The Issue The issue presented is whether Petitioner's application for certification as a minority business enterprise should be granted.
Findings Of Fact Petitioner Omni Outdoors, Inc., a for-profit corporation located in Coral Springs, Florida, is engaged in the business of commercial landscaping and irrigation. It was incorporated on September 19, 1995, by Bruce Reeb. When incorporated, Petitioner issued its 100 shares of stock as follows: 24 shares to Bruce, 26 shares to his wife Terry, 24 shares to Kevin McMahon, and 26 shares to Kevin's wife Michele. Accordingly, the Reebs and the McMahons each own 50 percent of the business. Both Reebs and both McMahons became the 4-member Board of Directors. Bruce became the president and the secretary of the corporation, and Kevin became the vice-president and the treasurer. According to the corporation's By-laws, the President is the chief executive officer of the corporation, responsible for the general supervision of its business. Bruce is a certified general contractor in the State of Florida and is the qualifier for Petitioner. Kevin holds an irrigation license and is the qualifier for Petitioner in that area. Bruce handles estimating, pricing, and proposal preparation and presentation. Kevin runs the field operations and purchasing of materials. In October 1996 Terry quit her job as a flight attendant to begin working for Petitioner, handling accounting and personnel matters. Her name was added to the corporation's bank accounts as an authorized signature. Bruce and Kevin remain as authorized signatures on the accounts, and only one signature is required for the corporation's checks. She was given the title "chief executive officer" of the corporation in January 1997, a position authorized by an amendment to the By-laws in March 1997. She was given a smaller salary than Bruce or Kevin, who were paid the same amount. Kevin's wife Michele has never been involved in the day- to-day activities of the corporation. She has never received a salary from the business. In January 1997 Terry filed an application with Respondent for the corporation to be certified as a minority business enterprise, under the status of "American Woman." Around the time the corporation filed its application, Terry's salary was increased to $600 per week so she would be making the same as Kevin, and Bruce's salary was decreased to $400 per week. Even after Terry's full-time employment by the corporation, the signatures of her husband or of Kevin continue to appear on corporate obligations, such as an indemnity agreement and corporate promissory notes.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying Petitioner's application for certification as a minority business enterprise. DONE AND ENTERED this 8th day of April, 1998, in Tallahassee, Leon County, Florida. LINDA M. RIGOT Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 8th day of April, 1998. COPIES FURNISHED: Terry M. Reeb, Chief Executive Officer Omni Outdoors, Inc. 1742 Northwest 112 Terrace Coral Springs, Florida 33071 Joseph L. Shields, Esquire Department of Labor and Employment Security 2012 Capital Circle, Southeast The Hartman Building, Suite 307 Tallahassee, Florida 32399-2189 Edward A. Dion, General Counsel Department of Labor and Employment Security 2012 Capital Circle, Southeast The Hartman Building, Suite 307 Tallahassee, Florida 32399-2189 Douglas L. Jamerson, Secretary Department of Labor and Employment Security 2012 Capital Circle, Southeast The Hartman Building, Suite 303 Tallahassee, Florida 32399-2189
Recommendation Based on the foregoing, it is RECOMMENDED: That petitioner's application for certification as a Women Business Enterprise be denied. DONE and ORDERED this 29th day of June, 1984, in Tallahassee, Florida. R. L. CALEEN, JR. 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 29th day of June, 1984. COPIES FURNISHED: Diann Criss Atkinson, Qualified Representative Shurly Contracting, Inc. P. O. Box 15267 West Palm Beach, Florida 33406 Vernon L. Whittier, Jr., Esquire Department of Transportation 605 Suwannee Street Tallahassee, Florida 32301 Paul A Pappas, Secretary Department of Transportation Haydon Burns Building Tallahassee, Florida 32301
The Issue The issue for consideration in this case was whether Petitioner, F & M Concrete Company, Inc., should be recertified as a disadvantaged business enterprise, pursuant to Chapter 14-78, F.A.C.
Findings Of Fact At all times pertinent to the issues herein, Petitioner, F & M Concrete Company, Inc., was a bridge and culvert construction company doing business in the State of Florida with principal offices in Plant City. Respondent, Department of Transportation, is the state agency responsible for certifying minority and disadvantaged business enterprises for bid award purposes with the Department. Prior to February 3, 1988, the Petitioner had been certified by the Department as a minority business enterprise, (women owned). Petitioner's stock is owned as follows: Jaretha Fletcher,. 43.3% Kathleen Fletcher,. 33.0% Jennifer Fletcher Prado,......21.67%, and Vesta Thomas,. 2.0%. All of the above, with the exception of Ms. Thomas, the retired bookkeeper, are members of the Fletcher family. Kathleen is W. Eddie Fletcher's mother, Jaretha is his wife, and Jennifer Fletcher Prado, is his sister. W. Eddie Fletcher is the President of F & M Concrete Company, Inc., and Chief Operating Officer. Kathleen Fletcher is Chairman of the Board of Directors. For approximately 15 years prior to the last 2 years, the stock owned by Jaretha Fletcher was owned in joint tenancy with W. Eddie Fletcher. Approximately 2 years ago, the ownership was transferred to Jaretha Fletcher alone. There is no evidence as to the consideration for that transfer. Mr. Fletcher claims he is not his wife's heir, and will not inherit her stock should she predecease him. Kathleen Fletcher, Mr. Fletcher's mother, has had tuberculosis for many years, and is incapable of taking a substantial, active part in the business. However, she comes to the office approximately once a week, and speaks with Jaretha by phone periodically. Jaretha is employed in the corporate office in a training capacity. Jennifer Fletcher Prado works for the Hillsborough County Road Department as an inspector, and in the course of her travels about the county, periodically sees Petitioner's crews at work. Though she does not interfere with or become involved in the supervision of those crews, if she sees something that causes her to question the crew's performance, she will phone Mr. Fletcher and demand an explanation. This is the extent of her participation in the operation of the business with the exception of serving as a member of the Board of Directors. When she retires from her position with the county, because of her experience, she will be eligible to work with Petitioner corporation but would have to spend some time gaining experience in the contracting end of the business before she could assume any managerial position. On November 1, 1988, Jaretha Fletcher, as Assistant Secretary of F & M Concrete Company, Inc., submitted the corporation's application for DBE certification. The application indicates that the firm was established in September, 1956, and is engaged in the business of building bridges, concrete pavements, curbs, sea walls, storm drainage systems, and culverts. It has 35 full time employees, of whom 57% are minority, and it serves the geographical areas incorporating numerous counties in the central part of the state. The firm is 100% woman owned in that the four individuals mentioned above own 100% of the 100 shares of stock authorized and issued. The firm is managed by a President, Vice President, Assistant Secretary, and Secretary-Treasurer. W. Eddie Fletcher is President. W. Randall Fletcher is Vice President. Jaretha Fletcher is Assistant Secretary, and Dori M. Keeler is Secretary- Treasurer. The Board of Directors is made up of the three Fletcher women. W. Eddie Fletcher received a salary of $33,800.00 in 1987; W. Randall Fletcher received $28,600.00; Dori Keeler received $20,800.00; Kathleen Fletcher received $13,520.00; Jaretha Fletcher received $7,800.00, and David L. Cox, General Manager, received $28,600.00. Question 18 of the application for recertification reflects that policy making and financial decisions are made by Kathleen Fletcher as Chairman of the Board, Jaretha Fletcher, and Jennifer Prado. Management personnel are hired and fired by the Board. Hourly personnel are hired and fired by Mr. Cox and the four job foremen. At question 19 of the application, Petitioner indicates that any decision to bid on a job is made by W. Eddie Fletcher as President and Jaretha Fletcher as Assistant Secretary. Since Mrs. Fletcher is currently serving the corporation as a trainee, her contribution to the decision making process must be minimal. Job estimating is done by W. Eddie Fletcher and David Cox. Purchases of equipment are approved by the Board upon the recommendation of W. Eddie Fletcher. Supervision of field operations is accomplished by Mr. Cox. Jaretha Fletcher, as Assistant Secretary, along with Randall Fletcher, shop foreman and Vice President; W. Eddie Fletcher, President; and Dori M. Keeler, Secretary-Treasurer, all sign the payroll checks. The application was mailed to the Department by certified package delivery on November 1, 1988 and was received by it on November 2, 1988. This was 94 days before the Petitioner's then current certification expired. On December 2, 1988, the Department mailed a letter to the Petitioner requesting additional information. This was 31 days after the date of receipt of the application, which exceeds the rule period of 30 days or requesting additional information. However, Petitioner responded to the request on December 7, 1988, one day after receipt. The additional information requested by the Department was forwarded to it by Petitioner on December 21, 1988, with the exception of two forms that had to be procured from the Department of State. After all the requested information was submitted, the Department set up an onsite review of the Petitioner's operation. According to Petitioner, though the rule governing MBE certification requires that the Department conduct the on- site review within 60 days of receipt of application, it was not done in this case until the 98th day after the application was submitted. The rule also states that approval or denial must be announced within a 90 day period from application. This was not done here until March 14, 1989, when Mr. Pete Davis, DBE Certification Coordinator for the Department, notified the Petitioner by certified mail that its application had been denied. Since the application was submitted on November 1, 1988 and received on November 2, 1988, March 14, 1989 terminates a period of 132 days from the date of receipt of application. Mr. Donnie Alford, an engineer, works for the Department's construction office and is a member of the DBE Certification Committee which considered Petitioner's application. This committee, which consists of three voting members and one nonvoting member, reviewed Petitioner's file. The application was reviewed by all committee members before a vote was taken and Mr. Alford, as a voting member, considered all the information in the file including such items as gross receipts, ownership, directorship, the officers, their salaries, the ethnic status and span of control of the ownership and other personnel, and all other matters mandated for consideration by Rule 14-78 F.A.C. Mr. Alford noted that Jaretha Fletcher, the majority stockholder, was paid the smallest salary of any salaried employee. This indicates to him that the rule in question, which dictates that salary should be consistent with ownership and job responsibility, was not followed. The committee also examined the resumes of the officers and directors with a view toward minority owners. Mr. Alford noted that prior to 1986, two years before the application in question, Mrs. Jaretha Fletcher had been a housewife, and he was concerned that her background did not qualify her to make business decisions. According to Mr. Fletcher, Jaretha signs all checks issued by the corporation though she does not prepare them. She has worked on the preparation of at least one bid. She has acted as signatory for insurance policies covering the operation of the business. She was a personal guarantor on the last capital loan taken out by the business. In addition, the company has developed a computer program which would enable Jaretha to prepare bids on all curb related projects. This, has not yet been implemented, and absent a showing of how much independent judgement and authority she would exercise, by itself, it is not particularly probative of anything. She is also assuming more responsibility in the bidding process though she is not yet qualified to prepare a bid. She has learned to take company owned equipment charges and the daily reports received from the field foremen to prepare reports for the comptroller. She works with the comptroller in determining who of the various business creditors get paid at any given time, and she has begun to serve as a liaison between the corporation and the various contractors who utilize its services. Further, she is in training to use the computer to prepare the weekly payroll. On the other hand, Jaretha is not qualified to go into the field by herself as a supervisor and by her own admission, is "afraid to drive outside the Plant City area." She works in the office daily from 8:00 AM to 3:00 PM except on those days when she has to be with her children. There is substantial evidence to indicate that the participation in business control and operation by Kathleen Fletcher and Jennifer Fletcher Prado is minimal, other than as members of the Board. The Board of Directors' primary function is to set policy for the operation of the Petitioner's business. The business is operated by W. Eddie Fletcher who is employed by the Board as President. He makes the day to day business decisions and decides what matters should be taken to the Board for ratification and approval. It is quite clear from the evidence as presented and all the permissible inferences and presumptions which may be drawn therefrom, that the operation and control of F & M Concrete Company, Inc., is exercised by W. Eddie Fletcher, and the Board of Directors does what he requests of it and provides what he asks. There is evidence, for example, that though the Board must provide for the purchase of major equipment, it "gives approval for whatever Eddie wants." In fact, two contracts, introduced by Respondent, which were prepared and executed by Petitioner with others in the operation of its business, for substantial sums and major projects, failed to reveal the signature or participation of any of the minority owners. All execution was accomplished by W. Eddie Fletcher on behalf of the corporation. After considering all the available information, the Department's committee voted to deny Petitioner recertification. The vote of the committee is not, however, binding on the Director of Administration who has final discretion to approve or disapprove the application for certification. Here the application for recertification was disapproved primarily because it was evident to the committee members and the Director of Administration, that the minority owners did not exercise the requisite amount of control over the operation of the business required under the intent and language of the rule governing minority business enterprise certification. The Department does not claim that the arrangement between the minority owners of the Petitioner corporation and Mr. Fletcher is in any way inappropriate or improper, nor does it deny that Jaretha Fletcher is now learning to participate in the operate in the operation of the business. However, the degree of control over the day to day operations of the business by the minority ownership, notwithstanding the propriety of the delegation of management to Mr. Fletcher, is not sufficient to qualify Petitioner as a minority owned business enterprise. Rule 14-78, F.A.C., allows management to be contracted out, but it does not allow delegation of the policy making function. Here, the committee and the Director of Administration concluded, and it is so found, that the owners of F & M Concrete Company, Inc. did not exercise sufficient control over the business to qualify it for certification. It is abundantly clear from the evidence adduced at the hearing, that Mr. Fletcher is, in fact, F & M Concrete Company, Inc. This conclusion is drawn from the fact that he is closely related by blood and marriage to the three principal owners; that prior to 1987 he owned 43.3% of the stock in the corporation jointly with Jaretha; that none of the principal owners other than Jaretha participate in the decision making process except as members of the Board; and that the Board does not engage in operating the business. Bids are not approved by the Board and operating decisions are within the exclusive province of the management team headed by Mr. Fletcher. Notwithstanding that the terms of the employment agreement between Mr. Fletcher and the Board provide that it may be terminated by the Board at any time for cause, from a pragmatic standpoint, with the Board's makeup being so closely related to Mr. Fletcher, the likelihood of this happening is remote. Instead, it becomes abundantly clear that the attempt to divest Mr. Fletcher from ownership of the corporation and demonstrate a bona fide minority owned and operated business enterprise is in form only and a sham and while the organization is in no way illegal or improper, it is not, in reality, a minority operated business so as to qualify for certification as such.
Recommendation Based on the foregoing findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Petitioner, F & M Concrete Company, Inc.'s application for recertification as a disadvantaged business enterprise be denied. RECOMMENDED this 7th day of December, 1989, 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 7th day of December, 1989. APPENDIX TO RECOMMENDED ORDER The following constitutes my specific rulings pursuant to s. 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: None submitted. FOR THE RESPONDENT: 1. - 6. Accepted and incorporated herein. & 8. Accepted and incorporated herein. 11.-13. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated herein. 17.&18. Accepted and incorporated herein. 19.-21. Accepted and incorporated herein. COPIES FURNISHED: W. Eddie Fletcher President F & M Concrete Company, Inc. Post Office Box 938 Plant City, Florida 34289-0938 Thomas H. Bateman, III, Esquire General Counsel DOT 562 Haydon Burns Bldg. Tallahassee, Florida 32399-0450 K.N. Henderson, P.E. Secretary Haydon Burns Building 605 Suwanee Street Tallahassee, Florida 32399-0450 Attn: Eleanor F. Turner, M.S. 58 Ruth B. Dillard, Esquire Department of Transportation 605 Suwanee Street, M.S. 58 Tallahassee, Florida 32399-0458 =================================================================
Findings Of Fact At all times pertinent to the issues herein, the Respondent, Commission, was the state agency responsible for the certification of Minority Business Enterprises in Florida. Petitioner, Computer Service, was founded by Ronald E. Willett in January, 1987. It is a computer maintenance and repair company of which Brenda Willett is currently President and Chairman of the Board and owner of a 51 percent share of the capital stock issued on December 15, 1993. Ronald E. Willett is the Executive Vice-president, a Director, and owner of a 49 percent share of the capital stock. Mr. Willett was the sole owner and Chairman of the Board until May, 1994, at which time he gave 51 percent of the stock to his wife, Ms. Willett, and the Board elected her Chairman. Ms. Willett has been in the data processing field for 13 years. Before she began working with the Petitioner, she was a computer programmer for the State Attorney's office. She uses computer software to help with managing the affairs of the company, but she is neither a programmer nor a technician. She does not do any repair work for the company because she is not trained to do it. Most of the repair work is done by her husband and two computer engineers employed by the company. A fifth employee works in the warehouse and repairs printers. Of the non-family employees, Ms. Willett interviewed one and hired another. Now she is responsible for all interviewing and hiring. Because of the technical nature of the work, however, she does the initial screening interview after which either Mr. Willett or one of the engineers evaluates the candidates' technical qualifications. She completes the evaluations of her employees' performance by relying on her customers to evaluate the employees' technical performance. In addition, she notes when an employee orders an inordinate amount of parts for a job instead of doing repair work because that generally indicates the employee is not performing properly. Ms. Willett is paid $1,500 every two weeks. Her husband is paid $6,500 per month, and each of the engineers is paid $40,000 per year. Ms. Willett is primarily in charge of the business administration. The inventory of repair parts is maintained at the company warehouse and at the various work sites where the company has contracts to maintain the equipment. Each repairman notifies her of the parts needed. She gets prices and orders the needed parts. The company does not have a line of credit with suppliers. Ms. Willett has, in the past, personally signed for a line of credit which was used for the company. The company presently owes $18,000 to a power supply company under a contract which she negotiated. For the past year, she has been the only company official to sign to commit the company on loans. In addition, Ms. Willett negotiates the company's contracts with customers and she works as a team with the engineers on pricing. The company works on a basis of 35 - 50 percent off IBM prices for similar service. Though her husband helps her decide on what machines the company can buy and repair, she would not need to replace him if he should retire. He is currently working only 18 -20 hours per week. The company submitted its application for minority business enterprise certification on April 18, 1994. Ms. Willett indicated she did not know about the program until it was mentioned to her by an instructor in a course she was taking, and she felt it would help her secure business. As a woman, she was finding it difficult to be taken seriously by the male business officers and managers she dealt with in soliciting business, and she understood that the minority certification would help her qualify for state contracts. The initial review of Petitioner's application was accomplished by Mr. DeLaO, who requested and received from Petitioner matters needed in clarification or amplification of the information contained in the application. Mr. DeLaO also conducted a telephone interview with Ms. Willett to determine how the business was operated and to reaffirm the accuracy of the documentation. Mr. DeLaO did not look elsewhere for information. Based on the information listed above, he recommended denial of the Petitioner's certification. Mr. DeLaO's recommendation was based on several factors, all of which are listed in the recommendation submitted in writing to his supervisor. The problems he found included: The risk of the minority owner, as weighed against the risk of the non-minority owner indicated Ms. Willett, who had received her shares as a gift, had no investment in the corporation to lose. Mr. DeLaO felt the risk of the minority owner should be greater than that of the non-minority owner. Risk was defined as the amount of investment capital put in to start the company or to purchase ownership. The minority owner's wages were not commen- surate with her percentage of ownership. Here, Mr. Willett, the non-minority owner, was making more than she was, as were both engineers. The Board of Governors of the corporation was not controlled by the minority owner. At the time of the review, only Mr. Willett was on the Board. Now that she is on the Board, she still does not control it because she one of only two Directors. Ms. Willett does not appear to have the technical expertise and capability to control the business of the company. She does not appear to have the technical education or experience to do the work of the company herself or to properly evaluate how her employees are performing it - computer repair. Her contribution appeared to be only administrative. Ms. Willett admits her ownership of the 51 percent of the shares of the company was a gift from her husband who felt she deserved it. She claims, however, that the initial cash infusion to the company, when it was first started, came from jointly owned funds utilized to purchase the necessary tools to start Mr. Willett in business. From that initial investment the corporation grew. It should be noted, however, that the actual transfer of stock ownership to Ms. Willett took place just four months prior to the filing of the application for certification, and Ms. Willett's election to the Board came in May, 1994, after the application was filed. The allegation regarding Ms. Willett's salary relative to that of her husband and two of the three other employees is correct. By the same token, the comments regarding her Board membership are also correct. In addition, it is clear her technical competence is insufficient to permit her to accomplish a majority of the computer repair functions completed by her employees. Whether she must be qualified to perform all tasks done by each employee is debatable. She must, however, have a general knowledge of the business which would make her supervision and management meaningful, and it is not at all clear she possesses either those skills or that knowledge. She is quite correct in her claim, however, that if she did not get the contracts, the workmen would have no work to do. Mr. DeLaO's supervisor, to whom his recommendation for denial of certification was addressed, on August 24, 1994 concurred with his recommendation and notified Ms. Willett, on behalf of the Petitioner, that the request for certification as an MBE was denied. The letter of denial contained the Commission's basis for denial.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Respondent enter a Final Order in this case denying Computer Service Concepts, Inc.'s request for certification as a minority business enterprise. RECOMMENDED this 28th day of February, 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 28th day of February, 1995. COPIES FURNISHED: Brenda J. Willett, pro se Computer Service Concepts, Inc. 7616 Industrial Avenue, Suite 3 New Port Richey, Florida 34668 Susan P. Stephens, Esquire Office of the Attorney General The Capitol, Suite PL-01 Tallahassee, Florida 32399-1050 Crandall Jones Executive Administrator Commission on Minority Economic and Business Development Knight Building 2727 Centerview Drive Tallahassee, Florida 32399-0950 General Counsel Commission on Minority Economic and Business Development Knight Building 2727 Centerview Drive Tallahassee, Florida 32399-0950
The Issue Whether Florida Moving Systems, Inc. should be certified as a minority business enterprise by the Respondent, pursuant to Section 288.703(1) and (2), Florida Statutes and the applicable rules implementing the statute.
Findings Of Fact Claudia Deneen and Thomas B. Deneen, husband and wife, and another partner purchased the applicant company with joint funds in 1988. Subsequently, the business was incorporated and the name changed to Florida Moving Systems, Inc. Prior to the time of the incorporation of the business, David P. Astolfi bought out the original partner and obtained a 25 percent share in the incorporated business. Claudia Deneen, Thomas B. Deneen and David P. Astolfi presently serve as the Directors of the applicant corporation. Neither Thomas B. Deneen nor David P. Astolfi qualify for classification as a "minority." In 1992, Claudia Deneen obtained her husband's stock in the corporation without consideration, but for prior services rendered. Claudia Deneen now holds 75 percent of the outstanding stock in her name. While Claudia Deneen was out on maternity leave in 1992, Thomas Deneen ran the business. Claudia and Thomas Deneen, as well as David Astolfi each have authority to individually sign business checks. Astolfi who serves as Vice President for Sales, is paid $1100 weekly, Thomas Deneen who serves as President, is paid $1500 weekly. Claudia Deneen who serves as Vice President, Secretary/Treasurer, and chief purchasing agent, is paid $1000 weekly when money is available. Both Claudia and Thomas Deneen signed and guaranteed the business leases. All three Directors, Claudia and Thomas Deneen and Astolfi, share common ownership in a similar business called Florida Distribution Systems, Inc. which is housed adjacent to the applicant. Thomas Deneen signs 90 percent of applicant's payroll checks. Business decisions are made jointly by all directors. Claudia Deneen is the chief purchasing agent for the corporation and maintains control over the purchase of goods, equipment and services. She also participates in the hiring and firing of personnel and the setting of all employment policies. Petitioner's offer of proof, consisting of business letters or recommendation, all recommended both Claudia and Thomas Deneen as a team, not individually.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application for Minority Business Certification filed by Florida Moving Systems, Inc. on January 17, 1994, be DENIED. DONE and ENTERED this 1st day of September, 1995, in Tallahassee, Florida. DANIEL M. KILBRIDE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of September, 1995. APPENDIX The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on proposed findings of fact submitted by the parties. Proposed findings of fact submitted by Petitioner. Petitioner did not submit proposed findings of fact. Proposed findings of fact submitted by Respondent. Accepted in substance: paragraphs 1-13. COPIES FURNISHED: Claudia Deneen Vice President and Secretary/Treasurer 4317 Fortune Place West Melbourne, Florida 32904 Joseph L. Shields, Esquire Senior Attorney 107 West Gaines Street 201 Collins Building Tallahassee, Florida 32399-2005 Crandall Jones Executive Administrator Collins Building, Suite 201 107 W. Gaines Street Tallahassee, Florida 32399-2000
The Issue Whether Petitioner should be certified by Respondent as a minority business enterprise.
Findings Of Fact Petitioner, Jupiter Environmental Laboratories, Inc. (Jupiter), is an environmental testing laboratory established in October 1995. The services performed by Jupiter include testing samples of water, oil, soil, and waste water in accordance with the Environmental Protection Agency standards. Jupiter also tests for inorganic and organic compounds by mass spectrography and gas chromatography. Jupiter is owned 70 percent by Glynda Russell, a female, and 30 percent by her husband, Edward Dabrea, who is a non- minority. Prior to forming Jupiter, Ms. Russell had not worked in a laboratory such as Jupiter. Her work experience had been in real estate and selling women's apparel. According to Ms. Russell she did gain some knowledge and experience in environmental testing because she was a customer of testing laboratories while she was in the real estate business. She became familiar with the Environmental Protection Agency's requirements while she was investigating environmental impacts when she was a realtor. Mr. Dubrea has a degree in earth science (geology) and has done post graduate studies in geoscience (organic geochemistry). He has extensive work experience in environmental testing laboratories. Both Ms. Russell and Mr. Dabrea are jointly liable for a $50,000 loan from the Small Business Administration and a $15,000 line of credit. Ms. Russell has also incurred debt of over $100,000 on her personal credit card for Jupiter's expenses. The company has three equipment leases which Ms. Russell signed and indicated she was personally liable. Ms. Russell also signed the lease for the space occupied by the business. Ms. Russell is the president of the corporation. Her duties include directing all marketing, sales, and financial operations. She is responsible for recruiting and hiring personnel, maintaining state certifications, prioritization of work flow (sample pick-up, sample log-in and report generation), bid pricing, selection of subcontracting laboratories, customer service and purchasing of supplies. Mr. Dabrea is the Technical Director for the company. In addition to working for Jupiter, he does freelance research. His resume states that his work at Jupiter includes the following: Planned and organized all technical details for new laboratory, including equipment requirements and analytical supplies. Received and setup instrumentation, performs necessary calibrations. Coordinates information with Laboratory Director and QA/QC Officer. Develops new methods and provides research assistance to clients with unusual assessments. Coordinates between laboratory and governmental agency to ensure compliance. Submits performance evaluation studies to E. P. A. for certification on quarterly basis. Responsible for ensuring adequate instrument capacity for continued growth of the company. Cliff Ross, a non-minority, is the Laboratory Director and works part-time for Jupiter. Start-up funds for Jupiter were contributed by Ms. Russell and Mr. Dabrea. Ms. Russell contributed $25,000 in cash, and computer equipment worth approximately $8,000. Mr. Dabrea contributed an $11,000 truck and $5,000 in computer equipment. Ms. Russell contributed 67 percent and Mr. Dabrea contributed 32 percent. Jupiter is certified in certain categories of environmental water testing by the State of Florida, Department of Health, pursuant to Chapter 403, Florida Statutes. In order to acquire such certification, tests must be performed in the laboratory by qualified technical personnel with the proper educational credentials. In order to acquire the certification for Jupiter, the tests were performed by Mr. Dabrea and Mr. Ross. Ms. Russell is not technically or educationally qualified to perform the tests required for certification. It is not necessary to have the certification to operate an environmental laboratory, but many companies acquire the certification as a marketing tool. Ms. Russell indicated in her response to the denial of her certification that "current market conditions make it all but impossible to get work without it." (Petitioner's Exhibit No. 1.) Ms. Russell can perform the extractions. Once the extractions are done for certain types of testing, the testing is automated. She cannot do chromatography. The Quality Assurance Director for Jupiter is Pamela Shore-Loeb. Her duties include responsibilities for all quality assurance and quality control requirements to ensure continued State of Florida laboratory certifications and project management to a growing client list. She, along with Ms. Russell, developed the quality assurance manual used by the business.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that Petitioner, Jupiter Environmental Laboratories, Inc., meets the requirements of Rule 38A-20.005(2)(c), Florida Administrative Code, but does not meet the requirements of Rules 38A- 20.005(3)(c), (d)1, 4 and (6) and (4)(a), Florida Administrative Code. Consequently, the final order should deny Jupiter Environmental Laboratories, Inc.'s application for certification as a minority business enterprise. DONE AND ENTERED this 1st day of December, 1997, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 1st day of December, 1997. COPIES FURNISHED: Joseph L. Shields, Esquire Department of Labor and Employment Security Hartman Building, Suite 307 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2189 Glynda E. Russell, President Jupiter Environmental Laboratories, Inc. 220 Venus Street, Suite 16 Jupiter, Florida 33458 Douglas L. Jamerson, Secretary Department of Labor and Employment Security 303 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Edward A. Dion, General Counsel Department of Labor and Employment Security 307 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152
Findings Of Fact Based on the stipulations and agreements of the parties, the exhibits received in evidence, and the testimony of the witnesses at the hearing, I make the following findings of fact: The costs and attorney fees sought by BTST in the amount of $2,344, are adequately substantiated and constitute reasonable costs and attorney fees for the representation of BTST in DOAH Case No. 88-3885. DOAH Case No. 88-3885 resulted in a Final Order granting recertification as a minority business enterprise to BTST. Therefore, BTST was a prevailing party in that case. The underlying agency action that resulted in DOAH Case No. 88-3885, was a Department letter of July 18, 1988, to BTST which notified BTST that its application for recertification was denied, stated the reasons for denial, and advised BTST of its right to request a hearing if it was dissatisfied with the Department's decision. The Department's letter of July 18, 1988, "initiated" the subsequent formal administrative proceedings. Business Telephone systems of Tallahassee, Inc., is a "small business party." The Department of General Services has the responsibility to certify and recertify minority business enterprises. The Department has developed a procedure which is followed by the Minority Business Enterprise Assistance Office in processing applications for certification and recertification. Upon receipt of an application, the entire business file is assigned by the supervisor of certification activities to an eligibility examiner, frequently referred to as a "reviewer." The reviewer conducts a desk audit and review, searches the Division of Corporation records, and by letter requests any items omitted from the application. The applicant then has 30 days in which to respond by sending the requested information to the Minority Business Enterprise Assistant Office. After receipt of requested additional information, the reviewer schedules an on-site interview with applicants whose eligibility for MBE status cannot be determined immediately. After the on-site review, the reviewer listens to the tape recording of the interview and completes the on- site review questionnaire form. At this point, all documents and on-site interview responses are reviewed by the eligibility examiner for the purpose of preparing a recommendation to grant or deny certification or recertification. The supervisor of certification activities reviews the recommendation and all materials related to the business for the purpose of either concurring or questioning the recommendation. The file is then referred to the coordinator of the Minority Business Enterprise Assistance Office for independent review. If the recommendation is for denial of MBE certification or recertification, the file is forwarded to the Office of the General Counsel for review of all documents, information, recommendations and findings by a staff attorney. By memorandum to the Minority Business Enterprise Assistance Office, the staff attorney will either concur in the recommendation or raise legal questions. In the case of concurrence, a letter of denial is prepared. Legal questions about the potential denial are generally resolved by discussion with all involved staff persons. BTST, a company principally engaged in sales, installation, and service of telephone systems and equipment, filed an application for recertification as a Minority Business Enterprise on April 13, 1988. The application was assigned to Stephen Johnson, an eligibility examiner of the Minority Business Enterprise Assistance Office. The initial recommendation to deny recertification of Petitioner was made by Stephen Johnson. Stephen Johnson received training by the Department in minority business enterprise certification and recertification review during his tenure at DGS. As the first step in the review process, Stephen Johnson, the eligibility examiner, performed a desk audit of the application, noting changes in ownership, management, daily operations, and domicile of the company. He also conducted a document search of State of Florida corporate records which revealed different corporate ownership than that which BTST stated in the application and different composition of the Board of Directors of three non- minority members and two minority members. Upon request of the eligibility examiner, additional documents were submitted by BTST. These documents named Mr. William Nuce as president and treasurer of BTST, listed a Board of Directors composed of one minority person and three non-minority persons, and included a BTST lease agreement signed by William Nuce as President of BTST and attested by Nancy Nuce, Secretary of BTST. An amendment to the lease dated May 4, 1988, was signed in the same manner. Upon review by the eligibility examiner and his supervisor of the information submitted by BTST, changes in the business raised the question of whether a minority person controlled the management and operations of the business. The application for recertification revealed that two of the three women owners of BTST "no longer performed any duties for the company." The minority owner who left the company possessed significant technical knowledge about the telephone systems business which in previous certifications of BTST had been a dispositive factor in the determination. William Nuce had not been working full-time for the company until January 1988. Until that time, the company had been run by three women, one being an out-of-state resident. With the concurrence of his supervisor, the eligibility examiner scheduled an on-site visit to BTST for the purpose of acquiring a new description of how the business operated and to establish whether the applicant owner was eligible for MBE certification. The on-site interview was tape recorded During the on-site review, Mrs. Nuce, the minority owner of BTST, made statements which were considered significant by DGS minority certification reviewers. Mrs. Nuce explained decision-making by her husband William Nuce and herself at BTST as "It is really a partnership." In response to the question, "Is anyone considered a supervisory person?", Mrs. Nuce stated, "Well, I guess Bill would be." Then she was asked, "Is he the installer supervisor?" and Nancy Nuce replied, "Yeah, I would say so." Continuing the on-site interview, in response to the question, "[W]ho employed Don?" Mrs. Nuce replied, "We both went to Jacksonville to where Don lived and interviewed Don in Jacksonville and we discussed it on the way back and when we got back Bill called him and offered him the job." She also said that William Nuce had invested "almost twice" as much as she had in the business. The occupational license issued by the City of Tallahassee was in the name of William Nuce. Concerning a truck which was the only large piece of equipment of the business, Mrs. Nuce said, "Bill signed the guarantee on it." Mrs. Nuce had never received a salary from BTST. During the on-site review, Mrs. Nuce confirmed the composition of the Board of Directors as having four members, one minority person and three non-minority persons. After this on-site interview, the eligibility examiner came back to his office, listened to the interview tapes, and reviewed his notes. He came to the conclusion that the minority owner of BTST did not have the capability, knowledge, and experience required to make the critical decisions in that the company heavily relied on Mr. Nuce's 20 years of experience in the installation and servicing of telephone systems, rather than Mrs. Nuce's limited prior experience and training in the bookkeeping area. The eligibility examiner further relied, as a basis for denial, on the fact that the Board of Directors at the time of the decision to deny recertification were Nancy' Nuce; William Nuce, a non-minority person; Peggy Ingram, a non-Florida resident (and therefore a non-minority person); and Don Ingram, a non-minority person. The corporate bylaws indicated that a majority of the directors legally controlled the management of the company. Since Mrs. Nuce was the only director who was a minority, the eligibility examiner concluded that, pursuant to the statutes, Mrs. Nuce did not have the legal authority to control the corporate Board of Directors and, therefore, the business of thee corporation.. After consultation and review of the BTST file, Stephen Johnson and Marsha Nims, the Labor Employment and Training Manager of the Minority Business Enterprise Assistance Office, reached the tentative decision to deny the recertification application of BTST. At the time of the decision to deny recertification of BTST, Ms. Nims was the Labor Employment and Training Manager in the Minority Business Enterprise Assistance Office and the supervisor of Stephen Johnson, the eligibility examiner. She had been with DGS since March of 1986. Her duties included supervision of the professional staff who conducted eligibility reviews of applications, assistance in eligibility determinations, advising the coordinator, supervision of staff involved in retention of records, preparation of documents, and preparation of the monthly MBE Directory. In evaluating the application for recertification of BTST, Marsha Nims reviewed the application and supporting documentation, the Desk Review and Audit by Stephen Johnson, the additional documents obtained by Stephen Johnson from Business Telephone Systems of Tallahassee, Inc., the Bylaws of BTST, the memo from Stephen Johnson to Marsha Nims, the reviewer's case management log, the on- site review questionnaire form and comments completed by Stephen Johnson, the denial recommendation drafted by Stephen Johnson, and the file of BTST on which previous certification had been based. Marsha Nims relied upon the information about BTST complied by the eligibility examiner. She had no reason to doubt the credibility of Stephen Johnson, the eligibility examiner. At the time of the decision to deny recertification to BTST, Marsha Nims was familiar with the Florida Statutes which governed certification and recertification of minority business enterprises as well as Chapter 13-8, Florida Administrative Code, which the Department promulgated to implement the statutes. Marsha Nims was familiar with the relevant Final Orders of the Department of General Services and the related Recommended Orders of the Division of Administrative Hearings. She concluded that the corporate structure analysis and the determination of lack of control over the management and daily business operations was consistent with the legal conclusions established in prior Department Final Orders denying certification. Following review by Ms. Nims, the entire BTST file described in Finding of Fact Number 15 was referred to Carolyn Wilson-Newton, the Minority Business Enterprise Assistance Officer Coordinator. Mrs. Wilson-Newton was the person charged with making the final decision to grant or deny certification and recertification to applicants. At the time of the decision to deny recertification, Mrs. Wilson- Newton was familiar with the Florida Statutes which govern certification and recertification of minority business enterprises, Chapter 13-8, Florida Administrative Code, and the relevant Final Orders of the Department of General Services and Recommended Orders of the Division of Administrative Hearings. Carolyn Wilson-Newton concurred with the recommendations of Stephen Johnson and Marsha Nims to deny recertification as set forth in the denial recommendation prepared by Stephen Johnson, and made the decision to deny minority business enterprise recertification. The proposed denial was approved by Sandra Allen, an attorney in the General Counsel's Office with previous experience in review of minority business enterprise decisions. The denial letter was mailed to the applicant on July 18, 1988. Although BTST prevailed in Case No. 88-3885, it is important to note that some of the evidence presented at the formal hearing in that case was substantially different from the information furnished to DGS prior to the July 18, 1988, denial letter. Some of the differences resulted from new developments (such as eleventh-hour stock purchases and changes in the corporate provisions regarding directors). Other differences resulted from more careful and precise descriptions than had been furnished earlier. Four competent, experienced MBE certification reviewers for DGS concluded that the information in the possession of the Department at the time of the decision to deny recertification of BTST was sufficient to warrant denial of recertification of the Petitioner. The denial of recertification had a reasonable basis in fact at the time of the decision. This is especially true when note is taken of the fact that BTST's corporate provisions regarding directors at the time of the decision were essentially the same as corporate provisions which had been the basis for denial of certification in other Department final orders.
Findings Of Fact Petitioner was incorporated in July 1992. Petitioner is a graphic design firm specializing in strategic, market-driven design. Petitioner conducts market analysis of a client and, only after defining the corporate identity of the client, engages in the development of suitable graphic design. Mary Francis Weathington is the president and chief executive officer of Petitioner. Her experience in communications began in 1980 as a technical writer and editor. From 1989-92, Ms. Weathington served as an account supervisor for an advertising firm. In this role, Ms. Weathington supervised all junior account executives, developed marketing plans, presented proposals to clients, and communicated client needs to agency staff. Ms. Weathington started Petitioner with John LoCastro, who had worked with her at the advertising agency during the same period of time. Mr. LoCastro was responsible for concept development, management, and design direction at the advertising agency. A third person, David Miller, was also involved with the formation of Petitioner. Mr. Miller served as secretary and treasurer, Mr. LoCastro as vice president, and Ms. Weathington as president. Until December 31, 1993, when Mr. Miller resigned from Petitioner, the three principals each owned 50 shares of the 150 issued shares of Petitioner. The capital contribution of each principal was valued at $4500. When he left the company, Mr. Miller transferred his stock to Petitioner in a transaction that required him to pay money to the company due to its thin capitalization and performance. At the same time, Ms. Weathington purchased two more shares. In the summer of 1994, Ms. Weathington bought three more shares and Mr. LoCastro's wife bought two shares. Presently, Ms. Weathington owns 55 shares, Mr. LoCastro owns 50 shares, and Mrs. LoCastro owns two shares. Petitioner has not issued other shares. Petitioner's board of directors consists of Ms. Weathington, her husband, Mr. LoCastro, and his wife. However, Mr. Weathington is a nonvoting director. Besides the two principals, Petitioner employs only one other fulltime employee, an office manager who is responsible for answering the phone, bookkeeping, proofreading, and handling miscellaneous clerical duties. Petitioner also employs, as needed, freelance graphic designers. Petitioner has recently employed a freelance copywriter. In a small company like Petitioner, there is necessarily some sharing of responsibilities in order to secure and produce design work and ensure that payables and receivables are properly managed. However, there are clear areas of responsibility for Ms. Weathington and Mr. LoCastro. As his resume states, Mr. LoCastro is "[r]esponsible for overall creative management, with an emphasis on creative development, planning and design." He is in charge of visual graphics and does nearly all of the computer graphics work, unless it is assigned to a freelancer. Ms. Weathington is responsible for marketing in two respects. First, she markets for Petitioner. She has brought a large majority of the clients to Petitioner and continues to remain responsible for their use of the company. Second, Ms. Weathington assists the clients in developing advertising and design programs that will effectively market the products and services of the clients. Ms. Weathington conducts market research of a client's needs and prepares advertising and design strategies to maintain and enhance the client's business. Ms. Weathington also is chiefly responsible for the management and administration of Petitioner. The office manager's bookkeeping duties are performed under the supervision of Ms. Weathington, who handles personnel, purchasing, planning, and accounting. Although the signatures of both principals are required on checks over $500, this requirement reflects security concerns and does not have a bearing on the division of responsibilities between Ms. Weathington and Mr. LoCastro. Although Mr. LoCastro is responsible for the in-house visuals, Ms. Weathington is responsible for copywriting, which is performed in-house nearly in its entirety. Each principal has been required to guarantee personally the debt of Petitioner. But, given the greater assets of Ms. Weathington, the financial risk is actually borne by her, not Mr. LoCastro. Petitioner's lender would not have made the loan on Mr. LoCastro's guarantee alone, but would have on Ms. Weathington's guarantee alone. Ms. Weathington's control of Petitioner is evidenced in other respects. Petitioner pays for a cellular telephone for her, but not Mr. LoCastro. The marketing brochure prepared by Petitioner features Ms. Weathington in a superior role to the subordinate roles of Mr. LoCastro and Mr. Miller. Ms. Weathington's indispensable contribution to Petitioner is documented by gross sales figures for 1993, during which, for personal reasons, she was unable to work in the spring and fall. When she returned to work in the summer, gross sales increased from less than $10,000 per month to over $50,000 per month. When she left work again in the fall, gross monthly sales fell again to the $20,000 level. Profits have also increased by 16 percent since Ms. Weathington's return.
Recommendation It is hereby RECOMMENDED that the Department of Management Services enter a final order granting Petitioner's application for minority business enterprise certification. ENTERED on January 24, 1995, 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 January 24, 1995. APPENDIX Rulings on Petitioner's Proposed Findings 8, 9, and 12: adopted, although based on the facts and not a claimed concession or absence of dispute. 22: adopted, except that the evidence showed only that gross revenues went down during Ms. Weathington's absences. Nothing in the record addressed net earnings or profits during these periods. Remaining proposed findings: adopted or adopted in substance. Rulings on Respondent's Proposed Findings 1 (first sentence): adopted. 1 (remainder)-4 (except for last sentence): rejected as subordinate. 4 (last sentence): adopted. 5-6: rejected as subordinate. 7-8: adopted or adopted in substance. 9: rejected as recitation of evidence and subordinate. 10: to the extent not subordinate, adopted or adopted in substance. 11-12: adopted or adopted in substance. 13 (first sentence): adopted or adopted in substance. 13 (remainder): rejected as unsupported by the appropriate weight of the evidence. 14-15: adopted or adopted in substance. 16-19: rejected as unsupported by the appropriate weight of the evidence, subordinate, and recitation of evidence. 20 (first sentence): adopted or adopted in substance. 20 (second sentence): rejected as legal argument. 21: adopted or adopted in substance, except for the implication that, as a practical matter, Mr. LoCastro's guarantee represents as real a financial risk as Ms. Weathington's guarantee. 22 (first sentence): adopted. 22 (second sentence): rejected as unsupported by the appropriate weight of the evidence. Increased sales does not mean increased profits, and nothing in the record indicates increased profits. 22 (remainder): rejected as unsupported by the appropriate weight of the evidence. COPIES FURNISHED: William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307 2737 Centerview Drive Tallahassee, FL 32399-0950 Paul A. Rowell, General Counsel Department of Management Services Knight Building, Suite 312 2737 Centerview Drive Tallahassee, FL 32399-0950 John S. Derr Bush & Derr, P.A. 2874-A Remington Green Circle Tallahassee, FL 32308 Attorney Cindy Horne Office of the General Counsel Department of Management Services Knight Building, Suite 312 2737 Centerview Drive Tallahassee, FL 32399-0950
Findings Of Fact The Petitioner, Parson & Associates, Inc., d/b/a Overhead Door Company of Tampa Bay (Parsons & Associates), is a Florida corporation, having been incorporated under the laws of the State of Florida in March, 1992. The principal place of business for Parsons & Associates is 5134 W. Idlewild, Tampa, Florida. The Petitioner corporation engages in the business of the sale, installation, and repair of overhead doors, both residential and commercial. The corporation has ten (10) full-time employees and one (1) part-time employee. The only stockholders of the Petitioner corporation are: Gail Parsons, the minority owner; and her son-in-law, Robert Briesacher. Gail Parsons owns eighty (80 percent) of the stock of Parsons & Associates. Robert Briesacher, who is not a minority, owns the remaining twenty (20 percent) of the Petitioner corporation. Gail Parsons was the incorporator of Parsons & Associates when it was initially incorporated. She also is its President. Robert Briesacher is the Vice-President. Prior to the incorporation of Parsons & Associates, Gail Parsons, who has a Bachelor of Business Administration degree, worked for the Better Business Bureau. Robert Briesacher had previous experience in the overhead door business, having worked for Overhead Door Company of Clearwater. Briesacher, who at the time was engaged to marry Parsons's daughter, learned from Overhead Door Corporation (the manufacturer) that the manufacturer intended to establish a distributorship in Tampa. Briesacher told Parsons about it. While Briesacher had the knowledge and experience to successfully sell, install, and repair both residential and commercial overhead doors, he had no money to invest in the business opportunity and had no experience running his own business. Thinking that she might be able to help her daughter and future/present son-in-law, and herself, by combining her capital and business and financial skills with his knowledge and technical skill in the automatic door business, Parsons suggested to Briesacher that they go into business together. He readily agreed, and the pursued the opportunity with the manufacturer. Parsons incorporated the business, registered the fictitious name, compiled the business plan, developed the cash flow projections (with Briesacher's help), found the office/warehouse space (which the manufacturer had to approve), and negotiated, executed, and personally guaranteed the lease agreement and negotiated the Distributorship Agreement with the manufacturer. Briesacher provided none of the initial start-up monies for the Petitioner. Gail Parsons is the financial interest holder in the corporation, having made all the initial contributions to capital ($38,000), as well as making all the personal loans to the corporation thereby accepting all the financial risk. Parsons personally guaranteed the promissory note, the credit agreement, contracts required to be personally guaranteed and the warehouse lease. The Distributorship Agreement is a standard Overhead Door Corporation agreement common to all distributors nationwide. It is customary for a manufacturer like Overhead Door Corporation to offer a distributor incentives-- like yellow page advertisement, signage, and telephone numbers--in order to gain market penetration. In the case of Parsons & Associates, Overhead Door supplied a telephone number (the number Overhead Door previously had bought from the prior distributor in Tampa), a year's worth (about $10,000) of yellow page advertising, and some signage. The total fair market value of the incentives to Parsons & Associates was approximately $31,000, but the marginal cost to the manufacturer was less. In the initial months of operation of the business, Gail Parsons had to rely on Briesacher and the first employee they hired, Charles Martin, who worked under Briesacher at Overhead Door of Clearwater, to teach her what she had to know about the technical aspects of the business. She had to learn about the Overhead Door products and the basics of how to install them. This knowledge, which she quickly acquired, soon enabled her to take service orders, schedule the orders, supervise the day-to-day activities, perform trouble-shooting over the telephone and handle all of the sales calls. Meanwhile, Robert Briesacher was in the field with Martin installing and servicing Overhead Doors. Briesacher currently corresponds with the factories on product orders, schedules and supervises the installers, and takes the physical inventory. Commercial bidding is only one portion of the total corporate sales, which includes residential new construction, residential service and residential retrofit. Over ninety-five (95 percent) percent of the business of Parsons and Associates is handled over the telephone from the office where Parsons spends virtually one hundred (100 percent) percent of her time. Parsons is personally responsible for the majority of the residential sales, including negotiating and contracting with contractors, and negotiating and entering into the agreement to provide installation services for Home Depot door sales. Business from negotiating, estimating, and bidding on contracts in the field is a relatively small portion of the company's overall revenues. Gail Parson is involved in the interviewing of prospective employees, including Martin and Charles Jarvis. She confers with Briesacher, but she alone controls hiring and firing. She possesses the knowledge to evaluate employee performance and has demonstrated her supervisory authority and evaluation skills in exercising her authority to fire an employee. Actually, it is not difficult to evaluate the performance of installers: service calls on warranty work and customer complaints generally tell her all she needs to know. The Petitioner/corporation has both commercial and residential outside sales persons who prepare bids for the Petitioner. The minority owner, Gail Parsons, establishes the geographic and profit margin parameters, which ultimately control the bidding process. She inspects all bids prior to executing the contracts, thereby further controlling who, where and under what terms the Petitioner corporation does business. In fact, Parsons recently rejected an accepted bid and cancelled the job because it was too far from Tampa. While both Gail Parsons and Robert Briesacher are authorized to sign checks for Parsons & Associates, Briesacher has signed less than five checks, out of the thousands of checks written. Parsons and Briesacher draw the same salary. However, their salaries are commensurate with the work they perform for the company. Parsons has chosen the salary levels; Briesacher does not even know what Parsons's salary is. Parsons also is entitled to an 80/20 split of any future distributions as a result of the operation of the company. Briesacher has the use of a company truck, while Parsons does not. However, Briesacher is a part-time installer and service man, while Parsons is not. All installers/service technicians at Parsons and Associates have the use of company trucks, not just Briesacher. Currently, in addition to controlling the entire corporation and making all of the business decisions, Gail Parsons sets inventory parameters, purchases the inventory, sells doors in the showroom, knows the purchased products, is responsible for accounts receivable, handles the payroll, and assists in the scheduling and supervising of the installers.
Recommendation On the basis of the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Management Services enter a final order granting Petitioner's application for certification as a minority business enterprise (MBE). RECOMMENDED this 14th day of July, 1994, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 14th day of July, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-1268 To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. 1.-3. Accepted and incorporated. First sentence, rejected as contrary to facts found; the rest is accepted and incorporated. Second sentence, rejected to the extent that it implies that Briesacher has no financial interest. Otherwise, accepted and incorporated. Accepted and incorporated. Rejected, as contrary to facts found, to the extent that it implies Parsons knew it all from the start and that Parsons "supervised" Briesacher and Martin installing and servicing doors; in fact, there was a learning curve. Otherwise, accepted and incorporated. 8.-11. Accepted and incorporated. Respondent's Proposed Findings of Fact. 1.-2. Accepted and incorporated to the extent not subordinate or unnecessary. 3.-4. Accepted and incorporated to the extent not subordinate or unnecessary. Last sentence, rejected in part as contrary to facts found and as contrary to the greater weight of the evidence. (She makes sales and trouble- shoots, and is no longer just learning those aspects of the business.) Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated to the extent not subordinate or unnecessary. However, except for actually installing and servicing doors, Parsons also does the same jobs as Briesacher to some extent, and some of Briesacher's functions are ministerial in light of Parsons's management decisions. Penultimate sentence, rejected as contrary to facts found and as contrary to the greater weight of the evidence; he proposed "piece-work" but Parsons participated in the final decision. (Since it is standard in Florida, it was not a difficult or controversial decision.) Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. (However, "joint responsibility" should not be construed to mean "equal authority." Parsons has the final say.) Accepted and incorporated to the extent not subordinate or unnecessary. However, while Parsons's knowledge and skill does not exceed the others' in the area of installing and servicing doors, she has enough knowledge to control the business. The characterization "very broad" in the last sentence is rejected as contrary to facts found and as contrary to the greater weight of the evidence. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. However, again, while Parsons's knowledge and skill does not exceed the others' in the area of installing and servicing doors, and while she does not personally install and service doors, she has enough knowledge to control the business. 10.-14. Accepted and incorporated to the extent not subordinate or unnecessary. Again, while Parsons and Briesacher, and other employees, share responsibilities, Parsons has the knowledge necessary to control the business and has dominant control over the business. COPIES FURNISHED: Jonathan D. Kaplan, Esquire 6617 Memorial Highway Tampa, Florida 33615 Wayne H. Mitchell, Esquire Department of Management Services Office of the General Counsel Suite 312, Ninth Building 2737 Centerview Drive Tallahassee, Florida 32399-0950 William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950 Paul A. Rowell, General Counsel Department of Management Services Knight Building, Suite 312 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950
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.
