Findings Of Fact The proposed transmission line corridor is for the purpose of connecting a 230 kV line from the City of Tallahassee's existing system to the Georgia Power Transmission grid. The southern terminus of the corridor is in Leon County where the City's 230 kV line running north from the Hopkins' Power Plant makes a right angle turn toward the east, following Interstate Highway 10 (Section 13, Range 1 West, Township 1 North). The northern terminus of the corridor is that point where it ties to the Georgia system in Gadsden County, Florida, just south of the Florida State line in close proximity to the intersection of U.S. Highway 27 and SR 157 (Section 90, Range 1 West, Township 3 North, north of the Watson line). The corridor generally follows a center line conjunct with the Range 1 West range line, except that approximately 2.75 miles north of its southern terminus the corridor bends approximately 25 degrees to the east for a distance of approximately one-half mile before turning north for approximately 1.4 miles at which point the corridor turns west approximately 25 degrees for a distance of approximately 1.2 miles, and then turns east approximately 35 degrees for approximately 8 miles before once again turning north. The corridor encompasses several major highways, including Interstate Highway 10 and U.S. Highway 27. It also encompasses part of the Ochlocknee River, the Gadsden County, Florida landfill, part of the Tallahassee Commercial Airport, and part of the Ochlocknee Wildlife Management Area and Lake Talquin State Recreation Area. Just north of the rest stop on Interstate Highway 10, the corridor includes an area known as Riverwood Acres, a non-platted subdivision. The center line of the corridor bisects the subdivision. From its southern origin north, for approximately the first one mile of the corridor, the width of the corridor is approximately 9/16 mile. Thereafter the width of the corridor is approximately 1/2 mile. The location of the corridor is depicted in Figures 2-3, 2-6A, 2-6B, and 2-6C of the application. There being no more definitive a description of the location of the corridor than that shown in the maps comprising figures 2-6A, B, and C of the application, it is found as a matter of fact that those figures define the parameters of the proposed corridor. The length of the corridor is approximately 15 miles. The purpose of the corridor is to provide a 100 foot right-of-way for a 230 kV transmission line constructed upon H-frame wood poles, with an approximate span of 600 feet. Pursuant to the requirements of Section 403.537, Florida Statutes (1980 Supp.), the Florida Public Service Commission, by order dated March 31, 1981, found that: The construction of the proposed transmission line will enhance electric system reliability and integrity. The proposed transmission line will improve the availability of low-cost electric energy within the State of Florida. The point at which the City of Tallahassee proposes to connect to the construction of Georgia Power Company, and the point at which it proposes to connect to its own system, are the appropriate starting and ending points of the line. The Public Service Commission then concluded that the proposed transmission line is needed. Approximately 11.0 miles of the corridor's center line traverses land that is wooded and undeveloped. The remainder of the corridor center line, 3.9 miles, crosses land that reflects some type of human development or use. That includes land that is currently agricultural, in improved pasture, or simply open, cleared land. Although no residences lie within the corridor's center line, houses do lie elsewhere within the corridor. Several houses are located near the southern end of the corridor just north of Interstate Highway 10 in the area referred to as Riverwood Acres. Several houses are located near the Gadsden County Sanitary Landfill, and scattered houses are located in the corridor to the west of the Concord and to the south of the Darsey communities. Immediately beyond the eastern corridor boundary, but not within the corridor, is a developing neighborhood located in Township 1 north, Range 1 West, Section In that area residential property boundaries abut the eastern corridor boundary. Because of the objection by homeowners in the Riverwood Acres area, the width of the corridor has been slightly extended along the western and eastern boundaries so that the right-of-way may be placed with least impact upon the homes in that area. Approximately 0.05 acres of agricultural land will be directly disturbed by placement of transmission structures. It is expected that agricultural land can continue to be farmed between transmission structures. Where possible, existing road crossings or roads adjacent to the right-of-way will be utilized for maintenance and construction purposes. Where necessary, new access roads will be developed, but only to the extent needed for construction and maintenance of the line. The only major water body crossed by the proposed corridor is the Ochlocknee River. Impacts to the river should be negligible since the line structures on each side of the river will be physically located away from the river banks, and the lines and structures spanning the river will be situated well above the ordinary high water mark as defined by the United States Corps of Engineers. The uncontradicted evidence presented indicates that other streams or small water bodies crossed by the corridor will not be adversely impacted. Similarly, the uncontradicted evidence established that the two wetland areas to be crossed by the corridor center line will not be adversely impacted. A 230 kV transmission line is not considered an extra high voltage transmission line. Lines at 345 kV or larger are considered extra high voltage lines. The uncontradicted evidence establishes that there will be no significant noise impacts from the proposed transmission line operation. Except as otherwise noticed in the Findings of Fact herein, the uncontradicted evidence established that the proposed transmission line, if constructed along a right-of-way in the proposed corridor, pursuant to the conditions of certification, would have no significant adverse effect on the environment. Its impact on the environment will be minimal. Although none of the parties to this proceeding posed any objection to the proposed transmission line corridor and the transmission line to be constructed therein, three members of the public gave testimony in opposition to the site certification at the final certification hearing. The three persons were all residents of Riverwood Acres and were generally expressing the concerns of the neighborhood. Their sincere concern is evidenced by the excellent quality of their presentation. They expressed their opinion that their land value would be diminished by the construction of a transmission line adjacent or over their property. While it is difficult to consider the construction of such a transmission line as an enhancement to the property, as established by the testimony of their property will be diminished by the construction of the transmission line. These public witnesses also expressed a concern for the aesthetic damage to their neighborhood by the construction of this transmission line. It is found as a matter of fact that should the transmission line be constructed over or adjacent to these residential owners in Riverwood Acres, the aesthetic value of their environment would be diminished by the visual impact of the transmission line. Finally, these public witnesses expressed their concern and belief that the effects of the electric and magnetic fields generated by the transmission line would effect the health and welfare of the residents of the neighborhood. However, as established by the testimony of two witnesses expert in the areas of electrical engineering, radiation biology, and biophysics, the electric and magnetic field forces encountered in the vicinity of the transmission line at ground level will have essentially no biological effect, and will be no stronger than similar forces encountered in the normal course of modern daily life. These members of the public presented a thoughtful, well conceived proposed alternative routing which would take the proposed transmission line around their residential neighborhood. However, the evidence presented in this proceeding does not establish that the existence of the alternative proposed by these members of the public by itself indicates that the corridor for which site certification has been requested, will not produce minimal adverse effects on the environment, public health, safety and welfare. The Department of Environmental Regulation, the Department of Veterans and Community Affairs, the Department of Natural Resources, the Florida Game and Fresh Water Fish Commission, and the Northwest Florida Water Management District have all recommended that the proposed transmission line corridor will have minimal, if any, adverse effects on the environment and public health, safety and welfare. Those agencies have recommended no reason why the site should not be certified subject to the conditions proposed by the Department of Environmental Regulation, which conditions are attached to this Recommended Order. Notice of the final certification hearing was published on May 13, 1981, in the Tallahassee Democrat, a daily newspaper published at Tallahassee, in Leon County, Florida.
Recommendation Having reviewed the record of this proceeding, and based upon the Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED that certification, pursuant to the Transmission Lines Siting Act, Chapter 403, Florida Statutes (1980 Supp.), be GRANTED to the City of Tallahassee for the transmission line corridor and the construction of the subject transmission lines as proposed in the application as amended and the evidence admitted to the record. It is further RECOMMENDED that certification be made subject to the Conditions of Certification attached hereto and the further condition pursuant to the requirement in Section 403.531(3), Florida Statutes (1980 Supp.), that the City of Tallahassee shall be required to seek any necessary interests in state lands, the title to which is vested in the Board of Trustees of the Internal Improvement Trust Fund, from the Board prior to engaging in any activity on or affecting such lands. DONE AND ENTERED this 23rd day of July 1981 in Tallahassee, Florida. CHRIS H. BENTLEY Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of July 1981. COPIES FURNISHED: Louis F. Hubener, Esquire Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, Florida 32301 C. Laurence Keesey, Esquire Department of Veteran and Community Affairs Room 204, Carlton Building Tallahassee, Florida 32301 Paul Sexton, Esquire Public Service Commission 101 East Gaines Street Tallahassee, Florida 32301 Douglas Stowell, Esquire Northwest Florida Water Management District Route 1, Box 3100 Havana, Florida 32333 Kenneth Gilleland, Esquire Game and Fresh Water Fish Commission Bryant Building 620 South Meridian Street Tallahassee, Florida 32301 John Williams, Esquire Department of Natural Resources 3300 Commonwealth Building Tallahassee, Florida Ted Steinmeyer, Esquire Leon County Attorney Leon County Courthouse, Room 203 Tallahassee, Florida 32301 John Shaw Curry, Esquire Gadsden County Attorney Post Office Box 469 Quincy, Florida 32351 Barrett Johnson, Esquire c/o Mahoney, Hadlow & Adams Post Office Box 471 Tallahassee, Florida 32302 James R. Brindell, Esquire Post Office Box 3103 Tallahassee, Florida 32303 (Representing Riverwood Acres Neighborhood Association)
The Issue Whether the Department of Corrections? action to withdraw its Intent to Award and to reject all replies to ITN 12-DC-8396 is illegal, arbitrary, dishonest, or fraudulent, and if so, whether its Intent to Award is contrary to governing statutes, rules, policies, or the solicitation specifications.
Findings Of Fact The DOC is an agency of the State of Florida that is responsible for the supervisory and protective care, custody, and control of Florida?s inmate population. In carrying out this statutory responsibility, the Department provides access to inmate telephone services. On April 15, 2013, the DOC issued the ITN, entitled “Statewide Inmate Telephone Services, ITN 12-DC-8396,” seeking vendors to provide managed-access inmate telephone service to the DOC. Responses to the ITN were due to be opened on May 21, 2013. The DOC issued Addendum #1 to the ITN on April 23, 2013, revising one page of the ITN. The DOC issued Addendum #2 to the ITN on May 14, 2013, revising a number of pages of the ITN, and including answers to a number of vendor questions. EPSI, GTL, and Securus are providers of inmate telephone systems and services. Securus is the incumbent contractor, and has been providing the Department with services substantially similar to those solicited for over five years. No party filed a notice of protest to the terms, conditions, or specifications contained in the ITN or the Addenda within 72 hours of their posting or a formal written protest within 10 days thereafter. Replies to the ITN were received from EPSI, GTL, Securus, and Telmate, LLC. Telmate?s reply was determined to be not responsive to the ITN. Two-Part ITN As amended by Addendum #2, section 2.4 of the ITN, entitled “ITN Process,” provided that the Invitation to Negotiate process to select qualified vendors would consist of two distinct parts. In Part 1, an interested vendor was to submit a response that described certain Mandatory Responsiveness Requirement elements, as well as a Statement of Qualifications, Technical Response, and Financial Documentation. These responses would then be scored using established evaluation criteria and the scores would be combined with cost points assigned from submitted Cost Proposals. In Part 2, the Department was to select one or more qualified vendors for negotiations. After negotiations, the Department would request a Best and Final Offer from each vendor for final consideration prior to final award decision. The ITN provided that the Department could reject any and all responses at any time. High Commissions and Low Rates Section 2.5 of the ITN, entitled “Initial Cost Response,” provided in part: It is the Department?s intention, through the ITN process, to generate the highest percentage of revenue for the State, while ensuring a quality telephone service with reasonable and justifiable telephone call rate charges for inmate?s family and friends similar to those available to the public-at- large. Section 2.6 of the ITN, entitled “Revenue to be Paid to the Department,” provided in part that the Department intended to enter into a contract to provide inmate telephone service at no cost to the Department. It provided that, “[t]he successful Contractor shall pay to the Department a commission calculated as a percentage of gross revenues.”1/ The commission paid by a vendor is the single largest expense in the industry and is an important aspect of any bid. Contract Term Section 2.8 of the ITN was entitled “Contract Term” and provided: It is anticipated that the initial term of any Contract resulting from this ITN shall be for a five (5) year period. At its sole discretion, the Department may renew the Contract in accordance with Form PUR 1000 #26. The renewal shall be contingent, at a minimum, on satisfactory performance of the Contract by the Contractor as determined by the Department, and subject to the availability of funds. If the Department desires to renew the Contracts resulting from this ITN, it will provide written notice to the Contractor no later than thirty days prior to the Contract expiration date. Own Technology System Section 3.4 of the ITN provided in part: The successful Contractor is required to implement its own technology system to facilitate inmate telephone service. Due to the size and complexity of the anticipated system, the successful Contractor will be allowed a period of transition beginning on the date the contract is executed in which to install and implement the utilization of its own technology system. Transition, implementation and installation are limited to eighty (80) days. The Department realizes that some "down time" will occur during this transition, and Respondents shall propose an implementation plan that reduces this "down time" and allows for a smooth progression to the proposed ITS. GTL emphasizes the language stating that the successful contractor must implement “its own” technology system, and asserts that the technology system which EPSI offers to install is not owned by it, but by Inmate Calling Solutions, LLC (ICS), its subcontractor. However, EPSI demonstrated that while the inmate telephone platform, dubbed the “Enforcer System,” is owned by ICS now, that EPSI has a Master User Agreement with ICS and that an agreement has already been reached that before the contract would be entered into, a Statement of Work would be executed to create actual ownership in EPSI for purposes of the Florida contract. GTL alleges that in EPSI?s reply, EPSI relied upon the experience, qualifications, and resources of its affiliated entities in other areas as well. For example, GTL asserts that EPSI?s claim that it would be providing 83 percent of the manpower is false, since EPSI has acknowledged that EPSI is only a contracting subsidiary of CenturyLink, Inc., and that EPSI has no employees of its own. While it is clear that EPSI?s reply to the ITN relies upon the resources of its parent to carry out the terms of the contract with respect to experience, presence in the state, and personnel, EPSI demonstrated that this arrangement was common, and well understood by the Department. EPSI demonstrated that all required capabilities would be available to it through the resources of its parent and subcontractors at the time the contract was entered into, and that its reply was in conformance with the provisions of the ITN in all material respects. EPSI has the integrity and reliability to assure good faith performance of the contract. Call Recording Section 3.6 of the ITN, entitled “Inmate Telephone System Functionality (General),” provided in part: The system shall provide the capability to flag any individual telephone number in the inmate?s „Approved Number List? as „Do Not Record.? The default setting for each telephone number will be to record until flagged by Department personnel to the contrary. Securus alleges that section 3.6 of the ITN implements Department regulations2/ and that EPSI?s reply was non-responsive because it stated that recording of calls to specific telephone numbers would be deactivated regardless of who called that number. Securus alleges that this creates a security risk because other inmates calling the same number should still have their calls recorded. EPSI indicated in its reply to the ITN that it read, agreed, and would comply with section 3.6. While EPSI went on to say that this capability was not connected to an inmate?s PIN, the language of section 3.6 does not mention an inmate?s PIN either. Read literally, this section requires only the ability to “flag” any individual telephone number that appears in an inmate?s number list as “do not record” and requires that, by default, calls to a telephone number will be recorded until it is flagged. EPSI?s reply indicated it could meet this requirement. This provision says nothing about continuing to record calls to that same number from other inmates. Whether or not this creates a security risk or is what the Department actually desired are issues which might well be discussed as part of the negotiations, but this does not affect the responsiveness of EPSI?s reply to section 3.6. Furthermore, Mr. Cooper testified at hearing that EPSI does have the capability to mark a number as “do not record” only with respect to an individual inmate, at the option of the Department. EPSI?s reply conformed to the call-recording provisions of section 3.6 of the ITN in all material respects. Call Forwarding Section 3.6.8 of the ITN, entitled “System Restriction, Fraud Control and Notification Requirements,” provided that the provided inmate telephone services have the following security capability: Ability to immediately terminate a call if it detects that a called party?s telephone number is call forwarded to another telephone number. The system shall make a “notation” in the database on the inmate?s call. The system shall make this information available, in a report format, to designated department personnel. In response to an inquiry noting that, as worded, the ITN did not technically require a vendor to have the capability to detect call-forwarded calls in the first place, the Department responded that this functionality was required. Securus alleges that EPSI is unable to comply with this requirement, citing as evidence EPSI?s admission, made some months before in connection with an RFP being conducted by the Kansas Department of Corrections, that it did not yet have this capability. EPSI indicated in its reply to the ITN that it read, agreed, and would comply with this requirement. As for the Kansas solicitation, EPSI showed that it now possesses this capability, and has in fact installed it before. EPSI?s reply conformed to the call-forwarding provisions of section 3.6.8 of the ITN in all material respects. Keefe Commissary Network Section 5.2.1 of the ITN, entitled “Respondents? Business/Corporate Experience,” at paragraph e. directed each vendor to: [P]rovide and identify all entities of or related to the Respondent (including parent company and subsidiaries of the parent company; divisions or subdivisions of parent company or of Respondent), that have ever been convicted of fraud or of deceit or unlawful business dealings whether related to the services contemplated by this ITN or not, or entered into any type of settlement agreement concerning a business practice, including services contemplated by this ITN, in response to a civil or criminal action, or have been the subject of any complaint, action, investigation or suit involving any other type of dealings contrary to federal, state, or other regulatory agency regulations. The Respondent shall identify the amount of any payments made as part of any settlement agreement, consent order or conviction. Attachment 6 to the ITN, setting forth Evaluation Criteria, similarly provided guidance regarding the assessment of points for Business/Corporate Experience. Paragraph 1.(f) provided: “If any entities of, or related to, the Respondent were convicted of fraud or of deceit or unlawful business dealings, what were the circumstances that led to the conviction and how was it resolved by the Respondent?” Addendum #2. to the ITN, which included questions and answers, also contained the following: Question 57: In Attachment 6, Article 1.f. regarding respondents “convicted of fraud, deceit, or unlawful business dealing . . .” does this include associated subcontractors proposed in this ITN? Answer 57: Yes, any subcontractors you intend to utilize on this project, would be considered an entity of and related to your firm. As a proposed subcontractor, ICS is an entity of, or related to, EPSI. There is no evidence to indicate that ICS has ever been convicted of fraud or of deceit or unlawful business dealings. There is no evidence to indicate that ICS has entered into any type of settlement agreement concerning a business practice in response to a civil or criminal action. There is no evidence to indicate that ICS has been the subject of any complaint, action, investigation, or suit involving any other type of dealings contrary to federal, state, or other regulatory agency regulations. The only evidence at hearing as to convictions involved “two individuals from the Florida DOC” and “two individuals from a company called AIS, I think that?s American Institutional Services.” No evidence was presented that AIS was “an entity of or related to” EPSI. Conversely, there was no evidence that Keefe Commissary Network (KCN) or anyone employed by it was ever convicted of any crime. There was similarly no evidence that KCN entered into any type of settlement agreement concerning a business practice in response to civil or criminal action. It was shown that KCN “cooperated with the federal government in an investigation” that resulted in criminal convictions, and it is concluded that KCN was therefore itself a subject of an investigation involving any other type of dealings contrary to federal, state, or other regulatory agency regulations. However, KCN is not an entity of, or related to, EPSI. KCN is not a parent company of EPSI, it is not a division, subdivision, or subsidiary of EPSI, and it is not a division, subdivision, or subsidiary of EPSI?s parent company, CenturyLink, Inc. EPSI?s reply conformed to the disclosure requirements of section 5.2.1, Attachment 6, and Addendum #2 of the ITN in all material respects. Phases of the ITN Section 6 describes nine phases of the ITN: Phase 1 – Public Opening and Review of Mandatory Responsiveness Requirements Phase 2 – Review of References and Other Bid Requirements Phase 3 – Evaluations of Statement of Qualifications, Technical Responses, and Managed Access Solutions3/ Phase 4 – CPA Review of Financial Documentation Phase 5 – Review of Initial Cost Sheets Phase 6 – Determination of Final Scores Phase 7 – Negotiations Phase 8 – Best and Final Offers from Respondents Phase 9 – Notice of Intended Decision Evaluation Criteria in the ITN As amended by Addendum #2, the ITN established scoring criteria to evaluate replies in three main categories: Statement of Qualifications (500 points); Technical Response (400 points); and Initial Cost Sheets (100 points). It also provided specific guidance for consideration of the commissions and rates shown on the Initial Cost Sheet that made up the pricing category. Section 6.1.5 of the ITN, entitled “Phase 5 – Review of Initial Cost Sheet,” provided in part: The Initial Cost Proposal with the highest commission (percentage of gross revenue) to be paid to the Department will be awarded 50 points. The price submitted in Table 1 for the Original Contract Term, and the subsequent renewal price pages for Table 1 will be averaged to determine the highest commission submitted. All other commission percentages will receive points according to the following formula: (X/N) x 50 = Z Where: X = Respondents proposed Commission Percentage to be Paid. N = highest Commission Percentage to be Paid of all responses submitted. Z = points awarded. * * * The Initial Cost Proposal with the lowest telephone rate charge will be awarded 50 points. The price submitted in Table 1 for the Original Contract Term, and the subsequent renewal price pages for Table 1 will be averaged to determine the highest commission submitted. All other cost responses will receive points according to the following formula: (N/X) x 50 = Z Where: N = lowest verified telephone rate charge of all responses submitted. X = Respondent?s proposed lowest telephone rate charge. Z = points awarded. The ITN as amended by Addendum #2 provided instructions that initial costs should be submitted with the most favorable terms the Respondent could offer and that final percentages and rates would be determined through the negotiation process. It included the following chart:4/ COST PROPOSAL INITIAL Contract Term 5 years ONE Year Renewal TWO Year Renewal THREE Year Renewal FOUR Year Renewal FIVE Year Renewal Initial Department Commission % Rate Proposed Initial Blended Telephone Rate for All Calls* (inclusive of surcharges) The ITN, including its Addenda, did not specify selection criteria upon which the determination of best value to the state would be based. Allegation that EPSI Reply was Misleading On the Certification/Attestation Page, each vendor was required to certify that the information contained in its reply was true and sufficiently complete so as not to be misleading. While portions of its reply might have provided more detail, EPSI did not mislead the Department regarding its legal structure, affiliations, and subcontractors, or misrepresent what entity would be providing technology or services if EPSI was awarded the contract. EPSI?s reply explained that EPSI was a wholly owned corporate subsidiary of CenturyLink, Inc., and described many aspects of the contract that would be performed using resources of its parent, as well as aspects that would be performed through ICS as its subcontractor. Department Evaluation of Initial Replies The information on the Cost Proposal table was reviewed and scored by Ms. Hussey, who had been appointed as the procurement manager for the ITN. Attempting to follow the instructions provided in section 6.1.5, she added together the six numbers found in the boxes indicating commission percentages on the Cost Proposal sheets. One of these boxes contained the commission percentage for the original five-year contract term and each of the other five boxes contained the commission percentage for one of the five renewal years. She then divided this sum by six, the number of boxes in the computation chart (“divide by six”). In other words, she calculated the arithmetic mean of the six numbers provided in each proposal. The Department had not intended for the commission percentages to be averaged in this manner. Instead, they had intended that a weighted mean would be calculated. That is, they intended that five times the commission percentage shown for the initial contract term would be added to the commission percentages for the five renewal years, with that sum then being divided by ten, the total number of years (“divide by ten”). The Department did not clearly express this intent in section 6.1.5. Mr. Viefhaus testified that based upon the language, Securus believed that in Phase 5 the Department would compute the average commission rate the way that Ms. Hussey actually did it, taking the arithmetic mean of the six commission percentages provided by each vendor, and that therefore Securus prepared its submission with that calculation in mind.5/ Mr. Montanaro testified that based upon the language, GTL believed that in Phase 5 the Department would “divide by ten,” that is, compute the weighted mean covering the ten-year period of the contract, and that GTL filled out its Cost Proposal table based upon that understanding. The DOC posted a notice of its intent to negotiate with GTL, Securus, and EPSI on June 3, 2013. Telmate, LLC, was not chosen for negotiations.6/ Following the Notice of Intent to Negotiate was this statement in bold print: Failure to file a protest within the time prescribed in Section 120.57(3), Florida Statutes, or failure to post the bond or other security required by law within the time allowed for filing a bond shall constitute a waiver of proceedings under Chapter 120, Florida Statutes. On June 14, 2013, the DOC issued a Request for Best and Final Offers (RBAFO), directing that Best and Final Offers (BAFO) be provided to the DOC by June 18, 2013. Location-Based Services The RBAFO included location-based services of called cell phones as an additional negotiated service, requesting a narrative description of the service that could be provided. The capability to provide location-based services had not been part of the original ITN, but discussions took place as part of the negotiations. Securus contends that EPSI was not a responsible vendor because it misrepresented its ability to provide such location-based services through 3Cinteractive, Inc. (3Ci). EPSI demonstrated that it had indicated to the Department during negotiations that it did not have the capability at that time, but that the capability could easily be added. EPSI showed that due to an earlier call it received from 3Ci, it believed that 3Ci would be able to provide location- based services to it. EPSI was also talking at this time to another company, CTI, which could also provide it that capability. In its BAFO, EPSI indicated it could provide these services, explained that they would require payments to a third- party provider, and showed a corresponding financial change to their offer. No competent evidence showed whether or not 3Ci was actually able to provide that service on behalf of EPSI, either at the time the BAFO was submitted, or earlier. EPSI showed that it believed 3Ci was available to provide that service, however, and there is no basis to conclude that EPSI in any way misrepresented its ability to provide location-based services during negotiations or in its BAFO. Language of the RBAFO The RBAFO provided in part: This RBAFO contains Pricing, Additional Negotiated Services, and Value Added Services as discussed during negotiation and outlined below. The other specifications of the original ITN, unless modified in the RBAFO, remain in effect. Respondents are cautioned to clearly read the entire RBAFO for all revisions and changes to the original ITN and any addenda to specifications, which are incorporated herein and made a part of this RBAFO document. Unless otherwise modified in this Request for Best and Final Offer, the initial requirements as set forth in the Department?s Invitation to Negotiate document and any addenda issued thereto have not been revised and remain as previously indicated. Additionally, to the extent that portions of the ITN have not been revised or changed, the previous reply/initial reply provided to the Department will remain in effect. These two introductory paragraphs of the RBAFO were confusing. It was not clear on the face of the RBAFO whether “other specifications” excluded only the pricing information to be supplied or also the specifications indicating how that pricing information would be calculated or evaluated. It was not clear whether “other specifications” were the same thing as “initial requirements” which had not been revised. It was not clear whether scoring procedures constituted “specifications.” While it was clear that, to the extent not revised or changed by the RBAFO, initial replies that had been submitted -- including Statements of Qualifications, Technical Response, Financial Documentation, and Cost Proposals -- would “remain in effect,” it was not clear how, if at all, these would be considered in determining the best value to the State. In the RBAFO under the heading “PRICING,” vendors were instructed to provide their BAFO for rates on a provided Cost Proposal table which was virtually identical to the table that had been provided earlier in the ITN for the evaluation stage, including a single square within which to indicate a commission rate for the initial five-year contract term, and five squares within which to indicate commission rates for each of five renewal years. The RBAFO stated that the Department was seeking pricing that would provide the “best value to the state.” It included a list of 11 additional services that had been addressed in negotiations and stated that, “in order to provide the best value to the state,” the Department reserved the right to accept or reject any or all of these additional services. It provided that after BAFOs were received, the Negotiation Team would prepare a summary of the negotiations and make a recommendation as to which vendor would provide the “best value to the state.” The RBAFO did not specify selection criteria upon which the determination of best value to the State would be based. In considering commission percentages as part of their determination as to which vendor would receive the contract, the Negotiation Team decided not to consider commissions that had been listed by vendors for the renewal years, concluding that the original five-year contract term was all that was assured, since renewals might or might not occur. On June 25, 2013, the DOC posted its Notice of Agency Decision stating its intent to award a contract to EPSI. Protests and the Decision to Reject All Replies Subsequent to timely filing notices of intent to protest the intended award, Securus and GTL filed Formal Written Protests with the DOC on July 5 and 8, 2013, respectively. The Department considered and compared the protests. It determined that language in the ITN directing that in Phase 5 the highest commission would be determined by averaging the price for the original contract term with the prices for the renewal years was ambiguous and flawed. It determined that use of a table with six squares as the initial cost sheet was a mistake. The Department determined that the language and structure of the RBAFO could be read one way to say that the Department would use the same methodology to evaluate the pricing in the negotiation stage as had been used to evaluate the Initial Cost sheets in Phase 5, or could be read another way to mean that BAFO pricing would not be evaluated that way. It determined that the inclusion in the RBAFO of a table virtually identical to the one used as the initial cost sheet was a mistake. The Department determined that the language and the structure of the RBAFO could be read one way to require further consideration of such factors as the Statement of Qualifications and Technical Response in determining best value to the State, or could be read another way to require no further consideration of these factors. The Department prepared some spreadsheets demonstrating the varying results that would be obtained using “divide by six” and “divide by ten” and also considered a spreadsheet that had been prepared by Securus. The Department considered that its own Contract Manager had interpreted the Phase 5 instructions to mean “divide by six,” while the Department had actually intended the instructions to mean “divide by ten.” The Department had intended that the Negotiation Team give some weight to the renewal-year pricing, and had included the pricing table in the RBAFO for that reason, not simply to comply with statutory requirements regarding renewal pricing. The Department determined that the way the RBAFO was written and the inclusion of the chart required at least some consideration of ten-year pricing, and that vendors had therefore been misled when the Negotiation Team gave no consideration to the commission percentages for the renewal years. Specifically, based upon the Securus protest, the Department determined that the RBAFO language had been interpreted by Securus to require that the Phase 5 calculation of average commission percentage be carried over to evaluation of the pricing in the BAFOs, which Securus had concluded meant “divide by six.” The Department further determined that based upon the GTL protest, the RBAFO language had been interpreted by GTL to require the Department to consider the renewal years in pricing, as well as such things as the Statement of Qualifications and Technical Response in the BAFO stage. The Department determined that had “divide by six” been used in evaluating the BAFOs, Securus would have a computed percentage of 70 percent, higher than any other vendor. The Department concluded that the wording and structure of the ITN and RBAFO did not create a level playing field to evaluate replies because they were confusing and ambiguous and were not understood by everyone in the same way. Vendors naturally had structured their replies to maximize their chances of being awarded the contract based upon their understanding of how the replies would be evaluated. The Department concluded that vendor pricing might have been different but for the misleading language and structure of the ITN and RBAFO. The Department did not compute what the final award would have been had it applied the scoring procedures for the initial cost sheets set forth in section 6.1.5 to the cost elements of the BAFOs. The Department did not compute what the final award would have been had it applied the scoring procedures for the Statement of Qualifications and Technical Response set forth in section 6.1.3 to the BAFOs. Ms. Bailey testified that while she had originally approved the ITN, she was unaware of any problems, and that it was only later, after the protests to the Notice of Intended Award had been filed and she had reviewed the specifications again, that she had come to the conclusion that the ITN and RBAFO were flawed. Following the protests of the intended award by GTL and Securus, on July 23, 2013, the DOC posted to the Vendor Bid System a Notice of Revised Agency Decision stating the DOC?s intent to reject all replies and reissue the ITN. On August 5, 2013, EPSI, GTL, and Securus filed formal written protests challenging DOC?s intended decision to reject all replies. Securus subsequently withdrew its protest to DOC?s rejection of all replies. As the vendor initially notified that it would receive the contract, EPSI?s substantial interests were affected by the Department's subsequent decision to reject all replies. GTL alleged the contract had wrongly been awarded to EPSI and that it should have received the award, and its substantial interests were affected by the Department's subsequent decision to reject all replies. The Department did not act arbitrarily in its decision to reject all replies. The Department did not act illegally, dishonestly, or fraudulently in its decision to reject all replies. EPSI would likely be harmed in any re-solicitation of bids relative to its position in the first ITN, because potential competitors would have detailed information about EPSI?s earlier reply that was unavailable to them during the first ITN. An ITN requires a great deal of work by the Department and creates a big demand on Department resources. The decision to reject all replies was not undertaken lightly. The State of Florida would likely benefit in any new competitive solicitation7/ because all vendors would be aware of the replies that had been submitted earlier in response to the ITN, and bidders would likely try to improve upon those proposals to improve their chances of being awarded the contract.
Recommendation Upon consideration of the above findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Corrections issue a final order finding that the rejection of all replies submitted in response to ITN 12-DC-8396 was not illegal, arbitrary, dishonest, or fraudulent, and dismissing all four protests. DONE AND ENTERED this 1st day of November, 2013, in Tallahassee, Leon County, Florida. S F. SCOTT BOYD 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 1st day of November, 2013.
The Issue The issue for determination is whether Petitioners should be placed on the State of Florida’s Convicted Vendor List.
Findings Of Fact On January 5, 2005, in the United States District Court for the Northern District Court of California, Technologies entered a plea of guilty to the commission of two crimes: an antitrust violation, involving the submission of fraudulent and non-competitive bids, and a mail fraud violation. Technologies’ conviction arose out of its participation in the E-Rate Program — a federal program designed to provide funding to public schools and public libraries for telecommunication services, including local and long-distance telephone service, internet access, and internal connections. The E-Rate Program is operated under the offices of the Federal Communications Commission, hereinafter FCC, and is administered by the Universal Services Administrative Company, hereinafter USAC. On January 28, 2005, by Notice of Public Entity Crime, Inter-Tel provided notice of this conviction to DMS. On March 9, 2005, Inter-Tel provided DMS a supplement to its (Inter-Tel’s) notice of January 28, 2005. On August 29, 2006, by Notice of Intent to Place Person or Affiliate on Convicted Vendor List, DMS issued a notice of intent to place Technologies on the convicted vendor list. Technologies received DMS’ notice of August 29, 2006, on August 31, 2006. On September 18, 2006, Inter-Tel timely filed a petition for formal administrative hearing to determine whether it is in the public interest for Technologies to be placed on the State of Florida Convicted Vendor List. The nature and details of the public entity crime for which Technologies was convicted are fully set forth in the criminal information filed in the U.S. District Court for the Northern District Court of California. As specified in the criminal information, Technologies’ public entity crime implicated specific employees working on specific transactions in Michigan and California only. In addition, the conduct was isolated to one of fifty-nine branch offices of Technologies and one related operating unit. As part of its plea agreement, Technologies agreed to pay $1,721,000.00 in criminal fines. In addition to these fines, Technologies agreed to pay to the United States $7,000,000.00 as part of a civil settlement between it an the United States. The $7,000,000.00 was comprised of a cash payment in the amount of $6,740,458.12 and the release of the United States from invoices in the amount of $259,541.88 for work Technologies and other affiliated subsidiaries had performed under the E-Rate Program but had not yet been compensated for. On January 6, 2005, one day after the plea agreement and civil settlement agreement were accepted by the Court, Technologies made cash payments to the United States in the amounts of $1,721,000.00 and $6,740,458.12. In doing so, Technologies paid all fines, penalties, and damages owed in connection with its conviction. Confirmation of the wire transfers to the United States was provided. As confirmed by the Department of Justice, hereinafter DOJ, Inter-Tel cooperated with the federal investigation by voluntarily supplying a wide array of information and documents to DOJ and by encouraging current and former employees to cooperate with DOJ’s investigators. DOJ characterized this cooperation by Inter-Tel as enabling it “to expand [its] knowledge base to criminal behavior at school districts not previously covered in other pleas” and noted that “the nature, speed, and extent of Inter-Tel’s cooperation has been very helpful in developing [its] investigation to date.” Inter-Tel has fully cooperated with DMS in connection with its investigation under Section 287.133, Florida Statutes. Inter-Tel promptly provided information as requested by DMS and made its attorneys available to DMS to facilitate collection of records and information vital to DMS’ investigation. The employees who were identified as being responsible for the conduct leading to the public entity crime to which Technologies pled guilty were Jason King, Bill Boehm, Jim O’Hare, Earl Nelson, and Tim Scarafiotti. Jason King resigned from Technologies on August 14, 2003. Bill Boehm resigned from Technologies on September 24, 2004. Jim O’Hare was terminated from Technologies on August 14, 2002. Earl Nelson retired from Technologies on April 30, 2002. Tim Scarafiotti resigned from Technologies on October 30, 2002. No business or employment relationships currently exist between Technologies and Jason King, Bill Boehm, Jim O’Hare, Earl Nelson, or Tim Scarafiotti. Inter-Tel has implemented an intensive, multi-year program of monitoring, training, and auditing with respect to government procurement contracts, including a comprehensive anti-fraud and antitrust compliance plan. On February 15, 2005, Inter-Tel formally adopted a compliance program that includes: (1) an Antitrust and Anti- Fraud policy; (2) a government sales policy; (3) and E-Rate code of conduct; and (4) detailed description of the procedures for administering these policies, including employee training, reporting of suspected violations, disciplinary action, internal monitoring, external reporting, and the responsibilities of Inter-Tel’s compliance officer. In January 2005, Inter-Tel hired a full-time compliance officer, whose job it is to ensure that Inter-Tel conducts its activities involving public entities in accordance with applicable laws and the compliance program. The compliance officer’s responsibilities include at least monthly meetings with key executives in Inter-Tel’s accounting, finance, installations, legal, marketing, and sales departments to ensure compliance. The current compliance officer has over ten years of legal experience specializing in public procurement. While the settlement agreement with the United States only requires training for employees who deal in public procurement, Inter-Tel’s management has mandated that all employees of Inter-Tel, and its subsidiaries, including Technologies, receive extensive training on the E-Rate program, antitrust, fraud, government procurement ,and ethics. To accomplish this, Inter-Tel developed internal training programs and, in addition, retained a private company that specializes in developing compliance training. To date, all employees of Inter-Tel and its subsidiaries, including Technologies, have received the above-mentioned trainings, and new hires receive the training shortly after beginning employment with Inter-Tel, or any of the affiliated subsidiaries, including Technologies. In 2004, Inter-Tel established an ethics hotline to permit employees and other third parties to report suspected violations of Inter-Tel’s Code of Business Conduct anonymously by telephone and the internet. In response to the fraudulent conduct, on June 30, 2006, the FCC issued its Notice of Debarment debarring Technologies from the E-Rate Program for one year, effective June 30, 2006 to June 30, 2007. The standard FCC debarment period is three years. The FCC debarment is limited in scope and does not affect Inter-Tel’s ability to continue contracting with other federal agencies. During the period of 2002 to 2004, Technologies transacted business with over twenty public entities within the State of Florida. Technologies is one of three companies that have been approved by DMS’ Division of State Purchasing to provide Key System telecommunication equipment to public entities in Florida. Since 2000, Inter-Tel has organized yearly company- wide United Way fundraisers, through which Inter-Tel has raised in excess of $100,000.00. After Hurricane Katrina, Inter-Tel conducted a one-month internal company-wide fundraising campaign and raised over $43,000.00 in donations from employees. Inter-Tel matched funds donated by employees for a total of over $85,000.00 raised for Hurricane Katrina victims. Following the terrorism events of September 11, 2001, employees raised over $117,000.00 for the American Red Cross. Inter-Tel matched the employee-donated funds for a total of over $241,000.00 donated by Inter-Tel to the 9/11 relief effort. A table reflecting all the charitable and civic campaigns participate in, or organized by, Inter-Tel since 2000 was provided.
The Issue Whether the Respondent, Bernard Hart, violated Section 112.313(4), Florida Statutes, by accepting free cable television service from a company holding a franchise with the City of Tamarac, Florida? Whether the Respondent violated Section 112.313(6), Florida Statutes, by using his official position to obtain such free cable television services? Whether the Respondent violated Section 111.011, Florida Statutes (1987), by failing to disclose such free cable television service?
Findings Of Fact General. The Respondent, Bernard Hart, was elected Mayor of the City of Tamarac (hereinafter referred to as "Tamarac"), Broward County, Florida, in March, 1986. The Respondent was the Mayor of Tamarac at all times pertinent to the Complaint at issue in this proceeding. The Respondent was sworn in as Mayor of Tamarac on April 26, 1986. Prior to holding office as Mayor of Tamarac, the Respondent had never held any public elective office. The Respondent served as Mayor of Tamarac for approximately two years until March, 1988. When the Respondent served as Mayor of Tamarac, the position was a part-time position and the Respondent was paid $90.00 a week. The Respondent is approximately 80 years of age. The Respondent does not now hold public office. Cable Television Services in The City of Tamarac. During the term of the Respondent's office as Mayor of Tamarac cable television services in Tamarac were provided pursuant to a franchise granted from Tamarac. From June, 1983, until February, 1988, the franchise for the cable television system in Tamarac was held by American Cable Systems of Florida, Ltd. (hereinafter referred to as "American Cable"). In approximately February, 1988, Continental Cablevision, Inc. (hereinafter referred to as "Continental"), acquired control of American Cable and took over the management of cable television services in Tamarac. American Cable's and Continental's Free Cable Television Services. During all times relevant to this proceeding, it was the policy of American Cable and Continental (hereinafter jointly referred to as the "Cable Companies"), to provide free cable service to public officials in the areas the Cable Companies served, including Tamarac. Free cable television services were provided to public officials by the Cable Companies only if requested by the public official. During the time that the Respondent served as Mayor of Tamarac, public officials other than the Respondent, including some in Broward County, received free cable television services from the Cable Companies. Any public official that requested free cable television service from the Cable Companies was requested to "monitor" the service he or she received. The request to monitor, however, was not the real reason why the free cable service was provided to the public official. The Cable Companies did not expect any public official to report to the Cable Companies or expect that the Cable Companies would gain any useful information from any report. The request to monitor, when made, was made to make the public official feel more comfortable about getting a free service. Monitoring cable television services would not provide a great deal of useful information to the Cable Companies because the picture quality received at one location would not necessarily reflect the quality of the picture received at other locations. The reason that the Cable Companies provided free cable television services to public officials was described as "good will." It was assumed that providing free cable television services to public officials "couldn't hurt". Although the weight of the evidence failed to prove that any public official, including the Respondent, agreed to vote on any matter favorably to the Cable Companies or otherwise use their official position (or the Respondent's position) to benefit the Cable Companies, the free cable television services were provided by the Cable Companies in the hope that public officials, including the Respondent, would be favorably inclined to the Cable Companies. Free cable television services were provided to public officials to influence them to look favorably on the Cable Companies. The free cable television services provided by the Cable Companies to public officials were generally not available to persons, who were not public officials. Free cable television services were, however, provided to officials of some condominium associations and employees of the Cable Companies. As a general rule, the Cable Companies did not solicit, offer, or invite public officials to take free cable television services. The free cable services were only provided if the public official requested the services. American Cable did offer free services to some public officials in the "western part of Broward County in 1986". Tamarac is in the western part of Broward County. The weight of the evidence, however, failed to prove if the Respondent or any other official of Tamarac was approached by the Cable Companies and offered free cable television services. The Cable Companies have also provided free cable television services in municipal buildings, such as police departments, fire stations and city halls. When the Respondent took office as Mayor in 1986, free cable television services were being provided by American Cable to the Mayor's office in the Tamarac City Hall. Walter Falck, the Mayor of Tamarac from March, 1976, though March, 1984, had the cable outlet moved into the Mayor's office in the Tamarac City Hall. Mayor Falck did not, however, review cable services when he received a complaint about the service from a constituent. The Mayor referred all complaints to the Tamarac City Manager to handle. Free Cable Television Services Provided to the Respondent. On April 12, 1986, cable television was installed by American Cable in the Respondent's home. From April 12, 1986, until January 30, 1990, the Respondent received basic cable television service, pay channels other than an adult channel, and remote control from the Cable Companies. The cable television services received by the Respondent from the Cable Companies during and after his term as Mayor of Tamarac were received without any charge to, or the payment by, the Respondent. The Respondent did not request that the free cable television services be disconnected or that he be charged for the services at any time while he was Mayor of Tamarac or when he left office in March, 1988. During late 1989, or early 1990, an employee of Continental was reviewing a list of persons who were receiving free cable television services. The employee noticed the Respondent's name on the list. The employee knew that the Respondent was no longer a public official. Therefore, the Respondent was informed that he would have to begin paying for the cable television services he was receiving in order to continue receiving the services. The Respondent requested that the service be disconnected. The free cable television services the Respondent received from the Cable Companies were terminated on January 30, 1990, after he indicated he did not want to pay for the services and requested that they be disconnected. In light of the policy of the Cable Companies that free cable television services were provided only upon a request of a public official, it is concluded that the Respondent requested, directly or indirectly, that the free cable television services be provided to him. Pending Cable Television Service Rate Increase. Prior to the Respondent's election as Mayor of Tamarac, American Cable had requested that Tamarac approve a rate increase. Because of the number of complaints about the services provided by American Cable, the requested rate increase was tabled for six months. American Cable's rate increase request was still pending when the Respondent took office as Mayor of Tamarac and when the Respondent was first provided with free cable television services by American Cable. Subsequent to the Respondent becoming Mayor of Tamarac, the American Cable rate increase request was approved. On May 14, 1986, on first reading the rate increase request was approved unanimously. On second reading the rate increase request was approved 4-1. Both readings of the American Cable rate increase request occurred after the Respondent began receiving free cable television services from American Cable. The Respondent voted in favor of the American Cable rate increase request on both readings. The Respondent's vote was the last vote cast. The American Cable increase in rate was contingent upon certain outstanding problems being corrected by July 1, 1986. The rate increase raised the rates charged in Tamarac to the middle of the rates charged by America Cable. The weight of the evidence failed to prove that the Respondent voted in favor of the American Cable rate increase in 1986, in exchange for the free cable television services provided to him by American Cable. In January, 1987, Tamarac lost the right to regulate the rates that Cable Companies charged. Municipalities, however, still had the right to grant franchises to operate cable television systems within their jurisdiction after January, 1987. The Respondent's Reason for Accepting Free Cable Television Services. Mr. Falck, the former Mayor of Tamarac, had received numerous complaints from residents of Tamarac about the quality of cable television services in the area. When the Respondent became Mayor in 1986, the Respondent also received complaints from his constituents about cable television services in Tamarac. The Respondent received complaints prior to the approval of American Cable's rate increase. After becoming Mayor, the Respondent had the cable television service in the Mayor's office in City Hall removed. The Respondent was in the Mayor's office until approximately noon each day. The Respondent removed the cable television hookup from the Mayor's office because he did not want to spend the time he spent in the Mayor's office monitoring cable television. The Respondent reported complaints that he received while serving as Mayor of Tamarac to the City Manager. He did not call the Cable Companies directly and report any complaints or problems with the cable television service he was aware of. Other Tamarac officials, including former Mayor Falck, Helen Massaro, who served on the Tamarac City Council in 1972, and from 1974 to 1988, and Sydney Stein, who served on the Tamarac City Council from 1984 until 1988, reported complaints they received about cable television services to the City Manager to handle. The Respondent testified during the formal hearing that he accepted the free cable television services while he was Mayor of Tamarac because he "considered it a function that [he] was doing on behalf of the citizens of the city." Transcript of June 4, 1991, Formal Hearing, page 115, lines 13-14. The Respondent indicated that he accepted the free services so that he could "monitor" the service when he received constituent complaints. The Respondent's testimony is rejected because of the following facts: The Respondent was aware that reception varied from location to location; The Respondent never contacted the Cable Companies directly to report any results of his purported monitoring; The Respondent removed the cable hookup from the Mayor's office. Therefore, the Respondent was not able to perform his "monitoring" service during the part of each day that he was in the Mayor's office; The Respondent continued to receive the free cable television services after he was no longer the Mayor of Tamarac and his need to "monitor" the services ended. The Respondent also testified that Sydney Stein, a member of the Tamarac City Council when the Respondent became Mayor, suggested that he accept the free cable television service so that the Respondent would be able to determine whether the complaints were valid. The Respondent indicated that Mr. Stein offered to make the necessary arrangements with American Cable for the free service to be provided to the Respondent. Based upon the weight of the evidence, it is concluded that Mr. Stein did not make the arrangements with American Cable for the Respondent's free cable services. Even if the evidence had proved that Mr. Stein requested that American Cable provide the Respondent with free cable television services, he would have done so on behalf of, and as agent for, the Respondent. Based upon the fact that the Cable Companies provided free cable television services to public officials to influence them to look favorably on the Cable Companies, it is concluded that the Respondent was provided free cable television services by the Cable Companies during his term as Mayor of Tamarac to influence him in his official capacity. The weight of the evidence also proved that the Respondent should have known why he was being provided free cable television services. The Respondent had not received free cable television services prior to being elected Mayor of Tamarac. The Respondent should have been aware, therefore, that cable television services were not generally available to members of the public without charge. Immediately after his election he was provided the free cable service. He should have realized that the free service was being provided to him because he had become the Mayor of Tamarac. Shortly thereafter the Respondent was required to vote on a rate increase request from American Cable, the company that first provided him with the free cable service. The Respondent should have had no doubt at that time why he was being provided free cable television services. Value of the Free Cable Television Services. The retail value of the free cable television services that the Respondent received between April 12, 1986, and March of 1988, was $1,649.43. The retail value of the free cable television services that the Respondent received for the entire period of time that free services were provided to the Respondent was $3,416.46. Although the Respondent received part of the $3,416.46 worth of free cable television services after his term as Mayor of Tamarac expired, all of the free services were received as a direct result of his position as Mayor of Tamarac. The cost to the Cable Companies for the free services provided to the Respondent was relatively insignificant. Failure to Report. The Respondent did not report the value of the free cable television services he received while Mayor of Tamarac pursuant to Chapter 111, Florida Statutes (1987).
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission on Ethics enter a Final Order and Public Report: (1) finding that the Respondent, violated Sections 112,313(4) and 112.313(6), Florida Statutes, as alleged in Complaint No. 90-31; (2) concluding that the Commission has no jurisdiction over the Respondent's alleged violation of Section 111.011, Florida Statutes, and, therefore, that portion of Complaint No. 90-31 is dismissed; and (3) imposing a civil penalty of $7,000.00 on the Respondent. DONE and ENTERED this 21st day of August, 1991, in Tallahassee, Florida. LARRY J. SARTIN 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 21st day of August, 1991. APPENDIX TO RECOMMENDED ORDER The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Advocate's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 and 4. 26 and 31. The weight of the evidence proved that the services was installed on April 12, 1986. 3 27. 4 28. 5-6 35 and 37. 7-8 See 29 and 41. 9 29. 10 Not supported by the weight of the evidence. The Respondent's testimony on this point was not credible. 11 30. 12 56. 13 52. 14 53. 15 Not supported by the weight of the evidence. See 55. 16 23. 17 24. 18 25. 19 47. 20 Not relevant and cumulative. 21-22 47. 23 45. 24 11. 25 19. 26 12 and 20. But see 21. 27 18 and 32. 28 49. 29 18. 30 14-15. 31 15-16. 32 Hereby accepted. 33 16. 34-35 48. 36 49. 37 50. 38 35, 37 and 51. 39* 48-51. * Appears as a second proposed finding of fact 38. The Respondent's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 1. 2 2. 3 3. 4 4. 5 8-9. 6-7 10. 8-12 Hereby accepted. 13 23-24. 14 24 and 42. 15 Not supported by the weight of the evidence. 16 33-34. 17 43. 18 13. Not supported by the weight of the evidence. Mr. Olmetti admitted that his testimony on this point was "total speculation." See 22. Although true, what is currently being provided is not relevant. 22 13 and 22. See 14-18. 23-27 Although these proposed findings of fact are generally true, they are not relevant to this proceeding. 28 See 12 and 20-21. 29 21. Official recognition that Tamarac is in western Broward County is taken. 30 18. See 21. Not supported by the weight of the evidence. Hereby accepted. See 32 and 49. 35 See 50-51. 36 See 18 and 50-51. 37 55. Not supported by the weight of the evidence. Not supported by the weight of the evidence. See 18 and 49. Not supported by the weight of the evidence. Hereby accepted. 42 44-45. 43 45. 44 5. Not supported by the weight of the evidence. The Respondent's testimony on this point was not credible. Although true, not relevant to this proceeding. The evidence also proved that the Respondent was well aware that Mr. Stein did not dictate what the Respondent should or should not do. 47 47. Hereby accepted. Not supported by the weight of the evidence. Mr. Stein merely testified that it was possible that made such a statement to the Respondent but that he did not known whether he actually did. 50-53 Not supported by the weight of the evidence. See 49. 54 Not supported by the weight of the evidence. Mr. Stein did not answer the question about whether he would release his records because an objection to the question was sustained as not being relevant. 55 43. 56 Hereby accepted. 57 45. 58 36. 59 See 37. The rate increase was not approved until all votes were cast. 60 38. 56. Why the Respondent failed to report the free cable service is not supported by the weight of the evidence. Not supported by the weight of the evidence. See 48. 63-64 Not relevant. 65 25 and 46-47. 66 Although generally true, this proposed finding of fact is not relevant. 67 36. 68 39. Not supported by the weight of the evidence. The improvements were made before the rate increase was finally approved. Although generally true, not relevant. 71-72 41. 73-74 Although generally true, not relevant. 75 Not supported by the weight of the evidence. The witnesses who testified on this matter indicated that his testimony about what discounts the Respondent might have been entitled to was merely speculation. 76-77 Although generally true, not relevant. COPIES FURNISHED: Virlindia Doss Assistant Attorney General Department of Legal Affairs The Capitol, Suite 1601 Tallahassee, Florida 32399-1050 Harry Boreth, Esquire Lloyd Glasser, Esquire GLASSER & BORETH 8751 West Broward Boulevard Plantation, Florida 33324 Bonnie J. Williams Executive Director Commission on Ethics The Capitol, Room 2105 Post Office Box 6 Tallahassee, Florida 32302-0006
The Issue The issue for determination is whether Respondent should grant Petitioner's application for a commercial telephone seller license pursuant to provisions of Chapter 501, Part IV, Florida Statutes.
Findings Of Fact Petitioner is Gerovicap Pharmaceutical Corporation, Inc., a Nevada Corporation. Petitioner was incorporated in 1988. Petitioner has no offices in any state other than Nevada. Petitioner has been operating telemarketing services for a period of approximately 10 years. Respondent is the state agency charged with the enforcement of state regulation of telemarketing businesses in accordance with provisions of Chapter 501, Part IV, Florida Statutes. The application submitted by Petitioner to Respondent for licensure as a commercial telephone seller listed three legal actions taken against Petitioner in the states of Florida, Oregon and Wisconsin. Petitioner entered into an Agreed Permanent Injunction and Final Judgment in the Circuit Court of the 11th Judicial Circuit for Dade County, Florida, on October 5, 1992. At that time, Petitioner accepted responsibility for running a mail advertisement promotion in Florida, advising potential customers to call a toll free number to place orders although Petitioner had not met the State of Florida's registration requirements. As a part of the settlement, Petitioner agreed to refrain from advertising and promoting sweepstakes in Florida in violation of state requirements and paid a total of $2,500 to cover a civil penalty, as well as attorney fees and costs. Petitioner entered into an Assurance of Voluntary Compliance in Circuit Court in Marion County, Oregon, on August 7, 1992. Petitioner agreed at that time to refrain from engaging in telephone solicitations in the state of Oregon and to pay $7,500 in investigative costs and attorney fees to the Oregon Department of Justice. On September 11, 1992, a Consent Judgment was entered in the Circuit Court for Waukesha County, Wisconsin. Based upon the stipulation of the parties, the judgment enjoined Petitioner from engaging in certain sweepstakes activities and ordered Petitioner to pay a civil forfeiture to the state of Wisconsin in the amount of $10,000 for various violations of that state's telemarketing regulations. In accordance with provisions of Section 501.612(1)(c), Florida Statutes, Respondent denied Petitioner's application for licensure in the State of Florida as a commercial telephone seller as a result of the Florida, Oregon and Wisconsin legal actions.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered denying Petitioner's application. DONE AND ENTERED this 20th day of July, 1993, in Tallahassee, Leon County, Florida. DON W. DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of July, 1993. APPENDIX The following constitutes my rulings, pursuant to requirements of Section 120.59, Florida Statutes, on proposed findings of fact submitted by the parties. Petitioner's Proposed Findings 1.-2. Accepted in substance. 3.-5. Rejected, relevance. 6.-8. Subordinate to HO findings on this point. Rejected, unnecessary. Accepted, but not verbatim. 11.-12. Rejected, argument, relevancy. Accepted. Rejected, weight of the evidence. Rejected, relevancy. Respondent's Proposed Findings 1.-7. Accepted in substance. Rejected, recitation of statute. Accepted. COPIES FURNISHED: Terry Fleischer, President Gerovicap Pharmaceutical Corporation 1785 East Sahara Ave., Suite 160 Las Vegas, Nevada 89104 Jerome A. DePalma, Esquire 3201 South Maryland Parkway Suite 326 Las Vegas, Nevada 89109 John S. Koda, Esquire Office of General Counsel Florida Department of Agriculture and Consumer Services Room 515, Mayo Building Tallahassee, Florida 32399-0800 Hon. Bob Crawford Commissioner of Agriculture The Capitol Tallahassee, Florida 32399-1550 Richard Tritschler General Counsel 513 Mayo Building Tallahassee, Florida 32399-0800 Brenda Hyatt, Chief Bureau of Licensing & Bond Department of Agriculture Mayo Building, Rm 508 Tallahassee, Florida 32399-0800
Findings Of Fact Petitioner, Larry Zeigler, started working for the Quincy Telephone Company as a lineman in the cable maintenance section in 1976 or 1977. His duties include the installing of telephone cable, both buried and aerial. He worked on the job with Claude Butler, Cleveland Zeigler, and Melton W. (Toby) Bruce. These four men, with several others, made up the entire cable and construction section. Among the men in that section, Butler had the most seniority and as a result did most of the paperwork. The job assignments were banded out to the crews by the supervisor of the section and it was company practice that the senior individual was the one in charge and normally responsible for accomplishing the paperwork. Telephone installation at this Company is primarily divided into two major sections. Cable and construction (C&C) is responsible for the outside installation of cable and telephone lines up to a building. Installation and repair (I&R) is a separate department which deals with inside wiring and the actual connection of the telephone instruments. C&C is and was at the time in question supervised by Bruce Gaston. I&R was not. In early May, 1983, Petitioner was transferred for a period of time to I&R to help out though he was still assigned to C&C. Right after lunch on May 27, 1983, he was directed to go to see Bruce Gaston, his supervisor, who advised him that the company was being forced to lay off a number of employees and that he, petitioner, had been selected as one of those. Petitioner contends that neither Gaston nor any other company official ever gave him a reason for discharge other than the force reduction, but this is not so. He claims, however, Gaston did advise at that time that he was aware of petitioner's previous discrimination complaint and that petitioner should not file one this time. Petitioner was confused over these developments. When he was sent over to I&R to help out, he was told that he was the only one in C&C with the skills needed at I&R. If that were the case, he reasoned, why should he be laid off without warning. In addition, at one point during 1982, Petitioner had asked Gaston for a transfer to I&R but was refused at that time because, according to petitioner, Gaston said he was needed in C&C. Petitioner was one of three individuals from the C&C section who were laid off. The others were Horace Jenkins, who is black, and Toby Bruce, who is white. Several individuals from I&R were also laid off and in the interim since the layoff, at least one new employee has been hired. Petitioner is convinced that he could do the job either in C&C or in I&R which was filled by outside recruitment since he was laid off. When a new parent company took over the operation of the Quincy Telephone Company in early 1983, there was a meeting held for all company employees at which a senior management official advised the employees that no layoffs were anticipated. Petitioner denies having any serious trouble with his employment while working for the company. To be sure, there were some rough spots, however. He had some trouble working with Melvin Locke, a more senior employee. According to Petitioner, Locke was lazy and did not want to work, pushing his work off on the Petitioner. They had words and Petitioner brought the matter up with Mr. Gaston. The following day, Mr. Forshay talked with Petitioner about it and advised him to do whatever Locke directed. Though Petitioner did not consider this to be particularly fair, nonetheless, he did as he was told. According to Gaston, however, Petitioner was assigned to work with Locke for on-the-job training in maintenance. It appeared he was selective as to what orders he would follow, refusing to learn how to do maintenance in those areas that did not interest him. On another occasion, according to Petitioner, when he drove a company vehicle into the work lot, Forshay told him he was driving too fast. In doing so, he says, Forshay cursed him in front of outsiders. On still another occasion, he disagreed with the way Forshay handled one of his absences. In summary of Petitioner's position, he feels that he was discriminated against when discharged because: he was there longer than others who were not discharged; less experienced people were retained instead of him; he had several disputes with Mr. Forshay; and, he filed a prior discrimination complaint which he won and had to be rehired. In May, 1983, Gaston was advised by Mrs. Corbin, the general manager of the company, that there was going to be a reduction in force. He was instructed how to identify those to be retained and those to be discharged. The emphasis was to be placed on selecting the best people for retention - not the worst people for discharge. In other words, supervisors were to examine their people closely with a positive attitude to identify those with the best records and the best potential rather than looking for reasons to discharge those with lesser records or potential. He was advised that of the 9 technicians working for him he would be allowed to retain only 6. Using the criteria given him he selected the 6 he would be able to keep which resulted in Petitioner, Mr. H. Jenkins, and Toby Bruce being identified as those not to be retained. Gaston then discussed his selections with Mr. Forshay who in turn forwarded them to Mrs. Corbin with his concurrence. Mrs. Corbin made the ultimate selection and decision. In going over the personnel records of the people in his section, Gaston made a memo on each one which he subsequently placed in each employee's file. There were several significant factors on the memo about Mr. Zeigler which contributed to his being one of the lowest three rated individuals in the section. These were: He frequently missed work for reasons other than illness. Review of Petitioner's time records kept by Mr. Gaston showed that in 1980. Petitioner was late 6 times and absent 11 times. All absences referred to here are unexcused absences wherein the employee did not call in advance to let anyone know he would not be in. This required a readjustment of the work schedule made up in advance on the expectation of the employee's presence. In 1981, he was late 5 times and absent 4 days. Gaston considered this to be an abuse of time off and Petitioner's absentee and tardy rates were much higher than those of the other employees in the section. Other disciplinary problems: On October 5, 1981, Petitioner requested that his time sheet be falsified (that time taken off as personal time be reported as sick leave). Petitioner did not deny this which, according to the company personnel handbook is grounds for dismissal. Though Gaston recommended this, dismissal action was not taken because it appeared to be an isolated incident. Petitioner broke his arm and took time off to see the doctor with the understanding he would call to report when he would be back to work. He failed to call and could not be reached by phone because his service had been disconnected for nonpayment of the bill even though, as a company employee, he got local service free and a discount on toll service. At this point in time, the company required employees to have a phone so that they could be reached in an emergency. Petitioner knew this. Again, here, Gaston recommended disciplinary action and again none was taken even though this was the second time this had happened. Employee conflict with Mr. Locke referenced above. Petitioner's training scores in courses which, though not required, would be beneficial to him in the performance of his duties, were below standard. He was given the opportunity to take the same material on two separate occasions: once at a company school in Winter Park where his scores were unsatisfactory, and again, from a black instructor in Quincy where, again, his score was unsatisfactory. No other student failed to achieve a satisfactory score. Error rate. The reports for January through May, 1983 and after the force reduction, kept by Gaston on the basis of checks made at random with full knowledge of the employees, reveal that the three employees who were laid off from this section were weak with Petitioner having a very high error rate. After the lay off the remaining people doing the same amount of work as before, made fewer errors than while these three were still employed. Paperwork. From time to time, Petitioner was in charge of details which required the completion of paperwork. His paperwork was unsatisfactory. He would let other people on the job do the paperwork. In making the decision as to who was to be retained and who was to be released, seniority was not the key element. Performance and capability were more important and seniority was important only if it carried with it the experience and competence needed. On the basis of the above factors, Gaston felt, and it is clear that his judgment was accurate, that Petitioner's record, not considering his seniority, reflected limited potential and competence. Mr. Gaston did not want to lay off any employees, black or white, because he felt there was ample work to do to keep the entire work force occupied. The work has not let up since the lay off but has increased. Notwithstanding Petitioner's comments that he was not given a reason for his lay off, Mr. Gaston fully explained to each terminated employee why he was being laid off. Mr. Bruce indicates that Gaston told him that if he had his choice, Bruce would still be working. This is true. A similar comment was made to each of the three men being discharged and it had no racial connotation at all. Gaston did want to keep each employee if he could. Race has never been an issue in the department and he always felt race relations were good. Mr. Gaston discharged Petitioner because he was the weakest employee in the section. He was the employee with the least potential for being able to accomplish all the tasks anticipated after the cutback. There are some minor inconsistencies in the official records as reflected by the employee performance appraisal forms rendered on the Petitioner and the personal work records kept by Gaston in his department. They are such things as tardiness and absences and some of the factors relied upon by Gaston in his analysis of the employee which he testified to at the hearing do not specifically appear on the appraisal forms. Gaston justified not putting them there by contending that he felt that at the time the deficiencies were noted, the appropriate corrective action was taken and the matter would not have been raised again had it not been for the cutback. Use of these factors was appropriate in weighing Petitioner's future use to the company in a comparison against other employees. Mr. Gaston's evaluation of Petitioner appears to have been accurate as other employees with whom he worked, such as Evant Jenkins, indicating that when Petitioner was assigned to him for training for several weeks, Petitioner did well in those areas in which he had an interest, but completely failed to learn anything that did not interest him. Mr. Butler also worked with Petitioner frequently and felt that though Petitioner could do the work, there were times he was difficult to work with and insisted on doing things his own way. Petitioner's uncle, Cleveland Zeigler, knows Petitioner's work and rates him as an acceptable worker. He states, however, that the people hired since the lay off in 1983 are high quality people and the work standards and performance have improved since that time. Toby Bruce feels that both Petitioner and Jenkins were highly qualified, perhaps even more so than he. He also feels that the layoffs were not appropriately done in some case with the wrong people being let go. He feels that he was not treated fairly because he had a house mortgage on which to pay, two cars on which to pay, and a family to support and with that, he was let go without notice with only two weeks severance pay. His obvious bias makes his credibility questionable. Mrs. Corbin made her ultimate decision on who would be retained and who would not on the basis of the entire personnel record of each employee which she reviewed over the several weeks prior to the cutback. She contends she had no choice in implementing the layoffs - that though she fought against them, she was directed by higher headquarters to put them into effect. She is convinced that Petitioner is a good construction man but his performance reports showed that he needs training in maintenance and it is her confirmed opinion that he could not compete with those identified for retention. It was on this basis and not on race that the decision was made to let him go. Race has not been an issue with the company and in fact there is a very active and strong equal opportunity program in effect. Of the 11 people cut from the total work force, 6 were white and 5 were black. Even after the cutback, blacks still accounted for 32 percent of the staff of 65.
Recommendation Based on the foregoing, therefore, it is RECOMMENDED that the petitioner, Larry Zeigler's Petition for Relief be denied. RECOMMENDED in Tallahassee, Florida, this 29th day of March, 1985. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 29th day of March, 1985. COPIES FURNISHED: Paul D. Srygley, Esquire 1030 East Lafayette Street Tallahassee, Florida 32301 Blutcher B. Lines, Esquire P.O. Box 5500 Quincy, Florida 32351 Donald A. Griffin, Executive Director Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32303
The Issue The issue for determination is whether Respondent should grant Petitioner's application for a commercial telephone seller's license.
Findings Of Fact Petitioner, Stanley Sarentino, Jr. (Sarentino) is the owner and president of the The A/C Guy, Inc. (The A/C Guy) an air-conditioning service business based in Pompano Beach, Florida. The A/C Guy was incorporated in 1996, and serves residential and business customers in Broward and Palm Beach Counties. Respondent Department of Agriculture and Consumer Services (the Department) is the state agency charged with the enforcement of state regulation of telemarketing businesses in accordance with the provisions of the Florida Telemarketing Act, Chapter 501, Part IV, Florida Statutes (2000) (the Telemarketing Act). Sarentino has worked in the air-conditioning business in South Florida for over ten years. Both as an employee of other companies and since he formed The A/C Guy, Sarentino works exclusively as an air-conditioning mechanic. Sarentino has no expertise in, and has never been involved with, the daily running of the business, nor in the marketing of services, at the A/C Guy. Neither has Sarentino worked in the business side of any of the prior companies in which he was employed. Sarentino is assisted in managing The A/C Guy by his wife of 10 years. The Sarentinos have three children, and the family is well regarded in the community. Prior to the marriage, Sarentino's life was less exemplary. In 1991, Sarentino was charged with felony transportation of stolen stock certificates. Close in time to the stock charges, Sarentino was charged with unlawfully purchasing cocaine. Both incidents were disposed of by plea agreements which spared Sarentino a jail sentence. Since then, Sarentino has devoted himself to “turning his life around” by attending church, providing for his growing family, and otherwise occupying himself with lawful pursuits. Recently, Sarentino has made efforts to grow his small business. Those efforts included hiring John Frank Aiello, Jr. (Aiello) as full-time General Manager of The A/C Guy in the spring of 2001. Sarentino and Aiello came to believe that The A/C Guy had grown about as much as it could via word of mouth and print media advertising. They desired to expand the customer base for the business through telemarketing. Under the provisions of the Telemarketing Act, individuals who wish to have their business engage in telemarketing are required to be licensed (the Department). Aiello prepared a telemarketing license application for Sarentino in accordance with the instructions contained in the application package provided by the Department. Before commencing to prepare the application, Sarentino and Aiello carefully reviewed the licensing criteria. They paid special attention to the requirement that any criminal background be disclosed, and acted in good faith to disclose Sarentino’s history with as much precision as Sarentino’s 10-year-old memory would allow. The Department’s independent investigation corroborated that Sarentino had truthfully provided all requested information. Since his successful completion of probation for the decade-old incidents revealed on his telemarketing application, Sarentino has been a law abiding citizen. All applications for a telemarketer's license must be accompanied by a non-refundable $1500 processing fee. Applicants must also provide proof that they have paid the premium and have otherwise fulfilled the requirements to obtain a $50,000 bond from a private bonding company. The bond premium in this case was $1000.00. It is also necessary for applicants to provide extensive information about the business in whose name telemarketing will be conducted, along with information about individuals affiliated with the business, so that the Department may investigate their backgrounds for the public’s protection. Sarentino spent in excess of $350.00 in accounting fees for the preparation of financial statements required for the application. Prior to investing the time and incurring the expense associated with the application process, both of which are considerable, Sarentino carefully considered the question of whether he had a realistic chance to obtain a license. At the time he submitted his application, Sarentino reasonably believed, based upon the information provided by the Department itself, that his application would not be automatically rejected on account of his decade-old legal difficulties. After Sarentino’s application was submitted, Aiello, in his capacity as The A/G Guy general manager, had telephone conversations with the Department’s Regulatory Consultant Tom Kenny (Kenny) to follow-up on the status of the application. During the course of such conversations, Kenny revealed that the plea to the stock charge as well as the plea to the cocaine charge---each, by itself---would trigger the denial of the license application once the Department had independently confirmed that Sarentino had indeed truthfully disclosed the pleas. The evidence established and the Department conceded that there is an informal, unwritten practice enforced by Kenny's supervisor, James R. Kelly (Kelly), the Department’s Director of the Division of Consumer Services, that a plea of guilty to a felony charge, no matter what the felony, no matter how remote in time, no matter whether the applicant was rehabilitated or not will automatically result in the denial of a license application. The Department has no written rules, policies, or guidelines to which a citizen may refer in order to be apprised that the applications of individuals like Sarentino, and those similarly situated, are, in fact, dead on arrival. The Department's interpretation of the law is directly contrary to the discretionary language of the statute, which plainly does not foreclose all possibility that mitigating factors would be taken into account by Department officials in evaluating an applicant's criminal history. Sarentino has fulfilled all the statutory criteria for licensure. The Department would have granted the license were it not for its unwritten policy that the statute requires that any plea to a criminal charge mandates automatic denial.
Recommendation Based on the foregoing, it is hereby recommended that a Final Order be entered by the Department granting a commercial telephone seller's license to Stanley Sarentino, Jr. DONE AND ENTERED this 28th day of September, 2001, in Tallahassee, Leon County, Florida. FLORENCE SNYDER RIVAS 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 28th day of September, 2001. COPIES FURNISHED: James Curran, Esquire 633 Southeast Third Avenue Suite 201 Fort Lauderdale, Florida 33301 William N. Graham, Esquire Department of Agriculture and Consumer Services Mayo Building, Room 515 407 South Calhoun Street Tallahassee, Florida 32399-0800 Brenda D. Hyatt, Bureau Chief Bureau of License and Bond Department of Agriculture and Consumer Services 541 East Tennessee Street India Building Tallahassee, Florida 32308 Honorable Terry L. Rhodes Commissioner of Agriculture Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Richard Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810
The Issue The central issue in this case is whether Petitioner should be awarded Bid No. 432-730-310-W for configurations 1, 2, and 3, Service Area 1.
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, I make the following findings of fact: The ITB for Bid No. 432-730-310-W consisted of three sections: general conditions, special conditions, and technical specifications. Bidders were evaluated on their technical and non-technical responses to the ITB. Once the Department determined the bidders to be compliant with their non-technical responses, they were ranked according to the evaluation award criteria described in Appendix F of the ITB. Once ranked, the Department forwarded the bid responses to the engineering staff of the Division of Communications for a technical review. This technical review consisted of verifying a lowest compliant bidder and a competitive compliant bidder. To complete the technical review the engineering staff considered the responses submitted on the ITB forms, technical literature provided by the bidder, and technical responses submitted to supplement other information. To the extent that an ambiguity in one response was satisfactorily explained elsewhere in the bid documentation, the bidder was given the benefit of the doubt and found to be responsive to the ITB. Prior to submitting bids, all bidders were given an opportunity to raise questions regarding the ITB at a pre-bid conference conducted by the Department. Petitioner's representative attended the conference and received a copy of the specimen bid. The ITB required specific mandatory responses. Failure to include the mandatory information resulted in the disqualification of the bid. An equipment list for the baseline system was a mandatory requirement of the ITB. Identification of the manufacturer and the part number, if any, were required to be provided. Another mandatory feature required by the ITB was a "handsfree" intercom. The ITB defined this feature as follows: Handsfree answer and talk back on intercom: Enables a station user to answer an intercom call through the station instrument's internal speaker/microphone without lifting the instruments handset. (This feature shall not be controlled by the calling party instrument intercom button.) Speed-dialing was another mandatory feature of the ITB. This feature could be provided at the station (an individual telephone) or by the system. If at the station, there was no requirement that the instrument retain memory in the event of a power outage. The central memory of the system, however, had to retain its memory in the event of a power failure. The ITB prohibited a method of programming which required access to the inside of the Key Service Unit (KSU) to make switch settings or set a switch to enter and/or leave the program mode. All mandatory operational service features of the ITB were listed on page 27, Section 3.4. Optional operational service features and equipment were listed on page 34, Section 3.16.8 of the ITB. An optional operational feature listed was "Station Message Detail and Equipment." The bidding of an SMDR or an option for an SMDR was not required. No bidder was disqualified because it failed to bid an SMDR or an SMDR option. All bidders were required to submit a spare parts price list. Any bidder failing to submit the list was disqualified. Any bidder which submitted the list automatically met the requirement. The lists were not evaluated as art of the bid criteria and no bidder was disqualified based upon the content of the information supplied on the list. Configuration 1 The Department determined Petitioner to be the seventh lowest bidder for configuration 1. Lower bidders, in order of their ranking, were Henkels & McCoy, Southern Bell Advanced, St. Joe Communications, Inter-Tel, Lanier Business, and Tel-Plus Communications. Tel Plus was considered the low compliant bidder and Inter-Tel was the competitive compliant bidder. Following a complete review of the bid responses, the parties agreed that Southern Bell Advanced, St. Joe Communications, and Lanier Business were non-compliant for configuration 1. The Henkels & McCoy bid provided a "handsfree" feature as described above in paragraph 8. The Henkels & McCoy bid did not provide an SMDR or an SMDR option. The Inter-Tel bid did not provide an SMDR or an SMDR option. The Tel Plus bid included a spare parts price list. The Tel Plus bid included an equipment list for the baseline system, however, such list did not completely and accurately describe the baseline system. The discrepancies with the equipment list were fully explained elsewhere in Tel Plus' bid response. Configuration 2 The Department determined Petitioner to be the fourth lowest bidder for configuration 2. Lower bidders, in order of their ranking, were Inter-Tel, Tel Plus Communications, and St. Joe Communications. St. Joe was determined to be non-compliant, leaving Tel Plus as the low compliant bidder and Inter-Tel as the competitive compliant bidder. The Inter-Tel bid provided a statement indicating the equipment bid would be modified to relocate a "DIP" switch to the outside of the KSU. This modification was necessary to comply with the requirement described in paragraph This modification is a minor, simple procedure done by many technicians. No documentation was provided as to how Inter-Tel intended to make the modification. The parties agreed, however, that the modification could be done. The Inter-Tel bid provided the speed-dialing feature described in paragraph 9 at the station. The findings of fact relating to configuration 1 and the Tel Plus bid are applicable to configuration 2. Configuration 3 The Department determined Petitioner to be the seventh lowest bidder for configuration 3. Lower bidders, in order of their ranking, were Business Telephone Systems, Henkels & McCoy, Marcom Telecommunications, Lanier Business, Tel Plus Communications, and Inter-Tel. Inter-Tel was determined to be the low compliant bidder with Henkel & McCoy the competitive compliant bidder. Following a complete review of the bid responses, the parties agreed that Marcom, Tel Plus and Lanier were non- compliant for configuration 3. The Business Telephone bid included a spare parts price list. The Business Telephone bid failed to include on the baseline equipment list the surge protector part number, however, such information was provided elsewhere in the bid response. The Business Telephone bid failed to include a part number for wiring, however, the part number for wiring was not required. The Henkels & McCoy bid included a spare parts price list. The Henkels & McCoy bid failed to list a console card on the baseline equipment list, however, this was to be provided with the console which was properly described elsewhere in the bid response. The findings of fact relating to configuration 2 and the Inter-Tel bid are applicable to configuration 3. Petitioner's bid for configuration 1 was $3641.08. The lowest responsive bid was $2343.00. Petitioner's bid for configuration 2 was $5407.97. The lowest responsive bid was $4723.00. Petitioner's bid for configuration 3 was $12,136.90. The lowest responsive bid was $9271.00. The parties stipulated that Petitioner timely filed its notice of intent to protest and the formal protest of bid award.
Recommendation Based on the foregoing, it is RECOMMENDED that the Department of General Services enter a Final Order dismissing the formal protest of the Petitioner. DONE and ENTERED this 5th day of January, 1988, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of January, 1988. APPENDIX Rulings on Findings of Fact submitted by Petitioner: Paragraph 1 is accepted. Paragraph 2 is accepted. Paragraph 3 is accepted in part. The information requested on the spare parts price list was for planning purposes only. Response of hourly rate etc. was not required to comply with the ITB. Paragraph 4 is accepted; see Finding of Fact paragraph 13. Paragraph 5 is accepted. 6 With regard to paragraphs 6-8, to the extent such paragraphs track the language of the ITB they are accepted; however, the SMDR or SMDR option was not a mandatory item of the bid. It was indicated as an optional operational feature. To the extent paragraph 9 sets forth optional operational features (as described in Section 3.16.8 of the ITB) it is accepted; however this specific proposed Finding is irrelevant and unnecessary to the conclusion of issues raised in this proceeding. Paragraph 10 is accepted. Paragraph 11 is rejected. The SMDR or SMDR option was an optional operational feature. No bidder was disqualified because it did not have the SMDR or an SMDR option. Paragraph 12 is accepted. Paragraph 13 is accepted. Paragraph 14 is accepted. Paragraph 15 is accepted. Paragraph 16 is accepted. Paragraph 17 is accepted. With regard to paragraphs 18-20, to the extent such paragraphs track the information on p.23 of ITB they are accepted; however, the listing of the printed circuit card may not be required when bid as a component of the console which is properly described in the bid response. Paragraphs 21-23 are accepted, however, speed dialing may be provided at the station which does not require memory retention. Paragraph 24 is accepted. Paragraphs 25-26 are accepted. Paragraphs 27-29 are accepted. Paragraphs 30-33 are rejected. Each paragraph makes a conclusion contrary to the weight of evidence. Paragraph 34 is accepted. Paragraph 35 is rejected as unnecessary. For the reasons explained in the conclusions of law, whether Petitioner was or was not compliant is not material. Assuming, arguendo, Petitioner was compliant, it still lacked sufficient standing to challenge the awards. Paragraph 36-38 are rejected as contrary to the weight of evidence. Paragraphs 39-40 are accepted. Paragraphs 41-44 are rejected as contrary to the weight of the evidence. Rulings on Findings of Fact submitted by the Department. Paragraphs 1-7 are accepted. Paragraph 8 is accepted to the extent it rephrases the definition found in the ITB. Paragraphs 9-11 are accepted. With regard to paragraph 12, the system was required to retain memory. Accordingly, that reference is accepted, however, the station was not required to retained memory. Paragraphs 13-15 are accepted. Paragraphs 16-18 are accepted. Paragraphs 19-21 are accepted. Paragraph 22 is accepted in part as it correctly restates the ranking of the bidders; the rest of the paragraph is rejected as argumentative. Paragraph 23 is accepted in part as it correctly states the ranking of the bidders and disqualifications; however the rest is rejected as argumentative. Paragraph 24 is accepted in part as it correctly states the ranking of the bidders, however, the rest is rejected as argumentative. Paragraph 25 is rejected as unnecessary. Paragraph 26 is accepted. COPIES FURNISHED: Edward W. Dougherty, Jr., Esquire Post Office Box 11127 Tallahassee, Florida 32302-3127 Susan B. Kirkland, Esquire Department of General Services 453 Larson Building Tallahassee, Florida 32399-0955 Joseph W. Lawrence, II, Esquire Post Office Box 589 Tallahassee, Florida 32302-0589 Ronald W. Thomas, Executive Director Department of General Services Room 133, Larson Building Tallahassee, Florida 32399-0955
The Issue Whether proposed rules 25-4.300 ("Scope and Definition"); 25-4.301 ("Applicability of Fresh Look"); and 25-4.302, ("Termination of Local Exchange Contracts"), Florida Administrative Code, known as "The Fresh Look Provision," constitute an "invalid exercise of delegated legislative authority".
Findings Of Fact Telecommunications carriers/providers may "wear different hats," dependent upon what function they are performing at a given time. Local exchange carriers are abbreviated "LECs" in the proposed rules. For purposes of this case only, Time Warner is an Alternative Local Exchange Carrier ("ALEC") and GTE and BST are Incumbent Local Exchange Carriers ("ILECs"). Both types of companies provide local telephone service over the public switch network. On February 17, 1998, Time Warner filed a Petition to Initiate Rulemaking. Time Warner's Petition requested that the Commission adopt what it described as a "Fresh Look" rule, under which a customer a/k/a "patron" a/k/a "end user" of an ILEC who had agreed to a long-term, discounted contract would have an opportunity to abrogate that ILEC contract without incurring the liability to the ILEC which the customer had agreed to, so that the customer could then enter a new contract with an ALEC. On at least one prior occasion, the Commission had elected to reach a similar result by a Final Order, rather than by enacting a rule. This time, the Commission granted Time Warner's Petition, and the Commission began the rulemaking process. Other states have adopted "Fresh Look" rules or statutes with varying degrees of success. The legislative, administrative, or litigation histories of these extraterritorial matters are immaterial to the rule validity issues herein, which are governed by Chapter 120, Florida Statutes. Those histories are likewise non-binding on this forum. The Commission has no way of identifying, let alone notifying, ILEC contract customers as a separate class of the public or as a separate class of potentially interested parties. However, the public, including customers and carriers, received the required statutory notice(s) at each stage of the rulemaking process, and only the following dates and occurrences have significance within the rulemaking process for purposes of the issues herein. A Notice of Rulemaking Development was published in the Florida Administrative Weekly on April 3, 1998. Commission staff held a Rule Development Workshop on April 22, 1998. Based on information received from carriers in response to staff data requests, the rules as proposed April 3, 1998, were revised by staff. On March 4, 1999, staff recommended that the revised rules be adopted by the Commission. At its Agenda Conference on March 19, 1999, the Commission set the rulemaking for hearing. On March 24, 1999, the Commission issued a Notice of Rulemaking, which included further revisions to the proposed rules. The Commission received a letter from JAPC dated April 28, 1999 ("the JAPC letter") which stated, in pertinent part: Article 1, Section 10 of the Florida Constitution prohibits the passage of laws impairing the obligation of contracts. Inasmuch as the rules effectively amend the terms of existing contracts, please reconcile the rules with the Constitution. The JAPC letter was not placed into the rulemaking record, responded-to by the Commission, or specifically addressed on its merits by any interested parties. Interested parties did not find out about it until many months later. A rulemaking hearing on the proposed rules was held before the Commission on May 12, 1999. Interested persons submitted written and oral testimony and comments at the hearing. No customer with a contract that would be affected by these rules participated in the rulemaking proceedings, including the hearing, before the Commission. At no time did anyone formally submit a lower cost regulatory alternative, but it was clear throughout the rulemaking process that Petitioners herein opposed the adoption of the proposed rules. Two Statements of Estimated Regulatory Cost ("SERCs") were prepared by Commission staff. The proposed rules were further revised after the May 12, 1999, hearing. On November 4, 1999, Commission staff issued a recommendation that the Commission adopt the latest rules draft, in part on the basis that the proposed rules will implement the "regulatory mandates" of Section 364.01, Florida Statutes, that the Commission should "promote competition by encouraging new entrants" and "encourage competition through flexible regulatory treatment among providers of telecommunication services." Attached to this recommendation was a revised SERC, dated September 13, 1999. The September 13, 1999, SERC addressed the alternative of not adopting the proposed rules, and found such an alternative was not viable because it would not foster competition. In preparing both SERCs, Commission staff relied solely on market share data for analyzing competition and did not fully account for revenues to which ILECs were contractually entitled, but which potentially could be unilaterally cancelled by the ILEC customer as a result of the proposed rules. Staff did not ask for such data for estimating cost of the proposed rules to the ILECs. At its November 16, 1999, Agenda Conference, the participation of interested parties was limited to addressing the new SERC. During this Agenda Conference, the Commission revised the rules further, limiting the contracts affected by them to contracts entered into before July 1, 1999, and voted to approve the proposed rules as revised. The exact language of the proposed rules under challenge, as published in the December 3, 1999, Florida Administrative Weekly, pursuant to Section 120.54(3)(d), Florida Statutes, is as follows: PART XII - FRESH LOOK: 25-4.300 Scope and Definitions. Scope. For the purposes of this Part, all contracts that include local telecommunications services offered over the public switched network, between LECs and end users, which were entered into prior to June 30, 1999, that are in effect as of the effective date of this rule, and are scheduled to remain in effect for a least one year after the effective date of this rule will be contracts eligible for Fresh Look. Local telecommunications services offered over the public switched network are defined as those services which include provision of dial tone and flat-rated or message-rated usage. If an end user exercises an option to renew or a provision for automatic renewal, this constitutes a new contract for purposes of this Part, unless penalties apply if the end user elects not to exercise such option or provision. This Part does not apply to LECs which had fewer than 100,000 access lines as of July 1, 1995, and have not elected price-cap regulation. Eligible contracts include, but are not limited to, Contract Service Arrangements (CSAs) and tariffed term plans in which the rate varies according to the end user's term commitment. The end user may exercise this provision solely for the purpose of obtaining a new contract. For the purposes of this Part, the definitions to the following terms apply: "Fresh Look Window" - The period of time during which LEC end users may terminate eligible contracts under the limited liability provision specified in Rule 25- 4.302(3). "Notice of Intent to Terminate" - The written notice by an end user of the end user's intent to terminate an eligible contract pursuant to this rule. "Notice of Termination" - The written notice by an end user to terminate an eligible contract pursuant to this rule. "Statement of Termination Liability" - The written statement by a LEC detailing the liability pursuant to 25-4.302(3), if any, for an end user to terminate an eligible contract. 25-4.301 Applicability of Fresh Look. The Fresh Look Window shall apply to all eligible contracts. The Fresh Look Window shall begin 60 days after the effective date of this rule. The Fresh Look Window shall remain open for one year from the starting date of the Fresh Look Window. An end user may only issue one Notice of Intent to Terminate during the Fresh Look Window for each eligible contract. 25-4.302 Termination of LEC Contracts. Each LEC shall respond to all Fresh Look inquiries and shall designate a contact within its company to which all Fresh Look inquiries and requests should be directed. An end user may provide a written Notice of Intent to Terminate an eligible contract to the LEC during the Fresh Look Window. Within ten business days of receiving the Notice of Intent to Terminate, the LEC shall provide a written Statement of Termination Liability. The termination liability shall be limited to any unrecovered, contract specific nonrecurring costs, in an amount not to exceed the termination liability specified in the terms of the contract. The termination liability shall be calculated as follows: For tariffed term plans, the payments shall be recalculated based on the amount that would have been paid under a tariffed term plan that corresponds to the actual time the service has been subscribed to. For CSAs, the termination liability shall be limited to any unrecovered, contract specific nonrecurring costs, in an amount not to exceed the termination liability specified in the terms of the contract. The termination liability shall be calculated from the information contained in the contract or the workpapers supporting the contract. If a discrepancy arises between the contract and the workpapers, the contract shall be controlling. In the Statement of Termination Liability, the LEC shall specify if and how the termination liability will vary depending on the date services are disconnected pursuant to subsections (4) and (6). From the date the end user receives the Statement of Termination Liability from the LEC, the end user shall have 30 days to provide a Notice of Termination. If the end user does not provide a Notice of Termination within 30 days, the eligible contract shall remain in effect. If the end user provides the Notice of Termination, the end user will pay any termination liability in a one-time payment. The LEC shall have 30 days to terminate the subject services from the date the LEC receives the Notice of Termination. (Emphasis provided only to facilitate the following discussion of "timed" provisions) "Tariff term plans" or "tariffed term plans" are telecommunication service plans in which the rate the customer pays depends on the length of the service commitment. The longer the service commitment the customer makes with the company, the lower the monthly rate will be. Ninety-eight percent of the contracts affected by the proposed rules are tariff term plans filed with the Commission. Contract service arrangements (CSAs) have many functions. By tariff term plans and CSAs, carriers and their customers formalize a negotiation whereby the customer signs-on for service for an extended period, in exchange for lower rates than he would get if he committed to shorter periods or under the regular tariff. Both tariff term plans and CSAs are subject to the Commission's regulatory oversight. No reason was given for use of the "included but not limited to" language added in the rules' current draft. The Commission has published that the "specific authority" for the proposed rules is Sections 350.127(2) and 364.19, Florida Statutes. The Commission has published that the "law implemented" by the proposed rules is Sections 364.19 and 364.01, Florida Statutes. The proposed rules would allow customers of ILECs, including Petitioners GTE and BST, to terminate their contracts and tariffed term plans for local exchange services without paying the termination liability stated in those contracts and tariffs. Instead, customers would only be required to pay the ILEC "any unrecovered, contract specific nonrecurring costs" associated with the contracts. (Proposed rule 25-4.302(3)(b)). For tariffed term plans (but not contracts), termination liability would be recalculated as the difference, if any, between the amount the customer paid and the amount he would have paid under a plan corresponding to the period during which he actually subscribed to the service. (Proposed rule 25- 4.302(3)(a)). The "Fresh Look" rule applies to agreements entered into before June 30, 1999, and that remain in effect for at least one year after the date the rule takes effect. (Proposed rule 25-4.300(1)). The window for contract termination starts 60 days after the rules' effective date and lasts for one year thereafter. (Proposed rule 25-4.301). In the case of ILEC customers who may exercise the "opt-out early" (termination) provisions of the proposed rules, the proposed rules would provide the ILECs with the compensation they would have received if the contracts had been made for a shorter period than for the period of time for which the parties had actually negotiated. The proposed rules clearly modify existing contracts. Indeed, they retroactively impair existing contracts. It may reasonably be inferred that the retroactive elimination of the respective durations of the existing contracts would work to the detriment of any ILECs which have waived "start up costs" on individual contracts or which planned or invested in any technological upgrades or committed to any other business components (labor, training, material, development, expansion, etc.) in anticipation of fulfilling the contracts and profiting over the longer contract terms legally entered-into prior to the proposed rules. The purpose of the proposed rules, as reflected in the Commission's rulemaking notices, is to "enable ALECs to compete for existing ILEC customer contracts covering local exchange telecommunications services offered over the public switched network, which were entered into prior to switch-based substitutes for local exchange telecommunications services." However, the Commission now concedes that switch-based substitutes for the ILECs' local exchange services were widely available to consumers prior to June 30, 1999, the date provided in the proposed rule. At hearing, the Commission asserted that it is also the purpose of the proposed rules to actively encourage competition, and that by proposing these rules, the Commission deemed competition to be meaningful or sufficient enough to warrant a "fresh look" at the ILECs' contracts, but not so widespread that the rules would not be necessary. In effect, the Commission made a "judgment call" concerning the existence of "meaningful or sufficient" competition, but has not defined "sufficient" or "meaningful" competition for purposes of the proposed rules. The Commission's selection of June 30, 1999, as the cut-off date for contract eligibility was motivated primarily by a concept that using that date would render approximately 40 percent of existing ILEC contracts eligible for termination. The rulemaking process revealed that the terms of so- called "long-term" agreements range from six months to four years in duration. The Commission selected a one-year term for eligible contracts subject to the proposed rules as a compromise based on this spread of actual contract durations. The one-year window of opportunity in which a customer will be permitted to terminate a contract was selected by the Commission as a compromise among presenters' views expressed during the rulemaking process. The one-year window is to be implemented 60 days after the effective date of the rule to avoid the type of problems incurred when a "fresh look" was previously accomplished by a Commission Order and to allow the ILECs and ALECs time to prepare. Tariffed term plans were developed as a response to competition and have been used at least since 1973. As early as 1984, the Commission had, by Order, given ILECs authority to use CSAs for certain services, upon the condition that there was a competitive alternative available. The Commission has long been aware of the ILECs' use of termination liability provisions in CSAs and tariff term plans, including provisions for customer premises equipment (CPE), and has not affirmatively determined that their use is anticompetitive, discriminatory, or otherwise impermissible. Private branch exchanges (PBXs), which are switches, competed with the ILECs' Centrex systems for medium- to large- size business customers and key telephone systems for smaller businesses, from the early 1980's, as recognized by a Commission Order in 1994. Commission Order No. PSC-94-0285-FOF-TP, dated March 3, 1994, in Docket No. 921074-TP, permitted a "fresh look" for customers of LEC private line and special access services with terms equal to, or greater than, three years. Customers were permitted a limited time to terminate their existing contracts with LECs to take advantage of emerging competitive alternatives, such as alternative access vendors' (AAVs') ability to interconnect with LECs' facilities. Termination liability of the customer to the ILEC was limited to the amount the customer would have paid for the services actually used. Prior to 1996, only ILECs could offer dial tone service, which enables end users to communicate with anyone else who has a telephone. Chapter 364, Florida Statutes, Florida's telecommunication statute, was amended effective January 1, 1996, to allow ALECs to operate in Florida. ILECs had offered tariffed term plans and CSAs for certain services before the 1996 revision of Chapter 364, Florida Statutes, but effective 1996, substantial amendments allowed the entry of ALECs into ILECs' markets. The new amendments codified and expanded the ILECs' ability to use CSAs and term and volume discount contracts in exchange for ILECs losing their exclusive local franchises and deleted statutory language requiring the Commission to determine that there was effective competition for a particular service before an ILEC could be granted pricing flexibility for that service. Tariff filings before the amendments had required Commission approval. The federal Telecommunications Act of 1996 also opened the ILECs' local exchange markets to full competition and imposed upon the ILECs a number of obligations designed to encourage competitive entry by ALECs into the market, including allowing ALECs to interconnect their networks with those of ILECs; "unbundling" ILEC networks to sell the unbundled elements to competitors; and reselling ILEC telecommunications services to ALECs at a wholesale discount. See 47 U.S.C. Section 51 et seq. "Resale" means taking an existing service provided by a LEC and repackaging or remarketing it. The requirement that ILECs resell their services, including contracts and tariffed term plans, to competitors at a wholesale discount, has been very effective in stimulating resale competition, but to resell or not is purely an internal business decision of each ALEC. For instance, Time Warner has elected not to be involved in "resales," and is entirely "facility based." Since 1996, competing carriers could and do sell additional (other) services to customers already committed to long-term ILEC contracts. They may also purchase ILEC CSAs wholesale at discount and resell such agreements to customers. Market share data demonstrates that there has been greater ALEC competition in Florida since the 1996 amendments, but typically, ALECs target big cities with denser populations and denser business concentrations. There is no persuasive evidence that any of the affected ILEC contracts (those post-June 30, 1999) were entered into by customers who did not have competing alternatives from which to choose. In fact, testimony by Commission staff supports a finding that since LECs' CSAs are subject to Commission review and their service tariffs are filed with the Commission, the Commission has not authorized CSAs unless there was an "uneconomic bypass" or competition. "Uneconomic bypass" occurs where a competitor can offer service at a price below the LEC's tariffed rate but above the LEC's cost. The Commission presented an ILEC customer, Mr. Eric Larsen of Tallahassee, who testified that he had had the benefit of competition, not necessarily from an ALEC, when he had entertained a bid from a carrier different from his then-current ILEC in 1999. However, at that time, he renegotiated an expiring contract with his then-current ILEC instead of with the competitor. This renewal contract with an ILEC would not be affected by the proposed rules. Business customers, such as Mr. Larsen, may reasonably perceive business trends. They could reasonably be expected to have factored into their negotiations with competing carriers at the time the contracts were formed that a potential for greater choices would occur in the future, even within the life of their long-term contracts with an ILEC. As of 1999, 80 ALECs were serving Florida customers, 100 more had expressed their intention of serving Florida before the end of the year 2000, and ALECs had obtained some share of the business lines in many exchanges. While this does not mean that every area of Florida has every service, it is indicative of a spread of competition. Petitioner GTE is anchored in the Tampa Bay area. By June 30, 1999, the date expressed in the proposed rules, nine facilities-based competitors were in the same geographic area. One ALEC (MCI) was serving 10,000 lines. Competitors operated 20 switches and 83 percent of the buildings in GTE's franchise area were within 18,000 feet of a competitor's switch. However, in most cases, GTE's CSA or tariff term agreements had been successful against specific competing bids for the respective services. Market share data showed that by June 30, 1999, Petitioner GTE had executed 101 agreements allowing ALECs to provide service by inter-connecting their networks with GTE's networks, reselling GTE's services, and/or taking "unbundled" parts of GTE's network. While market share data is not conclusive, in the absence of any better economic analysis by the Commission or other evidence of existing ALEC presence or of a different prognosis for ALEC penetration, market share is at least one indicator of the state of competition when the contracts addressed by the proposed rules were entered into. The Commission has no data about how many customers currently opt-out of their ILEC contracts prior to natural expiration and pay the termination liability to which those ILEC agreements bind them in order to accept a competing offer from another carrier, but clearly, some do. This evidences current competition. Competing carriers can and do sell to ILEC customers at the natural expiration of their long-term agreements. This evidences current competition. The Commission has no data predicting how many more customers would opt-out if the proposed rules are validated. Therefore, the presumption that "if we publish a rule they will come" is speculative. Likewise the Commission's presumption that customers regard termination liability provisions in ILEC contracts as a barrier to their choices and a bar to competition was not proven. Some of the factors that went into that presumption were speculative because the Commission has not reviewed the termination liability provisions of Petitioners' contracts and has offered no evidence of formal complaints to the Commission by customers who want to opt-out of ILEC contracts. "Informal communication" with Commission staff by customers was undocumented and unquantified. The Commission did present the testimony of Mr. Larsen who explained that because he needs to keep the same business telephone number, he feels that it is not economically feasible for him to opt-out of his several overlapping ILEC contracts unless he can synchronize all his existing contract termination dates and that the proposed "fresh look" rules would permit him to do that. However, his testimony provided no valid predictor that even if the termination of all his existing ILEC contracts were enabled by the proposed rules he would, in fact, be able to find a competitor in his area whose contract(s) were more to his liking. The proposed rules, with their arbitrary date of June 30, 1999, would not allow Mr. Larsen to terminate, without liability, the one ILEC contract he entered into after that date. (See Finding of Fact No. 47). Based on his sincere but unfocused testimony, it remains speculation to presume that Mr. Larsen would be willing to incur contractual liability by early termination of his single non-qualifying ILEC contract just because the proposed rules would let him "opt-out" of the several qualifying ILEC contracts. It is indicative of the proposed rules' possible effect on future competition that Mr. Larsen speculated that if he could terminate all his qualifying ILEC contracts simultaneously under the proposed rules, he might be able to persuade a competitor, perhaps an ALEC, to pay his termination costs on his single non- qualifying ILEC contract if he renegotiated all his business away from his ILEC and to that competitor. The introduction of the proposed rules into the market place could create a "competitive edge" not anticipated by the Commission. Other carriers, including ALECs competing with ILECs, can and do enter into contracts with their customers which, like the contracts which would be affected by the proposed rules, are long-term contracts subject to termination liability, but the long-term contracts of carriers other than ILECs would not be affected by the proposed rules. The proposed rules pertain only to ILECs and their business customers. In effect, the proposed rules apply predominantly to ILECs' large business customers. Under the proposed rules, competitors which had originally bid against the ILECs for an affected contract at the time it was entered-into could get "a second bite at the apple" occasioned solely by the application of the proposed rules.
The Issue The issue for consideration in this hearing is whether Petitioner, Larsen Communications and Professional Services, Inc., should be certified and designated as a Minority Business Enterprise.
Findings Of Fact At all times pertinent to the issues herein, the Commission on Minority Economic and Business Development was one of the agencies in Florida responsible for the certification of women and minority owned businesses in Florida as Minority Business Enterprises. Larsen Communications and Professional Services, Inc. was operating a video production and public relations company in Tampa. Petitioner, as a part of its business operation, sought and performed contracts with various agencies of the State of Florida. Valerie D. Larsen, current President and 75 percent owner of the Petitioner corporation, is a graduate of high school in Hillsborough County. After graduation, she went to work as a legal secretary and worked in that field for several years. She is currently a financial analyst with GTE Data Services. From 1991 through 1993 she was a student at the Tampa Academy of Performing Arts from which she claims to have graduated, though she has no diploma to so indicate. While there, she took training in on-camera acting, camera handling, voice over, and other facets of video production. She also acted in and produced plays, directed plays, and was active in all aspects of theatre production, both from the artistic and the business sides. In March, 1990, Ms. Larsen married her husband, a 1973 graduate of Florida State University with a bachelor's degree in Broadcast Communications. Mr. Larsen was, for many years, a television reporter in the Tampa area as well as elsewhere. He has considerable experience in the on-camera presentation of news stories and has written many of the pieces he delivered on air. From the very beginning, Mrs. Larsen wanted to own her own business, and over the years, as she worked as a legal secretary and with GTE, she maintained this ambition. Several years ago, when her husband was put out of work, she got the idea of starting her own production company, not only to give herself an opportunity to do that which she most enjoyed doing, but also to give her husband something to do as well. Ms. Larsen admits that she made a big mistake in not hiring an attorney to help her draft the business organization papers. Instead, she went to Office Depot and purchased an incorporation kit which she filled out without any professional advice and submitted to the Florida Secretary of State's office for registration. In doing so, she made her husband the President of the company even though she was in charge and actually made the business decisions. She did this in order to help her husband maintain his self respect. This officer designation was corrected sometime thereafter. When Ms. Larsen graduated from the Tampa Academy of Performing Arts she knew she wanted to start her own company and what she liked to do. Video production seemed to fit the bill, and on September 4, 1992, because she no longer could act due to her pregnancy, she started the company. The initial funding for the company came from a $2,500 withdrawal from funds owned jointly by the parties and to which she had contributed over the years. At the time the company was started, Mr. Larsen had his severance pay of $3,200 per month for two or three months. This money was used for the family's living expenses. The money which was invested in the company, and which had been in the joint account, came, Ms.Larsen avers, from her salary from GTE Data Services. Ms. Larsen is currently President of the company. She professes to make all business decisions. She consistently researches jobs to bid on and is a subscriber to the Florida Administrative Weekly, which lists bid opportunities. If she find something she feels the company can handle, she contacts the agency and asks for a proposal package. Then, she claims, she prepares and submits the company's bid. Ms. Larsen on the one hand claims to handle all the company accounting, but on the other hand states she hires a CPA to do the payroll. She claims also to make all the arrangements for financing and borrowing for the company, the hiring and firing of personnel, and the solicitation of work for the company. There are no full time employees, however, besides the Larsens. Usually, people with the particular skills needed for a specific job are contracted with on a tempor ary basis. She decides who she wants to use on a particular job, determines the costs as to how much each element will cost, and comes up with a final bid price. She might have Mr. Larsen do some of the research and plug details into the computerized bid shell, but she does the majority of the bid process and makes the ultimate decision as to whether a bid will be submitted. She also pays all the bills. Mrs. Larsen claims she must do a lot of research for the business which she does in her spare time at work, during her lunch periods and in the evenings. She also calls Mr. Larsen at home and gives him things to look up. For her research, she uses the University of South Florida library, two newspapers and other research sources dealing with the subject matter of the pending bid, so that she can effectively evaluate the project and submit an appropriate bid. Bid prices are based on what it will cost her to hire the required people and lease the required equipment. Since the company is small, she hires most artists, such as writers, photographers, editors and graphic artists, on a per job basis. If Larsen is successful and is awarded a bid for a particular production, Ms. Larsen has the initial job of preparing the script for the production, the blueprint to present to the photographer. A script is prepared for each production designed around the requirements of that particular subject. Most scripts are written on the basis of her research and that of her husband, and the skills needed to prepare a script include an ability to do research, writing skills, formatting skills, experience and creativity. Once the script is prepared, it is presented to the client for review and suggestions. Upon final approval, Ms. Larsen hires the photographer who will do the shooting. Often the photographer works alone, but sometimes either Ms. or Mr. Larsen accompanies him. Mr. Larsen does some of the research and the typing and purchases some supplies, but major purchases are approved and determined by Ms. Larsen. He also is responsible for answering the phone. Mr. Larsen is often the narrator on their productions, which is appropriate because of his on-air experience and his voice. In Mr. Larsen's prior career as a news journalist he wrote some of his material and appeared on camera. The nature of news broadcasting, however, is different from the productions of Larsen Communications. Whereas news reporting is primarily a recitation of facts which have occurred, Larsen's productions are far more creative, designed to tell a story or sell a particular product or point of view. Therefore, his prior experience, while good for on camera work, is not necessarily translatable to the management of the work the company does. In fact, Ms. Larsen is of the opinion that he does not have any skills she does not have, and is convinced that if he were not with the company, his absence would not have much effect on its operation. She is quite confident that she could do what he does or could easily hire someone to do what he does. Larsen Communications is a small company. To date, not more than 10 contracts have been awarded to it, and in each case, the solicitation process described above was used. Earnings from the company are split. Ms. Larsen receives an intermittent draw, depending on the company income. Mr. Larsen receives a set salary of $1,000 per month. There are no bonuses paid because this is all Ms. Larsen feels can be afforded, and even Mr. Larsen's salary is based on the company's money flow. He has been a salaried employee for several years, but only recently has he been paid by check. Aside from Ms. Larsen's 75 percent of the stock and Mr. Larsen's 25 percent, there are no other owners of the company and no one else shares any risk of loss. If the business fails, Ms. Larsen will bear the biggest loss, and Mr. Larsen would have to find a job elsewhere. The original application for MBE certification submitted by Larsen in 1994 sought certification in three areas: video production, public relations and media relations. This has been amended and now the only certification sought is that in video production. Ms. Larsen believes that all three areas are interrelated. Mr. Larsen confirms the testimony of Ms. Larsen regarding the responsibility for accomplishment of duties within the corporation. When the company was formed, he was unemployed and he agreed to support Ms. Larsen in the operation of her business; the company was her brainchild. She is the one who secured and filled out the incorporation forms that were submitted to the Secretary of State's office, and he did not know what the papers intended or what they said he was to do. He knows he was the original President of the company and a Director, but he also recognizes that those designations have been changed in the interim. Based on his education and experience, he believes he is qualified in video production, public relations and media relations. However, he was in news broadcasting by experience and throughout his career, and the business of Larsen Communications is totally different - more like entertainment. Mr. Larsen indicated he probably could be called the Marketing Director of the company, but it is a small company and in reality he has no title. He is authorized to make decisions on minor matters, but the ultimate decisions are made by Ms. Larsen. The company is her baby, her brainchild and her business, and he agrees that if he were to walk away from the company, while she might have trouble running the business alone while maintaining a full time job elsewhere, she has the skills, the experience and the ability to do so. He could be replaced easily. At no time, according to Mr. Larsen, did he ever run the company. He has researched and written scripts but Ms. Larsen has always had a major idea or input into whatever he has done and he works, he claims, at her direction. When Larsen's application was forwarded to the Commission, it was evaluated by Mr. Ringgold who conducted a telephone interview with Mr. and Ms. Larsen on August 29, 1994. At this point, the Commission now agrees there is now no issue as to the ownership of the corporation and that Larsen Communications in owned by Ms. Larsen. Nonetheless, Mr. Ringgold recommended that Larsen's application be denied under the provisions of Rule 60A-2.005, F.A.C. because he believed that Ms. Larsen does not assume the majority share of risk; that she does not have the authority to control and the experience to exercise dominant control over the corporation; that she does not have sufficient technical capability to run the corporation; that her control is not real, substantial and continuing; that she does not control the purchase of equipment and supplies; that she does not have independence in seeking business and that she does not have direction and control over all aspects of the business. Because he now accepts the fact that Ms. Larsen has knowledge and control of the company's financial affairs, the preexisting objection on that grounds is withdrawn, but taken together, as of the date of the hearing, Mr. Ringgold still recommended denial. No evidence was presented by the Commission, other than the testimony of Mr. Larsen which tended to support Petitioner's position, which would show with particularity any basis for disbelieving Petitioner's assertions. When Mr. Ringgold made his recommendation for denial, his decision was based on the matters submitted by the applicant and the information gained in the telephone interview. He did not make an on-site inspection of Larsen's facility. By the same token, he did not know of Ms. Larsen's schooling at the Tampa Academy of performing Arts at the time he made his recommendation. He does not recall ever having changed his mind regarding a recommendation in the nine years he has been doing this work. Mr. Ringgold has his educational credentials in speech and has some knowledge of video production having worked in that area for his uncle while in school.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Petitioner, Larsen Communications and Professional Services, Inc., be granted certification as a Minority Business Enterprise. RECOMMENDED this 29th day of August, 1995, 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 29th day of August, 1995. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 94-5839 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: Not a Finding of Fact but a Conclusion of Law. - 4. Accepted and incorporated herein. Accepted and incorporated herein except for references to F.A.C. which are Conclusions of law. - 8. Accepted and incorporated herein. FOR THE RESPONDENT: None Submitted. COPIES FURNISHED: Miriam L. Sumpter, Esquire 2700 North MacDill Avenue Suite 218 Tampa, Florida 33607 Joseph L. Shields, Esquire Commission on Minority Economic and Business Development 201 Collins Building 107 West Gaines Street Tallahassee, Florida 32399-2000 Crandall Jones Executive Administrator Commission on Minority Economic and Business Development Collins Building - Suite 201 107 West Gaines Street Tallahassee, Florida 32399-2000
