Tallahassee, Florida. DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 18th day of February, 1997.
The Issue The issue for consideration in this hearing is whether Petitioner should be certified as a Minority Business Enterprise, (Woman-Owned).
Findings Of Fact At all times pertinent to the allegations herein, the Commission On Minority Economic and Business Development, now the Division of Minority Business Advocacy and Assistance Office of the Department of Labor and Employment Security, was the state agency in Florida charged with the responsibility for certifying minority and women-owned businesses for most state agencies. It is required, by statute, to ensure that the preference for minority business firms obtained by the certification process are awarded only to those firms for which the benefit is intended. Petitioner, Bay Area Window Cleaning, Inc., is a small business corporation registered in Florida on August 7, 1985. At the time of the original incorporation of the corporation, 1,000 shares of corporate stock were issued of the 7,000 shares authorized in the Articles of Incorporation. Of these, 510 were issued to John D. Richeson, the individual who, with his brother in the late 1970's, started the window cleaning business while a student in college as a means of supporting himself and, later, his wife and family. The remaining 490 shares were issued to Hope L. Richeson, his wife. The funds utilized to start the business and ultimately incorporate were jointly owned by Mr. and Mrs. Richeson. The Articles of Incorporation, as filed initially, list John D. Richeson as incorporator and registered agent, and John D. Richeson and Hope L. Richeson as the Initial Board of Directors. On January 1, 1986, an additional 500 shares of corporate stock was issued in her name to give her a total of 990 shares out of a total 1,500 shares issued and outstanding. Mrs. Richeson's percentage of ownership, after the issuance of the additional 500 shares, was 66 percent. Share certificates reflect this fact. No additional funds were contributed to the corporate assets by Mrs. Richeson as consideration for the issuance of those shares. Mrs. Richeson, currently the President of the company, attended Bible College in Kansas for three years, graduating in 1978. She moved to Florida in 1980 where she attended Hillsborough Community College (HCC), taking as many business education courses as she could in pursuit of an Associates Degree in Business. In addition to that, she has taken the Small Business Administration Class offered by the University of South Florida. She married John Richeson in 1982 and they have worked together in the window cleaning business since that time. After graduating from HCC Mrs. Richeson contacted a family friend, an attorney, for the purpose of incorporating the business. It was at this time she began to run the business. Without asking any questions about the division of duties or the responsibility for leadership in the business, the attorney drafted the incorporation papers making Mr. Richeson the president. Ms. Richeson took the position of vice-president. She admits she did not, at the time, understand the ramifications of that action. Had she known the importance of the title, she would not have acquiesced in having her husband made president. Even though Ms. Richeson was the de-facto head of the business from the time of its expansion from a one-man operation, John D. Richeson served as president of the corporation from inception up to January 1, 1996, when Hope L. Richeson was elected president. At the annual meeting of the Board of Directors of the corporation, held on December 20, 1995, attended by Mr. and Mrs. Richeson, the two directors, the Board recognized Mrs. Richeson's control over the operation of the business since its inception and made her president effective January 1, 1996, when Mr. Richeson, the incumbent, became vice- president Mrs. Richeson indicates, and there is no evidence to the contrary, that neither she nor her husband had any specific training in order to operate the business. What was most important was a general business sense and a knowledge, gained by reading trade periodicals and from experience, of specific window cleaning products. Most of the major business contracts obtained by Petitioner come from bids to government entities and corporations. Other than herself, several employees, namely those who were brought into the business because of their experience with large cleaning projects, evaluate prospective jobs and prepare proposals. This proposal is then brought to her for approval before it is submitted to the potential client. These individuals are her husband and the Van Buren brothers. Based on a job costing formula learned in school, Mrs. Richeson then evaluates the bid to determine if it is too low or too high. She determines if the company can do the job for the price quoted. In addition to bidding, Ms. Richeson claims to oversee every aspect of the business. These functions range from buying office supplies to costing jobs. No one but she has the authority to purchase supplies or equipment other than minor items in an emergency. She also supervises the finances of the operation, determining how earnings are to be distributed and how much corporate officers and employees are to receive as compensation. By her recollection, on several occasions, due to a shortage of liquid funds, she has waived her right to be paid for a particular work period. She claims not to have taken a withdrawal from the corporation for a year, but the corporation's payroll documents reflect otherwise. The salary of each employee is set by Mrs. Richeson. Employees are paid on a percentage of job income. Those employees who do the high-rise jobs receive 40 percent of the income from those jobs. From her experience in the business, this arrangement for paying washers works far better than paying a straight salary. On the other hand, office personnel are paid on an hourly basis. In the event the business were to be dissolved due to insolvency, Mrs. Richeson would lose her 66 percent stock interest in the corporation and her husband would lose his 34 percent interest. There are no other owners of the company, and no one other than the Richesons would bear any loss. Not only can no one but Mrs. Richeson make purchases for the company, even Mr. Richeson cannot sign company checks by himself nor can he pay bills or make any major business decisions. Only she has the authority to borrow money in the name of the corporation. This was not always the case, however. In 1994, Mr. Richeson purchased a new vehicle for the corporation, signing the finance arrangement as president of the company, but even then, Mrs. Richeson signed as co-buyer. Also, the 1994 unsigned lease agreement for the company's use of real property owned by the Richesons calls for Mr. Richeson to sign as president of the company. Mrs. Richeson is the only one in the company who has the authority to hire or fire employees. While she believes the company would go out of business if she were not the president, she also believes she would be able easily to hire someone to replace Mr. Richeson if he were to leave the company. These beliefs are confirmed and reiterated by Mr. Richeson who claims that his role in the company from its very beginning has been that of services rather than management. On August 14, 1995, Mrs. Richeson, who at the time owned 990 of 1,500 shares of corporate stock, filed an application for certification as a minority business enterprise. The application reflected Mrs. Richeson as the owner of a 66 percent interest in the corporation, but also reflected Mr. Richeson as president. This was before the change mentioned previously Melissa Leon reviewed this application as a certification office for the Commission in September 1995. She recommended denial of the application on several bases. The Articles of Incorporation submitted with the application reflect the Director of the corporation as John D. and Hope Richeson and list only John Richeson as incorporator in August 1985. The corporate detail record as maintained in the office of the Secretary of State also reflects the resident agent for the corporation is John Richeson. The corporation's 1993 and 1994 federal income tax returns show John Richeson as 100 percent owner. No minority ownership is indicated. Income tax returns are afforded great weight by the Commission staff in determining ownership. Though Mrs. Richeson claims to own the majority interest in the corporation in her application, the tax returns do not reflect this. In addition, the corporation payroll summaries for February 28, 1995, March 31, 1995 and April 30, 1995 all show John Richeson receiving more income from the business than did Hope Richeson. In the opinion of Ms. Leon, Mrs. Richeson's salary was not commensurate with her claimed ownership interest. The same records for the last three months of 1995 and through April 1996 reflect Mrs. Richeson as receiving more than Mr. Richeson, however. Other factors playing a role in Ms. Leon's determination of non- qualification include the fact that the purchase order for the truck reflected Mr. Richeson as president; the lease agreement shows him signing as president; the bank signature card reflects him as president in 1994 and the corporate detail record shows Mrs. Richeson as resident agent by change dated May 14, 1996, after the filing of the application. Upon receipt of the Petitioner's application, Ms. Leon reviewed the documents submitted therewith and did a telephone interview with Mrs. Richeson. Based on this information and consistent with the guidelines set out in the agency's rules governing certification, (60A-2, F.A.C.), she concluded that the application did not qualify for certification. Not only was the required 51 percent minority ownership not clearly established, she could not determine that the minority owner contributed funds toward the establishment of the business. Ms. Leon determined that the payroll records, reflecting that from February through April 1995, Mrs. Richeson drew less than Mr. Richeson, were not consistent with the same records for the period from October 1995 through April 1996, which reflected that Mrs. Richeson was now earning more than her husband. Further, the amount Mrs. Richeson earned constituted only 53.2 percent of the salary while her ownership interest was purportedly 66 percent. A further factor militating toward denial, in Ms. Leon's eyes, was the fact that there were only two directors. Since Mrs. Richeson was one of two, she could not control the Board, and minority directors do not make up a majority of the Board. While the documents played an important part in Ms. Leon's determination, the telephone interview was also important. Here Ms. Leon found what she felt were many inconsistencies between what was stated in the interview and Mrs. Richeson's testimony at hearing. Therefore, Ms. Leon concluded at the time of her review that the business was jointly owned and operated. It was not sufficiently controlled by the minority party, to qualify for certification. Nothing she heard at hearing would cause her to change her opinion.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Labor and Employment Security enter a Final Order denying Minority Business Enterprise status to Bay Area Window Cleaning, Inc. DONE and ENTERED this 22nd day of August, 1996, in Tallahassee, Florida. ARNOLD H. POLLOCK, 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 22nd day of August, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-5913 To comply with the requirements of Section 120.59(2), Florida Statutes (1995), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. 1. Accepted and incorporated herein. 1. - 4. Accepted and incorporated herein. Accepted and incorporated herein except for the last sentence which is rejected as a legal conclusion. Accepted that she ran the operation. Accepted and incorporated herein. Accepted as a restatement of the testimony of Mrs. Richeson and a generalized agreement with the comments made. - 10. Accepted and incorporated herein, 11. - 12. Accepted. 13. - 14. Accepted. 15. - 17. Accepted. 18. - 19. Not proper Finding of Fact, but accepted as a restatement of witness testimony. 20. - 21. Accepted and incorporated herein. 22. - 25. Accepted as a restatement of witness testimony. Respondent's Proposed Findings of Fact. 1. - 8. Accepted and incorporated herein. Rejected as contradicted by the evidence. Accepted and incorporated herein. Accepted that until after the application was filed, Mr. Richeson was paid more than Mrs. Richeson, but the difference was not great. Accepted and incorporated herein. Accepted and incorporated herein. Rejected as not consistent with the evidence of record except for the allegation concerning Mr. Richeson's authority to sign corporate checks, which is accepted and incorporated herein. COPIES FURNISHED: Miriam L. Sumpter, Esquire 2700 North Dale Mabry Avenue, Suite 208 Tampa, Florida 33607 Joseph L. Shields, Esquire Department of Labor and Employment Security 2012 Capital Circle, Southeast Hartman Building, Suite 307 Tallahassee, Florida 32399-2189 Douglas L. Jamerson, Secretary Department of Labor and Employment Security 2012 Capital Circle, Southeast Hartman Building, Suite 303 Tallahassee, Florida 32399-2152 Edward A. Dion, General Counsel Department of Labor and Employment Security 2012 Capital Circle, Southeast Hartman Building, Suite 307 Tallahassee, Florida 32399-2189
Findings Of Fact On July 15, 1993, the School Board issued an invitation to bid for certain construction work on Bair Middle School, which was designated Project Number 2611-88-01. Responses to the invitation were due by 2:00 p.m. on August 26, 1993. Hewett-Kier, Pirtle, and six other contractors timely submitted bids for the project. The bids were opened on August 26, 1993, and Pirtle was the apparent low bidder with a bid of $1,150,000. Hewett-Kier was the second low bidder with a bid of $1,167,000. On September 2, 1993, the bids were posted. The Bid Tabulation Form indicated the intent of the School Board's Facilities Department to recommend that the School Board award the subject contract to Pirtle. Article 10 of the Special Conditions to the invitation pertains to MBE subcontractor participation goals and requirements. Article 10, Paragraph 1 sets forth the following MBE participation requirement for the subject bid: The School Board of Broward County, Florida is committed to affirmatively ensuring a substantial increase in the awarding of construction subcontracts to Minority Businesses. School Board Policy . . . requires all projects estimated to cost $1 million or more must have MBE subcontracting goals and that Contractors awarded work on such projects fully participate in the MBE Program. Compliance with the requirements of this article is mandatory. The total MBE Contract Goal for this project is 6 percent. This total MBE Goal will be comprised of the sum of the following categories: Black: 2 percent. Hispanic: 2 percent. Woman: 2 percent. Other: 0 percent. Article 10, Paragraph 3(A) of the Special Conditions provides, in pertinent part, as follows: Failure to Comply: Failure on the part of the Bidder to comply with the requirements of this Article shall be cause for finding the bidder Non-responsive, unless every reasonable effort to utilize MBE subcontractors is demonstrated to The School Board of Broward County, Florida. In the event a bid is deemed non-responsive, award may then be made to the next lowest bidder, or all remaining bids may be rejected and the project readvertised. Article 10, Paragraph 4(A) of the Special Conditions pertains to bidding requirements and procedures prior to contract award and provides, in pertinent part, as follows: Submittals Within seven (7) calendar days after bid opening, the low Bidder . . . as a condition of contract award, shall submit to the Owner the following documents . . . concerning MBE Contractor and Subcontractor participation in the contract: * * * 3. Unavailability Certification-MBE Subcontractor Participation: If the Low Bidder is unable to commit adequate MBE Subcontractor Participation to meet the Contract Goal, he/she should request execution of this document for each MBE Subcontractor he/she has solicited, but who cannot participate for reasons of their own. This is necessary to show good faith efforts on the Bidder's part to meet the Contract Goal. Failure to submit the requested Documents within the allotted time will render a bid non-responsive, unless it is determined that the contract goal cannot be met. Article 10, Paragraph 4(B) of the Special Conditions pertains to good faith efforts required of bidders to meet the MBE subcontracting goals and provides, in pertinent part, as follows: Good Faith Efforts: If the information submitted in response to the previous paragraph demonstrates a Bidder does not meet the MBE Subcontractor Goal, information sufficient to satisfy The School Board of Broward County, Florida that the bidder has made good faith efforts must be submitted. Efforts to obtain MBE Subcontractor participation are good faith efforts to meet the goal, if they are sincerely motivated, if, given all relevant circumstances, they could not reasonably be expected to produce a level of MBE Subcontractor participation sufficient to meet the goal. In order to award a contract to a Bidder that has failed to meet the MBE Subcontracting Goal, The School Board of Broward County, Florida must determine that the Bidder's efforts were those that a bidder actively and aggressively seeking the goal would make given all relevant circumstances. In making the required judgment, The School Board of Broward County, Florida may consider the kinds of efforts listed below. This is not a mandatory checklist. The School Board of Broward County, Florida does not insist the Bidder do any one or any particular combination of things on the list, nor is the list exclusive or exhaustive. Other factors or types of efforts may be relevant in appropriate cases. In determining whether or not a bidder has made good faith efforts, the School Board of Broward County, Florida will look not only at the different kinds of efforts that a Bidder has made, but also the quantity and intensity of these efforts. Good Faith Efforts are as follows: The Bidder attended pre-bid meetings if advertised and scheduled by The School Board of Broward County, Florida to inform MBE Subcontractors of subcontracting opportunities; The Bidder provided written notice to a reasonable number of specific MBE Subcontractors that their interest in the contract is being solicited in sufficient time to allow MBE Subcontractors to participate effectively; The Bidder, in order to increase the likelihood of meeting the goal, selected portions of the work to be performed by MBE Subcontractors that could be broken down into economically feasible units to facilitate MBE Subcontractor participation; The Bidder provided interested MBE Subcontractors with adequate information about the plans, specifications and requirements of the contract; The Bidder negotiated in good faith with interested MBE Subcontractors, not rejecting MBE Subcontractors as unqualified without sound reasons based on a thorough knowledge of their capabilities; The Bidder contacted the MBE Coordinator for direct referral of certified MBE Subcontractors; The Bidder maintained records listing name, address, type of trade, and describe (sic) results of contact of each MBE Subcontractor with regard to each prospective contract opportunity; The Bidder notified the MBE Coordinator whenever he cannot successfully locate qualified MBE Subcontractors; The Bidder actively maintains a file with the names and addresses of MBE subcontractors. (List may be obtained from MBE Coordinators Office) The Bidder engaged in specific and continuing personal recruitment efforts directed at Minority contractor's organizations, Minority recruitment organizations, and Minority Business Assistance Centers. Meeting the goal or making good faith efforts to do so is a condition of being awarded this contract. Claudia Williams is the MBE Contract Compliance Administrator for the School Board. Ms. Williams has the responsibility to assign minority goals to each project and to determine on behalf of the School Board whether bidders have complied with the School Board's policy pertaining to minority subcontractor participation. Ms. Williams has made this compliance determination on behalf of the School Board on over a 100 occasions. Ms. Williams is familiar with the good faith effort requirements contained in the School Board's bid documents and she is familiar with the availability of black-owned MBE subcontractors to perform work on School Board construction projects. There are fewer black-owned MBE subcontractors certified by the School Board than there are female or Hispanic-owned MBE subcontractors. It is more difficult for a contractor to meet the black-owned MBE subcontractor goal of 2 percent than it is to meet the other MBE subcontractor goals. Pirtle's bid had a total of 24 percent MBE participation comprised of female or Hispanic-owned MBEs. Initially, there were no black-owned MBE subcontractors. The MBE goals are not intended to be rigid or inflexible requirements, but the general contractor is expected to make good faith efforts to secure the participation of MBE subcontractors. Pirtle met (and greatly exceeded) the MBE goals set forth in the bid documents for total MBE participation. Consequently, Pirtle is required to show nothing further in this proceeding as to the total goal. It is the second goal, pertaining to MBE distribution based on the gender or the ethnicity of the subcontractor, that was not met. Specifically, Pirtle did not meet the MBE goal of 2 percent for participation by black-owned MBE subcontractors. On September 2, 1993, Pirtle submitted minority business enterprise (MBE) participation documentation pursuant to Article 10 of the invitation, which established that Pirtle had received responses to bid solicitations from three black-owned MBE subcontractors and that it had received noncompetitive bids from two of those black-owned MBE subcontractors. Pirtle also provided the School Board with a copy of the solicitation letter it sent to black-owned MBE subcontractors. Ms. Williams reviewed this documentation, taking into consideration the nature of the project, her knowledge of the availability of black-owned subcontractors, and the criteria for judging good faith efforts contained in the bid documents. Ms. Williams was satisfied after reviewing the information furnished to her by Pirtle on September 2, 1993, that Pirtle had satisfied the good faith efforts requirement to secure the 2 percent black-owned MBE subcontractor participation. Petitioner failed to establish that the Ms. Williams, on behalf of the School Board, acted fraudulently, arbitrarily, illegally, or dishonestly in making the determination that Pirtle's efforts to secure black-owned MBE subcontractors met the good faith efforts requirements contained in Article 10 of the Special Conditions to the invitation. Ms. Williams was nevertheless concerned that Pirtle had secured the participation of no black-owned MBE subcontractor, and so informed Pirtle. On September 7, 1993, Pirtle informed Ms. Williams that it had secured the participation of a black-owned MBE subcontractor to perform work valued at $5,700.00, which represented 0.5 percent of the value of the contract. This additional information was provided pursuant to Article 10, Paragraph (4)(D)1 of the Special Conditions of the bid, which provides for a pre-conciliation conference process as follows: If the MBE Coordinator questions the acceptability of the Low Bidder's MBE Subcontractor submissions, the Bidder shall, upon at least three (3) calendar days notice given by the MBE Coordinator, meet with the MBE Coordinator to present information and arguments pertinent to his compliance with the applicable requirements. At the formal hearing, Pirtle established that it had made good faith efforts to secure black-owned MBE subcontractors to participate in the project. Pirtle solicited bids from 47 black-owned subcontractors, only three of which filed any response to the solicitation. Hewett-Kier argued that Pirtle should have given black-owned MBE subcontractors the opportunity to undercut the bid of other subcontractors after the bidding was closed in order to obtain the ethnic distribution goal. This contention is rejected because this questionable tactic was not shown to be necessary, reasonable, or appropriate.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the School Board of Broward County, Florida, enter a Final Order which denies the bid protest of Hewett-Kier and which awards the subject bid to Pirtle. DONE AND ENTERED this 28th day of February, 1994, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of February, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-6449BID The following rulings are made on the proposed findings of fact submitted by Petitioner. The proposed findings of fact contained in the section designated "General Factual Background" are adopted in material part by the Recommended Order. The proposed findings of fact contained in the section designated "Intervenor is a Non-Responsive Bidder" are adopted in part by the Recommended Order. The proposed findings that Hewett-Kier was a responsive bidder is rejected as being unnecessary to the conclusions reached. The conclusion that Pirtle is a non-responsive bidder is rejected as being contrary to the conclusions reached. The proposed findings of fact contained in the section designated "The School Board's Determination of Good Faith Efforts is Arbitrary and Capricious" are adopted in material part by the Recommended Order, but the conclusions intertwined with those proposed findings are rejected as being contrary to the conclusions reached. The following rulings are made on the proposed findings of fact submitted by Respondent. The proposed findings of fact in paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, and 14 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraphs 15, 16 and 17 are rejected as being unnecessary to the conclusions reached. The following rulings are made on the proposed findings of fact submitted by Intervenor. The proposed findings of fact contained in the section designated "Testimony of Claudia Williams" are adopted in material part or are subordinate to findings made. The proposed findings of fact contained in the section designated "Testimony of Francisco Flores" are subordinate to the findings made. The proposed findings of fact contained in the section designated "Testimony of James Hewett" are subordinate to the findings made. The proposed findings of fact contained in the section designated "Testimony of Michael Geary" are subordinate to the findings made. COPIES FURNISHED: Robert E. Ferencik, Esquire David Valdini, Esquire LIEBY, FERENCIK, LIBANOFF & BRANDT Penthouse 2, 290 Northwest 165 Street Miami, Florida 33169-6457 Edward J. Marko, Esquire MARKO & STEPHANY Post Office Box 4369 Fort Lauderdale, Florida 33338 John B. DiChiara, Esquire 507 South East 11th Court Fort Lauderdale, Florida 33316 Virgil L. Morgan, Superintendent School Board of Broward County 600 Southeast Third Avenue Fort Lauderdale, Florida 33301-3125
Findings Of Fact Mill-It Corporation is a Florida Corporation licensed to do business in the State of Florida. Ben Guzman, a stipulated member of a recognized minority group, is the President of the Petitioner Corporation. Additionally, Mr. Guzman owns 26 percent of the stock. The other stockholders are James E. Quinn (24 percent), Myrna Bortell (26 percent), and Edward T. Quinn, Jr., (24 percent). Ms. Bortell is also a member of a qualified minority. The Petitioner Corporation was formed in August, 1983. The first three months of its existence was spent obtaining the necessary licenses, permits, loans, and equipment. Mr. Guzman was primarily responsible for these activities. During this time period, Mr. Guzman was required to return to Chicago, his former home, to undergo surgery on his arm. During his absence, he delegated minimal authority to Edward T. Quinn, Jr., in order that the Corporation could continue to operate. During Mr. Guzman's absence, he maintained control of the Corporation through frequent telephonic communications with Mr. Quinn. Just before Mr. Guzman was required to go to Chicago for the surgery, Mill-It Corporation had taken delivery of its milling machine. The machine had been in the possession of Mill-It Corporation for only one week and Mr. Guzman had not had an opportunity to run the machine prior to his departure. Mr. Guzman relied on Mr. Quinn because they had known each other for approximately 25 years and Mr. Guzman was aware of Mr. Quinn's knowledge of the road building business and the necessary steps to establish Mill-It Corporation as a viable business in Florida. Mr. Guzman returned to Florida for the onsite inspection by an agent of the Respondent, but he was still under a doctor's care and was on various types of medication for pain. Mr. Guzman returned to Chicago for additional medical treatment following the onsite inspection, and he did not return to Florida until January, 1984. In January, 1984, Mr. Guzman began to completely learn the operation and mechanics of running and maintaining the milling machine and he assumed the complete responsibility for overseeing all the projects of the milling operation. Mr. Guzman originally relied upon the expertise of Edward T. Quinn, Jr. in the field of bidding, but Mr. Guzman always supplied the necessary figures and data for the bid. Mr. Guzman hired Edward T. Quinn, Jr., as his sales representative and estimator. After the brief learning period, however, Mr. Guzman began to totally supervise the bidding procedures and began directing Mr. Quinn to attend various bid lettings with the figures supplied by Mr. Guzman. At the time of the onsite inspection, Mill-It Corporation had completed only its organizational phase of becoming a business entity. In fact the milling machine was such a recent acquisition that during the onsite inspection Mr. Guzman had not had time to learn the technical aspects of the operation and mechanics of the machine. After the onsite inspection, Mr. Guzman assumed responsibility for operation of the milling machine and supervising the overall performance of the job. Additionally, James Quinn also operated the machine. Mr. Guzman has the authority to hire and fire employees, sign checks, correspond on behalf of the corporation, enter into contracts, and purchase equipment on behalf of the corporation. Cancelled payroll and vendor's checks, correspondence to and from the company, bonding contracts, insurance contracts, and corporate documents were all signed by Mr. Guzman. All major business decisions are made by Mr. Guzman after considering the advise of the other officers and stockholders. All day-to-day decisions are made by Mr. Guzman.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Mill-It Corporation's application for certification as a Minority Business Enterprise be GRANTED. DONE and ENTERED this 7th day of June, 1984, in Tallahassee, Florida. DIANE K. KIESLING 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 7th day of June, 1984. COPIES FURNISHED: RUSSELL H. CULLEN, JR., ESQUIRE P. O. BOX 1114 ALTAMONTE SPRINGS, FLORIDA 32701 VERNON L. WHITTIER, JR., ESQUIRE DEPARTMENT OF TRANSPORTATION HAYDON BURNS BUILDING, M.S. 58 TALLAHASSEE, FLORIDA 32301 PAUL A. PAPPAS, SECRETARY DEPARTMENT OF TRANSPORTATION HAYDON BURNS BUILDING TALLAHASSEE, FLORIDA 32301
The Issue The issue presented is whether Petitioner's application for certification as a minority business enterprise should be granted.
Findings Of Fact Petitioner Omni Outdoors, Inc., a for-profit corporation located in Coral Springs, Florida, is engaged in the business of commercial landscaping and irrigation. It was incorporated on September 19, 1995, by Bruce Reeb. When incorporated, Petitioner issued its 100 shares of stock as follows: 24 shares to Bruce, 26 shares to his wife Terry, 24 shares to Kevin McMahon, and 26 shares to Kevin's wife Michele. Accordingly, the Reebs and the McMahons each own 50 percent of the business. Both Reebs and both McMahons became the 4-member Board of Directors. Bruce became the president and the secretary of the corporation, and Kevin became the vice-president and the treasurer. According to the corporation's By-laws, the President is the chief executive officer of the corporation, responsible for the general supervision of its business. Bruce is a certified general contractor in the State of Florida and is the qualifier for Petitioner. Kevin holds an irrigation license and is the qualifier for Petitioner in that area. Bruce handles estimating, pricing, and proposal preparation and presentation. Kevin runs the field operations and purchasing of materials. In October 1996 Terry quit her job as a flight attendant to begin working for Petitioner, handling accounting and personnel matters. Her name was added to the corporation's bank accounts as an authorized signature. Bruce and Kevin remain as authorized signatures on the accounts, and only one signature is required for the corporation's checks. She was given the title "chief executive officer" of the corporation in January 1997, a position authorized by an amendment to the By-laws in March 1997. She was given a smaller salary than Bruce or Kevin, who were paid the same amount. Kevin's wife Michele has never been involved in the day- to-day activities of the corporation. She has never received a salary from the business. In January 1997 Terry filed an application with Respondent for the corporation to be certified as a minority business enterprise, under the status of "American Woman." Around the time the corporation filed its application, Terry's salary was increased to $600 per week so she would be making the same as Kevin, and Bruce's salary was decreased to $400 per week. Even after Terry's full-time employment by the corporation, the signatures of her husband or of Kevin continue to appear on corporate obligations, such as an indemnity agreement and corporate promissory notes.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying Petitioner's application for certification as a minority business enterprise. DONE AND ENTERED this 8th day of April, 1998, in Tallahassee, Leon County, Florida. LINDA M. RIGOT Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 8th day of April, 1998. COPIES FURNISHED: Terry M. Reeb, Chief Executive Officer Omni Outdoors, Inc. 1742 Northwest 112 Terrace Coral Springs, Florida 33071 Joseph L. Shields, Esquire Department of Labor and Employment Security 2012 Capital Circle, Southeast The Hartman Building, Suite 307 Tallahassee, Florida 32399-2189 Edward A. Dion, General Counsel Department of Labor and Employment Security 2012 Capital Circle, Southeast The Hartman Building, Suite 307 Tallahassee, Florida 32399-2189 Douglas L. Jamerson, Secretary Department of Labor and Employment Security 2012 Capital Circle, Southeast The Hartman Building, Suite 303 Tallahassee, Florida 32399-2189
The Issue Whether Action Wire & Cable Corporation 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 In May, 1993, the Petitioner company was started in New York but incorporated in the State of Florida. Rosemarie Branciforte and Janet Monaco were two of the original incorporators as minority stockholders and three non- minority males held the majority of the stock. The two women incorporators were not named to the original Board of Directors. At the time of the incorporation, 100 shares of stock were issued as follows: Bert Polte-40 shares, Frank Kleeman-40 shares, Janet Monaco-10 shares, Rosemarie Branciforte-5 shares, and Ken Barry-5 shares. The company began operations out of the home of Monaco and Branciforte in New York, who contributed their knowledge and labor without compensation. Janet Monaco was appointed President and Rosemarie Branciforte was selected as Vice President-Sales & Marketing. Two of the male stockholders from Germany (Polte and Kleeman) contributed $2,000 which was used for the purchase of fax and computer equipment. Polte and Kleeman are listed as Regional Sales Managers and reside in the Federal Republic of Germany. On December 29, 1993, Ken Barry, one of the original stockholders, returned his 5 shares to the corporation. On January 1, 1994, at its annual meeting, the corporation voted to redistribute the shares among its stockholders, as follows: Janet Monaco-26 shares, Rosemarie Branciforte-25 shares, Bert Polte-25 shares, and Frank Kleeman-24 shares. This was based on the contribution of space in the women's house for the corporate offices and supplies, the assumption of risk and the operation of the company by Monaco and Branciforte without compensation. Monaco and Branciforte were also elected as sole directors of the company, with Monaco as Chair. In April, 1994, the company relocated to Florida and filed its application for certification with the Commission. In October, 1994, the corporate records were amended to reflect that Monaco and Branciforte were the sole directors of the corporation. As sole directors and chief operating officers of the company, the women owners perform the following: Develop and maintain the customer base, both in the United States and overseas; determine who to sell to depending on credit worthiness; develop market plans, advertising campaigns and mailings; promote the company at trade shows and community organizations; control bookkeeping; control all monies (including distribution of year end profits; sign all long term leases; select and maintain working relationships with vendors; and sign as guarantors on vendor accounts, as needed. Polte and Kleeman, stockholders in Petitioner, are owners of a wire and cable distribution business in Europe. As such, they have made a market for Petitioner's American wire in Europe and provide European wire to Petitioner for sale in the U.S. Sales generated by Polte and Kleeman account for approximately 15 percent of Petitioner's sales in Europe and 11 percent of products imported by Petitioner for distribution in the U.S. For their services, Polte and Kleeman receive an annual stockholders' dividend from the profits of the corporation, which has been designated as a "management fee" in the corporate books. Their combined ownership of stock in the corporation amounts to 49 percent. Monaco and Branciforte, both American women, are 51 percent owners of the corporation. The gross sales of the company was approximately $350,000 in 1993, $700,000 in 1994 and $500,000 to date in 1995. In 1995, Petitioner sold approximately $180,000 of material through its European sales managers and purchased approximately $27,000 from them.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application for Minority Business Certification filed by Action Wire & Cable Corporation on April 27, 1994, be GRANTED. DONE and ENTERED this 17th day of October, 1995, 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 17th day of October, 1995. APPENDIX 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 submitted in letter form proposed findings of fact. However, it contained, in paragraph form, comments on the evidence and argument which can not be specifically ruled upon. Proposed findings of fact submitted by Respondent. Accepted in substance: paragraphs 1, 2, 4 (in part), 5, 7 (in part), 8 (in part), 9. Rejected as against the greater weight of evidence: paragraphs 3, 4 (in part) 7 (in part), 8 (in part). Rejected as subsumed, irrelevant or immaterial: paragraphs 6, 8 (in part) COPIES FURNISHED: Rosemarie N. Branciforte Vice President-Sales & Marketing Action Wire & Cable Corporation 4802 Distribution Court, Unit 2 Orlando, Florida 32822 Joseph L. Shields, Esquire Senior Attorney 107 West Gaines Street 201 Collins Building Tallahassee, Florida 32399-2005 Crandall Jones Executive Administrator Collins Building, Suite 201 107 West Gaines Street Tallahassee, Florida 32399-0950
Findings Of Fact Introduction On March 31, 1983, Respondent, Department of Transportation (Department), gave notice to qualified contractors that it would receive sealed bids on the following project: BROWARD COUNTY: FEDERAL AID PROJECT NO. I-iD-75-4(38)225 (JOB NO. 86075-3417), SR-93, (I-75), from S. of Nova Dr. to S. of S.W. 13th St.. Work consists of Extra Heavy Embankment; Pav't. of Alt. 10" Limerock Base or 9", 7" or 6" Asph. Base Cse. (Type 1, 2 or 3) and Section of Alt. 8" Limerock Base of 7 1/2", 6" or 5" Asph. Base Cse. (Type 1, 2 or 3) all with Type S Structural Cse. and Asph. Conc. Fri-tion Cse. (FC-2), Shoulder Pav't.; Two Bridges (OAL 821') of Conc. Slab Deck and Prestr. Conc. Beams on Conc. Piers and Spread Footings; Conc. Handrail (Barrier and Sidewalk); Conc. Box Culverts; Storm Sewer and Small Drainage Structures; Conc. Curb and Gutter and Shoulder Gutter; Staked Silt Barrier; Guardrail (Rdwy.); Fencing; Roadway Signs; Pav't. Markings (Rer. Pav't. Markers and Thermoplastic Striping); and Incidental Items. Length 1.914 miles. (B. I. 440803) cost $20.00 FEMALE GOAL 1 percent M.B.E. GOAL 5 percent TOTAL M.B.E. GOALS 6 percent NOTE: ON-THE-JOB TRAINING WILL BE REQUIRED FOR THIS PROJECT. (Approx. 550 Cal. Days) The project is also known as the "Nova Drive Project". Such bids were to be received by the Department no later than April 27, 1983. Seven construction firms submitted bids on the project. As is pertinent here these included petitioner, Badgett Resources, Inc. (Badgett), a firm located in Fort Lauderdale, Florida, and respondent, Capeletti Brothers, Inc. (Capeletti), a firm with principal offices located in Miami, Florida. Capeletti submitted a bid for $6,917,515.50, which was the lowest bid on the project Badgett's bid was for $6,922,625.50, or $5,110.00 higher than the Capeletti bid, and was the next lowest bid. On April 27, 1983 the Department opened the sealed bids. Because certain information was not furnished with Capeletti's bid, Capeletti made another submittal on May 9, 1983. After reviewing this information, and having further communications with Capeletti, the Department finally concluded on May 17, 1983, that Capeletti met all applicable requirements. Thereafter, on May 20, 1983 the Department posted the bids and designated Capeletti as the lowest responsive bidder. On May 23, 1983 Badgett filed its notice of protest in which it requested a formal hearing prior to the award of the contract to Capeletti. That same day the Department notified Badgett that because it believed the failure to proceed with the award of the contract "would result in an immediate and serious danger to the public health, safety and welfare", it intended to immediately award the contract to Capeletti pursuant to Subsection 120.53(5)(c), Florida Statutes. It did so since the project was federally funded with Discretionary Interstate Lapse Funds, and if work did not commence prior to June 27, 1983, the State would suffer the loss of those funds. Capeletti began construction on the project prior to June 27 and has actively continued such work since that time. Bid Specifications According to the notice requesting bids, all work related to the project had to comply with the "Plans, Specifications and Special Provisions of the State of Florida Department of Transportation." These bidding requirements are more commonly known as the Bid Specifications. As is pertinent here, the Bid Specifications included a requirement that each bidder comply with the Minority Business Enterprises (MBE) requirements developed by the Department. The Department has a policy that firms owned and controlled by minorities or women shall be given the maximum opportunity to participate in the performance of contracts let by the Department. In this vein it has established overall minority goals in Rule 14-78.03, Florida Administrative Code, for its MBE program. These include contract goals for minority business enterprises (firms owned and controlled by minorities) and contract goals for women business enterprises (firms owned and controlled by women), both of which applied to the project in question. The MBE goals for the Nova drive Project were 5 percent for minority business enterprises and 1 percent for women business enterprises. This meant that 5 percent and 1 percent of the estimated total dollar value of the contract should have been performed by certified minority and women controlled enterprises respectively. However, Rule 14-78.03(1)(c)2. provides that if the successful bidder cannot meet the 5 percent and 1 percent goals, it "must satisfy the Department that the contractor has made good faith efforts to meet the goals." In this regard, the Rule requires that the bidder "actively and aggressively" attempt to comply with the goals, and sets forth nine relevant factors or types of effort that may be considered in determining whether a good faith effort has been made. (Rule 14-78.03(1)(c)2.a.i.-ix). The Rule cautions that "pro forma" good faith efforts are unacceptable. Department rules and the Bid Specifications made it quite clear that in order to be eligible to participate as MBE's the Department must first certify the firm. The specific requirements for certification are set forth in Rule 14- 78.05, Florida Administrative Code. A failure to comply with these requirements can result in the denial of a bid award. The Bid Specifications provided the following requirement pertaining to the submission of information showing compliance with the MBE goals: The Florida Department of Transportation prefers the Minority Business Enterprises Form I to accompany the bid documents. If this is not possible, the form must be received by the Florida Department of Transportation's Office of Minority Programs, attention MBE Liaison Officer, no later than ten (10) calendar days after the bid opening date. (Emphasis added) The term "calendar day" is defined in the Bid Specifications as "every day shown on the calendar, ending and beginning at Midnight". Since the bid opening date was April 27, 1983, a strict interpretation of this standard required that the MBE submissions by the bidders to be filed with and received by the Department's Office of Minority Programs no later than Saturday, May 7, 1983. This is confirmed by a memorandum prepared by the Secretary of the Department on June 4, 1982 which was sent to all prequalified contractors and clarified the requirements relative to MBE's. There he stated that "(i)t must be remembered that all the above information (including MBE Utilization Form No. 1) is to be in the Department's hands within ten (10) days following the bid opening as opposed, for example, to simply being mailed within the ten-day-period." However, it-has been an informal Department policy for many years to require a document to be filed on the next following Monday when the original deadline falls on a Saturday or Sunday. The Minority Business Enterprises Certification Form No.1 to be submitted in conjunction with the bid, or ten days thereafter, is a two-page Department prescribed form that identifies each minority subcontractor to be used on the project by the contractor, the class of work, dollar amount of work, percent of contract, sex, type of minority, and whether the subcontractor has been certified by the Department as an MBE. The Bid Specifications provide not only that "(t)he MBE Utilization Form No.1. . .only include firms which are certified by the Department", but also that they be ". . .certified prior to the submission of the. . .Form". (Emphasis added). MBE Submissions by the parties Badgett submitted its MBE Utilization Form No.1 with its bid on April That form reflected that Community Asphalt, Post Office Box 9179, Pembroke Pines, Florida, would perform the paving portion of the project at a cost of $1,022,853.97, or 15 percent of the total contract. Community is Hispanic owned and controlled, and was represented on the form as being certified by the Department. A female controlled firm identified as Triple J, Post Office Box 6321, Fort Myers, Florida, was listed as the grassing subcontractor, which represented 2 percent of the total contract. These percentages exceeded the 5 percent and 1 percent goals established by the Department. Badgett did not utilize the lowest bid it received for grass work since that was submitted by a non-MBE firm. Had it done so, its bid on the project would have been $7,111.63 lower, or approximately $2,000 less than the overall bid submitted by Capeletti. Capeletti did not submit an MBE Utilization Form No. 1 or its MBE "good faith efforts" submittal with its sealed bid. Neither did it make such submissions by the tenth calendar day, or May 7, 1983. On the following Monday, May 9, Capeletti filed an incomplete MBE Utilization Form No. 1 and a "good faith efforts" submittal. Form No. 1 reflected that Pro Contracting, Inc., 15111 Falkirk Place, Miami Springs, Florida, a Hispanic owned and controlled firm, would perform 5.04 percent of the total contract work. In answer to the question of whether the firm has been certified by the Department, Capeletti answered that such certification had been "applied for". Capeletti also listed three female owned and controlled firms, Len Hazen Painters, Inc., Advance Barricades and Signing, Inc., and C & G Specialties, Inc., as being subcontracted to perform 1 percent of the total contract price. The first two firms were shown as being certified by the Department while Capeletti indicated that, like Pro Contracting, certification for C & G Specialties had been "applied for". The percentage levels (5.04 percent and 1 percent) met the Department established goals. Although Capeletti indicated on its Form No. 1 that MBE certifications had been "applied for", this was incorrect. Neither Pro Contracting or C & G Specialties had in fact filed such an application on that date. Further, C & G Specialties had not applied for certification as of the time of the final hearing in mid-August. Both firms were also conspicuously omitted from the directories published by the Department which listed all MBE firms qualified to participate in Department contracts. On May 10, 1983, the Department Minority Programs Coordinator reviewed the Capeletti filing and found it to be deficient. He then telephoned Capeletti's MBE liaison officer, R. S. Stoddard, and informed him of "possible noncompliance" because of the non-certification of the two firms listed on the Form. He also advised Stoddard that Capeletti would have to submit other "qualified" MBE or WBE firms or provide the Department with evidence of its good faith efforts to meet the contract goals. The next day, May 12, the president of Pro Contracting flew to Tallahassee with an application for certification. Why he waited until after the deadline to seek certification was not disclosed. In any event, by 5:30 p.m. that day, it had been given a "temporary" certification good for ninety days, or until August 12, 1983, subject to a follow-up on-site evaluation of the firm by the Department. The temporary certification was given despite the application being incomplete in several respects and there being an admonition on the form itself that "INCOMPLETE FORMS WILL BE RETURNED." The less than twenty-four hour turnaround time for reviewing the application was by far the quickest time such an application had ever been processed, and a firm issued an MBE certification. In the past, such certifications had taken weeks or months since the Department has up to ninety days to review such applications pursuant to its rules. However, the Coordinator explained that "time was a factor", and justified the expedited approval on this basis. The temporary certificate expired on August 12 without being renewed, but the Coordinator stated it would be changed to a permanent certification on August 22, 1983. There are no Department rules which provide for "temporary" certification. However, the evidence reveals that this type of certificate had been issued to other subcontractors in the past, including Community Asphalt, which was used by Badgett. Because the 1 percent WBE goal was not met, it was necessary that Capeletti satisfy the Department it had made good faith efforts to meet the unmet goals. A "Good Faith Efforts" form specifying the information required to meet this test was sent by the Department on April 28, 1983. The form contained nine questions pertaining to the contractor's effort to meet the contract goal and tracked the criteria enumerated in the Rule. Although the form itself was not returned, Capeletti responded by letter dated May 6 and stated that it had mailed a letter to 85 WBEs and 10 MBEs on April 12 1983 soliciting quotes, and mailed the same letter to various WBE and MBE associations in the State of Florida. It also submitted a list of MBE/WBE firms that had subcontracted on Capeletti jobs in recent years. The reply by Capeletti essentially satisfied four of the nine suggested criteria in Rule 14-78.03(1)(c)2.a.i.-ix. It did not respond to the other five factors. Notwithstanding the failure of Capeletti to fully respond to all of the requested information, the Department recommended that 72 percent of the 1 percent WBE goal be waived since Capeletti had made a good faith effort to meet that goal. In so doing, the Department relied solely upon Capeletti's letter of May 6 as a basis for that determination. This recommendation was concurred in by a representative of the Federal Highway Administration on May 16. This was necessary since federal funds were being used on the project. On May 17, 1983, the Department determined that Capeletti had complied with the Department MBE requirements. This determination was based on the utilization of Pro Contracting to meet the entire 5 percent MBE goal, and the Federal Highway Administration's waiver of 72 percent of the 1 percent WBE goal of the project. On May 20 the Department posted the bids and designated Capeletti as the lowest responsive bidder for the project. The Status of Community Asphalt Respondents have raised the issue of whether Community Asphalt was a certified MBE at the time the bids were submitted on April 27. That subcontractor was used by Badgett to meet the 5 percent MBE goal. Community Asphalt was incorporated on September 22, 1980. Fifty-one percent of the stock is held by two Hispanics while the remaining 49 percent is held by non-Hispanic shareholders, one of whom owns Badgett. The purpose of the business was to qualify as a minority business enterprise for paving work on construction projects. The corporation is structured so that the Hispanic shareholders have ultimate control of the business and can elect the majority of the board of directors. Although Capeletti contended that the 49 percent block of stock can control the corporation's operations, or prevent it from bidding on jobs, sufficient provisions are available in the by-laws, articles of incorporation and statutes to allow effective Hispanic control. Community Asphalt was first certified on a temporary basis by the Department as a minority business enterprise for a 3-month period beginning October 28, 1981. A renewal application for continued certification was filed with the Department around January 7, 1982. That application was never acted upon by the Department despite numerous written and oral inquiries by the applicant and its attorneys over an extended period of time. The lack of action was caused in part by a shortage of personnel in the Department MBE office. Community was orally advised in June, 1982 by a Department MBE representative that its application had been approved and it would be placed on the approved list of MBE subcontractors for participation in Department contracts. Community relied upon this representation and did not pursue the matter further. Thereafter, Community's name appeared in the Department MBE directory provided to contractors for Department projects, including the updated directory used for the April, 1983 letting of projects. Most recently, it was again included in the June, 1983 directory. Badgett relied upon these directories to comply with the MBE goals. Although the Department "routinely" advises MBE contractors in writing whenever their certifications have expired, the Department did not do so in Community's case at the end of its 90-day certification on January 28, 1982, or at any time thereafter. The Department attributed this to an oversight and shortage of personnel. In March, 1983 Badgett submitted a bid on the I-75 and SR 84 Department project in Broward County. On that particular job it had also received a bid quote from Community Asphalt. The Department awarded the contract to Badgett and authorized Community Asphalt to be used to meet the MBE contract goals. It is now performing the contract. Further, Community consistently submitted bids from January, 1982 until the Nova Drive project without any question being raised by the Department and participated in numerous Department jobs over that period of time. Department Practice on MBE Submissions and Waiver of Irregularities The Department views the MBE program as being an opportunity for minority and female owned companies to participate in the road and bridge construction program. According to its Coordinator, the policy in the past has been to "stretch" the rules if necessary to afford MBEs such an opportunity. The MBE Coordinator could not recall ever rejecting a contract for noncompliance by a bidder with the MBE good faith requirements. In situations where a contractor has not submitted its good faith efforts in conjunction with its bid, the Coordinator has allowed contractors to supply such information after the tenth calendar day and even up to twenty-five days thereafter where "continuous communication" occurs, and the contractor is attempting to fulfill the requirements. The Department internally created an awards committee some fourteen years ago which reviews all bids whenever irregularities, discrepancies or unbalancing of bid items occur on a particular job. In determining how to resolve such problems, the committee's primary concerns are to protect the integrity of the competitive bid system and do whatever is in the best interest of the State. The committee did not get involved in the Nova Drive Project, but the director of the division of construction, who sits on the committee, considered the tardiness of Capeletti in complying with the MBE requirements to be a "minor deficiency" and a "waiverable irregularity". He described "major" deficiencies as being a failure to submit a bid bond or not signing the bond, either of which would warrant rejecting an apparent low bidder. Section 3-1 of the Florida Department of Transportation Standard Specifications for Road and Bridge Construction (1982 edition) provides in part as follows: Until the actual award of the contract, however, the right will be reserved to reject any and all proposals and to waive technical errors as may be deemed best for the interest of the State. (Emphasis added) Effects of Cancelling the Contract As noted earlier Capeletti has been performing under the contract since the latter part of June, 1983. Should the contract be cancelled, Capeletti estimates its reimbursable costs from the State to range from $500,000 to $1,000,000. This amount represents expenditures already made for such things as earth-work, drainage structures and pilings and beams ordered or already made. This amount was not considered to be unrealistic by a Department representative. The contract specifications call for the contract to be completed in approximately 550 calendar days. If the work is done at an even pace, around 20 percent of the job will have been completed at the time this recommended order is issued. However, from a construction standpoint, performance of the contract can be terminated at any time and the construction completed by another contractor.
Recommendation Based on foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Transportation enter a final order immediately terminating the contract awarded to Capeletti Brothers, Inc. on the Nova Drive Project, and that the remaining portion of the work under that project be relet for bids. DONE and ENTERED this 10th day of October, 1983, 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 10th day of October, 1983.
