Findings Of Fact Respondent is the governmental agency responsible for certifying persons as minority business enterprises. Petitioner applied for certification as a minority business enterprise. Petitioner is a minority business enterprise within the meaning of Section 288.703(2), Florida Statutes. 1/ Petitioner is a small business concern, domiciled in Florida, and organized to engage in commercial transactions. Petitioner is a Florida corporation wholly owned by Ms. Sandra A. Pichney, vice president, and by Mr. D.B. Young, president. Petitioner engages in the roof consulting business. Ms. Pichney owns 51 percent of Petitioner's outstanding stock. Ms. Pichney is a member of a minority group for purposes of Chapter 288. The remaining 49 percent of Petitioner's outstanding stock is owned by Mr. Young. Mr. Young is a licensed architect. No professional license is required for Petitioner to engage in the business of roof consulting. Petitioner has all of the occupational licenses required to engage in the commercial transactions required to conduct its business. Ms. Pichney has 16 years experience in the roof consulting business. Ms. Pichney controls the daily management and operations of Petitioner's business. Ms. Pichney: manages and operates the office; and is responsible for payroll, accounts receivable, and general financial matters. Ms. Pichney conducts field visits, estimates jobs, reviews projects, and rewrites specifications. Ms. Pichney is the person who signs checks for Petitioner in the ordinary course of Petitioner's trade or business. Mr. Young is authorized to sign checks but only signs checks in emergencies. Ms. Pichney hires and fires personnel. Ms. Pichney consults with Mr. Young, but the ultimate responsibility is born by Ms. Pichney. Ms. Pichney reviews specifications and design work for specific projects and makes amendments where appropriate. Original specifications and design work are prepared by Mr. Young and other personnel. Mr. Young, and other personnel, can be terminated by Ms. Pichney without cause. Mr. Young can be terminated as an employee at any time by Ms. Pichney, without cause. Mr. Young has no employment agreement or shareholder agreement with the company. The board of directors are comprised of Ms. Pichney and Mr. Young. Any director may be dismissed by a majority of the shareholders. As the majority shareholder, Ms. Pichney can terminate Mr. Young, as a director, without cause. Ms. Pichney and Mr. Young receive salaries and monthly draws. Although salaries are equal, monthly draws and dividends are distributed in proportion to the stock ownership of each shareholder. Ms. Pichney has exclusive use of the company car. Ms. Pichney's stock ownership has increased over the last two years because Mr. Young has been unable to attend to the demands of Petitioner's business due to Mr. Young's divorce. Ms. Pichney has properly reported the increase in stock ownership, for purposes of the federal income tax, and has, and will, pay the requisite income tax on her increased stock ownership. Ms. Pichney and Mr. Young consult with each other in making significant decisions in the ordinary course of Petitioner's business. However, the ultimate responsibility for those decisions is born by Ms. Pichney.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order granting Petitioner's application for certification as a minority business enterprise. RECOMMENDED this 22nd day of July, 1995, in Tallahassee, Florida. DANIEL MANRY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of July, 1995.
The Issue The issue is whether Petitioner is entitled to certification as a minority business enterprise.
Findings Of Fact By undated application, Petitioner filed an Application for Minority Business Enterprise Certification. Stating that the applicant was established in November 1991, the application lists as the sole shareholders Hui Schaefer (a/k/a Gina Schaefer), who is a Korean-American minority, and her husband, Reid, who is a nonminority. The application was filed in July 1995. The application states that Ms. Schaefer is an Asian female owning 81 percent of the shares. The application lists Ms. Schaefer as the chief executive officer, secretary, and treasurer, Mr. Schaefer as the president, and Gordon Holfelder as the vice-president. The application lists these three persons as directors, plus DuWayne Boudin and Lenny LaRose. Except for Ms. Schaefer, the directors are nonminorities. Petitioner's bylaws provide for management of the business and property by a majority of the directors. The articles of incorporation provide similarly. Petitioner claimed at the final hearing that she had fired all of the directors except herself, but she produced no documentary proof of this action. Mr. and Ms. Schaefer purchased all of the stock of Petitioner in 1991. At the time of purchase, Ms. Schaefer received 500 shares and Mr. Schaefer received 400 shares. The sole purpose of this allocation was to enable the corporation to qualify as a minority business enterprise. The sole consideration for the shares was the forgiveness of about $6000 in debt. Mr. and Ms. Schaefer had lent this sum to Petitioner or its parent corporation, Unidyn Corp., so it could pay operating expenses, such as a telephone bill. Upon acquiring the shares, Mr. and Ms. Schaefer contributed capital to Petitioner in the form of furniture and equipment, which they value at $100,000. The evidence does not indicate that Mr. or Ms. Schaefer possessed any disproportionate interest in the $6000 loan, equipment, or furniture. To the contrary, it appears that their interests were equal in the money and assets. Petitioner is in the computer software business. Specifically, at the time of the application, Petitioner was a value-added retailer of computer programs. Petitioner purchased software programs from developers, customized the programs for end users, and resold the program to the end user with a commitment to provide technical support and training. Mr. Holfelder is a computer programmer. Mr. Schaefer is a sales representative. Ms. Schaefer is an office manager. At the time of the application, Petitioner employed nine fulltime permanent employees and earned over $800,000 in the fiscal year ending in 1993. At all material times, the compensation of Mr. Schaefer or Mr. Holfelder at least doubled the compensation of Ms. Schaefer. For calendar year 1995, their salaries were set at $60,000, while Ms. Schaefer's was set at $30,000, which was the same paid to Mr. LaRose. The other director listed on the application, Mr. Boudin, was set to earn $48,000 for 1995. The malleability of salaries in response to the requirements of government programs is reflected by Petitioner's explanation why Mr. Schaefer's salary is greater than Ms. Schaefer's salary. In a latter to Respondent dated August 30, 1995, Petitioner explained that the Schaefers were trying to refinance a home mortgage and "[s]everal of the mortgage companies suggested that it would be much easier to approve a VA mortgage if the husband and veteran, Reid Schaefer, had the highest salary." Ms. Schaefer has little technical experience in software programming. She could provide some technical support to customers for programs with which she was familiar as an end user, but she generally was not involved with the technical end of Petitioner's business. Ms. Schaefer's actual authority over corporation management was quite limited in practice. Hiring and firing authority is divided into departments with persons other than Ms. Schaefer responsible for such personnel decisions in the crucial areas of programming and marketing. Mr. Schaefer is responsible for purchasing. Even Ms. Schaefer's involvement in internal bookkeeping is subordinated to Mr. LaRose, who is Petitioner's in-house accountant. Mr. Boudin handles customer training and assists in sales. Ms. Schaefer signed most of the checks, but appeared to do so at the direction of others. She was not the sole person authorized to sign checks drawn on any of Petitioner's accounts, all of which authorized checks to be signed by a single authorized signer. At the end of 1994, shares were redistributed, leaving Ms. Schaefer with 500 shares, Mr. Schaefer with 100 shares, and Mr. LaRose, Mr. Holfelder, and Mr. Boudin with five shares each. Later, Petitioner issues one share to Brian Risley, a systems installer. These transactions left Ms. Schaefer with 81 percent of the issued shares of Petitioner. Later transactions left her with an even greater percentage of the stock; Petitioner repurchased the shares owned by Mr. Schaefer and Mr. Holfelder, and Ms. Schaefer acquired an additional 89 shares. Petitioner repurchased Mr. Holfelder's shares in connection with her termination in January 1996. By that time, Petitioner had transformed from a value-added retailer to custom applications, designing software programs from scratch. Ms. Schaefer does not control Petitioner either in ownership or operation.
Recommendation It is RECOMMENDED that the Commission on Minority Economic and Business Development enter a final order denying Petitioner's application for certification. DONE and ENTERED on April 29, 1996, in Tallahassee, Florida. ROBERT E. MEALE 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 on April 29, 1996. APPENDIX Rulings on Petitioner's Proposed Findings 1: rejected as unsupported by the appropriate weight of the evidence. 2-3 and 6: rejected as legal argument. 4: rejected as unsupported by the appropriate weight of the evidence and subordinate. 5: adopted or adopted in substance except as to implication that Ms. Schaefer controls the business. 7: rejected as not finding of fact. 8-9: rejected as recitation of evidence. 10 (first sentence): rejected as unsupported by the appropriate weight of the evidence. 10 (remainder): rejected as recitation of evidence and unsupported by the appropriate weight of the evidence. 11: rejected as speculative and unsupported by the appropriate weight of the evidence. 12: rejected as speculative. 13: rejected as subordinate. 14 (first sentence): adopted or adopted in substance. 14 (remainder): rejected as irrelevant. 15: rejected as subordinate. 16: rejected as unsupported by the appropriate weight of the evidence, recitation of evidence, and subordinate. 17: rejected as unsupported by the appropriate weight of the evidence and recitation of evidence. 18-19: rejected as unsupported by the appropriate weight of the evidence. 20: rejected as unsupported by the appropriate weight of the evidence. 21 (first sentence): adopted or adopted in substance. 21 (remainder): rejected as unsupported by the appropriate weight of the evidence. 22: rejected as unsupported by the appropriate weight of the evidence and subordinate. 23: rejected as legal argument. 24: rejected as unsupported by the appropriate weight of the evidence, subordinate, and legal argument. 25-26: rejected as unsupported by the appropriate weight of the evidence. Rulings on Respondent's Proposed Findings 1: adopted or adopted in substance except for subsequent transaction, which does not alter findings. 2: adopted or adopted in substance. 3: adopted or adopted in substance except for presence of additional nonminorities. 4-8: adopted or adopted in substance. 9-10: rejected as subordinate and recitation of evidence. 11-14: adopted or adopted in substance. 15: adopted or adopted in substance except that such personnel decisions are divided into three areas with different persons in charge of each area. 16-17: adopted or adopted in substance except that the illustrations are rejected as subordinate and recitation of evidence. COPIES FURNISHED: Veronica Anderson, Executive Administrator Commission on Minority Economic and Business Development Collins Building, Suite 201 107 West Gaines Street Tallahassee, Florida 32399-2000 Joseph Shields, General Counsel Commission on Minority Economic and Business Development Collins Building, Suite 201 107 West Gaines Street Tallahassee, Florida 32399-2000 Kurt A. Streyffeler Kurt A. Streyffeler, P.A. 3440 Marinatown Lane, Northwest Suite 205 North Fort Myers, Florida 33903
The Issue The issue is whether the Petitioner is qualified for designation and certification as a minority business enterprise.
Findings Of Fact At the hearing, it became apparent that the reasons for denial were principally lack of independence and affiliation with a non-qualifying company. The parties stipulated to the following: Ms. Wendy Stephens, President and Secretary of WPS and sole stockholder WPS, possess the authority to, and does in fact, exercise complete control over the management, daily operations and corporate affairs of WPS. Ms. Stephens possesses the technical capability, managerial qualifications and expertise to operate WPS. The following facts were proven at hearing: Ms. Stephens is a white, female and is qualified as a minority person under the statute. In 1991, Charles Perry, Ms. Stephen's father and a white male, provided $7,000 for start up capital and a lease of 3 acres on his farm to house Alachua Greenery, a wholesale/retail nursery which Wendy Stephens began with assistance from Perry. Ms. Stephens has never made payments on the aforementioned lease. Charles Perry and Wendy Stephens were the sole stockholders in Alachua Greenery, each holding 50 percent of the shares in the corporation. Perry has contributed nothing more to the operation of the corporation, and has never exercised any control over the corporation, although he was initially a director. WPS is a Florida corporation, domiciled and doing business in the state. WPS is worth less than $3,000,000 and has three employees. Ms. Stephens is and always has been the sole stockholder of WPS, and has served as its President and Secretary since its incorporation. Ms. Stephens husband, Gary Stephens, was once a director of WPS upon the advice of counsel; however, he exercised no control over the corporation and resigned as a director on April 12, 1996. Gary Stephens sold a Bobcat tractor to Wendy Stephens upon which he has deferred payments. This Bobcat is used by WPS and Alachua Greenery. Gary Stephens has no other financial or other interest in WPS or Alachua Greenery. WPS was formed for the purpose of engaging in the retail landscaping business, which is a logical business expansion from the wholesale nursery business. WPS has engaged in the retail landscaping business for several customers. WPS shares equipment, land, vehicles, and employees with Alachua Greenery. There is no evidence that WPS, which has performed a number of contracts, has been a conduit of money to Alachua Greenery. On May 13, 1996, Perry gifted his share of Alachua Greenery to Wendy Stephens.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Petitioner's application for minority business status be denied. DONE AND ENTERED this 27th day of June, 1996, in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SunCom 278-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of June, 1996. APPENDIX TO RECOMMENDED ORDER CASE NO. 96-0023 Both parties submitted proposed findings which were read and considered. The following states which of those findings were adopted, and which were rejected and why. References to numbered paragraphs in Petitioner's findings includes all letter subparagraphs unless otherwise noted. PETITIONER'S RECOMMENDED ORDER Paragraphs 1,2 Statement of Case Paragraph 3 Irrelevant Paragraphs 4-6 Statement of Case Paragraph 7a Paragraph 9 Paragraph 7b Subsumed in Paragraph 6 Paragraph 7c Subsumed in Paragraphs 6 & 8 Paragraph 7d Contrary to best evidence Paragraph 7e Irrelevant Paragraph 7f Subsumed in Paragraph 9 Paragraph 7g Irrelevant Paragraphs 7h,i Paragraph 7 Paragraphs 7j,k,l Subsumed in Paragraph 8 Paragraphs 7m,n,o,p Paragraph 4 Paragraph 7q Subsumed in Paragraph 12 Paragraph 7r Paragraph 11 Paragraphs 7s,t Irrelevant RESPONDENT'S RECOMMENDED ORDER Paragraph 1,2 Subsumed in Paragraph 8 Paragraph 3 Subsumed in Paragraph 10 Paragraph 4 Paragraph 4 Paragraph 5 Subsumed in Paragraph 10 Paragraph 6 Not necessary Paragraph 7,8 Paragraph 12 Paragraph 9 Not necessary COPIES FURNISHED: David L. Worthy, Esquire Peter A. Robertson and Associates 4128 Northwest 13th Street Gainesville, Florida 32609 Joseph L. Shields, Esquire Commission on Minority Economic and Business Development 107 West Gaines Street, Suite 201 Tallahassee, Florida 32399-2005 Veronica Anderson, Executive Administrator Commission on Minority Economic and Business Development Collins Building, Suite 201 107 West Gaines Street Tallahassee, Florida 32399-2000
The Issue Should Petitioner be certified as a minority business enterprise (MBE) by the Minority Business Advocacy and Assistance Office of the Department of Labor and Employment Security?
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: Petitioner is a sole proprietor seeking certification as an MBE under the minority status of Native American (Indian). Also in his application seeking MBE certification, Petitioner claimed the category of Hispanic American but did not attempt to prove this category at the hearing. Petitioner is seeking certification as an MBE qualified to perform building maintenance, grounds maintenance, painting, cleaning, landscaping, and clearing and grubbing. Petitioner’s great-grandmother was a full-blooded Cherokee Indian (Native American) who lived her life as an Indian. However, Petitioner presented no evidence that his great-grandmother was a member of any federally recognized Indian Tribe, as that term is defined by Rule 38A-20.001(17), Florida Administrative Code. Petitioner was at one time a member of the American Cherokee Confederacy of Georgia. However, Petitioner resigned from the American Cherokee Confederacy of Georgia and no longer claims any ties to that group. The American Cherokee Confederacy of Georgia is not a federally recognized Indian Tribe as that term is defined by Rule 38A-20.001(17), Florida Administrative Code. Petitioner is not a member of any federally recognized Indian Tribe as that term is defined by Rule 38A-20.001(17), Florida Administrative Code. Respondent stipulated at the hearing that its denial was based solely on the fact that Petitioner had failed to present sufficient evidence to prove that he was a minority person as that term is defined in Section 288.703(3)(d), Florida Statutes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that Petitioner's application for Minority Business Enterprise status be denied. DONE AND ENTERED this 20th of June, 2000, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE 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) 921-6947 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 20th day of June, 2000. COPIES FURNISHED: Calvin W. "Bill" Wood 10577 Schaefer Lane Lake Wales, Florida 33853 Joseph L. Shields, Esquire Department of Labor and Employment Security The Hartman Building, Suite 307 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2189 Mary Hooks, Secretary Department of Labor and Employment Security The Hartman Building, Suite 303 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Sherri Wilkes-Cape, General Counsel Department of Labor and Employment Security The Hartman Building, Suite 307 2012 Capital Circle, Southeast Tallahassee, Florida
The Issue Are Rules 60A-2.001(10) and 60A-2.005(7), Florida Administrative Code, valid exercises of delegated legislative authority?
Findings Of Fact On December 22, 1991, the Respondents made amendments to Rules 60A- 2.001 and 60A-2.005, Florida Administrative Code, related to the certification of a "minority business enterprise" to engage in business with the State of Florida. With the amendments, a definition for the term "regular dealer" was created, which states in pertinent part: 60A-2.001 Definitions. . . . (10) 'Regular dealer' means a firm that owns, operates or maintains a store, warehouse, or other establishment in which the material or supplies required for the performance of the contract are bought, kept in stock, and regularly sold to the public in the usual course of business. To be a regular dealer, the firm must engage in, as its principal business and in its own name, the purchase and sale of products. . . . The amendments included other requirements that a "minority business enterprise", as defined at Section 288.703(2), Florida Statutes, must meet to be certified to participate in the Respondents' Minority Business Program. (The definition of "minority business enterprise" was changed by Section 288.703(2), Florida Statutes (1994 Supp.). The change does not effect the outcome in the case.) As promulgated December 22, 1991, Rule 60A-2.005(7), Florida Administrative Code states in pertinent part: The applicant business shall establish that it is currently performing a useful business function in each specialty area requested by the applicant. For purposes of this rule, "currently" means as of the date of the office's receipt of the application for certification. The applicant business is considered to be per- forming a useful business function when it is responsible for the execution of a distinct element of the work of a contract and carrying out its responsibilities in actually performing, managing, and supervising the work involved. The useful business function of an applicant business shall be determined in reference to the products or services for which the applicant business requested certification on Form PUR 7500. When the applicant business is required by law to hold a license, other than an occupational license in order to undertake its business activity, the applicant business shall not be considered to be performing a useful business function unless it has the required license(s). In determining if an applicant business is acting as a regular dealer and that it is not acting as a conduit to transfer funds to a non- minority business, the Office shall consider the applicant's business role as agent or negotiator between buyer and seller or contractor. Though an applicant business may sell products through a variety of means, the Office shall consider the customary and usual method by which the majority of sales are made in its analysis of the applicability of the regular dealer require- ments. Sales shall be made regularly from stock on a recurring basis constituting the usual operations of the applicant business. The proportions of sales from stock and the amount of stock to be maintained by the applicant business in order to satisfy these rule requirements will depend on the business' gross receipts, the types of commodities sold, and the nature of the business's operations. The stock maintained shall be a true inventory from which sales are made, rather than by a stock of sample, display, or surplus goods remaining from prior orders or by a stock main- tained primarily for the purpose of token compliance with this rule. Consideration shall be given to the applicant's provision of dispensable services or pass-through operations which do not add economic value, except where characterized as common industry practice or customary marketing procedures for a given product. An applicant business acting as broker or packager shall not be regarded as a regular dealer absent a showing that brokering or packaging is the normal practice in the applicant business industry. Manufacturer's representatives, sales representatives and non-stocking distributors shall not be considered regular dealers for purposes of these rules. In passing the rules amendments, the Respondents relied upon authority set forth in Sections 287.0943(5) and 287.0945(3), Florida Statutes. Those statutory sections are now found at Sections 287.0943(7) and 287.0945(6), Florida Statutes (1994 Supp.). Those provisions create the general and specific authority for the Minority Business Advocacy and Assistance Office to effectuate the purposes set forth in Section 287.0943, Florida Statutes, by engaging in rule promulgation. As it relates to this case, the law implemented by the challenged rules is set forth at Section 287.0943(1)(e)3, Florida Statutes (1994 Supp.), which establishes criteria for certification of minority business enterprises who wish to participate in the Minority Business Program contemplated by Chapter 287, Florida Statutes. That provision on certification was formerly Section 287.0943(1), Florida Statutes. In assessing a minority business enterprise application for certification, the Respondents, through that statutory provision: [R]equire that prospective certified minority business enterprises be currently performing a useful business function. A 'useful business function' is defined as a business function which results in the provision of materials, supplies, equipment, or services to customers other than state or local government. Acting as a conduit to transfer funds to a non-minority business does not constitute a useful business function unless it is done so in a normal industry practice. Petitioners, Expertech and Mechanical, had been certified to participate in the Respondents' Minority Business Program, but were denied re- certification through the application of Rules 60A-2.001(10) and 60A-2.005(7), Florida Administrative Code. Marsha Nims is the Director of Certification for the Commission on Minority Economic and Business Development, Minority Business Advocacy and Assistance Office. In her position, she develops policy on minority business enterprise certification. As such, she was principally responsible for developing the subject rules. In particular, as Ms. Nims describes, the purpose in developing the rules was to address the meaning of a "conduit" set forth at Section 287.0943(1), Florida Statutes, in an attempt to insure that improper advantage was not taken by persons using certified minority businesses to enter into contractual opportunities with the State of Florida. In promulgating the rule, the Respondents spoke to representatives who were involved with unrelated minority business enterprise certification programs. One person from whom the Respondents had obtained ideas was Hershel Jackson, who processed certifications for the Small Business Administration in its Jacksonville, Florida office. This individual indicated that the Small Business Administration had developed a "regular dealer rule" that required individuals who sought minority certification from the Small Business Administration to make sales from existing inventory. This conversation led to the utilization of federal law as a guide to establishing the rules in question. At 41 CFR 50-201.101(a)(2), the term "regular dealer" is defined as: A regular dealer is a person who owns, operates, or maintains a store, warehouse, or other estab- lishment in which the materials, supplies, articles, or equipment of the general character described by the specifications and required under the contract are bought, kept in stock, and sold to the public in the usual course of business. It can be seen that the definition of "regular dealer" set forth in Rule 60A-2.001(10), Florida Administrative Code, is very similar to the federal definition. In addition, the Respondents used the Walsh Healey Public Contracts Act Interpretations at 41 CFR 50-206 for guidance. The provision within the Walsh Healey Public Contracts Act that was utilized was 41 CFR 50-206.53(a). It states: Regular Dealer. A bidder may qualify as a regular dealer under 40 CFR, 50-201.101(b), if it owns, operates, or maintains a store, warehouse, or other estab- lishment in which the commodities or goods of the general character described by the specifi- cations and required under the contract are bought, kept in stock, and sold to the public in the usual course of business. . . . The Petitioners presented witnesses who established the manner in which their respective industries carried out normal industry practices involving fund transfers to non-minority businesses from minority and non- minority businesses. Joseph H. Anderson is the President of Suntec Paint, Inc. (Suntec), which does business in Florida. Suntec is a non-minority corporation. It manufactures architectural coatings (house paints). Suntec sells and distributes its paint products through its own stores, through other dealers who have stores, and through sales agents. The sales agents would also be considered as manufacturers' representatives. Suntec's relationship with its manufacturer's representatives is one in which Suntec has an agreement with the representatives to sell the paint products to the representatives at negotiated prices which may be discounted based upon volume of sales. The representatives then sell the products to end users at a price that may be higher than the price between Suntec and the representatives. The representatives are responsible for marketing the product to customers. The products manufactured by Suntec are inventoried for distribution, or in some instances, made to order for distribution. The maintenance of inventory is principally for the benefit of the retail outlets controlled by Suntec. Suntec prefers not to maintain inventory because it ties up raw materials, warehousing space, and requires personnel to be engaged in the management and shipment of those products. If the product is "picked up" more than once in the process, it costs more money. Therefore, Suntec distributes inventory through the representatives by direct shipping from the manufacturer to the end user. Suntec's arrangement with its representatives is one in which the customer pays the representative for the product and the representative then pays Suntec. The representatives for Suntec do not ordinarily maintain inventory of the paint products, because this avoids having the representatives handle the product and then reship the product to the end user. By the representative handling the product, it would add expense to the transaction. Suntec, in selling its products through representatives and shipping directly from the manufacturer to the end user, is pursuing a practice which is normal in its industry. Suntec's arrangement with dealers unaffiliated with Suntec who have stores, provides the independent dealers with inventory. Nonetheless, there are occasions in which the independent dealer will place a large order with Suntec; and Suntec will ship the product directly to the end user. That practice is a frequent practice and one that is standard in the industry. Suntec has two minority businesses who serve as manufacturers' representatives and other manufacturers' representatives who are non-minorities. The minority representatives are Expertech, located in Gainesville, Florida, and All In One Paint and Supply, Inc. (All In One), also located in Gainesville. The two minority representatives for Suntec maintain some stock of paint. The inventory amount which All In One maintains was not identified. Within a few months before the hearing, Expertech had purchased 60 gallons of paint from Suntec. It was not clear what the intended disposition was for the paint. Thomas Rollie Steele, the Branch Manager for Bearings and Drives, serves as Sales Manager for that company in its Florida operations. Bearings and Drives has its corporate offices in Macon, Georgia. The company has thirty locations throughout the southern United States, with five different divisions. It specializes in industrial maintenance products and some services. Bearings and Drives is a non-minority firm. In its business Bearings and Drives has manufacturing arrangements or agreements to represent other manufacturers. As representative for other companies who manufacture the products which Bearings and Drives markets, Bearings and Drives is expected to solicit sales. The agreements with the manufacturers which Bearings and Drives has, establish price structures, terms and conditions, and shipping arrangements. Bearings and Drives serves as representatives for the manufacturers in a distinct service area. Bearings and Drives buys products from the manufacturers and resells the products to Bearings and Drives' customers. Bearings and Drives derives compensation by selling to customers at a price higher than the product was sold to them. The price at which products are resold by Bearings and Drives is controlled by market conditions. Bearings and Drives maintains some product inventory; however, in excess of 50 percent of the products sold are shipped directly from the manufacturer to the customer. The direct shipment improves the profit margin for Bearings and Drives by not maintaining an inventory and saving on additional freight expenses, taxes paid on existing inventory and labor costs to be paid warehouse personnel. Bearings and Drives uses a direct delivery system to its customers that is scheduled around the time at which the customer would need the product sold by Bearings and Drives. This arrangement is a standard industry practice. Aileen Schumacher is the founder, President, and sole owner of Expertech. This Petitioner had been certified through the Minority Business Program prior to the rule amendments in December, 1991. When the Petitioner, Expertech sought to be re-certified, it was denied certification in some business areas for failure to maintain sufficient levels of inventory. Expertech sells and distributes technical supplies, such as pollution- control equipment, laboratory equipment, hand tools, and other technical supplies. It specializes in the sale and distribution of safety equipment. Expertech does not provide services. The areas in which Expertech has been denied re-certification relate to the sale of laboratory supplies, paint, and pollution-control equipment. In marketing products Expertech buys directly from manufacturers, except in the instance where they cannot access the manufacturer directly and must operate through a distributor. Expertech tries to maintain as little inventory as possible and to have the commodities it sells shipped directly from the manufacturer to the end user. In addition to ordinary sales, Expertech takes custom orders for products not maintained in inventory by the manufacturer, which are directly shipped from the manufacturer to the customer. In Expertech's business dealings as a manufacturer's representative, wherein it arranges for direct shipments, it is performing in a manner which is standard in the industries in which it is engaged. Otto Lawrenz is the sole proprietor of Mechanical. Prior to the rules changes in December, 1991, Mechanical had been certified as a minority business enterprise. The attempt to re-certify was denied based upon the fact that Mechanical did not stock products and was serving as a manufacturer's representative in selling heating and ventilation equipment. Mechanical sells to mechanical contractors and sheet-metal contractors as a representative for the manufacturer. Mechanical bids on construction jobs and "takes off" the amount of equipment needed in setting its price quotes. If the submission of the price quotation is successful, Mechanical receives a purchasing order from the contractor, as approved by the project engineer. The equipment is then ordered by Mechanical, and delivered by the manufacturer to the job site or the contractor's home office. Mechanical does not maintain a warehouse or a store. The end user pays Mechanical within 30-60 days from the time that the equipment is delivered to the end user. Mechanical then pays the original manufacturer an agreed upon price. Generally, Mechanical sells special-order equipment. This type of equipment would be difficult to inventory since it is being custom-ordered and the units that are ordered are large in size. In addition, the variety of parts involved in these projects makes it difficult to stock them.
The Issue Whether the Petitioner should be certified as a minority business enterprise (MBE) by the Minority Business Advocacy and Assistance Office of the Department of Labor and Employment Security (Department).
Findings Of Fact The Petitioner, All Kinds of Blinds, was incorporated in the State of Florida on January 15, 1999, as All Kinds of Blinds of So. Fla., Inc. The President of the Petitioner is Angela Conroy, a female. Mrs. Conroy owns 51 percent of the company. The remaining 49 percent of the company is owned by Phillip Conroy, Angela’s husband. Mr. Conroy also serves as the company’s vice president and secretary. On June 2, 1999, Mrs. Conroy executed a Florida Statewide and Inter-local Minority Business Enterprise Certification Application that was filed with the Department. The application identified Angela Conroy as the person who makes policy, financial decisions, signs payroll, signs surety bonds and insurance, and makes contractual decisions for the Petitioner. The application also identified Phillip Conroy as the person who makes personnel decisions and signs payroll for the Petitioner. Mr. Conroy is authorized to sign checks on behalf of the company. According to the application, the Petitioner performs various functions regarding the sales, consultation, service, and installation of all types of window coverings. Mrs. Conroy sought MBE certification as an American woman with majority ownership of the Petitioner. Mrs. Conroy has ten years of experience in this type of business but was reluctant to let her former employer know that she was opening her own business. Accordingly, Mrs. Conroy authorized Mr. Conroy to execute applications and various papers on behalf of the Petitioner. She relied on his business experience to guide her through the start-up process. An initial loan in the amount of $4,000 from the couple’s joint bank account was the start-up funds for the Petitioner. Mr. Conroy does the installations for the Petitioner. He performs other functions for the company as may be necessary. He also owns and operates an air conditioning filter company that leased a vehicle also used for the Petitioner’s business. Mr. Conroy maintained that his name appears on records pertaining to the Petitioner as a convenience for his wife. Mr. Conroy is a white male.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Labor and Employment Security, Minority Business Advocacy and Assistance Office, enter a final order denying the Petitioner’s application for MBE certification. DONE AND ENTERED this 28th day of April, 2000, in Tallahassee, Leon County, Florida. J. D. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of April, 2000. COPIES FURNISHED: Angela Conroy All Kinds of Blinds 123 North Congress Avenue Suite 328 Boynton Beach, Florida 33426 Joseph L. Shields, Senior Attorney Department of Labor and Employment Security 2012 Capital Circle, Southeast Suite 307, Hartman Building Tallahassee, Florida 32399-2189 Mary Hooks, Secretary Department of Labor and Employment Security 2012 Capital Circle, Southeast Suite 301, Hartman Building Tallahassee, Florida 32399-2189 Sherri Wilkes-Cape, General Counsel Department of Labor and Employment Security 2012 Capital Circle, Southeast Suite 307, Hartman Building Tallahassee, Florida 32399-2189
The Issue The issue for consideration in this hearing is whether Petitioner should be certified as a Minority Business Enterprise, (Woman-Owned).
Findings Of Fact At all times pertinent to the allegations herein, the Commission On Minority Economic and Business Development, now the Division of Minority Business Advocacy and Assistance Office of the Department of Labor and Employment Security, was the state agency in Florida charged with the responsibility for certifying minority and women-owned businesses for most state agencies. It is required, by statute, to ensure that the preference for minority business firms obtained by the certification process are awarded only to those firms for which the benefit is intended. Petitioner, Bay Area Window Cleaning, Inc., is a small business corporation registered in Florida on August 7, 1985. At the time of the original incorporation of the corporation, 1,000 shares of corporate stock were issued of the 7,000 shares authorized in the Articles of Incorporation. Of these, 510 were issued to John D. Richeson, the individual who, with his brother in the late 1970's, started the window cleaning business while a student in college as a means of supporting himself and, later, his wife and family. The remaining 490 shares were issued to Hope L. Richeson, his wife. The funds utilized to start the business and ultimately incorporate were jointly owned by Mr. and Mrs. Richeson. The Articles of Incorporation, as filed initially, list John D. Richeson as incorporator and registered agent, and John D. Richeson and Hope L. Richeson as the Initial Board of Directors. On January 1, 1986, an additional 500 shares of corporate stock was issued in her name to give her a total of 990 shares out of a total 1,500 shares issued and outstanding. Mrs. Richeson's percentage of ownership, after the issuance of the additional 500 shares, was 66 percent. Share certificates reflect this fact. No additional funds were contributed to the corporate assets by Mrs. Richeson as consideration for the issuance of those shares. Mrs. Richeson, currently the President of the company, attended Bible College in Kansas for three years, graduating in 1978. She moved to Florida in 1980 where she attended Hillsborough Community College (HCC), taking as many business education courses as she could in pursuit of an Associates Degree in Business. In addition to that, she has taken the Small Business Administration Class offered by the University of South Florida. She married John Richeson in 1982 and they have worked together in the window cleaning business since that time. After graduating from HCC Mrs. Richeson contacted a family friend, an attorney, for the purpose of incorporating the business. It was at this time she began to run the business. Without asking any questions about the division of duties or the responsibility for leadership in the business, the attorney drafted the incorporation papers making Mr. Richeson the president. Ms. Richeson took the position of vice-president. She admits she did not, at the time, understand the ramifications of that action. Had she known the importance of the title, she would not have acquiesced in having her husband made president. Even though Ms. Richeson was the de-facto head of the business from the time of its expansion from a one-man operation, John D. Richeson served as president of the corporation from inception up to January 1, 1996, when Hope L. Richeson was elected president. At the annual meeting of the Board of Directors of the corporation, held on December 20, 1995, attended by Mr. and Mrs. Richeson, the two directors, the Board recognized Mrs. Richeson's control over the operation of the business since its inception and made her president effective January 1, 1996, when Mr. Richeson, the incumbent, became vice- president Mrs. Richeson indicates, and there is no evidence to the contrary, that neither she nor her husband had any specific training in order to operate the business. What was most important was a general business sense and a knowledge, gained by reading trade periodicals and from experience, of specific window cleaning products. Most of the major business contracts obtained by Petitioner come from bids to government entities and corporations. Other than herself, several employees, namely those who were brought into the business because of their experience with large cleaning projects, evaluate prospective jobs and prepare proposals. This proposal is then brought to her for approval before it is submitted to the potential client. These individuals are her husband and the Van Buren brothers. Based on a job costing formula learned in school, Mrs. Richeson then evaluates the bid to determine if it is too low or too high. She determines if the company can do the job for the price quoted. In addition to bidding, Ms. Richeson claims to oversee every aspect of the business. These functions range from buying office supplies to costing jobs. No one but she has the authority to purchase supplies or equipment other than minor items in an emergency. She also supervises the finances of the operation, determining how earnings are to be distributed and how much corporate officers and employees are to receive as compensation. By her recollection, on several occasions, due to a shortage of liquid funds, she has waived her right to be paid for a particular work period. She claims not to have taken a withdrawal from the corporation for a year, but the corporation's payroll documents reflect otherwise. The salary of each employee is set by Mrs. Richeson. Employees are paid on a percentage of job income. Those employees who do the high-rise jobs receive 40 percent of the income from those jobs. From her experience in the business, this arrangement for paying washers works far better than paying a straight salary. On the other hand, office personnel are paid on an hourly basis. In the event the business were to be dissolved due to insolvency, Mrs. Richeson would lose her 66 percent stock interest in the corporation and her husband would lose his 34 percent interest. There are no other owners of the company, and no one other than the Richesons would bear any loss. Not only can no one but Mrs. Richeson make purchases for the company, even Mr. Richeson cannot sign company checks by himself nor can he pay bills or make any major business decisions. Only she has the authority to borrow money in the name of the corporation. This was not always the case, however. In 1994, Mr. Richeson purchased a new vehicle for the corporation, signing the finance arrangement as president of the company, but even then, Mrs. Richeson signed as co-buyer. Also, the 1994 unsigned lease agreement for the company's use of real property owned by the Richesons calls for Mr. Richeson to sign as president of the company. Mrs. Richeson is the only one in the company who has the authority to hire or fire employees. While she believes the company would go out of business if she were not the president, she also believes she would be able easily to hire someone to replace Mr. Richeson if he were to leave the company. These beliefs are confirmed and reiterated by Mr. Richeson who claims that his role in the company from its very beginning has been that of services rather than management. On August 14, 1995, Mrs. Richeson, who at the time owned 990 of 1,500 shares of corporate stock, filed an application for certification as a minority business enterprise. The application reflected Mrs. Richeson as the owner of a 66 percent interest in the corporation, but also reflected Mr. Richeson as president. This was before the change mentioned previously Melissa Leon reviewed this application as a certification office for the Commission in September 1995. She recommended denial of the application on several bases. The Articles of Incorporation submitted with the application reflect the Director of the corporation as John D. and Hope Richeson and list only John Richeson as incorporator in August 1985. The corporate detail record as maintained in the office of the Secretary of State also reflects the resident agent for the corporation is John Richeson. The corporation's 1993 and 1994 federal income tax returns show John Richeson as 100 percent owner. No minority ownership is indicated. Income tax returns are afforded great weight by the Commission staff in determining ownership. Though Mrs. Richeson claims to own the majority interest in the corporation in her application, the tax returns do not reflect this. In addition, the corporation payroll summaries for February 28, 1995, March 31, 1995 and April 30, 1995 all show John Richeson receiving more income from the business than did Hope Richeson. In the opinion of Ms. Leon, Mrs. Richeson's salary was not commensurate with her claimed ownership interest. The same records for the last three months of 1995 and through April 1996 reflect Mrs. Richeson as receiving more than Mr. Richeson, however. Other factors playing a role in Ms. Leon's determination of non- qualification include the fact that the purchase order for the truck reflected Mr. Richeson as president; the lease agreement shows him signing as president; the bank signature card reflects him as president in 1994 and the corporate detail record shows Mrs. Richeson as resident agent by change dated May 14, 1996, after the filing of the application. Upon receipt of the Petitioner's application, Ms. Leon reviewed the documents submitted therewith and did a telephone interview with Mrs. Richeson. Based on this information and consistent with the guidelines set out in the agency's rules governing certification, (60A-2, F.A.C.), she concluded that the application did not qualify for certification. Not only was the required 51 percent minority ownership not clearly established, she could not determine that the minority owner contributed funds toward the establishment of the business. Ms. Leon determined that the payroll records, reflecting that from February through April 1995, Mrs. Richeson drew less than Mr. Richeson, were not consistent with the same records for the period from October 1995 through April 1996, which reflected that Mrs. Richeson was now earning more than her husband. Further, the amount Mrs. Richeson earned constituted only 53.2 percent of the salary while her ownership interest was purportedly 66 percent. A further factor militating toward denial, in Ms. Leon's eyes, was the fact that there were only two directors. Since Mrs. Richeson was one of two, she could not control the Board, and minority directors do not make up a majority of the Board. While the documents played an important part in Ms. Leon's determination, the telephone interview was also important. Here Ms. Leon found what she felt were many inconsistencies between what was stated in the interview and Mrs. Richeson's testimony at hearing. Therefore, Ms. Leon concluded at the time of her review that the business was jointly owned and operated. It was not sufficiently controlled by the minority party, to qualify for certification. Nothing she heard at hearing would cause her to change her opinion.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Labor and Employment Security enter a Final Order denying Minority Business Enterprise status to Bay Area Window Cleaning, Inc. DONE and ENTERED this 22nd day of August, 1996, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of August, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-5913 To comply with the requirements of Section 120.59(2), Florida Statutes (1995), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. 1. Accepted and incorporated herein. 1. - 4. Accepted and incorporated herein. Accepted and incorporated herein except for the last sentence which is rejected as a legal conclusion. Accepted that she ran the operation. Accepted and incorporated herein. Accepted as a restatement of the testimony of Mrs. Richeson and a generalized agreement with the comments made. - 10. Accepted and incorporated herein, 11. - 12. Accepted. 13. - 14. Accepted. 15. - 17. Accepted. 18. - 19. Not proper Finding of Fact, but accepted as a restatement of witness testimony. 20. - 21. Accepted and incorporated herein. 22. - 25. Accepted as a restatement of witness testimony. Respondent's Proposed Findings of Fact. 1. - 8. Accepted and incorporated herein. Rejected as contradicted by the evidence. Accepted and incorporated herein. Accepted that until after the application was filed, Mr. Richeson was paid more than Mrs. Richeson, but the difference was not great. Accepted and incorporated herein. Accepted and incorporated herein. Rejected as not consistent with the evidence of record except for the allegation concerning Mr. Richeson's authority to sign corporate checks, which is accepted and incorporated herein. COPIES FURNISHED: Miriam L. Sumpter, Esquire 2700 North Dale Mabry Avenue, Suite 208 Tampa, Florida 33607 Joseph L. Shields, Esquire Department of Labor and Employment Security 2012 Capital Circle, Southeast Hartman Building, Suite 307 Tallahassee, Florida 32399-2189 Douglas L. Jamerson, Secretary Department of Labor and Employment Security 2012 Capital Circle, Southeast Hartman Building, Suite 303 Tallahassee, Florida 32399-2152 Edward A. Dion, General Counsel Department of Labor and Employment Security 2012 Capital Circle, Southeast Hartman Building, Suite 307 Tallahassee, Florida 32399-2189
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application of JEDI Enterprises, Inc., for certification as a minority business enterprise be APPROVED. DONE and ENTERED this 27th day of August, 1984, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of August, 1984. COPIES FURNISHED: Paul A. Pappas, Secretary Department of Transportation Haydon Burns Bldg. Tallahassee, Florida 32301 Thomas G. Brown, Esquire Florida National Bank Bldg. 301 First Street West Palm Beach, Florida 33401 Mark A. Linsky, Esquire Haydon Burns Bldg., M.S. 58 Tallahassee, Florida 32301-8064
The Issue The Department of Environmental Regulation issued a Reguest for Statement of Qualification for Petroleum Site Cleanup Services, Solicitation #9111C. Attachment F to the solicitation sought information related to utilization of minority business enterprises as subcontractors. Points were available for said utilization. The Department awarded zero points to parties which failed to include the three pages of the attachment in the responses to the solicitation. The issue in this case is whether the Department acted in accordance with law in awarding zero points for failure to submit all three pages of Attachment F.
Findings Of Fact On March 1, 1991, The Department of Environmental Regulation (DER) issued a Request for Statement of Qualifications (RFSOQ) for Petroleum Contamination Site Cleanup Services, Solicitation #9111C. As stated in the RFSOQ, the DER's objective is to enter into approximately ten contracts for petroleum cleanup services with contractors most qualified to perform the services. It is in the best interests of the state and the DER to enter into such contracts with the most qualified contractors available. Selected firms will be placed under contract with the DER to respond to task assignments. There is no work guaranteed to any contractor as a result of being selected and placed under contract. The cover sheet to the DER Solicitation #9111C identifies Attachment B as "General Instructions", Attachment C as "Instructions for Preparation of an SOQ", Attachment F as "Minority Business Certificate" and Attachment N as an "SOQ Checklist." In the RFSOQ, the DER specifically reserved the right to waive minor irregularities. The general instructions set forth at Attachment B provide, that the DER "may waive minor informalities or irregularities in the SOQs received where such are merely a matter of form and not substance, and the corrections of which are not prejudicial to other contractors." The DER is not required to waive all minor irregularities. The ability to waive such defects is within the jurisdiction of the agency. The evidence establishes that the DER applied such discretion consistently. There is no evidence that, at any time prior to the SOQ opening, did the Petitioner or Intervenors seek additional information from the DER regarding the agency's discretion to waive minor irregularities. Attachment C provides that "ANY AND ALL INFORMATION SUBMITTED BY A CONTRACTOR IN VARIANCE WITH THESE INSTRUCTIONS WILL NOT BE REVIEWED OR EVALUATED (e.g. pages beyond the 20-page SOQ limit will not be reviewed) or may result in the response being deemed non-responsive and rejected as noted." The purpose of the statement was to discourage responders from submitting information beyond that required by the RFSOQ, in order to provide a common basis for the evaluation of all SOQs submitted. The provision also provided the DER with the ability to reject an SOQ which failed to substantially comply with the agency's solicitation. Attachment C states that an SOQ shall consist of three parts, a one- page transmittal letter, a 20-page SOQ, and "other required information". According to Attachment C, the SOQ was to contain an introduction, a section on the company's background, a statement of experience and knowledge related to the qualifications required by the RFSOQ, a description of project organization and management appropriate to the tasks assigned, a list of personnel responsible for completion of assigned task, a list of "a minimum of ten separate and verifiable former clients other than the FDER" and related information. Work performed for the DER was to be set forth separately in addition to the ten non-DER clients. "Other required information" included minority business utilization information. Attachment C provides as follows: Contractors submitting SOQs under this solicitation must identify intended minority subcontractors and estimated percentage of total contract amount to be awarded to minority firms on Attachment F of this Request for Statement of Qualifications. Use of any document other that Attachment F shall result in disallowance of any credit for use of minority subcontractors. (emphasis supplied.) Evaluation points were available on a scaled basis to contractors based upon their commitment to utilization of minority businesses enterprises in their SOQs. Attachment B provides that "Minority Business Utilization will be evaluated. provided that the responder complies with the reporting requirements contained in Attachment F...." (emphasis supplied.) Attachment F, page 1 of 3, provides as follows: Directions: Each contractor and/or subcontractor which meets the definition of a certified small minority business, as described below, shall submit an originally signed copy of page 1 of this Attachment in the response package to this solicitation. If more than one minority business is to be used, the prime contractor shall copy this page and have each minority business complete that copy as though it were an original. A prime contractor which intends to utilize subcontractors meeting the definition of small minority business is responsible for completing page 2 of this Attachment. A prime contractor which meets the definition of a small minority business is responsible for completing page 3 of this Attachment. If a particular page of this Attachment is not applicable, the prime contractor shall so indicate on that page and include the page as part of the response package. At a minimum, the entire three page Attachment F shall be submitted in the response package. Failure to submit-- this Attachment in the response package shall result in the responder receiving a score of zero (0) for minority business utilization. (emphasis supplied.) Attachment N, the "SOQ checklist," provides a list of items which are to be "properly completed, signed and enclosed" in order to "ensure that your SOQ is responsive to FDER Solicitation No. 9111C...." Item 3.b. of Attachment N reads: "Minority Business Utilization Form - if applicable (Attachment F)". As stated in Attachment B to the RFSOQ, on March 13, 1991, a mandatory pre-bid meeting was held in Tallahassee, Florida, at the DER's offices for all contractors wishing to submit a Statement of Qualifications (SOQ). Failure to attend the meeting would have resulted in rejection of SOQs submitted by non- attending contractors. The Petitioner and Intervenors were represented at the pre-bid meeting. The meeting provided an opportunity during the solicitation process to have technical, legal or administrative questions answered. Accordingly, potential responders are expected to have read the complete RFSOQ prior to the meeting. At the pre-bid meeting, the DER did not review every part of the solicitation, but invited questions from participants. The DER official conducting the meeting stated that "any and all information submitted by a contractor in variance with these instructions will not be reviewed or evaluated," however, the other directions provided in the RFSOQ were otherwise reviewed only upon request. Although there was a specific discussion of the requirements for reporting proposed minority business utilization, there were no questions asked with regard to the requirements for completion of Attachment F. There were no questions asked regarding the DER's right to waive irregularities, or whether the failure to submit Attachment F in accordance with the directions would be regarded by the agency as a minor irregularity. Potential responders also had an opportunity to submit written questions prior to a time certain. There is no evidence that questions were raised related to the requirements of Attachment F or to the DER's application of it's discretionary authority to waive minor irregularities. On March 22, 1991, the DER issued an addendum, not material to this case, to the Request for SOQs. The addendum was sent by certified mail to each contractor represented at the March 13, 1991 meeting. On March 27, 1991, a second addendum was sent to each contractor. The addendum, among other things, changed the date for submission of an SOQ from April 1, 1991 to April 15, 1991 at 2:00 P.M. On April 15, 1991, SOQs were submitted by the Petitioner and Intervenors in this case. The bids were opened at 2:00 P.M. or shortly thereafter, and subsequently evaluated and scored by DER personnel. In some categories, points were awarded on a weighted basis, which provided a relative ranking of responders. For example, the prime contractor with the highest minority business enterprise subcontractor utilization received 13 points, with lesser ranked contractors receiving fewer points. On June 3, 1991, at 10:05 A.M. bid tabulation results were posted in the DER's contract office. The Petitioner and Intervenors in this case submitted responsive SOQ's to DER solicitation #9111C. The result of the DER's evaluation was the development of a short list of contractors permitted to make oral presentations to agency officials after which the DER will initiate contract discussions with approximately ten contractors. The SOQs were reviewed by DER officials who initially identified information submitted which did not comply with the requirements of the RFSOQ. Irregularities were identified and discussed with DER legal counsel to determine the materiality of the irregularity and to ascertain the appropriate treatment of the defects. The DER officials did not disclose the identity of the responder during the discussions, although the person identifying the defect was aware of the related responder. However, there is no evidence that the three DER officials were aware of an individual non-complying contractor's identity, or that the decision to waive such irregularities was based upon the identity of the participants. The DER determined that, in order to be equitable to all participants, it would not waive irregularities where the directions were clear and the consequences for noncompliance were specifically set forth. If the solicitation were less clear, or the consequence of noncompliance with the requirement was not specifically identified, the Department attempted to be more lenient regarding the waiver of such irregularities. Where the DER waived irregularities, such waivers were awarded on a consistent basis without regard to the individual responders involved. Information which was not to be reviewed or evaluated was concealed by either covering the information with white paper, or stapling excess pages together. The DER waived several types of minor irregularities in the SOQs received for Solicitation #9111C. Some contractors submitted transmittal letters consisting of multiple pages rather than the one page letter specified in the RFSOQ. The transmittal letter received no evaluation points. The DER stapled multiple page letters together and considered only information contained on the first page. Therefore, information submitted at variance with the one- page limit was not reviewed or evaluated. The DER did not waive the failure to attach a transmittal letter. DER waived some irregularities related to subcontractor letters. Multiple page letters were stapled together and only page one information was reviewed. The DER decision to waive such defects was based upon the fact that such subcontractors were less familiar with the DER's submission requirements than were the prime contractors, that such letters were submitted by the subcontractors, that it was unfair to penalize the prime contractors for the minor irregularities of the subcontractor letters, and that the tasks to be performed by subcontractors were generally not critical to the successful completion of the prime contractor's assigned responsibilities. There was sufficient information to permit the DER to conclude that the subcontractor and prime contractor were committed to the project. There is no evidence that the identities of the subcontractors was considered in determining whether such defects should be waived. The DER waived other irregularities related to subcontractor letters, including the failure of a subcontractor to sign the letter. There was no specific requirement that the subcontractor sign the letter. However, the DER did not waive the failure to submit subcontractor letters. In instances where no letters were submitted, the DER awarded zero points and references to the subcontractor in the SOQ were deleted. The DER's actions related to subcontractor letters was reasonable and appropriate. Another irregularity waived by the DER was the failure to supply a minimum of ten separate and verifiable former clients other than the DER, with work performed for the DER set forth separately. The DER did not waive the failure to submit ten references, however, in some cases, not all ten references were acceptable. Attachment C does not state that the failure to submit ten acceptable references shall result in an award of zero points. In such instances, the DER reduced the number of points available to reflect the percentage of acceptable references provided. Therefore, information submitted at variance with the requirements, such as unacceptable references, was not evaluated. The DER acted reasonably and consistently with the provisions set forth in the RFSOQ. The DER requested that responders identify three "deliverables" required through an ongoing contract which had been effective within the past year. The DER did not consider deliverables related to contracts which had not been effective within the past year. The DER checked the references and awarded no points for unacceptable references. Several SOQ's did not appropriately identify key personnel as required. The DER did not consider information which was not reported as required by the RFSOQ. Where minor irregularities were waived, the waiver was applied consistently to all responders. The DER did not waive the failure of any responder to submit the three pages of Attachment F, as clearly required by the directions to the attachment. All parties which failed to submit all three pages of the attachment received a score of zero. There is no evidence that the DER, at any time, indicated that the directions set forth on Attachment F were optional. Approximately 20 of 45 of contractors submitting SOQs failed to include all three pages of the MBE utilization form, Attachment F to the Request for SOQs. Most failed to include page three of the attachment. The Petitioner, as well as Intervenors ERM-South, ITC and Westinghouse, were included in the 20 responders which failed to submit all three pages of Attachment F. As provided in the directions to Attachment F, failure to include all three pages of the attachment resulted in a score of zero points for MBE utilization. The DER could have made certain assumptions about the applicability of Attachment F to specific responders to the solicitation. However, given that the directions were clear and the penalty for not complying with the directions was equally clear, the DER did not waive the failure to submit all three pages of the attachment as part of the SOQs. The evidence is insufficient to establish that the DER's action was outside the agency's discretion or the requirements of law. Extensive testimony was offered in support of the assertion that the directions related to reporting of minority business utilization were confusing and ambiguous. However, the directions to Attachment F are clear and provide that, "[a]t a minimum, the entire three page Attachment F shall be submitted in the response package. Failure to submit this Attachment in the response package shall result in the responder receiving a score of zero (0) for minority business utilization." There is no credible evidence to establish that such directions are confusing or ambiguous. The instructions to the RFSOQ consistently refer to Attachment F as being the only acceptable means of reporting minority business utilization information. Attachment F consists of three pages, with the "Directions" for completing and submitting the attachment set forth at page one, paragraph one. The Petitioner and Intervenors timely filed SOQ's and are substantially affected by the DER's determination that responders failing to submit all three pages of Attachment F were awarded zero points for minority business utilization. There is no evidence that the Petitioner or Intervenors are unable to perform the tasks identified in the RFSOQ.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Environmental Regulation enter a Final Order dismissing the petition of Metcalf & Eddy, Inc., (Case No. 91-4318B1D), as well as Cases No. 91- 43I6BID and 91-4317B1D, as set forth in the preliminary statement to this Recommended Order. DONE and RECOMMENDED this 26th day of September, 1991, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM 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 26th day of September, 1991. APPENDIX CASE NO. 90-4316B1D, 90-4317B1D, and 90-4318B1D The following constitute rulings on proposed findings of facts submitted by the parties. Petitioner Metcalf & Eddy, Inc. The proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 4. Rejected as to the implication that DER had no right to waive minor irregularities, contrary to the evidence. 12, 16, 19. Rejected, unnecessary. 20. Rejected. Such additional points appear to have been awarded to M&E in violation of Section 120.53(5)(c), Florida Statutes. 24-25. Rejected. Although the specific waivers are factually correct, the implication of the proposed finding is contrary to the weight of the evidence which establishes that the DER waives such irregularities, even though the instructions were clear, where the consequences for failing to comply with each specific instruction were unclear. There was no penalty set forth at the requirement that a document be signed or not exceed one page in length. The evidence establishes that the DER's actions were reasonable, logical, and within the authority of the agency. 29-32. Rejected. Contrary to the clear "Directions" of Attachment F, which state that "[a]t a minimum, the entire three page Attachment F shall be submitted in the response package. Failure to submit this Attachment in the response package shall result in the responder receiving a score of zero (0) for minority business utilization." Responders were referred to Attachment F by the instructions cited in the proposed finding. 33-34, 36-38, Rejected, irrelevant. 39. Rejected, immaterial. The fact the DER could have examined the information submitted by M&E and ascertained the information which would have been set forth in the complete attachment is irrelevant. The agency is under no obligation to review the information submitted for the purpose of determining a responders' minority business status. Such information is to be provided in the three pages of the completed attachment. 40-41 Rejected. A logical reading of the checklist reference to Attachment F would be that, if the attachment were applicable, the attachment should be included. The clear and specific directions to Attachment F require the submission of the three page package to receive points. 42-43. Rejected, irrelevant. 44. Rejected. The failure to submit all three pages of Attachment F resulted in zero points, as provided in the directions to the attachment. The DER policy related to waiver of irregularities does not include the waiver of irregularities where the instructions are clear, the penalty for noncompliance is specific, and a responder fails to comply. The policy is reasonable and was applied consistently. 47. Rejected, contrary to the evidence. It appears that M&E's assertion that it would be included in the "short list" requires addition of points awarded by the DER in violation of Section 120.53(5)(c), Florida Statutes. 49-50. Rejected. While "instructions in a competitive bidding solicitation can be rendered ambiguous by their location," in this case, the instructions contained in the RFSOQ referred readers to Attachment F for the reporting of minority business utilization information. Attachment F's directions are not ambiguous or confusing. 51-53. Rejected, immaterial. This proposed finding is also contrary to the suggestion that the instructions were unclear, and indicates, not that the instructions were unclear, but that the M&E representative did not read the RFSOQ. It is not possible to find that a careful and intelligent reader of the directions to Attachment F could misunderstand the meaning of "[a]t a minimum, the entire three page Attachment F shall be submitted in the response package. Failure to submit this Attachment in the response package shall result in the responder receiving a score of zero (0) for minority business utilization." 54-61. Rejected, immaterial. The fact that a substantial number of responders failed to comply with the clear directions of Attachment F does not establish that the directions are confusing. The instructions to the RFSOQ referred readers to Attachment F for the reporting of minority business utilization information. The first paragraph of Attachment F is entitled and contains "Directions" which are clearly set forth. There is nothing at all ambiguous about the requirement that "[a]t a minimum, the entire three page Attachment F shall be submitted in the response package. Failure to submit this Attachment in the response package shall result in the responder receiving a score of zero (0) for minority business utilization." 62-65. Rejected, irrelevant. There is no requirement that the DER waive all irregularities. Such irregularities may be waived at the Department's discretion. The DER chose not to waive irregularities where the requirements, and the penalties for failure to comply with said requirements, were clear. The DER applied this policy appropriately and consistently. There was no appearance of favoritism when the agency's policy is fairly and consistently applied. Rejected, irrelevant. The DER expects potential responders to have read the RFSOQ prior to the pre-bid meeting. The purpose of the meeting is to answer questions and provide clarifying information. The fact that no questions were asked regarding the requirement to submit all three pages of Attachment F indicates that participants either clearly understood the requirement or had not read the RFSOQ prior to the only mandatory opportunity to obtain clarification. In any event, the DER is not obligated to read every sentence of the RFSOQ aloud at a pre-bid meeting in order to make certain that responders who fail to read the document will submit responsive SOQs. Rejected, cumulative. 68-69. Rejected, immaterial, unnecessary. Respondent Department of Environmental Regulation The proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 2. Rejected, unnecessary. 6. Rejected, unnecessary. 20. Rejected, unnecessary. 23. Rejected as to the implication that Attachment C, Page 1, indicated the DER could not waive any irregularities. Cited language states that information submitted in variance with instructions would not be reviewed or evaluated. The evidence establishes that information submitted in variance with the instructions was not reviewed or evaluated, but was disregarded. 28. Rejected. It is not clear what is meant by this proposed finding. 37-39. Rejected, irrelevant, unnecessary. The directions to Attachment F clearly state that all three pages must be submitted or zero points will be awarded. 41. Rejected, unnecessary. The directions to Attachment F clearly state that all three pages must be submitted or zero points will be awarded. Testimony as to the ambiguity of such directions is not credible. 42-43. Rejected, unnecessary. The directions to Attachment F clearly state that all three pages must be submitted or zero points will be awarded. Testimony as to the ambiguity of such directions is not credible, especially given M&E/PIECO's correct submission in response to similar requirements of RFSOQ #9003C. Rejected, unnecessary. The directions to Attachment F clearly state that all three pages must be submitted or zero points will be awarded. Testimony as to the ambiguity of such directions is not credible. The fact that the cited witness understood the directive and failed to comply due to oversight does not suggest that the directive was unclear. Rejected, unnecessary. The directions to Attachment F clearly state that all three pages must be submitted or zero points will be awarded. The reason for the cited witnesses failure to comply is unclear. Rejected, cumulative. 48. Rejected, unnecessary. 50-51. Rejected, immaterial. The issue in this case is not whether to goals of the minority business utilization program are met, but whether the DER acted inappropriately in reviewing SOQs submitted in response to the DER RFSOQ #9111C. 52-53. Rejected, unnecessary. 54-56. Rejected, unnecessary, cumulative. Intervenor ERM-South The proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 2. Rejected, cumulative. 14-19. Rejected, irrelevant, unnecessary. See preliminary statement. 21. Last sentence rejected, contrary to the greater weight of the evidence which establishes that the DER applied the language of the RFSOQ in a reasonable way, and that material information submitted in variance with the instructions was not reviewed or evaluated. 32-39, 41. Rejected, immaterial. The issue is whether the failure to follow the clear directions of Attachment F should result, as the directions provide, in zero points being awarded. The fact the DER could have examined the information submitted by ERM-South and ascertained the information which would have been set forth in the complete attachment is irrelevant. The agency is under no obligation to review the information submitted for the purpose of determining a responders' minority business status. Such information is to be provided in the three pages of the completed attachment. 40. Rejected, contrary to the evidence. There is no evidence that the omission of Attachment F, page three, is the sole basis for exclusion of a contractor from the short list. The short list was determined by ranking scores awarded. As stated in the directions to Attachment F, the result of noncompliance with said directions was an award of zero points for minority business utilization. 42-46. Rejected, cumulative, contrary to the greater weight of the evidence which establishes that the DER's action in reviewing the submitted Attachment F was reasonable, logical, and was applied in a consistent manner. As to whether the DER should have contacted other agencies to determine MBE status, the agency is under no obligation to do so. 47-49. Rejected, contrary to the clear directions of Attachment F, which state that "[a]t a minimum, the entire three page Attachment F shall be submitted in the response package. Failure to submit this Attachment in the response package shall result in the responder receiving a score of zero (0) for minority business utilization." It is simply not possible to find, as suggested in the proposed finding, that such language cannot be relied upon to put contractors on notice that the failure to submit the three pages would result in zero points. Rejected, contrary to the evidence and to the clear directions set forth at Attachment F. Rejected, irrelevant. 52-54. Rejected, contrary to the evidence and to the clear directions set forth at Attachment F. 55-57. Rejected, irrelevant. 59-64. Rejected, irrelevant, unnecessary. See preliminary statement. Intervenor ITC The proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: Proposed findings of fact #7, #10 and #14-16 relate to evidence introduced at hearing by ITC to support it's position that it had been excluded from the "short list" due to DER's clerical error. As stated in the preliminary statement, ITC failed to timely file a notice of protest subsequent to the posting of the bid tabulation results challenging the DER's clerical error. Accordingly, this Recommended Order does not set forth Findings of Fact related to the clerical error due to ITC's failure to timely file a written notice of protest as required by Section 120.53(5)(b), Florida Statutes. 12. Rejected. The M&E formal written protest does not allege that the DER had improperly drawn the line for the "short list." 18-20. Rejected. Although likely correct, the proposed findings are irrelevant to the issue in this case. Rejected. Such additional points awarded to M&E by the DER appear to have been awarded contrary to Section 120.53(5)(c), Florida Statutes. Rejected, cumulative. ITC had an opportunity to timely file a written notice of protest subsequent to the bid tabulation posting, but failed to do so. An intervenor takes the case as it is found. Rejected, cumulative. 25. Rejected, contrary to the evidence. The evidence does not establish that the failure to complete all of Attachment F was based on it's inapplicability. Attachment F clearly states that inapplicable pages should be so marked and submitted with the response package. If such pages were not returned, as suggested, because there did not apply, then it is reasonable to conclude that the responder failed to read the clearly stated directions to Attachment F. 26-29. Rejected, irrelevant. The DER did nothing more than apply the clearly stated direction that "[a]t a minimum, the entire three page Attachment F shall be submitted in the response package" and imposed the clearly stated penalty, stating that "[f]ailure to submit this Attachment in the response package shall result in the responder receiving a score of zero (0) for minority business utilization." 32-33. Rejected, contrary to the greater weight of evidence that the DER did not waive irregularities where the requirements, and the penalties for noncompliance with said requirements, were clearly stated. The DER did waive other irregularities where the instructions were ambiguous or confusing, or where there was not a specific penalty attached for the failure to follow a specific requirement. The evidence establishes that the DER actions were appropriate. 34. Rejected, immaterial. All three pages of Attachment F were clearly required to be submitted or a score of zero would be awarded. Intervenor E&E The proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 2-3. Rejected, cumulative. 12. Rejected, contrary to the cited evidence. Although Attachment F was discussed in terms of reporting requirements, there were no questions asked related to the directions for completing or submitting the attachment. 21. Rejected, cumulative. Intervenors EBASCO, ABB, OHM, Cherokee and Westinghouse jointly filed a proposed recommended order. The proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 13, 16-17, 43-45, 47. Rejected, unnecessary. COPIES FURNISHED: Carol Browner, Secretary Twin Towers Office Building 2600 Blairstone Road Tallahassee, Florida 32399-2400 Daniel H. Thompson, Esq. General Counsel Twin Towers Office Building 2600 Blairstone Road Tallahassee, Florida 32399-2400 Carolyn S. Raepple, Esq. Carlos Alvarez, Esq. 123 S. Calhoun Street Post Office Drawer 6526 Tallahassee, Florida 32314 E. Gary Early, Esq. Assistant General Counsel Twin Towers Office Building 2600 Blairstone Road Tallahassee, Florida 32399-2400 M. Christopher Bryant, Esq. 2700 Blairstone Road, Suite C Post Office Box 6507 Tallahassee, Florida 32301 George N. Meros, Esq. 101 North Monroe Street Tallahassee, Florida 32301 Barrett G. Johnson, Esq. 315 South Calhoun Street, Suite 750 Tallahassee, Florida 32301 Rex D. Ware, Esq. 106 East College Avenue Highpoint Center, Suite 900 Tallahassee, Florida 32301 W. Robert Venzina, III, Esq. Mary M. Piccard, Esq. 1004 DeSoto Park Drive Post Office Box 589 Tallahassee, Florida 32399-0589 Harry R. Detwiler, Jr., Esq. Post Office Drawer 810 Tallahassee, Florida 32302
