The Issue 1. Whether the Petitioner (Lanier) has established, by a preponderance of the evidence, that the bid submitted by Intervenor (Dictaphone) is. not materially responsive to the Invitation to Bid (ITB) issued by the Respondent Department of Health and Rehabilitative Services (HRS). 2. Whether Lanier has established, by a preponderance of the evidence, that HRS improperly evaluated the bids. 3. Whether Lanier has established, by a preponderance of the evidence, that the HRS decision to award the contract to Dictaphone is arbitrary and capricious, or is otherwise not authorized by law.
Findings Of Fact I. Background 1. HRS has been using a lanier analog central dictation system for approximately ten years. 2. Prior to April, 1990, HRS determined that it needed to upgrade its central dictation system and decided that the most cost-effective procedure would be to replace the analog system. 3. HRS issued a Request for Information to vendors of dictating equipment and received responses from Lanier, Dictaphone, and one other vendor. 4. In July, 1990, Dictaphone made a presentation to HRS in the HRS Tampa office. This presentation was made based upon Dictaphone’s initiative and Lanier was offered the opportunity to make a presentation also. Lanier did not make a presentation to HRS. an 5. Dorea Sowinski, Operations and Management Consultant for the Office of Disability Determinations (OPDD), prepared an Invitation to Bid (ITB) for a central digital dictation system with the assistance and approval of William Cox, the Director of Purchasing for HRS. 6. A digital dictation system differs from traditional forms of dictation equipment. With a digital dictation system, dictation is converted from analog sound waves into digital impulses. The digital impulses are then stored on a magnetic disk in the recorder. 7. Generally speaking, the use of a digital dictation system requires the use of a telephone system to gain access to the recorder. 8. Ms. Sowinski had no prior experience with digital dictation systems prior to her involvement with this ITB and does not have technical expertise with respect to the configuration, operation and features of a digital dictation system. 9. Mr. Cox, who provided administrative assistance and oversight prior to the issuance of the ITB, also had no previous experience with digital dictation systems. Ii. The ITB 10. The Invitation to Bid No. 91-15BC for a digital dictation system was issued on October 8, 1990. The purpose of the ITB. is to acquire a digital dictation system for use within HRS offices statewide. 11. The special conditions of the ITB include the following relevant and material requirements: 5. Method of Cost Presentation: A separate cost presentation describing the proposal system/equipment for each OPDD location should be submitted. In addition, a separate cost presentation listing optional features and equipment should be submitted. 13. Evaluation and Award: Each bidder shall supply a separate bid price for each proposed system by location. Consideration of bid prices shall include any additional expense for telephone lines to support the system. The bidder with the lowest price and who meets all other requirements of this invitation to bid will win the award. (emphasis in original) 15. Bid Prices: Bid prices shall be submitted on the Summary Bid Pricing Sheet shown as Attachment D of this invitation. The bid prices must be firm for a period of one year (12 calendar months) from the date of contract award). The prices bid must include all delivery, installation, and testing of equipment. Included with submittal of the Summary Bid Pricing Sheet, bidder must provide a description of the offered equipment, ail other necessary items to be provided for each location, the amount for the offered trade in allowance, and any ongoing costs to OPDD after installations. In addition, the cost of maintenance for the entire system should be broken out on the Summary Bid Pricing Sheet. Maintenance services must be provided by the bidder’s company, and cost must include all parts, labor and related costs for the services. (Lanier, Ex. 1.) 12. The relevant, material technical specifications of the ITB are found in paragraph 18 and are outlined as follows: 18. Technical Specifications: The Office of Disability Determinations (OPDD) requires a he statewide telephone accessible digital dicta- tion system for processing medical documenta- tion, disability insurance adjudications, letters and general correspondence. The system must be capable of producing manage- ment reports on total workload, record of dictation and transcription production, and work location in the system. The system must have upgrade capabilities with expansion by ports and hours storage for staff increases. It must be a unified system with capabilities and interoffice communication. In the event one office system fails, the ability to access the system for dictation or trans- eription from another location by dialing into the system without specific unit assignment. Proposals must be for all new equipment. Configurations of systems/equipment for each geographical location must be fully described and justified, and must meet the following minimum requirements: A. Ports for dictation/transcription which optimize system usage as listed on Attachment B. B. Storage capabilities as listed on Attachment B. I. Remote dictation/transcription capa- bilities; Ability to access systems from locations other than installation location for use in the event of one system’s failure. Oo. The system must provide a management console with visual prompts to assist users for each location. R. The system must provide for remote diagnostics. System options: Bidder should include in the bid submittal any optional features/equipment which enhance the system’s function. These options should an be submitted with prices on a separate bid sheet for each location. (Lanier, Ex. 1, Special Bid Conditions and Technical Specifications, pp. 9-10, paragraph 18.) 13. As a result of questions from both Lanier and Dictaphone, HRS issued Clarification #1 to the ITB on October 15, 1990. Addendum #1 to the ITB on October 18, 1990, and Addendum #2 to the ITB on October 22, 1990.+ 14. Addendum #1 to the ITB provides as follows: The purpose of this Addendum #1 to HRS Bid 91-15BC is to revise information contained in item numbers 15 and 18 as follows: Item 15: 1. Paragraph Number two (2) is revised to read as follows: Included with submittal of the Summary Bid Pricing Sheet, bidder must provide a description of the offered equipment to include model number and company literature, all other necessary items to be provided for each location, the amount for the offered trade in allowance, and any ongoing costs after installation. 1 Mr. MacDonald, Lanier’s Eastern Region Systems Manager, testified that after the ITB was issued and prior to submission of bids, he engaged in a telephone conversation with Mrs. Sowinski regarding whether additional expense for telephone lines to support the system should be itemized (i.e., separately stated) in the bids. Mr. MacDonald does not remember the exact words Ms. Sowinski used in the conversation but testified that the gist of the conversation was that a separation of costs was required. (MacDonald, Vol. III, pp. 281-283.) Ms. Sowinski testified that bidders were not required to submit a separate itemization for such costs. (Sowinski, Vol. I, pp. 56-57 and 86.) oe Item 18: 1. Paragraph Number two (2) is revised to read as follows: Proposals must be for all new equipment. Configurations of systems/equipment for each geographical location must be fully. - described and ‘justified. Bidders must meet all technical specifications and minimum requirements and all line items, A through R, must be fully explained and described in detailed (sic). 2. Line Item A is revised to read as follows: Parts for dictation/transcription which optimize system usage as listed in Attachment B. See Attachment A for number of transcribe stations required per location. 7. Line Item R is revised to read as follows: The system must provide for on line or self diagnostics and remote diagnostics. The ability of the system to detect a problem and automatically notify a service representative. Upon notification, the ability of the representative to examine/repair the problem without traveling to the installation location. All other bid terms and conditions remain the same. (Lanier, Ex. 2, pp. 2-3.) 15. Addendum #2 to the ITB added the following footnote to the Minimum Requirements for each location’s Ports and Hours Storage contained in Attachment B to the ITB: *Note: System/equipment configurations offered could minimize the number of parts/hours needed. Bidders offering alternative configurations must clearly indicate the variations and must | fully : describe the equipment, including model number and company literature, and ‘justify the configuration offered. The evaluation committee is not bound to accept any variation which, in its opinion, is not in the best interest of the Office of Disability Determinations. (Lanier, Ex. 2, p. 5.) IIL. Bid Opening and Evaluation 16. The bids were opened at 2:05 p.m., on Monday, October 29, 1990, by William Cox, Purchasing Director of HRS. Only two bidders submitted bids in response to the ITB, Dictaphone and Lanier. Both Lanier and Dictaphone submitted timely bids. 17. The bids were then reviewed by a three member Evaluation Committee during one meeting which lasted approximately three hours to three and one-half hours. 18. The individuals present. at the Evaluation Committee meeting were the committee, Ms. Mary Simmons, Ms. Beth Bruce, and Ron Atchinson and Ms. Dorea Sowinski who served as bid officer. 19. As bid officer, Ms. Sowinski acted as the coordinator of the Evaluation Committee and as liaison to the HRS Purchasing Director, Mr. Cox. Ms. Sowinski did not conduct a separate and independent evaluation of the bids. 20. The members of the Evaluation Committee were not technical experts on the configuration and features of digital dictation systems. 21. Ms. Mary Simmons, a member of the Evaluation Committee, is the supervisor of the clerical staff that works on 10 all the dictating equipment and correspondence that leaves the Office of Disability Determination of HRS. Ms. Simmons has never dealt with digital dictation systems. 22. Ms. Beth Bruce has been an employee of HRS almost 17 years. Ms. Bruce has extensive experience in working with dictation equipment in HRS. Ms. Bruce has no technical expertise in dictation systems. 23. The Bid Officer, Dorea Sowinski, has ten years experience in purchasing and procuring equipment for HRS. 24, William Cox has over 20 years experience in procurement. Mr. Cox has extensive experience in drafting Invitations to Bid and reviewing many more. 25. The Evaluation Committee first reviewed Lanier’s bid. The committee found that Lanier had failed to provide equipment model numbers for system equipment components (other than the recorder) and failed to provide sufficient explanation and description of equipment and its capabilities as required by the ITB. The Evaluation Committee therefore rejected the Lanier bid as nonresponsive. 26. Although Ms. Sowinski stated that during the Evaluation Committee Meeting she did call Lanier regarding certain aspects of the Lanier bid, she did not attempt to obtain further information or clarification from Lanier because the nonresponsive aspects of Lanier’s bid went directly to material requirements of the ITB. 27. After determining that Lanier’s bid was not responsive to the ITB, the Evaluation Committee moved on to the Dictaphone bid. 11 28. There is a conflict in testimony regarding one aspect of the evaluation process. Mary Simmons testified that the committee compared the responsiveness of the Dictaphone bid to that of the Lanier bid. Both Beth Bruce and Ms. Sowinski testified that the Evaluation Committee first compared the Lanier bid to the ITB and then compared the Dictaphone bid to the ITB. 29. Lanier has failed to prove, by a preponderance of the evidence, that the Evaluation Committee improperly compared the Dictaphone bid to the Lanier bid, as opposed to comparing both responses to the ITB. Overall, the testimony of Ms. Bruce and Ms. Sowinski is more convincing on this point. 30. The Committee examined Dictaphone’s Summary Bid Pricing Sheets and concluded that if Dictaphone’s pricing included all costs to HRS, an award should be made to Dictaphone. 31. On the following day, Ms. Sowinski discussed the Evaluation Committee’s conclusions and remaining questions concerning Dictaphone’s pricing with Mr. Cox. Mr. Cox then called a Dictaphone representative and assured himself that the prices shown in the bid covered everything relative to purchasing and installing necessary equipment, implementing the dictation system and training personnel to operate the system and that there would be no additional charges not covered in the bid. This telephone conversation with a Dictaphone representative occurred after the Evaluation Committee had rejected the Lanier bid as being materially non-responsive in several aspects. 32. Following Mr. Cox’s telephone conversation with the Dictaphone representatives, Ms. Sowinski- called the .three 12 members of the Evaluation Committee to convey the information regarding Dictaphone’s pricing sheets and to confirm the committee’s October 29, 1990 recommendation to award the bid to Dictaphone. 33. On October 31, 1990, Ms. Sowinski prepared and issued the Evaluation Committee’s written Recommendation of Award. The Recommendation stated that the Dictaphone bid was complete and recommended that HRS "accept a single responsive bid and award the contract to Dictaphone Corporation." 34. On November 1, 1990, HRS posted a Bid Tabulation recommending the award of the contract pursuant to the ITB to Dictaphone as the lowest responsive bidder. 35. Lanier has failed to prove, by a preponderance of the evidence, that the Evaluation Committee’s evaluation of the bids was arbitrary, capricious, or not rationally related to the public policy objectives in the procurement process. 36. Lanier has failed to prove, by a preponderance of the evidence, that the Evaluation Committee was biased in its evaluation of the bids. IV. Dictaphone’s Bid 37. In Addendum #1 to the ITB, paragraph number two of Item 18 is xrevised and requires that "Configurations of systems/equipment for each geographical location must be fully described and justified." 38. In challenging the Dictaphone response to the ITB, Lanier offered the testimony of Mr. John MacDonald, the Eastern Regional Systems Manager for Lanier. Mr. MacDonald was accepted 13 as a witness qualified to render opinions in the area of design, implementation, and operation of digital dictation systems. 39. Mr. MacDonald testified that “system configuration," “simultaneous activities," and "telephone connectivity" are terms commonly used in the field of designing and implementing digital dictation systems. 40. According to Mr. MacDonald, the term "system configuration" identifies how a digital dictation system needs to be built, how many individuals are going to dictate and transcribe into a system and how individuals are going to transcribe from that system so that a determination can be made as to the number of simultaneous activities or ports within the system. 41. To rebut the testimony of Mr. MacDonald, Dictaphone presented the testimony of Mr. James Montali, District Manager for Dictaphone. Over the objection of Lanier, Mr. Montali was allowed to express opinions with respect to the terminology and terms of art used in the general marketing and sale of central dictation systems. 42. Mr. Montali testified that the term "system configuration" relates to a description of the components of a dictation system which is presented to a client. 43. Mr. MacDonald’s testimony centered, in significant part, on the failure of Dictaphone to specifically describe "telephone connectivity" to: (1) achieve access to the minimun number of ports required by the ITB; (2) provide remote dictation and transcription capability for all dictators--and -transcribers at each location; and (3) provide remote: diagnostics. 2 : 14 at) 44. Mr. MacDonald testified extensively as to the technical aspects of how digital dictation systems are built, how such systems are connected and how the systems work. 45. The ITB in this case does not require that bids submitted contain descriptions of how the proposed digital dictation system is built, the technical aspects of how components of the system are connected, or the technical aspects of how the system works. 46. The ITB does not require a bidder to provide a definitive description of "telephone connectivity." 47. The ITB does not require that the system handle a minimum number of simultaneous activities. | 48. In a dictation system such as the one described in the ITB, each recorder has a certain number of ports for dictating and transcribing depending on the needs of the system purchaser. Each port in the recorder allows one dictating or transcribing activity. 49, There are also ports or channels in the telephone system which interface with the recorder. In order to provide access to a designated number of ports, there needs to he sufficient telephone equipment in the form of ports in the existing telephone systen. 50. Attachment B of Addendum #2 of the ITB establishes minimum ports and storage hours required for each location in the statewide HRS digital dictation system. 51. The system that Dictaphone bid shares the existing telephone lines and ports at HRS and thereby includes sufficient 15 telephone lines to connect users of the system to the minimum number of ports required for the recorders in all locations as required by the ITB. 52. The ITB does not. require that the bidder provide dedicated lines to operate the proposed system. The ITB does not preclude or prohibit a bidder from using the existing HRS telephone lines in installing the system. 53. The technical specifications in the ITB require that the system bid provide remote dictation and transcription capabilities as well as remote diagnostics. 54. Remote dictation involves dictation by an individual in one location (e.g. Miami) which is transmitted by a telephone line into the system and recorder located at a different location (e.g. Orlando). Remote transcription involves the same activity for a transcriber. 55. Remote diagnostics involves the capability to ascertain problems or malfunctions in a recorder from an off premises location through the use of telephone lines. 56. Dictaphone’s bid utilizes existing telephone lines at HRS and thus provides for remote diagnostics of each recorder throughout the state. 57. Dictaphone’s bid adequately responds to Item 18(R) of the ITB. 58. The ITB does not require 24 hour on Iline diagnostics. 59. Dictaphone’s bid includes Summary Bid Pricing Sheets which reflect all costs to HRS for equipment and 16 peripheral equipment associated with providing the digital dictation system described in its bid. 60. The system described in Dictaphone’s bid does not require the installation of telephone lines in addition to those already existing in the HRS locations reflected in the bid. 61. The Dictaphone bid describes and justifies its proposed system and equipment configuration for each location as required by Item No. 18 of the ITB as amended. 62. A system capable of using the existing ports and telephone lines within the present HRS system saves HRS the cost of installing additional lines (and the ongoing monthly charges for such lines). . 63. Addendum #2 to the ITB contains a note which permits a bidder to offer system/equipment configurations which minimize the number of ports and storage hours otherwise required. 64. The Dictaphone bid offers such an optional configuration by proposing to combine the Central Area I and Tallahassee locations. 65. Dictaphone’s optional system for the combined Central Area I and Tallahassee location was designed to minimize the number of ports and storage hours as permitted in Addendum #2 to the ITB. 66. Dictaphone’s optional bid for the combined Central Area I and Tallahassee locations provides adequate justification for the optional configuration in accordance with Attachment B as revised in Addendum #2 to the ITB. 17 67. Dictaphone’s bid explains and describes. its system's storage capabilities as required by Addendum #2, Attachment B to the ITB. Lanier has failed to prove, by a preponderance of the evidence, . that Dictaphone’s bid is materially nonresponsive to Item 18B of the ITB as amended. 68. Item 18-0 of the ITB requires that the system provide a management console with visual prompts, to assist users at each location. The Dictaphone bid responds to Item 18-0 of the ITB on pp. 71-74, and 127-136 of the bid. On page 71 of its bid, Dictaphone represents that its bid meets the specification of Item 18-O of the ITB but does not state that its management console provides visual prompts. There is a depiction of a Management console on page 132 of the bid, however. The copy provided in Lanier’s Exhibit 4 is of poor quality. Testimony at the final hearing established that this depiction indicated that the console provided visual prompts. Based upon this information in the Dictaphone bid, the bid coordinator and Evaluation Committee determined that Dictaphone’s bid was materially responsive to the "visual prompts" aspect of Item 18-O of the ITB. Lanier has failed to prove, by a preponderance of the evidence, that the Dictaphone bid is materially nonresponsive to Item 18-0 of the ITB. 69. The costs to HRS for any long distance telephone charges for use of the remote dictation, transcription, and diagnostics features of the systen bid by Dictaphone are not included in the Dictaphone bid. Due to varying toll charges depending on such variables as location, the telephone company 18 used, how long the calls last, and the number of calls made, it would be impossible to accurately include such costs in Dictaphone’s bid. 70. The Dictaphone bid does not provide a separate breakdown of the cost of peripheral telephone equipment necessary to support its system but such costs are included in Dictaphone’s total bid price. 71. Dictaphone’s bid includes all the costs of peripheral equipment associated with providing the digital dictation system described in its bid. 72. The ITB does not require a bidder to break out or itemize the costs for peripheral equipment in the bidder's Summary Bid Pricing Sheet. 73. Dictaphone’s proposed digital dictation system will perform as described in its bid in accordance with the ITB. 74. \Lanier has failed to prove, by a preponderance of the evidence that the Dictaphone bid is not materially responsive to any relevant provision of the ITB which is at issue in this proceeding. Vv. Costs Incurred by HRS 75. On February 18, 1991, HRS filed its Corrected Proposed Final Order with Attachments outlining its costs in this proceeding which are recoverable pursuant to Section 287.042(c), Florida Statutes. Recoverable costs incurred by HRS in this proceeding are as follows: 19 Transcripts and Court Reporters Hearing $ 815.00 Sowinski $ 219.65 William Cox $ 40.70 John MacDonald/James Montali $ 134.35 George Hume/John MacDonald § 221.05 Art DeWitt $ 71.50 TOTAL $1,502.25 Employee Hours William F. Cox 12 hours at $19.56/hr. = $234.72.
Conclusions For Petitioner Lanier: Kenneth A. Hoffman, Esquire MESSER, VICKERS, CAPARELLO, FRENCH & MADSEN Post Office Box 1876 Tallahassee, FL 32302-1876 For Respondent HRS: Robert L. Powell, Esquire Department of Health and Rehabilitative Services Building One, Room 407 1323 Winewood Boulevard Tallahassee, FL 32399-0700 For Intervenor Daniel Marino, Esquire Dictaphone: SEYFPARTH, SHAW, FAIRWEATHER & GERALDSON Suite 500 815 Connecticut Avenue, N.W. Washington, D.C. 20006-4004
Recommendation Based on the forgoing, it is recommended that the Respondent enter a Final Order dismissing Lanier’s protest of the award of Bid Number 91-15BC to Dictaphone. DONE and ORDERED this ,>H. day of March, 1991, in Tallahassee, Florida. Ji aS W ORK, Hearing Officer DivisionmOf Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 904/488-9675 31 FILED with the Clerk of the Division of Administrative Hearings this [+4 day of March, 1991. Copies furnished: Kenneth A. Hoffman, Esquire MESSER, VICKERS, CAPARELLO, FRENCH & MADSEN First Florida Bank Building, Suite 701 215 South Monroe Street Post Office Box 1876 Tallahassee, Florida 32302-1876 Robert L. Powell, Esquire Department of Health and Rehabilitative Services Building One, Room 407 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Daniel Marino, Esquire SEYFARTH, SHAW, FAIRWEATHER & GERALDSON Suite 500 815 Connecticut Avenue, Northwest Washington, D.C. 20006-4004 Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0500 Case No. 90-7201BID 32 12. 13-15. 16-24. 25. 26-27. 28. 29-36. 37-39. 40. 41. APPENDIX A TO RECOMMENDED ORDER CASE NO. 90-7201BID Rulings on Petitioner Lanier’s Findings of Fact Proposed. findings of fact in paragraphs 1 to 9 are adopted in material part in the Recommended Order. Proposed findings of fact are cumulative and not necessary to the conclusions reached in the Recommended Order. The proposed findings of fact as stated in paragraph 12 are not supported by the record and are rejected. Proposed findings of fact in paragraphs 13 to 15 are addressed in footnote 1 on page 8 of the Recommended Order. Proposed findings of fact contained in paragraph 16 are accepted in material part in the Recommended Order. Proposed findings of fact in paragraph 25 are adopted to the extent such facts are relevant within the operative pleadings filed. Proposed findings of fact in paragraphs 26 and 27 are adopted in material part in the Recommended Order. The proposed finding of fact in paragraph 28 is rejected because it is not supported by the record. The findings of fact proposed in paragraphs 29-36 are essentially argument which is addressed in the Conclusion of Law in the Recommended Order. Proposed findings of fact in paragraph 35 are further discussed in Appendix B. Proposed findings of, fact in paragraphs 37-39 are adopted in material part in the Recommended Order. The proposed finding of fact contained in paragraph 40 is essentially argument and is discussed in the Conclusions of Law in the Recommended Order. Proposed finding of fact in paragraph 41 does not accurately state the record as sighted. Mr. MacDonald was accepted as qualified to express opinions in the areas of design, implementation and operation of digital dictation systems. The record also reflects that Mr. Montali is qualified to express certain opinions with regard to dictation systems and his testimony was accepted in rebuttal to certain aspects of Mr. MacDonald’s testimony. 33 42-65. Proposed findings of fact in paragraphs 42-65 are adopted in the Recommended Order only to the extent that such facts are relevant and necessary to the conclusions reached. The issue of the necessity for the technical detail contained in the testimony cited is discussed in the Conclusions of Law in the Recommended Order. 66-68. The proposed findings of fact in paragraphs 66-68 are adopted in the Recommended Order only to the extent such facts are relevant. To the extent that the proposed findings of fact in paragraphs 66-68 are argument, such arguments are discussed in the Conclusions of Law in the Recommended Order. The proposed findings of fact in paragraph 68 are further discussed in paragraph 69 of the Recommended Order. 69-73. Findings of fact proposed in paragraphs 69-73 are rejected as not relevant. The requirements are discussed for ports and storage hours pursuant to Addendum 2 to the ITB in paragraphs 63-65 of the Recommended Order. These issues are further addressed in the Conclusions of Law in the Recommended Order. 74. The proposed findings of fact in paragraph 74 are not supported by the evidence. 75. The proposed findings of fact in paragraph 75 are adopted to the extent material in paragraph 68 of the Recommended Order. Rulings on Respondent HRS’ Findings of Fact (As Proposed in the HRS Corrected Proposed Recommended Order) 1-12. The proposed findings of fact in paragraphs 1 to 12 are adopted in material part in the Recommended Order. 13. Proposed finding of fact in paragraph 13 is rejected as not necessary to the conclusions reached. 14-23. Proposed findings of fact in paragraphs 14 to 23 are adopted in material part in the Recommended Order. 24. The proposed finding of fact in paragraph 24 is not necessary to the conclusions reached. 25-29. The proposed findings of fact in paragraphs 25 ta 29 are adopted in material part in the Recommended Order. 30-31. The proposed findings of fact in paragraphs 30 and 31 are rejected as stated. These proposed findings of fact are addressed in paragraphs 35 and 36 in the Recommended Order. a 34 32-37. The proposed findings of fact in paragraphs 32 to 37 are adopted in material part in the Recommended Order. 38-39. The proposed findings of fact in paragraphs 38 and 39 are addressed in the Statement of Issues portion of the Recommended Order. 40. The proposed finding of fact in paragraph 40 is addressed in paragraph 74 of the Recommended Order. 41-47. The proposed findings of fact in paragraphs 41 to 47 are adopted in material part in the Recommended Order. 48-49. The proposed findings of fact in paragraphs 48 and 49 are adopted, in material part, in paragraph 51 of the Recommended Order. 50. Proposed finding of fact in paragraph 50 is addressed in paragraph 67 of the Recommended Order. 51-55. Proposed findings of fact in paragraphs 51 to 55 are adopted in material part in the Recommended Order. 56. Proposed finding of fact in paragraph 56 is subordinate to the conclusions reached in the Recommended Order. Rulings on Intervenor Dictaphone’s Findings of Fact 1-3. The proposed findings of fact in paragraphs 1 to 3 are not necessary to the conclusions reached in the Recommended Order. 4-17. The proposed findings. of fact in paragraphs 4 to 17 are adopted in material part in the Recommended Order. 18. The proposed finding of fact in paragraph 18 is not necessary to the conclusions reached in the Recommended Order. 19-26. The proposed findings of fact in paragraphs 19 to 26 are adopted in material part in the Recommended Order. 27. The proposed finding of fact in paragraph 27 is not necessary to the conclusions reached. 28-60. The proposed findings of fact in paragraphs 28 to 60 are adopted in material part in the Recommended Order. 35 APPENDIX B TO RECOMMENDED ORDER CASE NO. 90-720i1BID Lanier also seeks to raise the issue of Dictaphone’s response to Paragraph 18 (G) of the ITB. Lanier concedes that it failed to raise the issue in its pleadings. Instead, Lanier cites Rule 1.190 (b), Fla. R. Civ. P. as authority to amend its pleadings to conform to the evidence. Lanier adduced testimony regarding this portion of the ITB in the first day of the final hearing. At this time in the proceedings Lanier was still maintaining that it bid was materially responsive. The reference to this item in the ITB came about by comparison of the respective responses in the bids of Lanier and Dictaphone at a time in the proceedings when such a comparison was relevant. Lanier argues that there was no objection at that time and apparently contends that Dictaphone and HRS thereby allow the issue to be tried by "implied consent." The failure of a party to object to testimony which may touch upon an unpleaded claim does not amount to consent to trial simply because such testimony might be pertinent to a different issue that is pled. National Aircraft Services, Inc. v. Aeroserv International, Inc., 544 So.2d 1063, 1064 (Fla. 3d DCA 1989). On the second day of the hearing, after Lanier had stipulated that its bid was not responsive, Dictaphone raised a timely objection to testimony regarding paragraph 18(G) on the basis of relevance. The objection was sustained. Dictaphone also objected to Lanier’s motion to amend its pleadings regarding Paragraph 18(G) on the grounds of 36 An prejudice. In an accelerated proceeding such as this, time for discovery is limited and a failure to limit issues tried to the issues properly pled is important to avoid "trial by ambush." Based on the foregoing reasons, attempt to argue this issue in its proposed recommended order is inappropriate and the issue is not considered in the resolution of this dispute. See, Rule 22I1-6.004(4), Florida Administrative Code. 37
Findings Of Fact By its Invitation to Bid, RFP #84-012-PS, Respondent sought proposals for the production of public service announcements for statewide distribution for both television and radio broadcast. The Invitation to Bid contained five criteria for evaluating proposals. Four of these were "narrative" criteria worth a maximum of 25 points per category. The fifth category, price, was worth a maximum of 50 points. The dispute in this case concerns Respondent's interpretation of the narrative criteria contained in paragraph X, A., 1 which was used to evaluate: [t]he experience and evident capa- bility of the offeror to perform the work required including the background of the offeror's organi- zation. In response to the Invitation to Bid, Cowles and Petitioner submitted proposals for consideration by Respondent. In response to the narrative criteria requirement contained in paragraph X, A., 1, quoted above, Cowles submitted the following: Bill Cowles was for more than fifteen years employed in the radio and tele- vision industries in Ohio and Florida. For many of those years he was actively in charge of the production and direction of hundreds of public service announce- ments, commercials and news and public affairs programs. For an additional eight years while engaged in political campaigns and the direction of the Republican Party of Florida, he was responsible for innumer- able commercials (all media) for individual candidates, party promotions, get-out-the- vote campaigns, etc. For the past five years, as co-owner of his own business, he has worked closely with many state agencies in a variety of communication related situations. During all these years, the offeror assembled many "teams" of talent representing all the disciplines required in order to most effec- tively complete the task at hand In preparation for the project outlined in this RFP, Cowles has used his vast knowledge and experience to bring together a "team" that is particularly qualified. Working with him to successfully complete the requirements of the RFP will be a staff of experts who will be directed by Cowles and the following professionals: Roy Nilson who is the President/Owner of WRENPRO Corporation has spent his entire career in the electronic media. He has held positions as Program Director, Producer, Operations Manager and Executive Producer of radio and television stations in Minnesota, New Mexico and Tampa-St. Petersburg. He formed WRENPRO, a consulting and production company, in 1971. Nilson is credited with the innovation of the "do-nut" and "pretzel" commercials that are now commonplace in the industry. He has served as consultant to over 100 radio and television stations; written several books on electronic media contests, history and radio auto- mation and has produced and syndicated radio programs and contests. His pro- duction of OPUS, an annual review of the top records of the year, is aired on more than 300 stations. OPUS has been the recipient of two BILLBOARD "Silver Mikes". The public service announcements, com- mercials and programs produced by Nilson number in the thousands. The creativity of Cowles and Nilson will be augmented by the technical expertise of: Dan Lunin who is currently the General Manager of WRENPRO and is also the Production Engineer of Production Associ- ates of Tampa. Lunin in the cast twenty-five years has served as Production Engineer, Channel 40, Sarasota; Production and Chief Engineer, Channel 28, Tampa; Chief and Production Engineer, WLCY AM & FM, Tampa-St. Petersburg and General Manager of TV-9 (Group W), Tampa-St. Petersburg. Mr. Lunin will be in charge of the technical direction of the tasks to be performed at the studios of WRENPRO (radio) and Pro- duction Associates (television) Petitioner contends that the information quoted above from Cowles' proposal was not responsive to the narrative criterion in that Cowles submitted no evidence to show that he had entered into any joint venture agreement or contractual relationship with the associates named in the proposal. Petitioner contends further that Cowles' proposal should have been evaluated on his individual qualifications, and that no consideration should have been given to the background, experience, and capabilities of Messrs. Nilson and Lunin since they were neither employed by nor under contract with Cowles. Petitioner also contends that the inclusion of the experience and qualifications of Messrs. Nilson and Lunin was misleading in that they were not actually "offerors" on the proposal, but were instead only independent contractors who were to be utilized by Cowles. Finally, Petitioner contends that the inclusion of the qualifications and experience of Nilson and Lunin resulted in the award of higher point totals under narrative criteria X, A., 1 than would have been awarded had Cowles been measured on his individual qualifications. The gist of Petitioner's objection to Cowles' proposal is that Cowles does not own a production company, but instead proposes to produce the public service announcements to be furnished to Respondent with associates who are in essence independent contractors. There is, however, no requirement in the Invitation to Bid that the public service announcements be produced by means of an inhouse production company. The means by which the announcements are to be produced is left to the discretion of the offeror, so long as he can demonstrate, in accordance with the terms of the Invitation to Bid, "experience and evident capabilities" to perform the work. In fact, the narrative criteria at issue in this proceeding clearly require a demonstration of "experience and evident capability" to perform the work of both the "offeror" and the "offeror's organization." In this regard, Cowles' response to this narrative criteria, as outlined above, was clearly responsive to the provisions of the Invitation to Bid. Further, nothing in Cowles' response could be misleading, since there is no representation that Messrs. Nilson and Lunin are anything other than independent contractors who would be utilized by Cowles in the production of public service announcements. Cowles has extensive experience in the radio and television industry. In addition, he has produced radio and television announcements and commercials while employed by the Florida Republican Party. There are no facts of record in this proceeding from which it can be concluded that Cowles is either unqualified to perform the work required in the Invitation to Bid, or that he is unable for any reason to successfully produce the work called for in that document. In fact, this record supports the conclusion that Cowles has the requisite experience and evident capability to perform the required work, and that he has, in fact, successfully completed similar projects for other state agencies in the recent past. Finally, Petitioner's contention that Cowles was awarded more points on narrative criteria X, A., 1 than would otherwise have been the case had the qualifications of Messrs. Nilson and Lunin been omitted from his proposal, is without merit in that the record in this proceeding contains no evidence of the points actually awarded to either Cowles or Petitioner in the bid evaluation process. Even had Cowles' proposal been determined in this proceeding to have been unresponsive, there are insufficient facts of record in this cause from which any recommendation could have been made to award the contract to Petitioner. Although the petition alleged that Petitioner was the second lowest bidder, there are no facts of record to substantiate that allegation. In fact, there is no evidence of record in this cause regarding the "cost" portion of the bid submitted by Cowles or Petitioner, which would allow a comparison of those proposals to those of any of the other bidders.
The Issue The issue is whether Certified Armored Service, Inc. is the lowest responsible bidder.
Findings Of Fact On or about July 1, 1991, the Respondent published a Request for Bid seeking bids for a courier service to pick up funds from various district school sites and deliver them to a specified bank. The cover page of the Request for Bid, in the first paragraph, stated that: "any bid accepted or contract awarded shall be to the lowest responsible bidder meeting the requirements of law and State Board of Education Regulations". The Respondent received no protest of the specifications for this bid. (Joint Exhibit 1; Testimony of G. Long; T-10). The courier service contemplated under Bid No. 346 is of the same nature and scope as the Respondent has received in the previous years, provided most recently by the Petitioner. (Testimony of G. Long and E. Caudell). Six (6) bids were received by the Respondent. The bids were stated as cost per pick-up per day. From the lowest to the highest, the first four (4) bids were: Wells Fargo ($3.25); Sun Courier ($4.40); Certified Armored Service, Inc. ($4.50); and Pro-Run Courier Service ($5.00). (Joint Exhibits 2, 3 , 4, 5 and 8). The bid from Wells Fargo was deemed to be incomplete because it did not include specific prices for the additional cost, if any, of pick-up and delivery of activity funds to a bank other than Sun Bank. Accordingly, the bid of Wells Fargo was rejected. (Joint Exhibits 2 and 8; Testimony of G. Long). The next lowest bid was by Sun Courier, who was recommended to receive the award and that recommendation was posted on July 16, 1991. At the August 20, 1991 meeting, the Respondent was provided with a copy of a letter dated August 12, 1991 from Dwight Chastain, Supervisor, Division of Licensing, to Nick Chappini of Certified Armored Service, Inc. opining that a courier service, such as the subject of the Respondent's Bid No. 346, was required to be licensed under Chapter 493, Florida Statutes. (Joint Exhibits 9 and 10). At its meeting on August 20, 1991, the Respondent did not award the bid to Sun Courier, but directed that the administration ensure that the lowest responsive bidder meet all certification and licensure requirements. On August 23, 1991, a representative of the Respondent wrote to counsel for the Division of Licensing requesting a legal opinion on whether the proposed courier service would be a security agency subject to licensure under Chapter 493, Florida Statutes. On September 4, 1991, a reply was received from the Division of Licensing opining that such a license would be required. (Joint Exhibits 11 and 12). Following receipt of the legal opinion from the Division of Licensing, representatives of the Respondent contacted the owner of Sun Courier to inquire whether Sun Courier had or would be willing to obtain the necessary security agency license. The owner of Sun Courier indicated that he did not have the license and that, in view of the large fines which can be levied by the Division of Licensing, he was unwilling to assume the duties of courier during the time a license application would be pending. (Testimony of G. Long). On September 6, 1991, a representative of the Respondent wrote to all entities which had submitted bids, informing them that the recommendation for award, of Bid No. 346 was changed from Sun Courier to the Intervenor. The Petitioner received its copy of the letter on September 10, 1991. (Joint Exhibit 13). On September 11, 1991, the Respondent received a notice of protest by the Petitioner of the recommended award to the Intervenor; and on September 12, 1991, the Respondent received a letter from the Petitioner explaining the grounds for its protest. No other bidders, including Sun Courier, protested the intended award to the Intervenor. (Joint Exhibits 14 and 15; Testimony of G. Long). The Intervenor is owned and operated by Robert D'Agostino. The Intervenor was incorporated in 1991. At the time the bids were requested on July 1, 1991, the Intervenor had at least two customers who were receiving courier service. The Intervenor was licensed as a security agency under Chapter 493, Florida Statutes, in June of 1991. Prior to creating Certified Armored Service, Inc., Mr. D'Agostino had been employed by Wells Fargo for eight (8) years in the position of driver, messenger and truck supervisor. The duties of those positions included the pick-up, handling and delivery of funds. Mr. D'Agostino was also previously employed by the Petitioner during the school years 1989-90 and 1990-91 in the capacity of supervisor and driver. While with the Petitioner, Mr. D'Agostino regularly drove a route among eighteen (18) schools in Alachua County and performed the same pick-up and delivery service as is the subject of Bid No. 346. (Testimony of R. D'Agostino, D. Newman). While he was working for the Petitioner, Mr. D'Agostino performed his duties in a manner which was completely acceptable to those school personnel who dealt with him, and no complaints about Mr. D'Agostino or his job performance as courier were received by the school district office. (Testimony of E. Caudell).
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is therefore, RECOMMENDED that the School Board of Alachua County enter a Final Order dismissing the bid protest of Pro-Run Courier Service on Bid #346. DONE AND ENTERED this 22 day of January, 1992, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22 day of January, 1992. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 91-7I75BID Alachua County School Board's proposed findings were read, considered, and adopted. Pro Run submitted a letter dated November 15, 1991 which was read and considered. It did not set forth any specific findings. Certified submitted a proposed order which was read and considered. The Board's more proposed findings included those made in Certified's proposed order. COPIES FURNISHED: Dr. Douglas Magann, Superintendent Alachua County School Board 620 E. University Avenue Gainesville, FL 32601 Honorable Betty Castor Commissioner of Education Department of Education The Capitol Tallahassee, FL 32399-0400 Diane Newman Corporate Representative Pro-Run Courier Service P.O. Box 15143 Gainesville, FL 32604-5143 Thomas L. Wittmer, Esq. School Board of Alachua County 620 East University Avenue Gainesville, FL 32601 Bevin G. Ritch, Esq. P.O. Box 1025 Gainesville, FL 32602
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background Petitioner, First Federal Savings and Loan Association of Putnam County (petitioner or First Federal), owns and operates a full service savings and loan institution in the Palatka, Florida area. As a part of its regular business operations, petitioner utilizes the services of Florida Informanagement Services, Inc. (FIS), a data processing servicing firm which provides bookkeeping and data processing services. In performing these services, FIS collects financial data from computer terminals located at petitioner's offices and returns processed data in the form of financial statements, payrolls, tax reports, accounts receivable and payable statements, and related information to petitioner. Respondent, Department of Revenue (DOR), is the state agency charged with the responsibility of enforcing the Florida Revenue Act of 1949, as amended. Among other things, DOR performs audits on taxpayers to insure that all taxes due have been correctly paid. To this end, a routine audit was performed on petitioner covering the audit period from June 1, 1985, through December 31, 1989. After the results of the audit were obtained, and an initial assessment made, on September 13, 1991, DOR issued a notice of decision wherein it proposed to assess petitioner $43,204.91 in unpaid taxes. After a petition for reconsideration was filed, DOR issued its notice of reconsideration reducing the assessment to $37,805.92. The parties later reached an agreement as to all issues except an assessment of $11,476.12 for unpaid sales taxes plus applicable interest and penalties. The taxes relate to a charge on the monthly statement issued to First Federal by FIS and which is identified as "total data communications". The assessment concluded that the data communi-cations charge is a taxable sale of a private communication service or a telecommunication service within the meaning of Subsections 203.012(4)(a) and 203.012(5)(a), Florida Statutes (1989). Contending that the assessment should be withdrawn, petitioner initiated this proceeding. The Services Provided by FIS Established in 1968 by a group of savings and loan institutions, FIS is a data processing service bureau headquartered in Orlando, Florida, and which contracts with approximately one hundred clients, all savings and loan institutions, to provide comprehensive data processing and accounting-type services. Its sole purpose is to provide its clients with state of the art data processing services at an economical shared cost. The services being rendered here are commonly provided to banking institutions throughout the state by FIS and a number of similar data processing companies. FIS utilizes a network of long distance telephone lines leased from various telephone companies located throughout the state to collect financial transaction data from each of its member clients, including petitioner. Keyboards are utilized by bank employees at each office to input financial transaction information (e. g., a deposit to or withdrawal from a checking account) to a "data line" or communication channel, which is a multi-link long distance communication pathway leased by FIS from a telephone company. This information is collected by a front end processor and transmitted through the data line to the computer system (mainframe) located at FIS headquarters in Orlando. The computer acknowledges receipt of the transaction, records and processes the transaction, and sends a response back through the data line to the sending terminal. This process is repeated hundreds of times each day for every terminal located at each bank office. At the end of each business day, FIS processes all of the transaction data collected during the day into comprehensive reports which summarize such activities as loan and account balances, bank department activities, automatic teller transactions, and similar information. These reports are then delivered to the banks by courier the next morning. It is noted that during the first two years of the audit period, First Federal had a single data line with twenty-six terminals. In 1987, a second data line was added due to an increase in terminals. Today, First Federal has four offices with a total of forty-eight terminals on two data lines. FIS and its clients have entered into an information processing agreement which governs the provision of services and their price. This contractual relationship between FIS and First Federal began in 1974. Copies of the 1982, 1985 and 1987 agreements have been received in evidence as respondent's exhibits 6 and 7 and petitioner's exhibit 4, respectively. Paragraph 4.(c) of the first two agreements provides that "(t)elecommunications for on-line services will be provided by FIS as part of this agreement" while the 1985 agreement also provides that "(p)rice increases charged to FIS by telecommunications senders will be passed on to the institution". The copy of the 1987 agreement introduced into evidence is incomplete but the testimony suggests that except for the word "telecommunications" found in paragraph 4.(c) of the earlier agreements, the same provisions appear in the more recent agreements. The Data Communications Charge FIS issues on a monthly basis an itemized statement for its services. Among the charges on the statement is one labeled "total data communications", which is based upon the total number and types of computer terminals which can access the FIS computer. The charge is not based on the actual cost of establishing and maintaining the communication pathway but rather is assessed equally upon all FIS clients as an identical monthly flat fee per terminal charge of $86. The same flat fee per terminal charge is assessed regardless of the number of computer terminals utilized by an institution, the number of transactions per terminal, the amount of telephone time consumed, or the geographic distance between the FIS mainframe computer and the customer's location. Thus, the same fee per terminal would be assessed on a bank in Orlando a few blocks from the mainframe computer as one located in Pensacola or the Florida Keys. The data communications charge represents a number of cost elements including the establishment and maintenance of the FIS mainframe computer system, research and development, technical support, company overhead, and the cost of the leased telephone lines. However, the per terminal charge of $86 is neither a direct nor indirect pass-through by FIS of the actual cost of establishing and maintaining the communications link with any individual customer. Is the Transaction Taxable? DOR acknowledges that the various data processing services that First Federal purchases from FIS, which is acting as a "service bureau" under Rule 12A-1.032(6), Florida Administrative Code, are "professional services" and are exempt from taxation under Subsection 212.08(7)(v)1., Florida Statutes. It also admits that as of the date of hearing, it had no "firm" policy on the issue presented herein and was still in the process of developing one. Even so, DOR contends that the services identified as "total data communications", which include the communication network through which FIS collects the raw financial data from its clients for processing, are taxable since these services constitute a private communication service as that term is defined in Subsection 203.012(4)(a), Florida Statutes (1989). There, the term is defined as a communication service that entitles a subscriber "to exclusive or priority use of a communication channel." DOR first relies upon the fact that during the audit period FIS and First Federal had entered into agreements for FIS to provide First Federal with "telecommunications" for its "on line" services. DOR construes this language in a literal sense to mean that FIS is "selling" a telecommunication service. In addition, the agreements allow FIS to increase the data communication charges based upon potential increased telephone costs to FIS. Again, DOR interprets this language as further evidence that FIS is merely reselling a telephone service to its clients. DOR also points out that First Federal has a reasonable certainty of getting its communication through on the communication channel and that no other communication can take place on the line while First Federal is transmitting or receiving a message. It considers irrelevant the fact that First Federal may not have priority or exclusive rights over any other FIS client having access to the FIS data collection system. Thus, DOR concludes that First Federal has "exclusive or priority use" of a communication channel within the meaning of the law. It further concludes that FIS is engaged in the sale of a private communication service (via the leased telephone lines) which gives First Federal access to FIS's computer. The evidence shows that the computer terminals located at petitioner's offices are commonly referred to as "dumb" terminals whose sole function is data input, that is, to transmit data from the institution to the computer mainframe. They cannot be utilized to access the FIS mainframe to perform any type of individualized date processing or other analysis. Further, they cannot communicate with each other using the data lines nor can they communicate with any other financial institution or other computer system. In addition, the lines cannot be used for regular voice communication, and when the institution is closed, the lines cannot be used for any other purpose. Over ninety percent of FIS member institutions share portions of one or more data lines with other FIS clients. Although during the audit period First Federal did not share its two lines with another institution, if one should open an office in the Palatka area and utilize FIS's services, its terminals would be placed on the unused portion of First Federal's lines, assuming such unused capacity is then available. In addition, all of the data collection and processing services are controlled directly by FIS. Thus, no FIS client has any priority in transmitting transaction information or obtaining data processing services over any other FIS customer, regardless of size or geographic location. Rather, the data is collected by FIS according to a pre- determined polling system controlled by a communication processor. Since a single data line can collect information from as many as thirty individual computer terminals, the polling system must "poll" each of those thirty terminals in numeric sequence to determine if the terminal has any data to transmit. Once the polling system has "polled" a particular terminal, the terminal is unable to transmit data until all other terminals have been polled. Further, while a message is being transmitted to or received from the computer mainframe, no other transmissions can take place on the data line, and there is no provision in the system to interrupt a transmission. Processed data is then returned to the institution according to the same numeric cycle. Therefore, no institution has "use" of a data line other than that which is directed by FIS, and the fact that a client can be reasonably assured that FIS will collect its data transmissions in a timely manner does not equate to a "priority use" of the communication pathway. The overall cost of the telephone line "network" represents a substantial portion of the total data communication charges assessed to each customer. However, the terminal charge made to each FIS customer is not truly representative of the cost to FIS of obtaining and providing the actual communications link between FIS and an individual bank. As noted earlier, and by way of example, the cost of establishing and maintaining a telephone link between FIS and a small bank in the Florida Keys or the Panhandle would substantially exceed the data communications charge assessed to those institutions. FIS receives telephone bills from every local and regional telephone company from which it leases telephone lines. During the audit period, it was not uncommon for FIS to receive between seven hundred and one thousand telephone bills per month for services to approximately eighty-four full service data processing clients. These bills included both sales and gross receipts taxes and were paid by FIS on a monthly basis. The FIS accounting department does not analyze the individual charges on the various statements to determine the monthly cost of a data line to an individual customer, nor are the charges made to FIS by the various telephone companies for each FIS client rebilled to any particular institution, either directly or indirectly. Rather, FIS absorbs the cost of the entire telephone network as a part of its normal business expense. The earlier information processing agreements refer to "telecommunication services" being provided under the agreement. However, the agreements also refer to the existence of one or more third party providers (i.e., regulated telephone companies) of the actual telephone service, and FIS makes no charge for "telephone service". While the agreements allow FIS to increase the data communications charges based upon the potential increased telephone costs to FIS, the charges assessed to FIS customers are unrelated to the actual cost of providing the service between any particular institution and the computer. Indeed, the provision simply allows FIS, when deemed to be necessary, to increase the terminal fee based upon an increase in one of its many cost components. Even if this right is exercised, any increase in that charge would be equally assessed on all clients throughout the state, regardless of their size or location. However, it should be noted that FIS has experienced a substantial increase in costs in providing the telephone service in recent years, but has not raised the data communication charge to any client since 1986. FIS has never charged First Federal for "telephone service". It is irrelevant to the institution how FIS establishes or designates its charges. If the data communication charge was deleted and the costs of the other tax exempt charges increased accordingly, First Federal would still continue to utilize FIS's services. During the audit period, FIS was not registered with DOR as a provider of private communication services. Indeed, its only business is providing data processing and accounting-type services. If it was reselling private communication services, as DOR suggests, it would have to register with DOR and pay a 1.5 percent gross receipts tax on the actual cost of operating the system. DOR recently concluded an eighteen month audit of FIS for the period 1985-1989 and determined that FIS was not liable for gross receipts tax on the sale of any alleged telecommunications services. Finally, testimony by an expert who served as DOR executive director during most of the audit period established that when the law was amended effective July 1, 1984, to impose both sales and gross receipts taxes on the sale of private communication services, DOR interpreted the amendments to apply to those providers who were selling communication services which escaped taxation by bypassing the existing telephone companies or other regulated utilities. This included those who provided communications by microwaves, satellites, privately owned telephone lines and "smart buildings", which utilize a combination of both public and private communication systems. The expert further established that if the issue had been raised during his tenure, DOR would not have construed the activity here to be a taxable sale of a private communications service since neither FIS nor its clients were operating outside the existing telephone company pathways thereby escaping the sales and gross receipts taxes. In summary, the evidence supports a finding that First Federal does not have exclusive or priority use of the data lines and accordingly the challenged service cannot be considered a private communication service. In addition, because FIS could not function as a data processing company without the data collection system, which is an integral part of its comprehensive data processing services, the collection of raw financial data must be construed as a tax exempt service. Therefore, the assessment against First Federal should be withdrawn.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent enter a final order withdrawing (rescinding) the assessment against petitioner. DONE AND ENTERED this 5th day of April, 1993, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER 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 5th day of April, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-2763 Petitioner: Partially accepted in finding of fact 1. Partially accepted in findings of fact 2 and 3. Partially accepted in findings of fact 4 and 6. 4-8. Partially accepted in finding of fact 5. 9. Partially accepted in finding of fact 7. 10-12. Partially accepted in finding of fact 9. Rejected as being unnecessary. Partially accepted in finding of fact 10. 15-16. Partially accepted in findings of fact 7 and 10. 17-18. Partially accepted in finding of fact 8. 19-20. Partially accepted in finding of fact 13. 21-23. Partially accepted in finding of fact 14. 24. Partially accepted in finding of fact 16. 25-27. Partially accepted in finding of fact 15. 28. Partially accepted in findings of fact 11 and 12. 29-30. Partially accepted in finding of fact 11. 31-35. Partially accepted in finding of fact 12. 36. Partially accepted in finding of fact 5. 37-39. Partially accepted in finding of fact 18. Rejected as being unnecessary. Partially accepted in finding of fact 17. Partially accepted in findings of fact 3 and 4. Respondent: 1-2. Partially accepted in finding of fact 1. 3-4. Partially accepted in finding of fact 3. 5. Partially accepted in finding of fact 6. 6. Partially accepted in finding of fact 10. 7. Partially accepted in finding of fact 5. 8. Partially accepted in finding of fact 10. 9. Rejected as being contrary to more credible and persuasive evidence. 10-13. Partially accepted in finding of fact 12. Note - Where a proposed finding has been partially accepted, the remainder has been rejected as being irrelevant, unnecessary, subordinate, not supported by the evidence, or a conclusion of law. COPIES FURNISHED: Mr. Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL 32399-0100 Linda Lettera, Esquire General Counsel Department of Revenue 204 Carlton Building Tallahassee, FL 32399-0100 Patrick J. Phelan, Jr., Esquire P. O. Box 669 Tallahassee, FL 32302 Lealand L. McCharen, Esquire Department of Legal Affairs The Capitol-Tax Section Tallahassee, FL 32399-1050
Conclusions Mr. Klein had a duty to operate the van he was driving on the day of the accident with reasonable care. See ss. 316.183(1), 316.1925(1), F.S. Mr. Klein breached that duty when he was distracted by a cellular phone call at or around the time of the accident or otherwise not paying full attention to the road at the time of the accident. Mr. Klein’s negligent operation of the van was a proximate cause of the accident that resulted in Angelica’s death. Mr. Klein was acting within the course and scope of his employment at the time of the accident. Therefore, the County is responsible for Mr. Klein’s negligence. Angelica violated s. 316.130(10) and/or (11), F.S., when she attempted to run across SR 436 in the middle of the block rather than at a cross-walk and, as a result, Angelica’s own negligence contributed to her death. The percentage of fault allocated to Angelica by the jury -- 39 percent -- is reasonable under the circumstances. Ms. Wagner’s failure to supervise Angelica on the night of the accident was, in my view, irresponsible and unreasonable. Ms. Wagner knew or should have known that Angelica might cross SR 436 based upon prior instances of her crossing the road without permission. Furthermore, it is irresponsible and unreasonable for Ms. Wagner to allow an 11-year-old child to be unsupervised and to stay out on her own until 9:00 p.m., which was after dark. Ms. Wagner’s negligent supervision of Angelica contributed to her death because if she had been supervised she would not have gone across SR 436 in the first place. Thus, notwithstanding the jury verdict on this issue, I find that a portion of the fault for Angelica’s death should be apportioned to Ms. Wagner and, in my view, a figure of 10 percent is reasonable. In summary, I conclude that liability for Angelica’s death should be apportioned as follows: 51 percent to the County; 39 percent to Angelica; and 10 percent to Ms. Wagner. As to the damages, I find the amounts awarded by the jury -- $8,000 in funeral expenses and $1.4 million in non-economic damages -- to be reasonable. The amount of the claim bill should be reduced to reflect a set-off of the $8,000 received by Ms. Wagner from another source (i.e., Angelica’s uncle) to pay the funeral expenses and to reflect the allocation of a portion of the fault to Ms. Wagner. As adjusted, the claim bill should be for $652,080, which is calculated as follows: $1,408,000 (verdict) x 51% (County’s revised share of liability) = $718,080 + $42,000 (taxable costs) - $100,000 (partial satisfaction by County) - $8,000 (set-off for funeral expenses paid by uncle). ATTORNEY’S FEES AND LOBBYIST’S FEES: The claimant’s attorney provided an affidavit stating that that attorney’s fees will be capped at 25 percent in accordance with s. 768.28(8), F.S. The attorney’s fees will be $163,020 if the bill is approved at the amount recommended. The lobbyist’s fees are in excess of the 25 percent attorney’s fee, and according to the contract between the claimant’s attorney and the lobbying firm, the lobbyist’s fees will be an additional 5 percent of the final claim. Thus, the lobbyist’s fees will be approximately $32,604 if the bill is approved at the amount recommended. The bill, as filed, provides that payment of attorney’s fees, costs, and lobbyist’s fees are limited to 25 percent of the final claim. If that language remains in the bill and the claim is paid in the amount recommended, the claimant will receive $489,060 and the balance of $163,020 will go towards attorney’s fees, costs, and lobbyist’s fees. If that language was not in the bill, the claimant would receive only $456,456. LEGISLATIVE HISTORY: This is the second year that this claim has been presented to the Legislature. Last year’s bill, SB 62 (2007), was not referred to committee. RECOMMENDATIONS: For the reasons set forth above, I recommend that Senate Bill 26 (2008) be reported FAVORABLY, as amended. Respectfully submitted, T. Kent Wetherell Senate Special Master cc: Senator Gary Siplin Faye Blanton, Secretary of the Senate House Committee on Constitution and Civil Law Counsel of Record
The Issue The issue for consideration in this hearing is whether Petitioner, Larsen Communications and Professional Services, Inc., should be certified and designated as a Minority Business Enterprise.
Findings Of Fact At all times pertinent to the issues herein, the Commission on Minority Economic and Business Development was one of the agencies in Florida responsible for the certification of women and minority owned businesses in Florida as Minority Business Enterprises. Larsen Communications and Professional Services, Inc. was operating a video production and public relations company in Tampa. Petitioner, as a part of its business operation, sought and performed contracts with various agencies of the State of Florida. Valerie D. Larsen, current President and 75 percent owner of the Petitioner corporation, is a graduate of high school in Hillsborough County. After graduation, she went to work as a legal secretary and worked in that field for several years. She is currently a financial analyst with GTE Data Services. From 1991 through 1993 she was a student at the Tampa Academy of Performing Arts from which she claims to have graduated, though she has no diploma to so indicate. While there, she took training in on-camera acting, camera handling, voice over, and other facets of video production. She also acted in and produced plays, directed plays, and was active in all aspects of theatre production, both from the artistic and the business sides. In March, 1990, Ms. Larsen married her husband, a 1973 graduate of Florida State University with a bachelor's degree in Broadcast Communications. Mr. Larsen was, for many years, a television reporter in the Tampa area as well as elsewhere. He has considerable experience in the on-camera presentation of news stories and has written many of the pieces he delivered on air. From the very beginning, Mrs. Larsen wanted to own her own business, and over the years, as she worked as a legal secretary and with GTE, she maintained this ambition. Several years ago, when her husband was put out of work, she got the idea of starting her own production company, not only to give herself an opportunity to do that which she most enjoyed doing, but also to give her husband something to do as well. Ms. Larsen admits that she made a big mistake in not hiring an attorney to help her draft the business organization papers. Instead, she went to Office Depot and purchased an incorporation kit which she filled out without any professional advice and submitted to the Florida Secretary of State's office for registration. In doing so, she made her husband the President of the company even though she was in charge and actually made the business decisions. She did this in order to help her husband maintain his self respect. This officer designation was corrected sometime thereafter. When Ms. Larsen graduated from the Tampa Academy of Performing Arts she knew she wanted to start her own company and what she liked to do. Video production seemed to fit the bill, and on September 4, 1992, because she no longer could act due to her pregnancy, she started the company. The initial funding for the company came from a $2,500 withdrawal from funds owned jointly by the parties and to which she had contributed over the years. At the time the company was started, Mr. Larsen had his severance pay of $3,200 per month for two or three months. This money was used for the family's living expenses. The money which was invested in the company, and which had been in the joint account, came, Ms.Larsen avers, from her salary from GTE Data Services. Ms. Larsen is currently President of the company. She professes to make all business decisions. She consistently researches jobs to bid on and is a subscriber to the Florida Administrative Weekly, which lists bid opportunities. If she find something she feels the company can handle, she contacts the agency and asks for a proposal package. Then, she claims, she prepares and submits the company's bid. Ms. Larsen on the one hand claims to handle all the company accounting, but on the other hand states she hires a CPA to do the payroll. She claims also to make all the arrangements for financing and borrowing for the company, the hiring and firing of personnel, and the solicitation of work for the company. There are no full time employees, however, besides the Larsens. Usually, people with the particular skills needed for a specific job are contracted with on a tempor ary basis. She decides who she wants to use on a particular job, determines the costs as to how much each element will cost, and comes up with a final bid price. She might have Mr. Larsen do some of the research and plug details into the computerized bid shell, but she does the majority of the bid process and makes the ultimate decision as to whether a bid will be submitted. She also pays all the bills. Mrs. Larsen claims she must do a lot of research for the business which she does in her spare time at work, during her lunch periods and in the evenings. She also calls Mr. Larsen at home and gives him things to look up. For her research, she uses the University of South Florida library, two newspapers and other research sources dealing with the subject matter of the pending bid, so that she can effectively evaluate the project and submit an appropriate bid. Bid prices are based on what it will cost her to hire the required people and lease the required equipment. Since the company is small, she hires most artists, such as writers, photographers, editors and graphic artists, on a per job basis. If Larsen is successful and is awarded a bid for a particular production, Ms. Larsen has the initial job of preparing the script for the production, the blueprint to present to the photographer. A script is prepared for each production designed around the requirements of that particular subject. Most scripts are written on the basis of her research and that of her husband, and the skills needed to prepare a script include an ability to do research, writing skills, formatting skills, experience and creativity. Once the script is prepared, it is presented to the client for review and suggestions. Upon final approval, Ms. Larsen hires the photographer who will do the shooting. Often the photographer works alone, but sometimes either Ms. or Mr. Larsen accompanies him. Mr. Larsen does some of the research and the typing and purchases some supplies, but major purchases are approved and determined by Ms. Larsen. He also is responsible for answering the phone. Mr. Larsen is often the narrator on their productions, which is appropriate because of his on-air experience and his voice. In Mr. Larsen's prior career as a news journalist he wrote some of his material and appeared on camera. The nature of news broadcasting, however, is different from the productions of Larsen Communications. Whereas news reporting is primarily a recitation of facts which have occurred, Larsen's productions are far more creative, designed to tell a story or sell a particular product or point of view. Therefore, his prior experience, while good for on camera work, is not necessarily translatable to the management of the work the company does. In fact, Ms. Larsen is of the opinion that he does not have any skills she does not have, and is convinced that if he were not with the company, his absence would not have much effect on its operation. She is quite confident that she could do what he does or could easily hire someone to do what he does. Larsen Communications is a small company. To date, not more than 10 contracts have been awarded to it, and in each case, the solicitation process described above was used. Earnings from the company are split. Ms. Larsen receives an intermittent draw, depending on the company income. Mr. Larsen receives a set salary of $1,000 per month. There are no bonuses paid because this is all Ms. Larsen feels can be afforded, and even Mr. Larsen's salary is based on the company's money flow. He has been a salaried employee for several years, but only recently has he been paid by check. Aside from Ms. Larsen's 75 percent of the stock and Mr. Larsen's 25 percent, there are no other owners of the company and no one else shares any risk of loss. If the business fails, Ms. Larsen will bear the biggest loss, and Mr. Larsen would have to find a job elsewhere. The original application for MBE certification submitted by Larsen in 1994 sought certification in three areas: video production, public relations and media relations. This has been amended and now the only certification sought is that in video production. Ms. Larsen believes that all three areas are interrelated. Mr. Larsen confirms the testimony of Ms. Larsen regarding the responsibility for accomplishment of duties within the corporation. When the company was formed, he was unemployed and he agreed to support Ms. Larsen in the operation of her business; the company was her brainchild. She is the one who secured and filled out the incorporation forms that were submitted to the Secretary of State's office, and he did not know what the papers intended or what they said he was to do. He knows he was the original President of the company and a Director, but he also recognizes that those designations have been changed in the interim. Based on his education and experience, he believes he is qualified in video production, public relations and media relations. However, he was in news broadcasting by experience and throughout his career, and the business of Larsen Communications is totally different - more like entertainment. Mr. Larsen indicated he probably could be called the Marketing Director of the company, but it is a small company and in reality he has no title. He is authorized to make decisions on minor matters, but the ultimate decisions are made by Ms. Larsen. The company is her baby, her brainchild and her business, and he agrees that if he were to walk away from the company, while she might have trouble running the business alone while maintaining a full time job elsewhere, she has the skills, the experience and the ability to do so. He could be replaced easily. At no time, according to Mr. Larsen, did he ever run the company. He has researched and written scripts but Ms. Larsen has always had a major idea or input into whatever he has done and he works, he claims, at her direction. When Larsen's application was forwarded to the Commission, it was evaluated by Mr. Ringgold who conducted a telephone interview with Mr. and Ms. Larsen on August 29, 1994. At this point, the Commission now agrees there is now no issue as to the ownership of the corporation and that Larsen Communications in owned by Ms. Larsen. Nonetheless, Mr. Ringgold recommended that Larsen's application be denied under the provisions of Rule 60A-2.005, F.A.C. because he believed that Ms. Larsen does not assume the majority share of risk; that she does not have the authority to control and the experience to exercise dominant control over the corporation; that she does not have sufficient technical capability to run the corporation; that her control is not real, substantial and continuing; that she does not control the purchase of equipment and supplies; that she does not have independence in seeking business and that she does not have direction and control over all aspects of the business. Because he now accepts the fact that Ms. Larsen has knowledge and control of the company's financial affairs, the preexisting objection on that grounds is withdrawn, but taken together, as of the date of the hearing, Mr. Ringgold still recommended denial. No evidence was presented by the Commission, other than the testimony of Mr. Larsen which tended to support Petitioner's position, which would show with particularity any basis for disbelieving Petitioner's assertions. When Mr. Ringgold made his recommendation for denial, his decision was based on the matters submitted by the applicant and the information gained in the telephone interview. He did not make an on-site inspection of Larsen's facility. By the same token, he did not know of Ms. Larsen's schooling at the Tampa Academy of performing Arts at the time he made his recommendation. He does not recall ever having changed his mind regarding a recommendation in the nine years he has been doing this work. Mr. Ringgold has his educational credentials in speech and has some knowledge of video production having worked in that area for his uncle while in school.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Petitioner, Larsen Communications and Professional Services, Inc., be granted certification as a Minority Business Enterprise. RECOMMENDED this 29th day of August, 1995, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of August, 1995. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 94-5839 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: Not a Finding of Fact but a Conclusion of Law. - 4. Accepted and incorporated herein. Accepted and incorporated herein except for references to F.A.C. which are Conclusions of law. - 8. Accepted and incorporated herein. FOR THE RESPONDENT: None Submitted. COPIES FURNISHED: Miriam L. Sumpter, Esquire 2700 North MacDill Avenue Suite 218 Tampa, Florida 33607 Joseph L. Shields, Esquire Commission on Minority Economic and Business Development 201 Collins Building 107 West Gaines Street Tallahassee, Florida 32399-2000 Crandall Jones Executive Administrator Commission on Minority Economic and Business Development Collins Building - Suite 201 107 West Gaines Street Tallahassee, Florida 32399-2000
The Issue Whether Respondent violated the Florida Civil Rights Act of 1992, as alleged in the Employment Charge of Discrimination filed by Petitioner on November 12, 2013.
Findings Of Fact On or about November 12, 2007, Respondent hired Petitioner to work as a full-time installation technician. Respondent terminated Petitioner’s employment on or about December 19, 2012. Petitioner, who is of Puerto Rican descent, alleges, in his Charge of Discrimination filed on November 12, 2013, the following: My termination from Bright House Networks is clearly a pretext. As a benefit of being an employee I received complimentary cable. In June 2012, I relocated and connected the complimentary cable to my new residence. I was never informed upon hire that I could not connect my complimentary cable if I relocated. In November 2012 I advised a manager that my route was too far from my residence and he told me to update my address with the company. Shortly after I did so I was terminated. I feel I was treated adversely as similarly situated employees have relocated and connected their own cable. Based on the foregoing actions of Bright House Networks described herein, I believe that I have been discriminated against including my unlawful termination, based on my national origin in violation of the Florida Civil Rights Act of 1992, [and] Title VII of the Civil Rights Act. Due to my unlawful termination, I have suffered and continue to suffer severe financial and emotional damages. Respondent’s policies and procedures provide in part that “[a]ll full and part-time Bright House Networks employees are entitled to free cable television service as long as their home is located within an area served by Bright House Networks.” The policies and procedures also provide that “[f]ree cable service is not transferable to another person’s residence.” Respondent’s procedures also provide that “[c]omplimentary service is provided for viewing, monitoring, and product knowledge by the employee at his/her own personal residence [and] [t]his benefit is not in any way transferable to another party or residence.” According to Christopher Kranert and Brinkley Ruffin, the intent of the policies and procedures governing free cable television is to allow employees to receive free cable television service at a single residential address. This is a reasonable interpretation by Respondent of its policies and procedures. When initially hired by Respondent, Petitioner resided at 1203 Arrowsmith Avenue, Orlando, Florida (Arrowsmith), and this is the address of record for Petitioner that Respondent maintained in its database of employee addresses. In June 2012 Petitioner moved out of the Arrowsmith property and relocated to 4413 Kirkman Road, Apartment F205 (Kirkman), which is also in Orlando, Florida. Petitioner did not initially inform Respondent that he had moved to the Kirkman address. Both the Arrowsmith and Kirkman addresses are in areas where Respondent provides cable television service. 7 During Petitioner’s term of employment, Respondent assigned Petitioner a truck that was equipped with a GPS device which allowed Respondent to approximate the whereabouts of the vehicle at all times. As an efficiency measure, Respondent, at the beginning of each workday, assigns service calls to its individual technicians based on a customer’s proximity to the technician’s home address of record. In furtherance of this efficiency measure, Petitioner, at the end of each workday, was authorized to drive his assigned vehicle to his home so that the following workday he could leave directly from home and report to his assigned service call(s). Petitioner noticed, at some point after June 2012, that the locations for his daily work assignments were a significant distance from his Kirkman address. This meant that not only did Petitioner have to wake-up earlier, and drive further, each morning in order to timely arrive for his service calls, but it also meant that he drove further when returning home at the end of each workday. Petitioner complained to Respondent about the distance that he was travelling to and from his daily service calls. In investigating Petitioner’s complaint, Respondent pulled the GPS data log for the truck assigned to Petitioner. The GPS data revealed that at the beginning and end of each workday, the truck was parked at a location other than Petitioner’s home address of record (Arrowsmith) and that this apparent anomaly had been happening for a significant period of time. Armed with this information, Respondent sent two of its employees to the Arrowsmith address for the purpose of finding out if cable service remained active. The employees confirmed that cable service for the Arrowsmith address was active and that the service was listed in Petitioner’s name. Next, Respondent identified the location where Petitioner’s assigned truck was parked at the end of each workday (Kirkman). Respondent sent employees to the Kirkman address and determined that the address was receiving cable television service and that the address was not listed as an active account in Respondent’s billing system. Respondent reasonably concluded that Petitioner was receiving unauthorized cable service at the Kirkman address while simultaneously receiving authorized cable service at the Arrowsmith address. Petitioner believes that his actions complied with company policy because, according to Petitioner, the policy authorizes him to activate service when moving to a new address without having to notify Respondent. While Respondent’s policies do not prohibit Petitioner from personally connecting cable service at his residence, the policies do prohibit Petitioner from doing so without first notifying Respondent. After consulting with Petitioner’s immediate supervisor Victor Gomez and Brinkley Ruffin, Chris Kranert terminated Petitioner’s employment with Respondent. Petitioner alleges that Respondent treated him differently from another employee that engaged in the exact same conduct that resulted in Petitioner’s termination from employment. Petitioner’s only evidence in support of this allegation is a conversation that he overheard between his former supervisor Allen Summers and Bright House employee M.S., who is African-American. According to Petitioner, Allen Summers asked M.S. if he was simultaneously receiving free cable service at more than one address. M.S. answered the question in the affirmative and explained to Allen Summers that he (M.S.) forgot to fill out the paperwork that would have informed Bright House about the transfer of cable service to M.S.’s new address. According to Petitioner, Respondent did not discipline M.S. for his violation of company policy. Petitioner relies on the conversation between M.S. and Allen Summers to prove that the facts asserted in the conversation are true. The referenced statements attributed to M.S. and Allen Summers are hearsay. Respondent denies having knowledge of any instance where M.S. was allowed to receive free cable service at multiple addresses. Respondent did, however, offer evidence where two former employees were terminated as a result of theft of cable television services.2/ Petitioner offered no evidence that his national origin played a role in Respondent’s decision to terminate his employment.3/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order finding that Respondent, Bright House Networks, did not commit an unlawful employment practice as alleged by Petitioner, Manny Rolon, and denying Petitioner's Charge of Discrimination. DONE AND ENTERED this 22nd day of September, 2014, in Tallahassee, Leon County, Florida. S LINZIE F. BOGAN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of September, 2014.
The Issue The issues under consideration result from the attempt by The Beaches Leader, Inc., (Petitioner) to gain refund of sales tax paid to the State of Florida. That refund is sought from the State of Florida, Office of the Comptroller (Respondent). The theory of the pursuit of the tax claim is set forth in Section 212.08(6), Florida Statutes, in which there is provided an exemption from sales tax associated with the sale of newspapers. In this connection, the question is raised, whether Petitioner is a newspaper within the meaning of Rule 12A-1.08, Florida Administrative Code, in effect at the time that the refund was requested.
Findings Of Fact Petitioner, by this action, seeks a refund from Respondent for the payment of sales tax related to the cost of printing of the publication known as The Mirror. As publisher, Petitioner sought the refund in keeping with Section 215.26, Florida Statutes. The request dates from August 16, 1985. This application for refund is premised upon the Petitioner's belief that it is entitled to refund in that The Mirror is a newspaper within the meaning of Rule 12A-1.08(3), Florida Administrative Code, and as such is exempt from taxation associated with the cost of printing the publication. The statement of law dealing with exemptions from sales tax pertaining to newspapers is set forth in Section 212.08(6), Florida Statutes. Petitioner finds solace in the decision of Campus Communications vs. Dept. of Revenue, 473 So.2d 1290 (Fla. 1985). Petitioner believes the finding in that case in which the Florida Supreme Court upheld the claims of the publication, The Independent Florida Alligator, because it was a newspaper by definition found in the aforementioned rule and entitled to be exempt from sales tax requirements, applies to Petitioner's circumstance. The amount of refund claimed is $6,577.10. Having considered the request for refund, and being mindful of the case of Campus Communications, supra, Respondent denied the refund request upon the expressed belief that The Mirror is not a newspaper within the meaning of Rule 12A-1.08(3), Florida Administrative Code. This statement of denial dates from March 20, 1986. Petitioner made timely application for the tax refund ire question and has sought timely review of the Respondent's intent to deny that refund request. The Mirror is a civilian enterprise publication for the special interests of personnel of the United States Naval Station at Mayport, Florida. However, it does solicit and contain some news items of general interest to the community. The testimony of the witnesses and the documentary evidence, including the issues of The Mirror which were admitted into evidence, establish that The Mirror is published under a contract between Petitioner and the United States Navy. It is distributed free of charge to naval personnel at the Mayport Naval Station, Jacksonville, Florida. In addition to distribution throughout the Mayport Naval Station, it is available and is distributed to civilian employees of the United States Navy both on and off the naval base, and also to military dependents and visitors both on and off the Mayport Naval Station base. The Mirror is delivered to 1,200 off-base residences and distributed at the offices of the Beaches Leader, a newspaper sold to the general public. There, residents of the Duval County, Florida, beaches communities obtain copies of The Mirror. Finally, copies are mailed weekly to paid subscribers in Florida and five other states. The affected community served by and which is the principal audience for The Mirror is the United States Naval Station at Mayport and the surrounding beaches area. This community is composed of naval personnel, their dependents and civilian naval employees. There are other persons who have no direct connection to the Navy but who, as beaches communities residents, are affected by the naval presence in the beaches area and in the Jacksonville metropolitan area as a whole and who use The Mirror as a means of information and dissemination of information. Mr. Paul Henkemeyer, a civilian employee of the United States Navy who is responsible for maintaining and disseminating information concerning the economic and other impacts of the naval installations in the Jacksonville area, testified in the course of the hearing. He pointed out that the Navy has a very substantial economic and social impact upon the residents of metropolitan Jacksonville, Florida. The Navy employs over 37,000 military personnel in the Jacksonville area in addition to over 10,000 civilian employees. Its payroll in the Jacksonville area approaches $1.7 billion. The Navy and its related economic activity account for in excess of 10 per cent of the Jacksonville area economy. The witnesses Mr. Henkemeyer; Mr. Townsend Hawkes, a beaches area real estate broker; Mr. Simon A. Smith, Jr., former Chief Executive of the North Florida Council of the Boy Scouts of America; and Ms. Marion Perry, supervisor of services of the United Way, testified that The Mirror is considered by them to be a "newspaper" of general circulation and interest to the public in the Jacksonville beaches communities. They demonstrated that The Mirror disseminates information about local events, including the Boy Scouts, United Way, and other charitable interests, and religious news. This pertains to the beaches communities and is a routine activity within The Mirror. More specifically, Mr. Hawkes said that he regularly reads The Mirror to follow his interests and involvement with the Sea Cadets, a group of boys and girls from the community interested in sailing and nautical activities. He also promotes the activities of the Kiwanis Club related to a swim marathon sponsored by that club in the publication. He reads the publication in furtherance of his business as a real estate broker to determine current happenings in the beaches communities associated with the Navy as it affects his business interests. He is involved with paid advertisements in The Mirror. He noted several issues which are peculiarly beaches topics about the Navy. He referred to certain road development and transportation matters found in The Mirror. Mr. Smith indicated that he considers The Mirror to be a "newspaper" of general circulation to the beaches communities, because it provides extensive coverage of Boy Scout activities and is viewed by the Boy Scouts of America and other charitable and community institutions as a source of dissemination of news and press releases concerning their present and future activities. Ms. Perry, in her role with the United Way in which her unit serves several north Florida counties including Duval County, testified that The Mirror is considered by her and the United Way to be a "newspaper" of general circulation and public interest for the beaches communities. She indicated that it is included in the mailing lists for press releases by the Florida Press Association and the United Way. She testified that The Mirror is listed as a "newspaper" in the Media Guide prepared by her. She notes that The Mirror includes features and opinions to the editor pages. She explained that The Mirror regularly disseminates information about the activities and fund raising efforts of the United Way throughout Jacksonville and the beaches communities. Generally speaking, Mr. Hawkes, Mr. Smith and Ms. Perry testified that The Mirror is included among the list of newspapers to which information, including press releases is regularly and routinely distributed by the organizations with which they are now or have been affiliated. In summary, those individuals and their community organizations consider The Mirror to be a "newspaper" of general circulation which contains matters of current public interest to the general public, and of current events and news of interest to the general public. The testimony of Mr. Tom Wood, the chief executive officer of The Beaches Leader, Inc., which owns and publishes The Mirror, provided further insight into the operations and function of The Mirror. The publication has a designated employee who serves as editor and news reporter of The Mirror. This employee works on the base at the United States Naval Station Mayport where he collects news items from all sources, including not only those provided by the United States Navy, but also sources from the community at large and throughout Florida in the form of press releases. Mr. Wood's testimony was that The Mirror is a publication whose purpose and function is to disseminate the news. His testimony also established that it is not a "shopper" type of publication, and it is not given over principally to advertisements or personal classified advertisements. The Mirror contains a percentage of advertising which is less than the national average and regularly carries news items of general interest to the public and the beaches communities in particular. Mr. Wood conceded that the publication is decidedly directed to the special interests of the United States Naval Station Mayport, but he pointed out current events and news of current interest to the general public are found in the publication. Wood identified the fact that the Navy informs the publisher where it wishes to have its news items placed and indicates to the publisher which of those items must be placed in a given issue. Beyond this arrangement, the publisher may choose what it wishes to include in an issue based upon remaining available space. In this realm, the number of pages in each issue of the publication, as well as the advertising ratio, is controlled by contract between Petitioner and the Navy. In picking examples of issues of The Mirror presented at hearing, issues were selected which are particularly demonstrative of a broader base of news stories than would relate to the Navy. Wood describes Petitioner's contract with the Navy as allowing the Navy to take back articles that were initially provided for placement in The Mirror. Per the contract, no editorial cartoons can be used. The Navy may request to see the galley or paste-up of an issue of the publication but has yet to do so. As stated, The Mirror is published for the special interest of personnel of the U.S. Naval Air Station, Mayport, Florida. To this end, Mr. Wood explained that, "we do not expect to have readers, substantial number of readers who don't have some connection, interest in the Naval Air Station at Mayport." The Mirror does not contain any news stories gathered from either Associated Press (AP) or United Press International (UPI) wire service material. Mr. Wood indicated that The Mirror does not routinely cover news of the day; however, given that this is not a daily publication, this arrangement is not unexpected. A review of the issues of The Mirror admitted into evidence offered by both the Petitioner and the Respondent, reveals the nature of news of general interest to the public, including weekly religious and recreational columns and feature stories. The issues submitted include news reports about hurricane preparation, athletic events, Halloween safety programs, youth recreational league registration information, matters concerning important historical dates, information concerning the need for volunteers and other assistance in charitable works in the beaches communities, news concerning the public schools, news of Fire Prevention Week, news concerning Native American Week, as well as information pertaining to drug abuse and automobile safety, a recipe column, television information, as well as matters of national interest, including news concerning the disaster of the space shuttle Challenger, together with the efforts of the Navy associated with its recovery. The basic structure of the publication may be seen in Petitioner's Exhibits 1-12 and 17-19 and Respondent's Exhibits 1 and 2 admitted in evidence. Here are some subjects covered in those editions: The Mirror for the week of January 25, 1985, included religious columns, information on preventive dentistry and actions to be taken as precautions to colder weather, a story on African famine relief, reminders concerning taxes and matters pertaining to personal income tax, as well as an extensive classified section concerning both real property and personal property, in addition to the activities of the Boy Scouts in the beaches area. The Mirror issue of February 15, 1985, included feature story on the observation of Black History Month, as well as columns on recreation and religion. The issue of June 14, 1985, included articles on the restoration of the Statue of Liberty and a feature on Father's Day, in addition to the information on recreational activities and religious events. The Mirror issue of June 21, 1985, included coverage of religious activities. The Mirror issue dated June 28, 1985, included special features on the Fourth of July, a recreational feature on cave diving and safety measures, in addition to information on recreational and family activities and a feature on safety precautions concerning fireworks and their use. The September 6, 1985, issues of The Mirror contained features on square dancing, marriage counseling, carnival con-men and the surrender of the Japanese at the conclusion of World War II. The September 27, 1985, issue of The Mirror included a special feature on Native American Week, the dangers of cocaine, automobile safety and recreational and religious activities sections. The November 29, 1985, issue of The Mirror had a feature on toys for tots collections and year-end tax information, as well as the regular features on recreational, charitable and religious activities. The issues of The Mirror admitted in evidence for the dates January 31, 1986, and February 7, 1986, focused upon the disaster of the space shuttle Challenger and the extensive search efforts by the United States Navy and other vessels to locate the wreckage and to assist in determining the cause of the explosion. Extensive coverage of the shuttle disaster and NASA news was contained in those issues of The Mirror as well as in civilian newspapers which were introduced in evidence. The Mirror issue of February 21, 1986, contained a feature on Black Americans. The issue of August 8, 1986, focused upon the change in command of the United States Navy aircraft carrier Saratoga, which news was also the feature story of the local Jacksonville newspapers, The Florida Times Union and Jacksonville Journal, on that day. The issues of The Mirror regularly contain feature stories concerning the United States Navy and matters related to the Naval Station Mayport. The testimony of the witnesses makes it evident that naval happenings, especially as they relate to the activities and events at the Naval Station Mayport and other naval bases in Jacksonville, are news in metropolitan Jacksonville, Florida. Two issues of The Independent Florida Alligator, Petitioner's Joint exhibits 2 and 3, were admitted. A comparison of The Mirror and The Independent Florida Alligator shows in what ways they are similar and dissimilar. Both publications are publications of special interest to a particular community--the University of Florida in the case of The Independent Florida Alligator, and the United States Naval Station Mayport in the case of The Mirror. However, The Independent Florida Alligator has a much broader base in its reporting of news beyond its principal community and offers more extensive editorial comment. In addition, it serves the function of training student journalists in the newspaper business as the court in Campus Communications, supra, referenced in its favorable response to the claim for tax exempt status. No such role is played by The Mirror. The Independent Florida Alligator has a format that is more akin to a general circulation newspaper, whereas The Mirror is in many respects more of a news bulletin. The articles related to the Navy may preempt other news information and the reporting of other news events beyond the Navy's activities is secondary. The Navy exerts influence on the basic design and focus of The Mirror through the contract with its publisher. By contrast, the The Independent Florida Alligator has a wide-ranging set of topics in which there does not appear to be any outside entity predetermining space requirements or which has a say in what news is pursued by the student newspaper.
The Issue Whether WKDR II, Inc. (WKDR), is jurisdictionally time-barred from bringing the challenges in Case Nos. 21-0844 and 21-0845 to contest the Department of Revenue's (Department) tax assessment and subsequent freeze of WKDR's bank account to attempt to collect on the assessment.
Findings Of Fact The Department administers Florida's sales tax statutes and performs audits to ensure compliance with sales tax laws. WKDR is a Ford franchise car dealership operating as LaBelle Ford. WKDR is organized as an "S" corporation and is wholly owned by Douglas Plattner (Mr. Plattner). WKDR's address is 851 South Main Street, LaBelle, Florida 33935 (851 South Main Street). Mark Smith (Mr. Smith) is a self-employed certified public accountant (CPA) at the firm of Smith and Waggoner CPAs. He is the CPA for Mr. Plattner and WKDR. Mr. Smith's business mailing address is 115 Tamiami Trail North, Suite 7, Nokomis, Florida 34275 (115 Tamiami Trail). On or about March 21, 2019, the Department began a sales tax audit of WKDR for the period of March 1, 2016, through February 28, 2019 (audit period). WKDR was notified of the audit through a Notice of Intent to Audit Books and Records, dated March 21, 2019. Jeff Barnard (Mr. Barnard) was a tax auditor for the Department. Mr. Barnard was responsible for examining the books and records of various taxpayers for compliance with Florida tax laws. Mr. Barnard retired from the Department in May 2021. He was employed by the Department for 30 years. He spent the last 15 years with the Department as a Tax Auditor IV—the most senior tax auditor position at the Department. Mr. Barnard was responsible for the tax audit of WKDR for the audit period. On or about July 30, 2019, Mr. Smith sent the Department a fully executed Power of Attorney/Declaration of Representative form (POA form) to appear as WKDR's representative in connection with the Department's audit. The POA form was completed and signed by WKDR's owner (Mr. Plattner) and its CPA (Mr. Smith). The POA form gave Mr. Smith authority to speak and act on WKDR's behalf for the Department's audit. The POA form correctly states the mailing addresses of both WKDR and its CPA/representative, Mr. Smith. It also correctly states the e-mail address and fax number for Mr. Smith. Mr. Smith entered WKDR's address in section 1 of the POA form. The POA form included spaces for a contact person's name, telephone number, and fax number at WKDR, but those spaces were left blank in the form signed by Mr. Smith and Mr. Plattner. The POA form signed by both Mr. Smith and Mr. Plattner set forth the name, address, telephone number, and fax number of Mr. Smith’s CPA firm in section 2 of the POA form. Section 6 of the POA form provides as follows: Notices and Communication. Do not complete Section 6 if completing Section 4. Notices and other written communications will be sent to the first representative listed in Part I, Section 2, unless the taxpayer selects one of the options below. Receipt by either the representative or the taxpayer will be considered receipt by both. If you want notices and communications sent to both you and your representative, check this box. If you want notices or communications sent to you and not your representative, check this box. Mr. Smith completed section 6 by checking option "a," indicating that they wished to have notices and communication sent to both the taxpayer (WKDR) and the representative (Mr. Smith). Mr. Smith's e-mail address was added on the POA form by the Department's employee, Lisa Weems, after she called Mr. Smith's telephone number to obtain his e-mail address. All other information was added by Mr. Smith after consultation with Mr. Plattner, before they both signed the form. Throughout the audit, the Department's auditor, Mr. Barnard, primarily communicated with WKDR through its designated representative—Mr. Smith—at his mailing address and e-mail address. This included multiple requests for documents. At times, Mr. Barnard communicated directly with Mr. Plattner while copying Mr. Smith on the correspondence. Mr. Barnard sent a letter dated November 14, 2019, by regular mail, to WKDR at 851 South Main Street, with a copy to Mr. Smith at 115 Tamiami Trail. Mr. Smith testified that he received and read this letter. The November 14 letter provided WKDR and Mr. Smith with notice that, as things stood on that date, a NOPA was imminent. The letter stated, in pertinent part: On September 20th, we wrote you a letter requesting the information needed to complete the audit of WKDR II Inc. and the DR54 Formal Notice of Demand to Produce Certain Records. The letter stated that your failure to provide the information be [sic] September 27, 2019 may result in an assessment. That is, the implementation of alternative audit procedures to estimate a liability based on the best available information. As of the date of this letter you have not complied with our request. Therefore, enclosed is the Notice of Intent to Make Audit Changes (DR1215) and the audit work papers, which are an estimate based upon the best information available as provided in Section 212.12(5)(b), Florida Statutes. You have 30 days to review the audit adjustments, which expires on December 16, 2019. * * * If we do not hear from you by December 16, 2019, the audit file will be sent to Tallahassee so that the Notice of Proposed Assessment (NOPA) can be issued to you. The NOPA is the formal notice of the amount due. The NOPA will also provide the procedures for filing informal and formal protests. The Notice of Intent to Make Audit Changes, which was included with the November 14 letter, listed a "balance due through 11/14/2019" of $1,157,025.16. This sum included taxes of $801,967.01, a penalty of $200,491.75, and interest of $154,566.40. The notice also explicitly laid out WKDR's opportunities to informally protest this preliminary sum through a conference with the auditor or the auditor's supervisor. It provided that after the 30-day informal conference period expired, a NOPA would be issued. On December 20, 2019, Mr. Barnard sent an e-mail to Mr. Plattner with a copy to Mr. Smith. Attached to the e-mail was a letter of the same date. The letter provided as follows: On November 14, 2019, a Notice of Intent to Make Tax Audit Changes (DR-1215) was issued with additional tax due of $801,967.00. The 30 day informal protest period with the Service Center was up December 13, 2019.[2] Although your representative, Mark Smith, did provide some sales invoices after issuance of the DR-1215 they did not represent a full month of invoices as requested. Please be advised all sales invoices for December 2018 must be provided by January 3, 2020 for any changes in the assessment to be considered. These invoices should consist of same for all new and used vehicle sales, parts sales, service invoices/tickets, and autobody invoices for December 2018. As indicated in the December 20 letter, one month before the NOPA was issued, Mr. Barnard notified Mr. Smith and Mr. Plattner that the 30-day informal protest period expired on December 13, 2019. Mr. Smith's testimony on this matter was evasive. At first, he acknowledged that he received the December 20 letter. However, after objection from WKDR's counsel, Mr. Smith backtracked and denied receipt. His attempted denial was not credible and is not credited. The undersigned finds that Mr. Smith received the December 20 letter. Mr. Barnard sent another letter, dated January 7, 2020, by regular mail to Mr. Plattner, and by e-mail to both Mr. Plattner and Mr. Smith, which stated as follows: Please be advised the information necessary to make an adjustment to the audit results issued on November 14, 2019 has not been provided. As stated in our December 20, 2019 letter this information was sales invoices for all new and used vehicle sales, parts sales, service invoices/tickets, and autobody invoices for the entire month of December 2018. 2 The Notice of Intent to Make Tax Audit Changes sent on November 14 provided a deadline of December 13 for the 30-day informal conference period, while the e-mail sent on December 20 referenced a deadline of December 16. The discrepancy in the December 20 letter is immaterial as both deadlines (December 13 and 16) had passed by the date of the December 20 letter. The audit will be closed and a Notice of Proposed Assessment will be issued shortly. Once again, Mr. Smith’s testimony was evasive. After seemingly admitting he received and read the January 7 letter, Mr. Smith testified that he did not receive the January 7 letter. The undersigned found Mr. Smith's testimony on this point wholly untruthful. At the hearing, during cross-examination, the Department's counsel asked Mr. Smith about his actions and impressions after receipt of the January 7 letter in the following exchange: Q. Let's go to Exhibit 22, which is Bates Number 00081. This is another e-mail sent to you on January 7th, 2020 to Mr. Plattner showing a carbon copy to Mr. Mark Smith CPA POA. The third sentence states; "The audit will be closed and a notice of proposed assessment will be issued shortly." Does that mean that the audit is still open or the audit is closed? A. That, like I said, I mean, I've -- I've dealt with audits where they say they're going to do this and do that and it's taken them two years to send anything. Q. This letter dated January 7th, 2020 does not give a new deadline, does it? A. It does not appear to but -- yeah, it does not appear to. Q. In fact, it says the audit is closed. That means that it's done, right? A. No. I don't -- I -- not necessarily. Q. It also says that the notice of proposed assessment will be issued shortly. So you knew at this time, the NOPA was imminent, right? A. Not necessarily. Q. Is there any language in this letter indicating that WKDR has any more time to provide additional documents? A. I've worked with the State before and they've provided us additional time quite often. Q. In fact, the auditor did provide you a deal -- a great deal of additional time to have the audit, didn't he? A. Well, we provided him so many documents that we thought he needed more time too. The whole tenor of Mr. Smith's testimony was to acknowledge that he read and understood the January 7 letter to say the NOPA was imminent, but that he knew from his experience the NOPA was "not necessarily" imminent. Notably, when asked if he knew at that time that the NOPA was imminent, Mr. Smith did not say that he did not know that because he did not receive or read the January 7 letter when it was sent to him by e-mail. Mr. Smith provided answers to these and several other questions about what he did or did not do in response to the January 7 letter. It was not until after an objection by WKDR's counsel that, as before, Mr. Smith backtracked to say that he did not receive the letter. In making the finding that Mr. Smith was untruthful when he testified that he had not received the January 7 letter, the undersigned had the distinct opportunity to observe the demeanor of Mr. Smith during testimony on this issue. He was not credible and his belated denial is not credited. The undersigned finds that Mr. Smith received the January 7 letter, reviewed it, and hoped that he could buy more time as he had thought he might be able to. Testimony of Lisa Weems Ms. Weems is a Revenue Specialist III for the Department. She has worked for the Department, in its Compliance Standards Section, for over 15 years. In addition to other tasks, Ms. Weems is responsible for printing NOPAs to send out to taxpayers and their representatives. Ms. Weems testified in great detail about the process she uses to send out NOPAs. When a NOPA is issued, it is uploaded to the Department's system overnight and cannot be printed until the following morning. Because of this, Ms. Weems sends out NOPAs only four days a week—Tuesdays, Wednesdays, Thursdays, and Fridays. Ms. Weems prints and mails out approximately 400 NOPAs per week. On the day of the final hearing, she had mailed out 88 NOPAs. Ms. Weems has a system in place to keep track of the NOPAs she sends out. Ms. Weems clearly and credibly testified about the process she used to send out NOPAs and when and by what means she used to send the NOPA to WKDR and its representative in this case. Each NOPA is mailed out in a packet that includes four documents: the NOPA, NOPA Remittance Coupon, Tax Audit Satisfaction Survey, and a document titled How to Pay Your Audit Assessment and Notice of Taxpayer Rights. The packets are sent by USPS first-class mail. WKDR's NOPA was issued on January 13, 2020. It had to load in the Department's system overnight, so it was printed on January 14, 2020. WKDR's NOPA assessed taxes of $801,967.01, a penalty of $200,491.75, and interest of $166,431.12, for a total due by WKDR of $1,168,889.88 following the audit.3 3 The amount of the taxes assessed and penalty remained the same as was listed in the Notice of Intent to Make Audit Changes. The amount of the interest had increased. The interest listed in the Notice of Intent to Make Audit Changes was for the period up to November 14, 2019. The NOPA specified that the deadline to request a formal hearing before DOAH was May 12, 2020, or 60 days from the date the assessment becomes a final assessment. The Notice of Taxpayer Rights provided detailed instructions on how to contest the assessment and provided further details on the timelines and deadlines to do so. Ms. Weems sent WKDR and Mr. Smith copies of the NOPA by USPS first-class mail on January 14, 2020. On January 14, 2020 (the day after the NOPA was uploaded), Ms. Weems printed an original and copy of WKDR's NOPA. She placed the original NOPA and the other three documents in a window envelope, addressed to WKDR at 851 South Main Street. A copy of the NOPA, along with the three other documents, were placed in another envelope, addressed to Mark Smith, CPA, at his business mailing address, 115 Tamiami Trail. Ms. Weems testified that she created a mail log sheet, wrapped the log sheet around the envelopes, and placed both of these NOPA envelopes in the outgoing mail basket. After placing the items in the outgoing mail basket, a Department employee from Building L picks up the outgoing mail and mails it out. Ms. Weems testified that she has mailed NOPAs this way for over 10 years. Ms. Weems testified that it was her practice, and what she was taught by the Department, to send NOPAs that had assessments for over $100,000.00 by fax and e-mail, in addition to regular mail.4 WKDR's assessment was for an amount greater than $100,000.00. On January 16, 2020, Ms. Weems sent a copy of the NOPA to Mr. Smith by fax transmission. 4 It must be noted that the Department's internal policy to send NOPAs with assessments over $100,000.00 by e-mail and fax is an unadopted rule; however, it is not necessary to rely on it as the basis for the determination in this matter. See § 120.57(1)(e)1., Fla. Stat. Ms. Weems sent the fax to Mr. Smith's fax number, which was provided on the POA form. Ms. Weems used a fax coversheet when sending the fax. The coversheet recorded several important pieces of information. It provided the case number and the taxpayer's name (WKDR). Two boxes on the fax coversheet were checked—a box indicating there was a "POA" (Power of Attorney) in the file and a box indicating the NOPA was to be sent to the "POA." Ms. Weems also made some notes on the fax coversheet. She wrote: "original notice mailed 1/14/20," "email: mark@swagcpa.com," and "(8) pages." Ms. Weems testified that the reference to eight pages represented the amount of pages she faxed. These pages included the four documents sent by USPS first-class mail mentioned above. After faxing the documents to Mr. Smith's fax number, Ms. Weems received a fax transmission report. The report indicated "Results OK." The term "OK" on a fax transmission report is generally accepted as meaning that the transmission was completed successfully. On January 16, 2020, Ms. Weems also sent a copy of the NOPA and Notice of Taxpayer Rights to Mr. Smith by e-mail. Ms. Weems sent the e-mail to Mr. Smith at mark@swagcpa.com—the e-mail address she obtained from Mr. Smith's office, and which he confirmed was his through testimony at the hearing. The e-mail's subject line stated "Audit Number 200262550-010 WKDR II, INC." The e-mail stated as follows: Please respond back to me by e-mail letting me know you did receive the Notice of Proposed Assessment (Nopa) and Taxpayer Rights by Email and Fax please. Good afternoon, Mr. Smith. I'm e-mailing you the Notice of Proposed Assessment (Nopa) & Taxpayer Rights. I also faxed you the Notice of Proposed Assessment (Nopa) & Taxpayer Rights to fax number 941-866-7691. The Original Notice of Proposed Assessment (Nopa) & Taxpayer Rights was mailed out on 1/14/2020. Any questions call the Nopa Line at 850-617-8565. Thanks, Lisa Weems. The e-mail included an attachment labeled "3125_001.pdf." Ms. Weems testified that the attachment was a copy of the NOPA and Taxpayer Rights. Ms. Weems requested a "delivery receipt" and "read receipt" through her e-mail platform for the e-mail she sent to Mr. Smith. This was her customary practice when sending e-mails. A few seconds after sending her e-mail, she received a "delivery receipt" confirmation that the e-mail was delivered to mark@swagcpa.com. Shortly thereafter, Ms. Weems received a "read receipt" confirmation that her e-mail was received by Mr. Smith and was "read." The use of delivery and read receipts are not novel practices. Delivery and read receipts are used by a sender of an e-mail to confirm that the e-mail sent has been delivered to the addressee and, subsequently "read," that is, opened by the recipient. Ms. Weems keeps a monthly log of the NOPAs she sends out by fax and e-mail. Ms. Weems's monthly log for January 2020 includes entries that confirm she sent the WKDR NOPA by e-mail and fax to Mr. Smith at the contact information he provided. In addition to her personal monthly log, Ms. Weems also used SAP—a Department computer system that employees work in every day—to document her activities. On January 16, 2020, Ms. Weems made a notation in SAP that stated as follows: "I faxed the Notice of Proposed Assessment (NOPA) & taxpayer rights to Mark Smith on 1/16/20 to fax number 941-866- 7691. I e-mailed the Notice of Proposed Assessment (NOPA) and taxpayer rights to Mark Smith on 1/16/20 to e-mail address (mark@swagcpa.com). See attachments and notes." Testimony of Mark Smith Mr. Smith testified that he did not receive the NOPA by USPS first- class mail, fax, or e-mail. If the undersigned took Mr. Smith's testimony as true, all three of the Department's avenues of sending the NOPA failed. Mr. Smith testified that the NOPA, sent by USPS first-class mail, in the same fashion used for several other letters that he had received from the Department, was not received. Other than Mr. Smith's denial, WKDR provided no evidence that the NOPA and accompanying documents Ms. Weems mailed in separate packages to WKDR at its address and to WKDR's representative's address were not received. Mr. Smith testified that during the time the NOPA was sent, his business utilized an electronic faxing service called MyFax.com. Through this service, he received faxes in e-mail format, with the contents of the fax attached to the e-mail as a PDF document. Mr. Smith testified that he did not receive the fax from Ms. Weems. Mr. Smith also testified that he rarely read faxes because "90 plus percent of our faxes are payroll-related" and belonged to his business partner. Mr. Smith did not credibly explain how he comes to know about the ten percent of faxes directed to him. While perhaps his business partner screens faxes, it is inconceivable that a business firm would not ensure that incoming faxes are directed to the person to whom they are sent. That is particularly true where, as here, Mr. Smith has provided his business fax number as a means to give him notices regarding WKDR's audit. Although the Department provided documentation of a delivery and read receipt of the NOPA sent by e-mail to Mr. Smith, Mr. Smith testified that he did not receive it. Mr. Smith offered no credible explanation for the delivery and read receipts. Once again, it is not credible that a CPA who serves as the POA for taxpayer WKDR would not be reviewing e-mails delivered to his e-mail address, when his office has provided that e-mail address to the Department. Notably, he acknowledged reviewing other e-mail communications from the Department with regard to WKDR's audit. Mr. Smith's feigned ignorance of an e-mail delivered to him and opened by him is not credible and is not credited. The competent substantial evidence establishes that the Department mailed the NOPA to both Mr. Smith and WKDR at the addresses provided on the POA form. The testimony that Mr. Smith did not receive the NOPA is not credible. WKDR did not deny that it received the NOPA mailed to it; WKDR offered no testimony on the subject.5 The NOPA was mailed to the same addresses provided by Mr. Smith and Mr. Plattner on the POA form and used by the Department to successfully communicate with Mr. Smith during the audit. WKDR and Mr. Smith were on notice that a NOPA was forthcoming. The Department advised WKDR and Mr. Smith by letter through regular mail and e-mail, on at least two occasions, that a NOPA was going to be issued and that the Department anticipated an assessment of additional taxes of approximately $801,967.00. The Department provided notice of the NOPA in a manner reasonably calculated to inform WKDR and its representative of WKDR's rights and of the deadlines to take action to protect those rights. WKDR and the Department communicated frequently during the audit, but after issuance of the NOPA, communications with WKDR and Mr. Smith ceased for several months. Mr. Smith did not reach out to the Department to find out why communications ceased. The reasonable inference is that Mr. Smith was fully aware of why the previous communications during the audit stopped: because the audit had culminated 5 In its post-hearing submittal, WKDR argued that the NOPA mail should have been sent to Mr. Plattner. But the NOPA package was addressed to WKDR, the taxpayer, at the mailing address given on the NOPA. WKDR had the opportunity in the POA form to designate Mr. Plattner as the taxpayer contact person but chose not to do so. in the NOPA and it was up to WKDR to contest the NOPA in a timely hearing request. On or around February 18, 2021, the Department issued an NIL against WKDR, by which it notified WKDR that it intended to freeze funds from WKDR's bank account in the amount of $999,999.99. The NIL provided that WKDR had 21 days from the date of receipt of the NIL to dispute the matter. On February 19, 2021, WKDR submitted a petition for a chapter 120 administrative hearing to challenge the NOPA. WKDR's petition challenging the Department's NOPA was filed with the Department 403 days after the date on the NOPA (January 13, 2020) and 286 days after the deadline for filing a petition to request an administrative hearing had passed. On February 23, 2021, WKDR timely filed a petition for an administrative hearing to dispute the NIL. WKDR's dispute of the NIL is solely based on its challenge to the NOPA, and its claim that it did not receive the NOPA when issued the year before. WKDR failed to timely exercise its opportunity to protest the amount of the Department's assessment, the underlying audit findings, and the methods the Department used to reach the amount in the assessment. There is no claim by WKDR in this case that the content of the Notice of Taxpayer Rights was unclear regarding the deadline to request a hearing or the manner in which a hearing must be requested; its claim is solely that it did not receive the NOPA and the accompanying Notice of Taxpayer Rights, a claim which is not credible. In sum, the persuasive and credible evidence adduced at hearing demonstrates that the Department sent the NOPA to WKDR's representative by USPS first-class mail, e-mail, and fax, and to WKDR directly by USPS first-class mail; and that Mr. Smith received the NOPA by USPS first-class mail, e-mail, and fax, and that WKDR received the NOPA by USPS first-class mail. WKDR did not submit a timely request for hearing to dispute the NOPA.
Conclusions For Petitioner: Michael J. Bowen, Esquire Akerman LLP 50 North Laura Street, Suite 3100 Jacksonville, Florida 32202 For Respondent: J. Clifton Cox, Esquire John G. Savoca, Esquire Office of the Attorney General Revenue Litigation Bureau The Capitol, Plaza Level 01 Tallahassee, Florida 32399
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order dismissing DOAH Case Nos. 21-0844 and 21-0845. DONE AND ENTERED this 30th day of November, 2021, in Tallahassee, Leon County, Florida. COPIES FURNISHED: S JODI-ANN V. LIVINGSTONE Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of November, 2021. Mark S. Hamilton, General Counsel Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Kristian Oldham, Esquire Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Jacek Stramski, Esquire Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Doug Plattner 3118 Walter Travis Drive Sarasota, Florida 34240 James H. Sutton, Esquire Moffa, Sutton & Donnini, PA 8875 Hidden River Pkwy, Suite 230 Tampa, Florida 33637-2087 J. Clifton Cox, Esquire Office of the Attorney General Revenue Litigation Bureau The Capitol, Plaza Level 01 Tallahassee, Florida 32399 Allison M. Dudley, Esquire Office of the Attorney General Revenue Litigation Bureau The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 John G. Savoca, Assistant Attorney General Office of the Attorney General Revenue Litigation Bureau The Capitol, Plaza Level 01 Tallahassee, Florida 32399 Michael J. Bowen, Esquire Akerman LLP 50 North Laura Street, Suite 3100 Jacksonville, Florida 32202 James A. Zingale, Executive Director Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668
