The Issue The issue in the case is whether the Petitioner’s certification as a Minority Business Enterprise (MBE) should be granted.
Findings Of Fact Locker Services, Inc., is a business owned by Kimberly Gates and her husband, James Gates. Kimberly Gates is a Caucasian female. There is no evidence that James Gates is within a protected classification under the minority business enterprise certification program. Kimberly Gates is the president of the corporation and owns 60 percent of the stock. James Gates is the vice-president of the corporation and owns the remaining 40 percent of the stock. The bylaws on record for Locker Service, Inc., establish that the Board of Directors directs the corporation’s business affairs. The Board of Directors consists of Kimberly Gates and James Gates. According to the by-laws, both Mrs. and Mr. Gates manage the business. Both Kimberly Gates and James Gates are authorized to sign checks on the corporate checking account. A General Indemnity Agreement underwrites the corporation’s bonding requirements. James Gates is a signatory on the agreement and is personally liable as an Indemnitor.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Florida Department of Labor and Employment Security enter a final order denying the Petitioner’s application for certification as a minority business enterprise. DONE AND ENTERED this 27th day of March, 2000, in Tallahassee, Leon County, Florida. WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of March, 2000. COPIES FURNISHED: Kimberly Gates, President Locker Service, Inc. 2303 Bayshore Drive Belleair Beach, Florida 33786 Joseph L. Shields, Esquire Department of Labor and Employment Security 2012 Capital Circle, Southeast Hartman Building, Suite 307 Tallahassee, Florida 32399-2189 Sheri Wilkes-Cape, General Counsel Department of Labor and Employment Security Hartman Building, Suite 307 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Mary Hooks, Secretary Department of Labor and Employment Security Hartman Building, Suite 303 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152
Findings Of Fact Petitioner was incorporated on November 17, 1980, and, since that time, has been primarily engaged in the base work and asphalt paving business. James L. Sauder and his wife, Annette, were the incorporators of Petitioner and continue to serve as Petitioner's two directors. From the inception of the corporation through the present time, James Sauder has been Petitioner's president while Annette Sauder has filled the offices of both secretary and treasurer of Petitioner. Additionally, at all times material hereto, James Sauder has been the registered agent for the corporation. Initially, James Sauder drew a salary of $220 a week, while Annette Sauder received no salary for her work. Thereafter, the Sauders decided to declare Petitioner a "subchapter S. corporation" for income tax purposes. At the end of Petitioner's first and second years of operation, all of the undistributed shareholders' profit of the company was drawn out by James Sauder only. Petitioner's income tax returns for both 1981 and 1982 reflect that James Sauder is the stockholder, that he owns 170 shares of Petitioner's stock, and that he devotes all of his time to the business. Petitioner's bylaws describe the duties of the officers of the corporation and provide that: The President shall be the chief executive officer of the corporation, shall have general and active management of the business and affairs of the corporation subject to the directions of the Board of Directors, and shall preside at all meetings of the shareholders and Board of Directors. The bylaws further provide, in addition to some specific duties, that the secretary and the treasurer are also required to ". . . perform such other duties as may be prescribed by the Board of Directors or the President." Accordingly, Petitioner's secretary and treasurer work under the supervision and control of the president. Petitioner's articles of incorporation authorize Petitioner to issue 250 shares of stock with a five-dollar par value. On August 20, 1980, Petitioner's stock certificate No. 1 was issued to James L. Sauder for 125 shares of Petitioner's stock. No shares were issued to Annette Sauder until March 1, 1983, when 70 shares of James Sauder's stock were transferred to her using Petitioner's stock certificate No. 2. At the same time, an additional 55 shares of stock were issued to James L. Sauder using Petitioner's stock certificate No. 3. Accordingly, James Sauder owns 110 shares of Petitioner's stock, while Annette Sauder owns only 70 shares of Petitioner's stock. The occupational license issued to Petitioner by the City of Key West, Florida, for the 1982-83 year lists James L. Sauder as the owner of Petitioner. Decisions as to hiring and firing, the purchase and/or financing of equipment and other personalty, the jobs on which bids will be submitted and the amounts of bids, the supervision of Petitioner's employees, and even actual paving work are duties performed by both James and Annette Sauder. Although operating Petitioner's business appears to be a joint effort on the part of both James and Annette Sauder, it is clear that the ultimate decision maker, as well as chief executive officer, is James Sauder. In addition to testifying primarily using the word "we," the following is illustrative of the testimony given by Annette Sauder as to whether she or her husband controls the operation of Petitioner: (Tr. 72.) Q. If your husband told you that he didn't want a piece of equipment, but you wanted it, would you go out and get it? A. Not unless I wanted a divorce, I don't think I would. On November 28, 1983, Respondent denied Petitioner's application to be certified as a Minority Business Enterprise.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying Petitioner's application for certification as a Minority Business Enterprise and, specifically, Women's Business Enterprise. DONE and RECOMMENDED this 23rd day of July, 1984, in Tallahassee, Leon County, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of July, 1984. COPIES FURNISHED: John R. Sutton, Esquire 7721 South West 62nd Avenue, First Floor South Miami, Florida 33143 Mark A. Linsky, Esquire Department of Transportation 605 Suwannee Street, MS-58 Tallahassee, Florida 32301-8064 Paul N. Pappas, Secretary Department of Transportation 605 Suwannee Street Tallahassee, Florida 32301-8064
The Issue Whether Petitioner should be certified by Respondent as a minority business enterprise.
Findings Of Fact Petitioner, Jupiter Environmental Laboratories, Inc. (Jupiter), is an environmental testing laboratory established in October 1995. The services performed by Jupiter include testing samples of water, oil, soil, and waste water in accordance with the Environmental Protection Agency standards. Jupiter also tests for inorganic and organic compounds by mass spectrography and gas chromatography. Jupiter is owned 70 percent by Glynda Russell, a female, and 30 percent by her husband, Edward Dabrea, who is a non- minority. Prior to forming Jupiter, Ms. Russell had not worked in a laboratory such as Jupiter. Her work experience had been in real estate and selling women's apparel. According to Ms. Russell she did gain some knowledge and experience in environmental testing because she was a customer of testing laboratories while she was in the real estate business. She became familiar with the Environmental Protection Agency's requirements while she was investigating environmental impacts when she was a realtor. Mr. Dubrea has a degree in earth science (geology) and has done post graduate studies in geoscience (organic geochemistry). He has extensive work experience in environmental testing laboratories. Both Ms. Russell and Mr. Dabrea are jointly liable for a $50,000 loan from the Small Business Administration and a $15,000 line of credit. Ms. Russell has also incurred debt of over $100,000 on her personal credit card for Jupiter's expenses. The company has three equipment leases which Ms. Russell signed and indicated she was personally liable. Ms. Russell also signed the lease for the space occupied by the business. Ms. Russell is the president of the corporation. Her duties include directing all marketing, sales, and financial operations. She is responsible for recruiting and hiring personnel, maintaining state certifications, prioritization of work flow (sample pick-up, sample log-in and report generation), bid pricing, selection of subcontracting laboratories, customer service and purchasing of supplies. Mr. Dabrea is the Technical Director for the company. In addition to working for Jupiter, he does freelance research. His resume states that his work at Jupiter includes the following: Planned and organized all technical details for new laboratory, including equipment requirements and analytical supplies. Received and setup instrumentation, performs necessary calibrations. Coordinates information with Laboratory Director and QA/QC Officer. Develops new methods and provides research assistance to clients with unusual assessments. Coordinates between laboratory and governmental agency to ensure compliance. Submits performance evaluation studies to E. P. A. for certification on quarterly basis. Responsible for ensuring adequate instrument capacity for continued growth of the company. Cliff Ross, a non-minority, is the Laboratory Director and works part-time for Jupiter. Start-up funds for Jupiter were contributed by Ms. Russell and Mr. Dabrea. Ms. Russell contributed $25,000 in cash, and computer equipment worth approximately $8,000. Mr. Dabrea contributed an $11,000 truck and $5,000 in computer equipment. Ms. Russell contributed 67 percent and Mr. Dabrea contributed 32 percent. Jupiter is certified in certain categories of environmental water testing by the State of Florida, Department of Health, pursuant to Chapter 403, Florida Statutes. In order to acquire such certification, tests must be performed in the laboratory by qualified technical personnel with the proper educational credentials. In order to acquire the certification for Jupiter, the tests were performed by Mr. Dabrea and Mr. Ross. Ms. Russell is not technically or educationally qualified to perform the tests required for certification. It is not necessary to have the certification to operate an environmental laboratory, but many companies acquire the certification as a marketing tool. Ms. Russell indicated in her response to the denial of her certification that "current market conditions make it all but impossible to get work without it." (Petitioner's Exhibit No. 1.) Ms. Russell can perform the extractions. Once the extractions are done for certain types of testing, the testing is automated. She cannot do chromatography. The Quality Assurance Director for Jupiter is Pamela Shore-Loeb. Her duties include responsibilities for all quality assurance and quality control requirements to ensure continued State of Florida laboratory certifications and project management to a growing client list. She, along with Ms. Russell, developed the quality assurance manual used by the business.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that Petitioner, Jupiter Environmental Laboratories, Inc., meets the requirements of Rule 38A-20.005(2)(c), Florida Administrative Code, but does not meet the requirements of Rules 38A- 20.005(3)(c), (d)1, 4 and (6) and (4)(a), Florida Administrative Code. Consequently, the final order should deny Jupiter Environmental Laboratories, Inc.'s application for certification as a minority business enterprise. DONE AND ENTERED this 1st day of December, 1997, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 1st day of December, 1997. COPIES FURNISHED: Joseph L. Shields, Esquire Department of Labor and Employment Security Hartman Building, Suite 307 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2189 Glynda E. Russell, President Jupiter Environmental Laboratories, Inc. 220 Venus Street, Suite 16 Jupiter, Florida 33458 Douglas L. Jamerson, Secretary Department of Labor and Employment Security 303 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Edward A. Dion, General Counsel Department of Labor and Employment Security 307 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152
Findings Of Fact The Genesis of School Board's Minority Business Enterprise (MBE) Program The 1984 Omnibus Education Act, Chapter 86-336 Laws of Florida, did the following: Authorized district school boards to set aside up to 10 percent of their total funds allocated for construction of capital projects and 10 percent or more of the total amount of funds allocated for procurement of personal property and services, for competitive bidding among Minority Business Enterprises (MBE) only. Chapter 84-336, sec. 108, Law of Florida, codified as Section 235.31(1)(b), Florida Statutes (1985) (construction); Chapter 84-336, sec. 109, Laws of Florida, codified as Section 287.094(3), Florida Statutes (1985) (purchasing). Adopted in those newly enacted sections the definition of minority business enterprises which had been enacted in Chapter 82-196, sec. 2, Laws of Florida, codified as Section 287.094, Florida Statutes (1983). That act provided in part: "Minority business enterprise" means any legal entity, other than a joint venture, which is organized to engage in commercial transactions and which is at least 51 percent owned and controlled by minority persons. Required that minority business enterprise set-asides be used only to redress present effects of past discriminatory practices. Chapter 84-336, sec. 108 and 109 Laws of Florida; see also, Exhibit C and Exhibit B at 1 of "Background." Establishment of the Minority Contracting Committee On July 25, 1984, one month after the effective date of the 1984 Omnibus Education Act, the School Board established the Minority Contracting Committee (sometimes referred to as the Minority Business Enterprise Advisory Committee), to assist it in implementing the minority set-aside program authorized under the Act. Hearing Transcript Vol. II at 325; Exhibit A: July 13, 1984 Staff Memorandum re: Item B-35 on the agenda for School Board Meeting of July 25, 1984, and Minutes of July 25, 1984 School Board Meeting at 24; Corrected exhibit EE: Rules 6Gx13-3G-1.01(II)(E) at page 3 of 5, and 6Gx13-3G- 1.04, unnumbered paragraph 2 at page 1 of 6. The School Board has indicated to its staff that it generally intends to adhere to the recommendations of the Minority Contracting Committee. Hearing Transcript, Vol. I at 214-215. The Minority Contracting Committee's membership consists of a representative appointed by each School Board member, and representatives of various minority and majority business interests and as nonvoting members, selected School Board staff. Corrected Exhibit EE at page 3 of 5; Exhibit B at 2 of "Background." The following persons are, and were at all times material to this controversy, among the members of the Minority Contracting Committee: Newall Daughtrey, Co-Chairperson Tony Novo, Co-Chairperson Lourdes San Martin Maria Teresa Cruz Maria Luisa Castellanos Brenda Rivers School Board Staff (Nonvoting) Sam Blank Dr. Tee S. Greer, Jr. Rose Barefield-Cox (Since April, 1986) Calvin Jennings Janie Daniels Id; see also Exhibits E, G and AA. Sam Blank is Executive Assistant Superintendent, Office of Facilities Management and is the individual directly responsible for the School Board's school construction, school renovation, maintenance and plant operations. Hearing Transcript Vol. II at 323, Vol. I at 140. Blank was not an evaluator for the CA Contract. With the exception of the MBE certification process, he coordinated the evaluation of the applicants by Board staff. Hearing Transcript, Vol. I at 188. Dr. Tee S. Greer, Jr. is Associate Superintendent for Governmental Relations and Acting Associate Superintendent for Business Management. Dr. Greer is the individual charged with overall responsibility for School Board construction, renovation and plant maintenance. Dr. Greer is Blank's immediate supervisor. Dr. Greer reports directly to the Superintendent of Schools, who in turn reports directly to the School Board. Hearing Transcript, Vol. I at 139- 40. Dr. Greer was Chairman of the School Board's Capital Improvements Committee and an evaluator for the CA Contract. Hearing Transcript, Vol. I at 179-180; Exhibit JJ at 28, Exhibit V. Rose Barefield-Cox is, and has been since April, 1986, the Coordinator of the School Board's MBE Program. Barefield-Cox coordinated the MBE certification process used in connection with the CA Contract. Hearing Transcript, Vol. II at 545-49. Calvin Jennings is a Manager III in the School Board's MBE Program. Jennings assisted Rose Barefield-Cox in the MBE certification process used in connection with the CA Contract. Hearing Transcript, Vol. II at 563, 571. Lourdes San Martin and Tony Novo are principals of TASC as well as members of the Minority Contracting Committee. The Study Leading to the Implementation of the School Board's MBE Program Pursuant to the 1984 Omnibus Education Act, the School Board engaged the accounting firm of Deloitte Haskins & Sells to conduct a study of MBE participation in School Board contracting and procurement. The Deloitte Haskins & Sells study, Study of Contracting and Purchasing Practice of School Board for Purpose of Assessing the Effects of Such Practices with Minority Business Enterprises, was issued in January, 1985. Exhibit B at 1. In reliance upon the study's finding of disparate participation by MBEs in contracting and procurement activities of the Board, on February 6, 1985, the School Board adopted Resolution No. 85-3, relating to MBE participation in Construction Capital Outlay Projects and Procurement of Personal Property and Services. The resolution directed the Superintendent of Schools to establish an MBE program and adopted, as the School Board's definition of an MBE, the definition found in Section 287.094, Florida Statutes (1983). Exhibit C, page 1, Minutes, pages 2-9; see also paragraph 14b, ante. The School Board's Long Range MBE Goals As a result of the Deloitte Haskins & Sells' finding of disparate MBE participation in procurement by the School Board, the Board adopted on July 10, 1985, in its Rule 6Gx13-3G-1.02, ten-year "minority business percentage participation objectives" (MBE goals) as follows: Black 17 percent Hispanic 17 percent Women 17 percent Other 1 percent Corrected Exhibit EE: Rule 6Gx13-3G-1.02(II)(A) at pages 1-2 of 4. Board Rule 6Gx13-3G-1.02 further provides: Goals should be established to increase MBE participation to levels reasonably proportionate to the availability and capability of the respective MBE groups within Dade County. Corrected Exhibit EE: Rule 6Gx13-3G-1.02(I)(D); Hearing Transcript, Vol. III at 707. Administrative procedures established to implement MBE goals shall include department goals, i.e. goals for construction (capital outlay), commodity purchasing and professional services. Corrected Exhibit EE: Rule 6Gx13-3G-1.02(III) (unnumbered paragraph 3); Hearing Transcript, Vol. I at 175, Vol. III at 706. MBE goals shall be reviewed annually and annual goals adjusted by subtracting each MBE group's percentage of unassisted participation during the previous year from the ten-year goals. Corrected Exhibit EE: Rule 6Gx13-3G- 1.02(II)(B)(3), and (VI) at unnumbered paragraph 2. An MBE certification procedure shall exist to ensure that businesses seeking to participate in the MBE Program are "at least 51 percent legitimately owned, operated and controlled by minorities." Corrected Exhibit EE: Rule 6Gx13-3G-1.02(IV). The School Boards 1985-86 Annual MBE Goals The School Board established MBE goals for 1985-86 as follows: Black 16 percent Hispanic 10 percent Women 8 percent Other 1 percent Corrected Exhibit EE: Rule 6Gx13-3G-1.02(II)(B)(3) at pages 2-3 of 4; Hearing Transcript, Vol. 1 at 159; Exhibit H at 3-4. The reduction of the goals for women represented the judgment of the School Board, based on actual experience, that women had been more successful in securing School Board contracts than blacks and hispanics. Hearing Transcript, Vol. I at 172-73; Vol. II at 485, 566-67, see also Exhibit WW(5) at 29-30. Annual goals remain in effect until modified by School Board rule. Corrected Exhibit EE: Rule 6Gx13-3G-1.02(II)(B)(3); Exhibit H at 15, 25. The Role of the Minority contracting committee in the Development of the School Board's Ongoing MBE Policies The minutes of the January 31, 1985 meeting of the Minority Contracting Committee show that School Board staff distributed a Proposed MBE Program Development Schedule "clearly delineating" the task of the committee relating to development of rules implementing the School Board's MBE policy and establishing a timetable for it to do so. The schedule encompassed the period from January 31, 1985 through July 24, 1985. Exhibit II. The Proposed MBE Program Development Schedule attached to the minutes of the January 31, 1985 meeting of the Minority Contracting Committee provided that the Minority Contracting Committee would begin work on administrative procedures for MBE participation in consultant contracts at the committee meeting to be held on June 13, 1985. It projected that the review process would culminate with the School Board's adoption of a rule on that subject at the School Board's July 24, 1985 meeting. Id. The Minority Contracting Committee did not develop a proposed rule on MBE participation in consultant contracts as scheduled. Exhibit VV at 51-52, 73-74, 77-78, 82-83; Exhibit WW(5) at 18. Rules were adopted by the School Board for construction and purchase of commodities. Corrected Exhibit EE, Rules 6Gx13-1.03 and 6Gx13-1.04. The CA Contract is one of four major consulting contracts for architectural and engineering services which the School Board enters into. The other major contracts are contracts for the engineering projects consultant, architectural projects consultant and uniform building code inspector. These major architectural and engineering services contracts are subcategories of professional service contracts. Hearing Transcript Vol. II, page 479-80. Other professional services the School Board purchases by contract include educational consulting, legal, medical, production and security services. Exhibit VV at 15- 16. By their memorandum dated October 1, 1985, Mr. Blank and Dr. Greer informed the Superintendent of Schools that staff was "currently developing evaluation procedures," including "MBE requirements," for the selection of consultants including architectural and engineering firms. The memorandum further advised: "A proposed revision to the procedures manual, referenced in Board Rule 6Gx13-2C-1.08, [would] be prepared and brought to the Board for approval in the near future." Exhibit GG. Rule 6Gx13-2C-1.08 incorporates a procedures manual which includes forms and instructions for evaluating applicants for consulting services by architects and engineers. Exhibit DD. The committee did not recommend to the School Board rules on MBE participation in architectural and engineering consulting contracts. No rule was adopted by the School Board in the ordinary course of rulemaking prior to the School Board's request for proposals in connection with the major consultant contracts for the period July 1, 1986 through June 30, 1989, among which is the CA contract at issue here. Exhibit JJ at 116. The 1986-89 Consulting Architect Contract is Advertised by the School Board On March 24, 1986, the School Board announced its intention to contract with an architectural-engineering firm for project management and consulting architectural services in the areas of school facility planning and construction for the three- year period July 1, 1986 through June 30, 1989. The School Board initially established April 18, 1986 as the deadline for submitting proposals for the CA Contract. Exhibit D. The consulting architect is a major consultant upon whom the School Board relies "very heavily." Hearing Transcript, Vol. II at 618; Exhibit JJ at Joint ventures are not permitted by School Board policy to compete for the CA Contract for two reasons: (1) it is "very important" that the consulting architect have all the requisite services available in-house, Exhibit JJ at 38; Hearing Transcript, Vol. II at 609.10; and (2) the School Board is concerned that the joint venturers may not have worked together previously, and may not provide a stable team capable of the work, Exhibit JJ at 38, 48-49; Hearing Transcript, Vol. II at 610-11, 618-19. Moreover, the definition of an MBE adopted by School Board Rule 6Gx13-3G-1.01(II)(A)(1), excludes joint ventures from receiving preferential treatment as MBEs. Corrected Exhibit EE. Spillis Candela is currently, and has been for approximately 22 years, the consulting architect to the School Board. Hearing Transcript, Vol. III at 830; Exhibit JJ at 43-44. The Minority Contracting Committee Meeting of March 20, 1986 At the March 20, 1986 meeting of the Minority Contracting Committee, San Martin raised as an item of new business a proposed recommendation that the professional services subcommittee of the Minority Contracting Committee meet to discuss MBE participation in consultants' contracts because "a big chunk of those dollars that wouldn't come up every year are going to be coming up for a selection very soon. And I would hate for us not to have anything in place." Exhibit VV, page 21- 22; Hearing Transcript, Vol. II, page 464, line 17. The only budget information then before the committee was Sam Blank's guess that the four consultant contracts together represent approximately 30 percent of the School Board's architectural and engineering services budget. Exhibit VV at 28, lines 15 and 17; Hearing Transcript, Vol. II at 472-73. At no time thereafter was the committee provided with more precise budget information. Hearing Transcript, Vol. II at 473-74. The committee was not at any time aware of the actual percentage of the School Board's professional services budget attributable to the four major consultant contracts. No study had been undertaken by the committee or by the School Board to determine the percentage of the School Board's overall procurement budget attributable to architectural and engineering services contracts. Hearing Transcript, Vol. II at 571. These four contracts represent a small portion of the School Board's total annual purchases. Hearing Transcript, Vol. I at 169, lines 3-8. The committee did not have at any time statistical data on the MBE composition of the firms which had held or were currently holding the four major consultant contracts. Hearing Transcript, Vol. II at 570, 585. The only information before the committee were the statements of individual committee members, none of whom had in the past or currently held any of the four consultant contracts. Hearing Transcript, Vol. II at 575, 603- 04. The committee did not at any time have statistical data establishing the number of MBEs in Dade County in the architectural and engineering professions. See e.g., Exhibit WW (5) at 34. No full-service black-owned or women-owned architectural-engineering firm having all the services required to perform the CA Contract existed in Dade County prior to the adoption of the emergency rule on MBE participation. Exhibit JJ at 5, 7, 45, 49, 55; Exhibit J at page 2 of 3; Exhibit M at page 2 of 3, unnumbered paragraph 4; Hearing Transcript, Vol. II at 611-12, 622-23; Vol. III at 791. Blank advised the committee during that meeting that the bulk of architectural and engineering services contracts were beyond the scope of any procedures it might develop for evaluation of MBE participation in applicant firms. All of the architectural and engineering services contracts were about to be advertised. Some of the contracts had already been negotiated. Exhibit VV at 26, Hearing Transcript, Vol. II at 467-68. The selection process for the remaining four major consultant contracts was to be concluded within the next month to six weeks. Blank believed that MBE procedures could not be formulated and adopted in time to apply to the selection of the four major consultants. Exhibit VV at 25, Hearing Transcript, Vol. II at 466. San Martin suggested that: Staff recommend that the School Board adopt an emergency rule on MBE participation. Exhibit VV at 29-30, Hearing Transcript, Vol. II at 472; The four major contracts be readvertised and a paragraph inserted in the advertisements stating that consideration will be given to applicants' MBE participation. Exhibit VV at 31, Hearing Transcript, Vol. II at 477; and The existing contracts be extended, if necessary, to accommodate any delay in completion of the selection process. Exhibit VV at 88-89, Hearing Transcript, Vol. II at 507. Novo concurred in the suggestions that the committee request the School Board to take emergency action, Exhibit VV at 50, Hearing Transcript, Vol. II at 481, 483; Exhibit VV at 79, Hearing Transcript, Vol. II at 502, and that the consultant contracts be readvertised, exhibit VV at 79, 84, Hearing Transcript, Vol. II at 502, 505-06. After several motions offered by Novo and San Martin failed, (Exhibit E at unnumbered pages 4-6), the committee decided to hold a special meeting on March 27, 1986, "for the sole purpose of developing a resolution to be presented to the [School] Board concerning the selection process for Professional Services and specifically for those [four (4) consultant contracts] currently being advertised." Id. at 6. No specific MBE proposals existed at that time. Hearing Transcript, Vol. II at 483-84, 510. Minority Contracting Committee Special Meeting of March 27, 1986 Seven of the nine voting members and one of the three nonvoting members who attended the Minority Contracting Committee's March 27, 1986 special meeting were women. Novo did not attend the meeting. Exhibit G. At the March 27, 1986 special meeting, the Minority Contracting Committee adopted a resolution recommending that the School Board: Restart the selection process for the four major consultant contracts; Extend the current consultant contracts beyond their June 30, 1986 deadlines, if necessary; and Modify the Board's selection process for the major consultant contracts by creating a new eighth category on the Professional Services Qualification Form (BC/I) which would allow evaluators to award points for MBE participation. Exhibits G, H at 48, and I. Maria Luisa Castellanos prepared the draft of the resolution. Exhibit H at 2. Castellanos is a registered architect whose license the engineering firm of San Martin Associates, Inc. uses for architectural services. Hearing Transcript, Vol. II at 516. San Martin is president of San Martin Associates, Inc. Hearing Transcript, Vol II. at 513-14; Exhibit WW(1) at 23-25. Castellanos has been an employee of San Martin's firm. Exhibit WW(1) at 25. Castellanos assumed that blacks are discriminated against more than women and Hispanics, and women are discriminated against more than Hispanics, especially with regard to the major consulting contracts, all without the benefit of and statistical evidence. Exhibit H at 8, Hearing Transcript, Vol. II at 525. In explaining how she arrived at her recommended increase in MBE participation goals for women, Castellanos stated: So I looked at [the 1985-86 MBE goals] and I said, well, what would we do to up the Women participation and still try to make it even. So I said well, maybe the Black and Hispanic wouldn't be too mad if we took 2 percent from the Black and we took 2 percent from the Hispanic and we added those to the Women category. We're also looking at the fact that Women are about 50 percent of the work force and in reality we should take half of the Blacks and half of the Hispanics and dump it with the Anglo Women. But I know there was going to be a big uproar about it, so I said we'll -- we'll only take 2 percent from the Black and 2 percent from the Hispanic. So, the annual goals would be 14 percent for Blacks, 8 percent for the Hispanics, and 12 percent for the Women. Exhibit H at 4-5, Hearing Transcript, Vol. II at 521. The Minority Contracting Committee recognized that MBE participation levels are to be reviewed annually and the MBE goals modified to reflect the current unassisted participation levels. Exhibit H at 13, 30. Data on the 1985-86 MBE participation levels was not available to calculate the 1986-87 goals. Exhibit H at 27, 31-32; Hearing Transcript, Vol. II at 566, 569; Exhibit WW(5) at 44, 50. No data establishing the number of black and Hispanic women MBEs exist. Exhibit JJ at 117-18; see also Exhibit H at 27, 32. The committee's March 27, 1986 resolution stated: "The goals established [for 1985-86] are obsolete and the study and statistics are not available to establish goals for 1986-87." Exhibit I. Chairman Newall Daughtrey opined that the 1985-86 MBE participation levels probably are not substantially different from the 1984-85 levels used to establish the 1985-86 goals. Exhibit H at 27-28, Hearing Transcript, Vol. II at 534. Without any data to support changes in the School Board's MBE goals, the Minority Contracting Committee voted to adopt Castellanos' proposal. This proposal modified the School board's MBE goals by subtracting two percentage points from each of the black and Hispanic categories and adding them to the women category to increase the participation goal for women. This change in the goal would apply only to the four major architectural consulting contracts. Exhibit G; Exhibit H at 2-5, Hearing Transcript, Vol. II at 519. San Martin argued in favor of and voted in favor of that proposal. Exhibit G; Exhibit H at 48. The committee members recognized that the School Board did not have sufficient time to promulgate through normal rulemaking procedures a rule changing the 1985-86 goals which would apply to the consulting architect contract. Exhibit H at 23. The committee recommended that "as a temporary measure", the MBE goals for the four major consultant contracts only be modified as follows: Black 14 percent Hispanic 8 percent Women 12 percent Exhibit I at unnumbered page 1, second paragraph of the "resolved" clause; Exhibit H at 2-5, Hearing Transcript, Vol. II at 519. No overall annual MBE goals for professional services or for any other category of procurement have been established for 1986-87 by the School Board. See generally Hearing Transcript Vol. II at 605. In adopting Castellanos' proposal, the Minority Contracting Committee proposed the following new point category for applicants for the four major contracts "certified as 51 percent owned, operated and controlled by Blacks, Hispanics, or Women": Total Potential Category Points Weight Additional Points Black 26 x 5 = 130 Hispanic 15 x 5 = 75 Women 22.5 x 5 = 112.5 The committee recommended that a weight factor of 5 be established for the MBE participation category. Exhibit F at unnumbered page 2, paragraph D. The highest score possible on the point system in effect prior to the adoption of the emergency rule on MBE participation was 180 points per evaluator for a firm which had not done School Board work in the last five years, and 185 points for a firm which had done School Board work recently. A firm should not receive points in both categories 6 and 7 according to the instructions for completing these forms. See Exhibit N at 9- 9b of 11. The largest weight factor used under the previous point system was 4. A weight factor of 4 applies to only category one: "LOCATION OF OFFICE." Exhibit J, attachment B, at page 9 of 20. The intent in adopting the point scoring system was to award sufficient points to black and women MBEs to so that a black-owned or women- owned firm could be selected the number one applicant, even though its scores in the other categories were lower. Exhibits H at 8, 10 and JJ at 118. Professional Services Subcommittee Meeting of April 10, 1986 The Minority Contracting Committee's Professional Services Subcommittee met on April 10, 1986. Exhibit K. Blank and three other School Board staff persons attended, as were the following voting members of the Minority Contracting Committee: Maria Luisa Castellanos Maria Teresa Cruz Lourdes San Martin Exhibit K. Maria Teresa Cruz is an engineer with whom San Martin consults and co- ventures. Exhibit WW(1) at 61-62. Blank expressed concern with the recommendations the Minority Contracting Committee had adopted in the resolution of March 27, 1986 for two reasons: (1) the committee had recommended that the MBE goals be modified when no data existed to support the change, and (2) the committee had proposed a point scoring system which allowed more points for MBE participation than for other factors such as experience and capability. Exhibits J and M at page 1 of 3, at numbered paragraphs 1 and 2; Hearing Transcript, Vol. II at 595-96, 598, 599-600, 605-06. Blank presented to the subcommittee the following modification of the Minority Contracting Committee's recommended scoring system for certified MBE owned, operated and controlled firms: Category Points Weight Potential Black 10 x 5 = 50 Hispanic 2 x 5 = 10 Women 10 x 5 = 50 Exhibit J at page 2 of 3, paragraphs 8(A) and (D); Hearing Transcript, Vol. II at 602. Exhibit K at unnumbered paragraph 1; Hearing Transcript, Vol. II at 345, 597. The committee's March 27, 1986 resolution allocated more points to blacks and women than to Hispanics. Blank's modified point scoring system also allocated more points to blacks and women than to Hispanics. Blank developed the modifications without the benefit of any studies or statistical data. Exhibit JJ at 6-7. Castellanos, Cruz and San Martin requested that an emergency meeting of the entire Minority Contracting Committee has convened on either April 14 or April 15 to discuss the full committee's final position on the recommendation regarding MBE participation in the major consultant contracts. The recommendation was scheduled to be presented to the School Board on April 16, 1986. Exhibit K at unnumbered paragraph 2. Minority Contracting Committee Emergency Executive Committee Meeting of April 14, 1986 The Minority contracting Committee held an emergency meeting on April 14, 1986. The emergency meeting was convened as an executive committee meeting. Exhibits L and JJ. The committee adopted Blank's proposed modification of the MBE point scoring system and recommended to the School Board that MBE bonus points be awarded as follows: Blacks 10 Hispanics 2 Women 10 With the exception of Cruz, who did not believe the proposal went far enough, all members present, including San Martin, voted in favor of the recommendation. Exhibits L, JJ at 118-119, 127-30. When the committee asked the basis of the numbers under his modified point scoring system, Blank stated: "There is really no basis". Exhibits JJ at 7. The modified point scoring system increased the recommended disparity between points allocated to Hispanics and points allocated to women from 37.5 percent to 40 percent. Hearing Transcript, Vol. II at 602. San Martin moved to amend the Minority Contracting Committee's resolution to include a provision that the consulting architect be permitted to subcontract. Cruz seconded the motion. Exhibit L at 2. Sandra Riggs, Maria Louisa Castellanos, Lourdes San Martin and Maria Teresa Cruz voted for the amendment. Exhibit L at 2. The motion failed on a tie vote. Id. Blank advised the Minority Contracting Committee that, pursuant to state law in order to take effect immediately and to have a duration of 90 days, the committee's recommendation to the School Board would have to be adopted as an emergency rule, rather than adopted merely as a Board resolution. Accordingly, the Minority Contracting Committee's modified resolution was submitted to the School Board as a recommendation for the adoption of an emergency rule. See Exhibit M. No statistical study of the current level of MBE participation in the consultant contracts or any professional services or other contracts existed at the time the Minority Contracting Committee adopted its March 27, 1986 resolution and April 14, 1986 modified resolution. Exhibit WW(5) at 19; See Exhibit M at page 1 of 3, numbered paragraph 1, Hearing Transcript, Vol. I at 153-54, 164, 177; Vol. II at 596-97, 603- 04. San Martin did not, at any time prior to or during the vote on the March 27, 1986 resolution or the April 14, 1986 modified resolution, publicly announce an intent to form an ostensibly women-owned firm to compete for the consulting architect contract and did not file with the secretary of the Minority Contracting Committee within fifteen days of the vote, a memorandum of her intent to do so. This is so because at that time she had no such intent. Exhibit WW(1) at 5-6, 77. See also Finding of Fact 90, post. The School Board Meeting of April 16, 1986 Blank prepared the April 11, 1986 memorandum transmitting the Minority Contracting Committee's proposed emergency rule to the School Board. Exhibit M, Hearing Transcript, Vol. II at 595-98. Blank expressed "two major concerns the [School] Board should consider: The affirmative action goals of the MBE program have been established by Board rule at 16 percent for Blacks, 10 percent for Hispanics, 8 percent for Women and 1 percent for other MBEs. A change in these goals at this time, with no new data regarding participation levels, does not appear to be advisable. The proposed Minority Contracting Committee revisions to the selection process point system are not considered to be in the best interests of the Board. The Committee's proposed system would provide significantly more points for being a minority firm than for previous experience of the firm, or background, experience and capabilities of the firm, or past performance on similar projects. Emphasis is placed on the minority composition to the extent that it could overcompensate for deficiencies in the technical areas, which are so critical to satisfactory performance of these consulting services. It also should be noted that subcontracting of the four services in question is not advisable, and has not been allowed in past contracts. The use of joint ventures in lieu of subcontracting is allowed, with the exception of the Consulting Architect's contract, and is treated affirmatively in staff's recommendation. The Consulting Architect contract requires that all services be available in-house from a single firm." Exhibit M at page 1 of 3. Blank further stated: The proposed MBE points system is based on the fact that participation in these four contracts has historically been dominated by a Hispanic firm, with no Black or Female participation. It is also unlikely that a single Black or Woman owned firm will meet the minimum qualifications for these contracts; therefore, the emphasis on joint ventures. Id. at page 2 of 3. Despite these reservations, the Board staff recommended adoption of the emergency Rule "applicable only to the four consulting contracts currently being processed." Id. at page 2 of 3. On April 16, 1986, the School Board adopted Agenda Item 5-38, entitled "Emergency Rule 6Gx13 ER 85-86 No. 6: Selection of Consulting Architect, Engineering Projects Consultants, Architectural Projects Consultants and Uniform Building Code Inspector, AMENDED procedures manual to revise the Professional Services Qualification Form BC-I, which provides additional points for various levels of MBE involvement, applicable only to the four contracts." This emergency rule amended a part of the Procedures Manual - Building Committee Procedures for Selection of Architects, Engineers, Construction Managers, Land Surveyors and Other Consultants or Professional Services Required for Design or Construction of School Facilities, incorporated by reference in Rule 6Gx13-2C- 1.08, to include an eighth category on MBE participation. School Board Exhibit 3, Minutes of the April 16, 1986 School Board Meeting at 4; Exhibit CC. The School Board adopted the following specific reason for emergency rulemaking: SPECIFIC REASONS FOR FINDING AN IMMEDIATE DANGER TO PUBLIC HEALTH, SAFETY AND WELFARE: This situation requires immediate action to prevent undue delay in the selection of the major consultants utilized to implement the Board's construction program. Such a delay would have a substantial adverse impact on the public health, safety, and welfare by delaying the delivery of new schools and improvements required to relieve overcrowding and renovations affecting the health, safety, and welfare of students and staff. Exhibit M at unnumbered page 4; School Board Exhibit 3. The School Board expressly provided that the emergency rule was to apply only to the four consultant contracts. Id. Peter Spillis is the principal of Spillis Candela responsible to service the CA Contract. Hearing Transcript, Vol. III at 829. Spillis received a copy of replacement item B-38 on the agenda for the School Board's April 16, 1986 meeting relating to the emergency rule. Hearing Transcript, Vol. II at 879. Spillis was present at the April 16, 1986 School Board meeting when the emergency rule was adopted. Hearing Transcript, Vol. III at 874. The consulting architect is required to attend all School Board meetings. Hearing Transcript, Vol. III at 832. Peter Spillis did not address the School Board during the Board's April 16, 1986 meeting on the proposed emergency rule on MBE participation. Spillis Candela did not at any time prior to the adoption of the emergency rule, or any time prior to submitting its application for the CA Contract, advise the School Board that it objected to the rule. Hearing Transcript, Vol. III at 880- 81. Peter Spillis was not aware of the Minority Contracting Committee or the School Board's MBE Program prior to the emergency rule. Hearing Transcript, Vol. III at 878-79. The School Board's staff did not advise Spillis of the existence of the Minority Contracting Committee and did not solicit his input in the development of the MBE Program or the emergency rule. Hearing Transcript, Vol. III at 880. Spillis Candela has never previously requested the School Board grant it a hearing under Sections 120.54 or 120.56, Florida Statutes, or any School Board rule. Cf. Hearing Transcript Vol. III at 887. Peter Spillis was concerned about the impact the emergency rule might have on Spillis Candela and expressed those concerns to Blank. Blank assured him that the rule would not affect Spillis Candela because there were no black- owned or women-owned full-service architectural and engineering firms which could take advantage of the emergency rule in competing for the consulting architect contract. Hearing Transcript, Vol. III at 687-88, 733. The Consulting Architect Selection Process The emergency rule took effect immediately on April 16, 1986. Exhibit HH; Section 120.54(9)(d), Florida Statutes (1985). The availability of the consulting architect contract was readvertised and the deadline for submitting applications was extended to May 9, 1986. The readvertisement stated: The selection process has been amended to include an affirmative action provision for minority firms. This provision will provide additional points in the screening instrument. (50 points maximum). Exhibit P. The maximum score possible under the emergency rule was 50 points for each of the nine evaluators, for a total of 450. See Exhibit M, attachment C, page 9b of 11, paragraph 8. On or before the May 9, 1986 deadline for submitting applications, the School Board received a number of applications for the CA Contract. Among them was a joint venture application composed, in part, of TASC principals Lemuel Ramos, Tony Novo and Jorge S. Azze. They subsequently withdrew that application from consideration. Exhibit WW(3) at 20; Hearing Transcript, Vol. I at 243-44; see also Exhibit WW(4) at 10. Ramos withdrew the joint venture application from consideration because he was advised that joint ventures could not be considered for the consulting architect contract. Exhibit WW(3) at 19, Hearing Transcript Vol. I at 264-65. After the CA Contract was readvertised with the provision for affirmative action, Ramos decided to submit a second application. Exhibit WW(3) at 19, 21. Ramos was permitted to physically remove the joint venture application from the School Board offices. Exhibit WW(3) at 20-21; Hearing Transcript, Vol. I at 243-44. TASC Ramos decided to submit the new application as one from a woman-owned company after he learned of the new School Board rule in the latter part of April, about April 22. Exhibit WW(3) at 18-25. As a result he amended the old joint-venture application with the former joint venturers and added two women as principals, Vivian Salaga, an architect and San Martin, an engineer. Id. at 20- 30, Hearing Transcript Vol. I at 243. On May 9, 1986, TASC submitted an application for the CA Contract. Exhibit Q. In its application, TASC characterizes itself as a "collaborative" of architects and engineers experienced in working with educational facilities. Exhibit Q at unnumbered page 33, paragraph 10 of Standard Form 255. Portions of the Ramos-Novo-Azze joint venture application were used in TASC's application. Hearing Transcript, Vol. I at 261-62; 243. TASC was incorporated by the Secretary of State on May 9, 1986. Exhibit R. Ramos organized TASC as a corporate entity and was its sole subscriber. Hearing Transcript, Vol. I at 245, Exhibit WW(3) at 18; Exhibit WW(2) at 29; Exhibit R; Exhibit VV at page 3 of Articles of Incorporation. Ramos formed TASC because joint ventures are not permitted for the consulting architect contract. Hearing Transcript, Vol. I at 265, 274; Exhibit WW(3) at 23. TASC consists of the following principals, who also comprise its board of directors: Vivian Salaga, President Lemuel Ramos, Executive Vice President Lourdes San Martin, Vice President Tony Novo, Treasurer Jorge S. Azze, Secretary Exhibit T at page 1, paragraph 5. The principals of TASC acting as its board of directors control TASC. Hearing Transcript, Vol. III at 943. A majority of TASC's board of directors are white Hispanic males. Exhibit S at unnumbered page 3. San Martin and Salaga each own 26 percent of the stock of TASC. Ramos, Novo and Azze own equal percentages of the remaining stock. Hearing Transcript, Vol. III at 903-04, 926-27; Exhibit S at unnumbered page 3. The principals of TASC have no agreements to make capital contributions based upon their stock ownership. They have simply been putting money into TASC on an as-needed basis. Hearing Transcript, Vol. I at 267; Exhibits WW(3) at 49-52, WW(4) at 42. San Martin and Salaga had never met each other until approximately two weeks prior to May 9, 1986. Ramos introduced them to each other at the second organizational meeting of TASC. Hearing Transcript, Vol. III at 902, 928-29. Ramos also: Proposed, and the other TASC principals agreed, that San Martin and Salaga be allocated more than 51 percent of TASC's stock to take advantage of the MBE emergency rule, Hearing Transcript, Vol. I at 293-94; Vol. III at 937- 38; Exhibit WW(3) at 23, 25-27; Provided a temporary address and telephone number for TASC, Hearing Transcript, Vol. I at 246, 254; Exhibit WW(2) at 28-29; Selected the persons who would form TASC, Hearing Transcript, Vol. I at 245, 247, 275; Selected TASC's attorneys, Exhibit WW(2) at 29- 30; and Coordinated the preparation of TASC's application for the CA Contract, Hearing Transcript, Vol. I at 245. Prior to May 9, 1986, the principals of TASC had never worked together as a group on any architectural and engineering or other project. Hearing Transcript, Vol. I at 242, 262, Vol. III at 932-33, Exhibit WW(5) at 14. Each of the principals of TASC is also a principal of a separate firm: Salaga is a registered architect, a full-time professor of architecture at Florida International University and the sole owner of Atelier Architects. Exhibit WW(2) at 3; Hearing Transcript, Vol. III at 896-97, 964. At the time of her deposition in this matter, Salaga described her duties for TASC as less defined than the duties of the other principals. Exhibit WW(2) at 25. Ramos is a registered architect and owner of Lemuel Ramos & Associates, Inc. Exhibit WW(3) at 3; Hearing Transcript, Vol. I at 240. San Martin is a registered structural engineer and owner of San Martin Associates, Inc. Exhibit WW(1) at 3-4; Hearing Transcript, Vol. II at 513-14. Novo is a registered mechanical and electrical engineer and owner of Professional Associated Consulting Engineers, Inc. ("PACE"). Exhibit WW(5) at 4. Azze is a registered architect and owner of Jorge S. Azze, Architect, P.A. Azze is also part of a joint venture known as Professional Engineering Specialty Team ("PEST"). Exhibit WW(4) at 3-4. With the possible exception of Azze, the principals of TASC intend to continue to operate their respective firms, notwithstanding the formation of TASC. Exhibits WW(3) at 42; WW(4) at 36; Hearing Transcript, Vol. I at 252-53, 291; Vol. III at 906-07, 944, 974-75. The principals of TASC agreed to use the services of each of their separate firms to the extent necessary to service the CA Contract. Exhibits WW(2) at 33-34, 37; WW(3) at 48; WW(4) at 39; WW(5) at 75-76; Hearing Transcript Vol. I at 290-91, 304-306, Vol. III at 973. This agreement was not disclosed in TASC's application for the CA Contract. TASC did not disclose that the 47 employees listed in its application included the employees of each of the five principals' individual firms and that the principals intended to keep them separately employed by their individual firms, although some employees ultimately might be employed by TASC. Hearing Transcript, Vol. I at 264-65, 307-08; see Exhibit WW(1) at 35-36. The School Board requires that any persons or firms not providing full-time services be listed in the application as consultants. Hearing Transcript, Vol. III at 799- 800. The five TASC principals claim to employ the following numbers of personnel: Salaga (Atelier Architects) has between 4 and 6 employees, Exhibit XX(5) at 3, 11; Hearing Transcript, Vol. III at 897; Lemuel Ramos & Associates, Inc., has between 15 and 17 employees, Exhibit WW(3) at 4; San Martin Associates, Inc., has 7 employees, Exhibit WW(1) at 43; Novo (PACE) has 14 employees, Exhibit WW(5) at 4; and Jorge S. Azze, Architect, P.A., has 3 employees, Exhibit WW(4) at 5. The five principals of TASC employ through their separate firms, between 43 and 47 people. Not all are full-time employees. It is not possible to determine what employees TASC had at the time it submitted its application for the CA Contract. The principals of TASC gave different accounts of the number of persons actually employed by TASC on that date: Salaga maintained TASC had 47 employees. Hearing Transcript, Vol. III at 921, 972-73. Ramos testified in deposition that TASC had between 15 and 20 employees, Exhibit WW(3) at 48. Ramos testified at the hearing that he did not count the number of employees TASC had, but that he believed it was 47. Hearing Transcript, Vol. I at 254. San Martin maintained TASC has 8 employees. Exhibit WW(1) at 15. Novo maintained TASC has no employees other than the employees of the principals' separate firms. Exhibit WW(5) at 79. Novo stated that TASC hoped to employ between 15 and 20 full-time employees. Exhibit WW(5) at 78; see also Finding of Fact 98d, post. Azze maintained TASC employs only the principals, but has interviewed three people it hopes to hire. Exhibit WW(4) at 43. TASC claims in its application (Exhibit Q) that the following persons are among its employees; yet each testified he has no employment agreement with TASC: John L. Tennison is an architect in Tampa, Florida. He has no employment agreement with TASC. Salaga only discussed with him doing administrative work for TASC, but did not discuss specifically the nature of the administrative work. Exhibit XX(1) at 9. Miguel A. Manteiga is not employed by TASC. He is employed by Lemuel Ramos & Associates, Inc. Exhibit XX(2) at 9. Thomas T. Cooper is not employed by TASC. His future employment with TASC depends upon whether TASC is awarded the CA Contract and what type of profit-sharing arrangement and benefits TASC will offer. Exhibit XX(3) at 17, 14-15. Guillermo Gonzalez is an employee of PACE. He does not have an employment agreement with TASC, but has been told by Novo that if TASC is awarded the consulting architect contract, he will work for TASC. Exhibit XX(4) at 3, 7, 12. Edmond M. Maurice is an employee of Atelier Architects. Whether he would be employed by TASC was not discussed the first time he met with the principals of TASC: "It was understood." Maurice has agreed to work for TASC at a salary of $50,000 per year as soon as it gets work for him to do. Exhibit XX(8) at 3, 8-9, 12. Lester F. Clayton is a part-time employee of Lemuel Ramos & Associates, Inc. Clayton made "a verbal commitment to be an employee" of TASC in June, 1986. The agreement was not in effect when TASC's application was submitted to the School Board on May 9, 1986 listing him as "Manager of Consultant Services." Exhibit XX(6) at 3, 13. TASC has never paid any employee a salary. Hearing Transcript, Vol. I at 254, Vol. III at 916, 946-47; Exhibit WW(4) at 42. TASC lists in its application the prior experience of the 47 employees it claims in support of its contention that it has had substantial school-related experience. At least a part of the experience listed consists of projects performed by persons who have no employment relationship with TASC. Hearing Transcript, Vol. II at 649-651. See Finding of Fact 98, ante. The definition of "employee" utilized by TASC in claiming 47 employees is not a definition which is accepted by the School Board staff. Had TASC disclosed the true nature of its relationship with the employees it listed, the School Board staff should have rejected the application as it did the other applications of the firms which disclosed consulting or joint venture relationships. Hearing Transcript, Vol. III at 986-87, 802-03. Finding of Fact 22, post. Although it had a valid corporate charter, TASC functions like a joint venture, not as a single, integrated architectural-engineering firm. TASC stated in its application that it had no consultants. Hearing Transcript, Vol. III at 923; Exhibit Q, SF 255, paragraph 6 at 4. The principals of TASC have an oral agreement that each of them will be paid an equal salary based upon the amount of money TASC makes, plus an equal hourly rate for time expended. Exhibit RR at page 1, paragraph 6; Exhibits WW. The oral agreement regarding compensation to principals was not disclosed in TASC's MBE Certification Statement, nor was it otherwise communicated to the School Board. Exhibit S at unnumbered page 5, paragraph (b); Hearing Transcript, Vol. II at 551-60. The existence of an oral agreement to divide salaries equally should have been disclosed in the MBE Certification Statement since such an agreement bears on whether the applicant is actually owned and controlled by minorities. Hearing Transcript, Vol. II at 552-53. TASC did not have its own office when it filed its application on May 9, 1986. Exhibit WW(3) at 58; Hearing Transcript, Vol. I at 254; Vol. III at 911. TASC also did not have a lease for office space. TASC has since entered into negotiations for lease of 3,000 square feet of office space, but does not have an executed written lease agreement. Exhibit WW(3) at 59; Hearing Transcript, Vol. I at 255-56, Vol. III at 978-979. TASC has also considered purchasing 15,000 square feet of office space to be allocated as follows: TASC 5,000 Atelier Architects (Salaga) 1,000 Lemuel Ramos & Associates, Inc. 3,000 San Martin Associates, Inc. 2,000 PACE (Novo) 3,000 Jorge S. Azze, Architect, P.A. 1,000 The office will be on the same floor so that the companies can work together. Hearing Transcript, Vol. I at 289-90; Exhibit WW(4) at 49. The square footage allocated to TASC is not sufficient to accommodate 47 employees and the School Board's as-built drawings, which the consulting architect is required to store. Hearing Transcript, Vol. III at 982. At the time it submitted its application for the consulting architect contract, TASC did not have a telephone listed in its name, but used the telephone number of Ramos & Associates, Inc. Exhibit WW(3) at 57. Hearing Transcript, Vol. III at 911-12. Four of the principals of TASC, Ramos, Novo, Azze and San Martin have provided substantial professional services to the School Board through their separate corporate entities during the preceding five years. Exhibit Q. TASC was not licensed and did not have a certificate of authorization to practice or to offer to practice architecture on May 9, 1986. Hearing Transcript, Vol. I at 267- 68. TASC did not so advise the School Board. Hearing Transcript, Vol. I at 269-70. TASC's submission of a letter of interest and an application for the CA Contract was an "offer" to provide architectural services. Cf. Hearing Transcript, Vol. I at 269. On June 20, 1986, TASC submitted to the Board of Architecture, Department of Professional Services, an application for certification to practice architecture. Exhibit T. MBE Certification On June 11, 1986, TASC submitted a sworn MBE Certification Statement to the School Board as part of the application process for the CA Contract. Exhibit S. The School Board's MBE staff certified TASC as an MBE owned and controlled at least 51 percent by women. Hearing Transcript, Vol. II at 549. Minority status is determined by a two-part test of ownership and control. Hearing Transcript, Vol. II at 550-51. The MBE staff relied upon the information TASC submitted in its certification statement and accepted the information as true. Hearing Transcript, Vol. II at 547-49. It conducted no independent investigation to determine whether TASC was in fact a legal entity other than a joint venture legitimately owned and controlled by women. Hearing Transcript, Vol. II at 560- 62. The same certification procedures were applied to all MBE applicants, including Spillis Candela. Hearing Transcript, Vol. II at 560. TASC was the only allegedly black-owned or women- owned entity to apply for the CA Contract. See Exhibit V: BC/I evaluation forms. TASC received the highest possible score of 450 in category 8 for MBE participation. See Exhibit U at unnumbered page 2. On June 11, 1986, Spillis Candela submitted a sworn MBE Certification Statement to the School Board as part of the application process for the consulting architect contract. Exhibit PP. Spillis Candela was certified as an Hispanic MBE and received the maximum 90 points available to an Hispanic firm in category 8 for MBE participation. See Hearing Transcript, Vol. II at 562; Vol. III at 721-22; Exhibit U at unnumbered page 2. Evaluation of the Applications by the Capital Improvements Committee School Board staff reviewed the applications for the CA Contract and determined that some applicants disclosed on their applications that they did not have the required full-time architectural and engineering employees in- house. Those applicants were eliminated from consideration. Hearing Transcript, Vol. II at 620-623. The Capital Improvements Committee reviewed and rated applications on the eight categories listed in Form BC/I and then conducted interviews of the top five applicants for the CA Contract using form BC/II to rate performance at the interview. The Capital Improvement Committee assumed the validity and accuracy of all of the information provided by TASC and undertook no independent investigation of it. Hearing Transcript, Vol. I at 183-84, 187, 644-45. TASC received identical scores from each of the nine evaluators in the following categories: Factor Rating Weight Score 1. Location of Office 10 4 40 2. Years Firm/Individual 6. Recent Projects with School Board Firm/Individual 0 10 3 0 30 8. MBE Participation 10 5 50 See Exhibit U at unnumbered page 2. 125. TASC received a total of 360 points in category 1 for having a Dade County office. (40 points x 9 evaluators) Exhibit U at unnumbered page 2. It should not have received those points, for TASC did not have a Dade County office of its own on the date it filed its application. Findings of Fact 106- 108, ante. Hearing Transcript, Vol. II at 651-52. TASC received 309 points in category 3 for the collective experience of the persons listed as employees in its application. The experience for which TASC received credit is attributable to persons with whom TASC had no employment relationship. Hearing Transcript, Vol. II at 650. TASC received more points than it should have received in category 3, but it is not possible to determine, on the basis of the record, how many fewer points should have been given. TASC received 134 points in category 4 for staff background and experience, and having all requisite expertise in- house. TASC did not have the staff described in its application on the date it submitted its application, and was not entitled to the points it received in category 4. Hearing Transcript, Vol. II at 645-649. TASC received 309 points in category 3 for the substantial school- related work claimed by its principals and "employees," including a substantial amount of work done for the School Board in the preceding five years. In category 6, TASC, as an entity, received 270 points for not having done any School Board work in the preceding five years, which is inconsistent. Exhibit U, unnumbered page 2. On July 8, 1986, School Board staff notified the Capital Improvements Committee that the evaluation of CA candidates was completed. Spillis Candela was listed number two with a total score of 3193. TASC scored only twenty-two more total points than Spillis Candela. Exhibit U. This determination was erroneous for TASC received 360 points it was not entitled to in category 1, and excessive points in categories 3, 4 and 6. The rankings were as follows: 1. TASC 3215 Spillis Candela 3193 Wolfberg, Alvarez & Associates 3085 4. Harper/Buzinec/Carreno 3073 5. Smith Korach Hayet Haynie Partnership 2732 Staff recommended that the Capital Improvement Committee (1) confirm the rankings at its regular meeting on July 14, 1986, (2) negotiate the consulting architect contract with TASC and (3) make a recommendation to the School Board to approve the contract at its July 23, 1986 meeting. Id. Blank explained to the Minority Contracting Committee at its July 24, 1986 meeting, that he felt the point scoring system had overcompensated firms for MBE participation. After scoring the applicants using Board form BC/I (the first phase of the selection process), MBEs were listed as number one for all four major contracts. Hearing Transcript, Vol. II at 695-96. Novo and San Martin did not, as members of the Minority Contracting Committee, at any time prior to their forming TASC or at any time thereafter, file a public disclosure statement in connection with their application for the CA Contract. The School Board did not, and has not, at any time voted to exempt Novo and San Martin from the conflict of interest provisions of Sections 112.313(3) and 112.313(7), in connection with the CA Contract. The School Board did not provide the notice of its intended decision to enter into negotiations with TASC for the CA Contract, in the form required under Section 120.53(5)(a), Florida Statutes (1985) to Spillis Candela or any other applicant for that contract. Subsequent School Board Action On July 9, 1986, the School Board directed staff to allow Emergency Rule 6Gx13-ER 85-86 No. 6 on MBE participation to expire, and to hold the selection of a consulting architect in abeyance pending the adoption of a new rule on MBE participation, which would treat all minorities equally. Exhibit W at 4, Item D-3. On July 10, 1986, the Board of Architecture, Department of Professional Regulation, issued TASC a Certificate of Authorization to practice architecture. Exhibit X. On July 15, 1986, the emergency rule expired by its own terms. See Section 120.54(9)(c), Florida Statutes (1985); Exhibit O. On July 23, 1986, the School Board rescinded its July 9, 1986 action and directed staff to continue the selection process for the consulting architect as established under the expired emergency rule. Exhibit Z at 4, Item 5-72. The School Board has stayed negotiating the consulting architect contract with TASC. See Section 120.53(5)(c), Florida Statutes (1985). The School Board has also stayed the selection process for the other three consultant contracts which were the subject of the emergency rule. Hearing Transcript, Vol. III at 697-98.
Recommendation It is RECOMMENDED that the School Board of Dade County: Enter a Final Order upholding the formal written protest filed by Spillis Candela and Partners, Inc. and Negotiate pursuant to the provisions of the Consultants' Competitive Negotiations Act with Spillis Candela as the most highly qualified applicant to receive the consulting architect contract. DONE AND ORDERED this 15th day of December, 1986, in Tallahassee, Florida. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 15th day of December, 1986. APPENDIX TO RECOMMENDED ORDER CASE NO. 86-3002BID The following constitute my specific rulings pursuant to Section 120.59(2), Florida Statutes (1985), on the proposed findings of fact submitted by the parties. Rulings of Proposed Findings of Fact Submitted by Petitioner (Spillis Candela & Partners, Inc.) The proposed findings of fact for Spillis Candela & Partners, Inc., have generally been accepted in the Recommended Order. Rulings on Proposed Findings of Fact Submitted by Respondent (The School Board of Dade County) 1-3. Rejected as statements of law. Covered in Finding of Fact 16. Covered in Finding of Fact 123. Rejected as unnecessary. Covered in Findings of Fact 16 and 123. Rejected as unnecessary. Rejected as unnecessary. Generally rejected as unnecessary. Footnote 1 is rejected on the grounds that the existence of TASC's corporate charter does not control whether it should be treated as a joint venture given the findings of fact made in paragraphs 89-111. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected for the reasons stated in Conclusions of Law section V. Rejected as unnecessary. Rejected for the reasons stated in Conclusions of Law section III. Covered in Findings of Fact 6, 20 and 67. Rejected as unnecessary. Rejected as unnecessary. Rejected as irrelevant. Rulings on Proposed Findings of Fact Submitted by Intervenor (The Association of School Consultants) 1-4. Rejected as Conclusions of Law. Rejected as unnecessary and covered in Finding of Fact 7. Covered in Finding of Fact 7b. Covered in Finding of Fact 8. Covered in Findings of Fact 16 and 64. Rejected as a restatement of law. Rejected as unnecessary. Covered in Findings of Fact 6-8. Covered in Findings of Fact 1 and 64. Covered in Finding of Fact 64. Covered in Finding of Fact 20. Rejected as unnecessary and inherent in Finding of Fact 20. Covered in Finding of Fact 18. Rejected as unnecessary. Covered in Finding of Fact 20. Covered in Finding of Fact 67. Rejected as unnecessary. 21-22. Rejected for lack of transcript citation. See Rule 22I- 6.13(3), F.A.C. Covered in Findings of Fact 68 and 77. Rejected as unnecessary. Covered in Finding of Fact 81. Covered in Finding of Fact 81. Rejected as irrelevant. Covered in Finding of Fact 150. Rejected as irrelevant. Covered in Finding of Fact 153. Rejected for lack of record support. Covered in Finding of Fact 136. Rejected as unnecessary. Rejected as unnecessary. Covered in Finding of Fact 93. Covered in Finding of Fact 103. 37-40. Rejected as statements of law. Covered in Finding of Fact 149. Rejected as a statement of law. 43 Covered in Finding of Fact 103. Rejected as irrelevant. Rejected as irrelevant. Rejected as unnecessary. Rejected as unnecessary. Rejected as a conclusion of law. Rejected for the reasons stated in Finding of Fact 111. Covered in Findings of Fact 105 and 106. Rejected as unnecessary. Covered in Findings of Fact 45-60. 53 Covered in Finding of Fact 45. Rejected as unnecessary. Covered in Finding of Fact 17. Covered in Finding of Fact 27. Covered in Findings of Fact 67-77. Rejected as a statement of law. Rejected as unnecessary. Rejected as unnecessary. Rejected for the reasons stated in Finding of Fact 53. Accepted in Findings of Fact 74 and 90. 63-66. Rejected as conclusions of law. 67-73. Rejected as unnecessary. 74. Rejected for the reasons stated in Findings of Fact 108- 113. 75-80. Rejected as conclusions of law. 81-84. Rejected as irrelevant. Covered in Finding of Fact 148. Sentence 1 covered in Finding of Fact 147, sentence 2 rejected as lacking record basis. Covered in Finding of Fact 75-77. Rejected as irrelevant. Rejected as a conclusion of law. Covered in Finding of Fact 131. Rejected as unnecessary. Covered in Finding of Fact 75 to the extent relevant. 93-95. Rejected as unnecessary. 96. Covered in Finding of Fact 136. 97-98. Rejected as unnecessary. Rulings on Proposed Findings of Fact Submitted by Intervenor (Wolfberg-Alvarez & Associates) No findings of fact were submitted by Wolfberg-Alvarez & Associates. COPIES FURNISHED: Eugene D. Stearns, Esquire STEARNS, WEAVER, MILLER, WEISSLER, ALHADEFF & SITTERSON, P.A. One Biscayne Tower 2 South Biscayne Boulevard Miami, Florida 33131 Phyllis O. Douglas, Esquire School Board of Dade County, Florida Suite 301 1450 N.E. Second Avenue Miami, Florida 33132 Bernard S Mandler, Esquire SMITH & MANDLER 1111 Lincoln Road Miami Beach, Florida Gerhardt A. Schreiber, Esquire SCHREIBER, RODON-ALVAREZ, P.A. 430 South Dixie Highway Suite 10 Coral Gables, Florida 33146 Dr. Leonard Britton School Board of Dade County, Florida Suite 301 1450 N.E. Second Avenue Miami, Florida 33132 Honorable Ralph D. Turlington Commissioner of Education The Capitol Tallahassee, Florida 32301 =================================================================
The Issue The issue presented is whether the Department acted fraudulently, arbitrarily, illegally, or dishonestly in proposing to award to Intervenor, The Weitz Company, Inc., a contract for Project No. DGS-88114000.
Findings Of Fact On February 18, 1992, Respondent Department of General Services issued its Invitation to Bid on Project No. DGS-88114000, the construction of the Fort Pierce Regional Service Center. The bid package contained a copy of the Department's Advertisement for Bids, together with the bid specifications, evaluation criteria, and criteria for award of the contract. The Department's Advertisement for Bids identified the project, advised that sealed bids would be received and opened at 2:00 p.m. on March 12, 1992, stated that the Bid Tabulation and Notice of Award Recommendation would be posted at 4:00 p.m. on that same date, and contained the following language: MINORITY PROGRAM: In accordance with Florida Statute 287.057(6), at least 21 percent of the project contracted amount will be expended with DGS certified minority business enterprises. If 21 percent is not attainable, the Division of Building Construction will recognize Good Faith Efforts by the Bidder. The Bidder is advised to review these requirements in the Section B-13B "Employment of and Reporting of DGS Certified Minority Business Enterprises Participation" immediately, in order to schedule the necessary tasks to accomplish Good Faith Efforts. Page 2 of the bid package was the Invitation to Bid form letter which contained the identical language as that quoted above. Section B-13B found on page 14 of the bid package under Instructions to Bidders provides as follows: B-13B EMPLOYMENT OF AND REPORTING OF DGS CERTIFIED MINORITY BUSINESS ENTERPRISE PARTICIPATION Florida Statute 287.042 and the Department of General Services Rules 13-8 and 13-9, encourages the employment of and requires the reporting of DGS Certified Minority Business Enterprise (MBE) participation in state contracting. The Department has as its goal to spend twenty-one percent (21 percent) of construction contracts with DGS certified minority business enterprises. The overall goal for construction contracts are as follows: 4 percent Black Americans 6 percent Hispanic Americans and 11 percent American Women The Division Director of the Division of Building Construction recognizes the need to take affirmative actions to insure that Minority and Women business enterprises and minority and women employees are given the opportunity to participate in the performance of the Division of Building Constructions' construction programs. This opportunity for full participation in our free enterprise system by traditionally, socially and economically disadvantaged persons is essential to obtain social nd [sic] economic equality and improve the functioning of the State economy. Accordingly, it is the policy of the Division of Building Construction to foster and promote the full participation of such individuals and business firms in the State's building construction program. The Contractor, by bidding on this Contract, acknowledges his understanding and support for the social policy herein stated and pledges to fully cooperate with the State in the implementation of this policy, and further to exert a good faith effort to solicit and obtain the participation of such individuals and firms as subcontractors, suppliers and employees on this Contract. Prior to the execution of a contract, the bidder shall provide the following information on his contract or subcontracts for all DGS certified minority business firms to be utilized on the project: * * * Contractor's Schedules of Values and Requests for Partial Payments shall also reflect the payments made to each MBE subcontractor, using the name, minority vendor code, type of business and amounts. The contractor shall make a good faith effort to use services or commodities of minority business enterprises by: Attending any presolicitation or prebid meetings that were scheduled by the division to inform minority business enterprises of contracting and subcontracting opportunities; Advertising in general circulation, trade association, and/or minority-focus media concerning the subcontracting opportunities; Providing written notice to a reasonable number of specific minority business enterprises that their interest in the contract was being solicited in sufficient time to allow the minority business enterprises to participate effectively; Following up initial solicitations of interest by contacting minority business enterprises or minority persons to determine with certainty whether the minority business enterprises or minority persons were interested; Selecting portions of the work to be performed by minority business enterprises in order to increase the likelihood of meeting the minority business enterprise goals, including, where appropriate, breaking down contracts into economically feasible units to facilitate minority business enterprise participation; Providing interested minority business enterprises or minority persons with adequate information about the plans, specifications, and requirements of the contract or the availability of jobs; Negotiating in good faith with interested minority business enterprises or minority persons, not rejecting minority business enterprises or minority persons as unqualified without sound reasons based on a through [sic] investigation of their capabilities; and Effectively using services of available minority community organizations; minority contractors' groups; local, state, and federal minority business assistance offices; and other organizations that provide assistance in the recruitment and placement of minority business enterprises or minority persons. Prior to the issuance of the Invitation to Bid, the St. Lucie County Democratic Executive Committee directed a letter to Governor Lawton Chiles concerning the high rate of unemployment in the construction industry in the Fort Pierce and St. Lucie County area. That letter requested that language be included in the invitation for bids for the Fort Pierce Regional Service Center specifying that priority be given to the available resident work force, first, from within the city of Fort Pierce and, second, from within St. Lucie County. That correspondence reached the Department of General Services, with the result that the following language was included within the bid specifications on page 14a: B-13C EMPLOYMENT OF LOCAL LABOR, SUBCONTRACTORS AND MATERIAL SUPPLIERS The procurement by General Contractors and Sub- contractors of persons for skilled and unskilled worker positions, the sub-contracting by General Contractors for Sub-contractor services and the purchase by General Contractors and Sub-contractors of materials, equipment, supplies and services is highly encouraged to the maximum extent possible, to be from persons residing within or businesses located within Ft. Pierce and St. Lucie County. A Pre-bid Conference was conducted on February 28, 1992. The Minutes from the Pre-bid Conference reflect that Addendum No. 1 to the bid specifications provided to potential bidders a copy of the Department's Minority Business Enterprise Construction Directory listing DGS-certified minority business enterprises as of December 1991. Those Minutes also contain the following entry: Highlights of front-end of Project Manual * * * Page 14, Paragraph B-13B for reporting minority participation stipulates 21 percent goal: 4 percent Black 6 percent Hispanic 11 percent American Women Contractors must thoroughly document their good effort. Procedure for documenting good effort can be obtained from Susan Hodge. * * * K. Page 89 - Post Bid Qualifications: Form is to be completed and submitted within 7 days after Bid Opening. A few of the lowest Bidders will probably be required to submit this form. At 2:00 p.m. on March 12, 1992, the Department received and opened eleven bids for the construction of the Fort Pierce Regional Service Center. Two of those bids were from Petitioner D. I. C. Commercial Construction Corp. (hereinafter "D.I.C.") and from Intervenor The Weitz Company, Inc., (hereinafter "Weitz"). At 3:00 p.m. on March 12 the Department posted its Bid Tabulation and Notice of Award Recommendation. That Bid Tabulation reflected that The Weitz Company of West Palm Beach submitted the lowest bid, in the amount of $5,545,800, and that D.I.C. Commercial Construction of Fort Pierce submitted the second lowest bid, in the amount of $5,553,600. The Bid Tabulation and Notice of Award Recommendation further provided as follows: This is to advise you that the Division of Building Construction, Department of General Services, State of Florida, Has recommended that the contract for the referenced project be awarded to the firm of: THE WEITZ COMPANY, INC. in the amount of $5,545,800.00, accepting the BASE BID AND ALTERNATE #1 AND #2, determined to be the lowest acceptable qualified bid. Any bidder disputing the contract award recommendation must file . . . . Written notice of protest within seventy-two (72) hours after posting of this notice. A formal written protest by petition in compliance with Rule 13-4.12, Florida Administrative Code, and Section 120.53(5), Florida Statutes, within ten (10) days after the date on which he filed the notice of protest. * * * The Executive Director of the Department of General Services, State of Florida plans to act on the above recommendation after expiration of the seventy-two (72) hour notice period. That proposed bid award took into consideration only the amount bid by each of the eleven bidders. In making its proposed bid award, the Department gave no consideration to its bid specifications that required the inclusion of at least 21 percent participation by subcontractors who were DGS-certified minority business enterprises (hereinafter "MBEs"), and which "highly encouraged to the maximum extent possible" the use of "persons residing within or businesses located within Ft. Pierce and St. Lucie County." On March 16, 1992, D.I.C. timely filed its Notice of Protest to the proposed award of the contract to Weitz. On March 26, 1992, D.I.C. timely filed its Formal Notice of Protest to that proposed bid award. Since the Weitz bid did not achieve the required 21 percent MBE participation, Weitz was required to submit documentation of its "good faith effort" to the Department along with other post-award qualification documentation. Weitz submitted its "good faith effort" documentation on March 16, 1992. Although the Department was aware that a Notice of Protest had been filed on March 16, the Department commenced its "good faith effort" review on March 17, 1992. Weitz's good faith submittal recited that it had achieved a total DGS- certified MBE participation of 13.6 percent in its attempt to reach the goal of at least 21 percent. Of the required classes of 4 percent Black Americans, 6 percent Hispanic Americans, and 11 percent American Women, Weitz reported it had achieved 3.2 percent, 8.9 percent, and 1.5 percent respectively. One of the MBEs included within the percentage of Hispanic Americans was improperly included since that minority subcontractor is an Asian subcontractor, which is a different certification classification and not one of the types of minorities specifically required to be included in this project. That Asian subcontractor represented almost one-half of the Hispanic participation claimed by Weitz. Accordingly, Weitz failed to achieve the required overall percentage and failed to achieve the required percentage in any of the three categories. Weitz's submittal also showed that it had included within its achieved percentages of participation subcontractors who were not yet DGS-certified, by listing three of those subcontractors under the heading of "pending minority certification." Although one of those did become certified by the time of the formal hearing in this cause, the other two have never applied for certification. Although the bid specifications use the language DGS-certified MBE subcontractors for inclusion in the 21 percent participation requirement, it is clear that D.I.C., Weitz, and the Department believed that the bid specifications meant certified or certifiable. The Department's policy is that the MBE must be certified by DGS, not on the date of bid submittal, but by the time that the Department enters into the construction contract with the prime contractor. It is also clear that the Department began tracking the efforts of Weitz's subcontractors to become certified by DGS and became involved in the certification process for Weitz's subcontractors who were not yet DGS-certified. Although Weitz had received 21 bids from DGS-certified MBEs, it chose to use the bids of only five. The bids of the others were rejected because Weitz had made the prior determination that it would use the bid of a DGS- certified MBE only if that subcontractor submitted the low bid for that particular portion of the work. In other words, Weitz's focus was on submitting the lowest possible bid rather than on submitting a bid which included the required MBE participation goal. On the other hand, when D.I.C. received and reviewed its bid package, it made the determination that the Department's requirement of at least 21 percent minority participation was easily achievable. Accordingly, D.I.C. did not prepare any "good faith effort" documentation since the bid specifications clearly stated that the Department would consider good faith efforts only if the 21 percent goal were not attainable. D.I.C. made the decision that it would include the required percentage, both overall and in each individual category, in its bid submittal and that, if it could not, it would simply not submit a bid on this construction project. D.I.C. included in its bid the bids of MBE subcontractors who it believed were either DGS-certified or certifiable for a total participation of 26.5 percent. Included within that overall participation D.I.C. exceeded the required percentage for Black Americans, exceeded the required participation for Hispanic Americans, and fell barely short of meeting the required participation for American Women. After D.I.C. filed its Notice of Protest, although the Department freely communicated with Weitz and Weitz's subcontractors in the Department's efforts to certify those subcontractors to be used by Weitz who were not certified, the Department ceased communication with D.I.C. and D.I.C.'s subcontractors. Further, the Division of Building Construction of the Department commenced and continued in its efforts to review Weitz's "good faith" submittal. The Department further rejected communication from the supervisor in its own Minority Business Enterprise Assistance Office regarding the Department's good faith efforts review. When conducting its good faith review, the Department looked only at the documentation submitted by Weitz. It made no effort to ascertain if there were things that Weitz could have done that Weitz chose not to do. Further, in conducting its good faith effort review, the Department reviewed Weitz's documentation under the belief that there was no specific MBE goal for this project. The Department's belief that there was no required MBE participation for this project, contrary to the bid specifications, was based upon the fact that the Legislature had given the Department a goal of at least 21 percent minority participation with the breakdown for the three categories of MBEs listed in the bid specifications as an overall Department goal. Although not disclosed in the bid specifications, the Department looked to meet its goal through the totality of its construction contracts and not pursuant to any individual contract. By March of 1992, the Department had already exceeded its statutorily-imposed goal by 140 percent for that fiscal year. Further, it was the Department's policy and practice to include in its reports to the Legislature concerning whether the Department had met its own statutorily- imposed MBE participation goal the participation of all minority subcontractors in all of the Department's construction contracts without regard to whether those subcontractors were DGS-certified by the time that the Department entered into those construction contracts with the prime contractors. In reviewing Weitz's good faith efforts, the Department utilized the criteria set forth in the bid specifications. It looked at each of the eight criteria listed in the bid specifications and then looked at the documentation submitted by Weitz to ascertain if there had been an effort to comply. The first criterion considers whether the contractor attended presolicitation meetings scheduled by the agency to inform minority business enterprises of the subcontracting opportunity. Since the Department held no such meeting regarding this construction project, none of the bidders could have met this criterion. The second criterion relates to advertising in general circulation, trade association, and/or minority-focus media. Weitz ran an ad one time only on Sunday, March 1, in the Palm Beach Post and in the Fort Lauderdale News/Sun- Sentinel. Weitz placed no other ads. The third criterion requires providing written notice to a reasonable number of specific minority business enterprises that their interest is being solicited in sufficient time to allow them to participate effectively. Weitz sent 98 letters throughout the state of Florida to MBEs listed in the Department's December 1991 directory. That letter was dated February 25, 1992. The fourth criterion requires following up initial solicitations by contacting MBEs or minority persons to determine with certainty whether they are interested. Weitz sent a follow-up letter dated March 4 to the same 98 addressees as its prior letter. The fifth criterion requires selecting portions of the work to be performed by MBEs to increase the likelihood of meeting the MBE goals, including, where appropriate, breaking down contracts into economically feasible units to facilitate MBE participation. Weitz's documentation reflected that the work of several trades had been broken down into smaller units. The sixth criterion requires providing interested MBEs or minority persons with adequate information about the plans, specifications, and requirements of the contract or the availability of jobs. The advertisement placed by Weitz gave no information other than that it was seeking bids from certified MBEs for construction of the Regional Service Center in Fort Pierce, that the bid deadline was March 12, and that plans were available for review at Weitz's office in West Palm Beach. The first letter sent by Weitz advised the recipient of the square footage of the project, that Weitz might assist subcontractors on their bonding requirement, and that plans were available for review at Weitz's office in West Palm Beach and at local plan rooms, or full sets of plans and specifications could be purchased from Weitz at a price of $300 a set. The letter further gave the names of two persons at Weitz's office who could be contacted. The follow-up letter sent by Weitz contained the same information. The seventh criterion requires negotiating in good faith with interested minority business enterprises or minority persons and not rejecting them as unqualified without sound reasons based upon a thorough investigation of their capabilities. The Weitz documentation contained a statement saying that it had not rejected any minorities as being unqualified. The eighth criterion requires effectively using services of available community organizations; minority contractors' groups; local, state, and federal minority business assistance offices; and other organizations that provide assistance in the recruitment and placement of minority business enterprises or minority persons. Weitz sent letters to six organizations in the state of Florida stating that it was seeking proposals for the Fort Pierce Regional Service Center, that it had contacted those companies listed in the December 1991 directory, that plans were available for review at Weitz's office in West Palm Beach and at local plan rooms, and that the recipients should refer any known interested persons to Weitz. It is clear that Weitz made an effort to obtain minority participation. It did not, however, use its "best ability and effort" to obtain minority participation. Weitz's efforts did result in the receipt of a substantial number of bids from DGS-certified MBEs. It does not, however, appear that Weitz used its best effort to assist interested MBEs to participate in the construction project since it did not use any subcontractor's bid unless it was the low bid. Weitz's documentation contains a copy of each of the letters sent to the 98 businesses in the state of Florida and also contains some notations of telephone contact between Weitz and some MBEs. The documentation does not support the proposition, however, that Weitz used its best efforts to work with individual MBEs to solicit their interest; to ascertain with certainty their level of interest; to make the plans and bid specifications available to them; to organize the scope of work into smaller units, if necessary, to enable MBEs to effectively participate in the bidding process; and, most importantly, to utilize bids received by those MBEs. Although the bid specifications specifically stated that the minority participation was to be at least 21 percent and, if that 21 percent was not attainable, the Department would consider good faith efforts, the Department made no independent determination of whether 21 percent DGS-certified MBE participation on this project was attainable. Contrary to the language of the bid specifications, the Department interpreted the criteria to be a requirement that the bidder either attain 21 percent or submit good faith efforts. Since Weitz was the apparent low bidder by price, and since Weitz did not achieve the 21 percent participation, the Department assumed that such level of participation could not be attained and that Weitz could instead submit its "good faith effort." Although a provision was specifically written into the bid specifications for this project that the bidders were encouraged to use local labor from the Fort Pierce and St. Lucie County areas, the Department developed no criteria by which to judge whether the bidders attempted to comply with that bid specification. Additionally, the Department failed to review the bids received for this construction project to see if efforts had been made to include local labor. In essence, this bid specification was ignored by the Department. Although Weitz included in its "good faith effort" submittal a statement that it would utilize local labor by using its own employees, Weitz is located in West Palm Beach, not in St. Lucie County or in Fort Pierce. Although Weitz further included a statement that it might utilize up to twelve companies located in that area, the Department made no determination as to the number of qualified companies located there. The Department was not aware of the fact that Weitz had solicited only by letter two DGS-certified subcontractors in St. Lucie County and only three DGS-certified subcontractors in surrounding counties. On the other hand, D.I.C. had expended extensive efforts to involve businesses in the Fort Pierce and St. Lucie County area. Although Weitz attached to its Petition to Intervene in this proceeding a list of St. Lucie County firms which were encouraged to submit bids and a list of other firms who employ a majority of St. Lucie County employees on projects located in Fort Pierce which were encouraged to submit bids, those documents were never presented to, or considered by, the Department when it evaluated Weitz's bid. Section B-21 of the bid specifications provides, in essence, that the contract would be awarded to the bidder submitting the lowest bid. Weitz's bid was slightly lower than that of D.I.C.--a difference of $7,800 on bids of over five and a half million dollars. D.I.C.'s bid could have been $60,000 lower if it had not sought to comply with the 21 percent MBE requirement set forth in the bid specifications. Its bid would have been lower if it had, like Weitz, rejected all bids from DGS-certified MBE subcontractors who were not also the lowest bidder in that particular trade. D.I.C.'s belief that the Department would require compliance with all provisions in the bid specifications caused D.I.C.'s bid to be higher than that of Weitz, which placed emphasis on the lowest price rather than the lowest price plus effective effort at meeting the MBE participation specification. By focusing on one bid specification and not on all of the bid specifications, the Department gave Weitz an unfair advantage over other bidders. By allowing Weitz to submit "good faith effort" rather than comply with the 21 percent minimum participation requirement, the Department, in essence, allowed Weitz to make a subjective determination that the 21 percent requirement was not attainable. It was the Department's duty under the bid specifications to make its own objective determination that the 21 percent bid specification was not attainable before the alternative consideration of "good faith effort" became relevant to the bid award recommendation. The Department could have, for example, looked at the other bids submitted to see if the other bidders had attained the 21 percent participation requirement. Under the Department's approach, i.e., relying solely on Weitz's representation and considering only Weitz's bid, it is possible that the other bidders attained the 21 percent requirement and that only Weitz did not comply with that bid specification. The Department's procedure rendered the 21 percent bid specification meaningless, which fact was not known in advance by all of the bidders. By failing to determine whether the goal for MBE participation set forth as a bid specification was attainable, the Department failed to determine whether Weitz had complied with all bid specification requirements. Accordingly, the Department did not in fact make a determination that Weitz was a responsive bidder by meeting all bid specifications. Further, the Department made no determination in fact as to whether any of the other bidders, including D.I.C., were responsive to the Department's own bid specifications. Accordingly, there has been no determination that Weitz, or any other bidder, is the lowest responsive bidder. Similarly, the Department made no determination as to whether Weitz had complied with Section B-13C of the bid specifications which provided that bidders were "highly encouraged to the maximum extent possible" to utilize persons residing within or businesses located within Fort Pierce and St. Lucie County. D.I.C., with offices in Fort Pierce, submitted a bid which included 67 percent local participation. Weitz, with offices in West Palm Beach, submitted a bid representing that it would utilize its own employees for 15 percent of the contract (a different bid specification) and represented that it would probably utilize up to a dozen local companies. Since it is clear that Weitz solicited subcontractors from all over the state of Florida, Weitz made no showing that it had attempted "to the maximum extent possible" to utilize persons and businesses from Fort Pierce and St. Lucie County. Additionally, Weitz's single advertisement in the two newspapers chosen by it does not show an intent to obtain local participation since the Fort Lauderdale News/Sun-Sentinel is not sold in either Fort Pierce or St. Lucie County and the Palm Beach Post is obtainable in Fort Pierce only at 7-11 convenience stores and in newspaper vending machines. The Department made no determination as to whether Weitz, or any other bidder, was responsive to this bid specification. Further, the Department did not advise bidders that it might not enforce this bid specification in the same manner that the Department did not advise all bidders that it might not enforce the 21 percent bid specification. In short, the procedures utilized by the Department in evaluating the bids submitted for this project did not afford fair and equal review of all bids submitted. Further, Weitz was given a competitive advantage by the Department's determination that Weitz should be given the bid award based solely on the Weitz bid being the lowest submitted.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered rejecting all bids on Project No. DGS- 88114000 for the Fort Pierce Regional Service Center. RECOMMENDED this 25th day of June, 1992, at Tallahassee, Florida. LINDA M. RIGOT 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 25th day of June, 1992. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-2370BID Petitioner's proposed findings of fact numbered 1-4, 7-14, 17, 20, 29, 30, 33, 35, 36, 39, 43, 45-48, and 55 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed findings of fact numbered 5, 6, 15, and 18 have been rejected as not being supported by the weight of the competent evidence in this cause. Petitioner's proposed findings of fact numbered 16, 21-28, 34, 37, 38, 40, 42, 49-52, and 54 have been rejected as being unnecessary to the issues involved herein. Petitioner's proposed findings of fact numbered 19 and 53 have been rejected as being irrelevant to the issues under consideration in this cause. Petitioner's proposed findings of fact numbered 31, 32, 41, and 44 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Respondent's proposed findings of fact numbered 1, 2, 4, 7, 8, 11, 17, 19, 21, 22, 24-28, and 37 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed findings of fact numbered 3, 5, 6, 20, 29, 31, 33, 35, 36, and 38-41 have been rejected as not being supported by the weight of the competent evidence in this cause. Respondent's proposed findings of fact numbered 9, 10, 12-14, and 34 have been rejected as being unnecessary to the issues involved herein. Respondent's proposed findings of fact numbered 15, 16, 18, 30, and 32 have been rejected as being irrelevant to the issues under consideration in this cause. Respondent's proposed finding of fact numbered 23 has been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Intervenor's proposed findings of fact numbered 1 and 10 have been adopted either verbatim or in substance in this Recommended Order. Intervenor's proposed findings of fact numbered 2, 3, 7, 12, 15, and 16 have been rejected as not being supported by the weight of the competent evidence in this cause. Intervenor's proposed findings of fact numbered 4-6, 8, 9, 11, 13, and 14 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. COPIES FURNISHED: Melinda S. Gentile, Esquire Ruden, Barnett, McClosky, Smith, Schuster & Russell, P.A. 200 East Broward Boulevard Post Office Box 1900 Fort Lauderdale, Florida 33302 Stephen S. Mathues, Esquire Department of General Services Knight Building, Suite 309 2737 Centerview Drive Tallahassee, Florida 32399-0950 Bruce G. Alexander, Esquire Boose Casey Ciklin Lubitz Martens McBane & O'Connell Suite 1900 515 North Flagler Drive Post Office Box 024626 West Palm Beach, Florida 33402 Neil H. Butler, Esquire Butler & Long, P.A. Post Office Box 839 Tallahassee, Florida 32302 Ronald W. Thomas Executive Director Department of General Services Knight Building, Suite 307 2737 Centerview Drive Tallahassee, Florida 32399-0950 Susan Kirkland, General Counsel Department of General Services Knight Building, Suite 309 2737 Centerview Drive Tallahassee, Florida 32399-0950
The Issue The issue is whether the Petitioner is qualified for designation and certification as a minority business enterprise.
Findings Of Fact At the hearing, it became apparent that the reasons for denial were principally lack of independence and affiliation with a non-qualifying company. The parties stipulated to the following: Ms. Wendy Stephens, President and Secretary of WPS and sole stockholder WPS, possess the authority to, and does in fact, exercise complete control over the management, daily operations and corporate affairs of WPS. Ms. Stephens possesses the technical capability, managerial qualifications and expertise to operate WPS. The following facts were proven at hearing: Ms. Stephens is a white, female and is qualified as a minority person under the statute. In 1991, Charles Perry, Ms. Stephen's father and a white male, provided $7,000 for start up capital and a lease of 3 acres on his farm to house Alachua Greenery, a wholesale/retail nursery which Wendy Stephens began with assistance from Perry. Ms. Stephens has never made payments on the aforementioned lease. Charles Perry and Wendy Stephens were the sole stockholders in Alachua Greenery, each holding 50 percent of the shares in the corporation. Perry has contributed nothing more to the operation of the corporation, and has never exercised any control over the corporation, although he was initially a director. WPS is a Florida corporation, domiciled and doing business in the state. WPS is worth less than $3,000,000 and has three employees. Ms. Stephens is and always has been the sole stockholder of WPS, and has served as its President and Secretary since its incorporation. Ms. Stephens husband, Gary Stephens, was once a director of WPS upon the advice of counsel; however, he exercised no control over the corporation and resigned as a director on April 12, 1996. Gary Stephens sold a Bobcat tractor to Wendy Stephens upon which he has deferred payments. This Bobcat is used by WPS and Alachua Greenery. Gary Stephens has no other financial or other interest in WPS or Alachua Greenery. WPS was formed for the purpose of engaging in the retail landscaping business, which is a logical business expansion from the wholesale nursery business. WPS has engaged in the retail landscaping business for several customers. WPS shares equipment, land, vehicles, and employees with Alachua Greenery. There is no evidence that WPS, which has performed a number of contracts, has been a conduit of money to Alachua Greenery. On May 13, 1996, Perry gifted his share of Alachua Greenery to Wendy Stephens.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Petitioner's application for minority business status be denied. DONE AND ENTERED this 27th day of June, 1996, in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SunCom 278-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of June, 1996. APPENDIX TO RECOMMENDED ORDER CASE NO. 96-0023 Both parties submitted proposed findings which were read and considered. The following states which of those findings were adopted, and which were rejected and why. References to numbered paragraphs in Petitioner's findings includes all letter subparagraphs unless otherwise noted. PETITIONER'S RECOMMENDED ORDER Paragraphs 1,2 Statement of Case Paragraph 3 Irrelevant Paragraphs 4-6 Statement of Case Paragraph 7a Paragraph 9 Paragraph 7b Subsumed in Paragraph 6 Paragraph 7c Subsumed in Paragraphs 6 & 8 Paragraph 7d Contrary to best evidence Paragraph 7e Irrelevant Paragraph 7f Subsumed in Paragraph 9 Paragraph 7g Irrelevant Paragraphs 7h,i Paragraph 7 Paragraphs 7j,k,l Subsumed in Paragraph 8 Paragraphs 7m,n,o,p Paragraph 4 Paragraph 7q Subsumed in Paragraph 12 Paragraph 7r Paragraph 11 Paragraphs 7s,t Irrelevant RESPONDENT'S RECOMMENDED ORDER Paragraph 1,2 Subsumed in Paragraph 8 Paragraph 3 Subsumed in Paragraph 10 Paragraph 4 Paragraph 4 Paragraph 5 Subsumed in Paragraph 10 Paragraph 6 Not necessary Paragraph 7,8 Paragraph 12 Paragraph 9 Not necessary COPIES FURNISHED: David L. Worthy, Esquire Peter A. Robertson and Associates 4128 Northwest 13th Street Gainesville, Florida 32609 Joseph L. Shields, Esquire Commission on Minority Economic and Business Development 107 West Gaines Street, Suite 201 Tallahassee, Florida 32399-2005 Veronica Anderson, Executive Administrator Commission on Minority Economic and Business Development Collins Building, Suite 201 107 West Gaines Street Tallahassee, Florida 32399-2000
Findings Of Fact At all times pertinent to the issues herein, the Department had the authority to certify those firms who qualified as MBE's for the purpose of contracting with it under the provisions of Chapter 13-8, F.A.C. When an application for MBE status is received at the Department's certification office in Tallahassee, it is assigned to one of five certifying officers who reviews it and determines whether it is complete as submitted or requires additional documentation. This is called a desk audit review. In the event all required documents have not been submitted with the application, they are requested in writing and the applicant has thirty days to provide them. Failure to do so results in denial of the application. If, on the other hand, all the required documentation is present, a decision is then made as to whether an on-site visit of the applicant's operation is necessary. If so, Department personnel go to the site and look to see if the business can qualify as an MBE. If an on-site visit is appropriate, but for some reason cannot be made, Department personnel try to get the required information by phone. The decision to approve or deny certification is made, based on the reviewing certifying officer's recommendation, by the certification manager who, before making a decision, personally reviews the file and, if appropriate, sends it to the Department's legal staff for additional review. Once the legal staff has made its recommendation, if the decision is made to deny the application, a letter of denial is sent to the applicant who may then appeal that decision. An application must meet all criteria set out in Rule 13-8, F.A.C. to be certified as an MBE. Each application is looked at on a case by case basis to see if those criteria are met. In the instant case, the denial was based on the Department's concern over several factors. These are related to Rule 13- 8.005(3), F.A.C. and included A question as to whether the business was actually controlled by Ms. Hogan. The nature of the corporate structure. The application of Chapter 47, F.A.C., dealing with the construction industry. The ability of both Hogan and Perretta to sign business checks. Whether Ms. Hogan had the technical and mechanical capability, skills and training to run a construction company, and Whether Ms. Hogan could effectively control such areas as financing, purchasing, hiring and firing, and the like. In arriving at its decision to deny Petitioner's application, the Department relied only on those matter submitted with the application. It did not ask for or seek any information about the company and its operation beyond that initially provided. Notwithstanding her recommendation in this case, Ms. Freeman has previously recommended the certification of numerous woman owned businesses as MBEs. On April 6, 1990, Ms. Hogan, as owner of E.C. Construction, Inc., a licensed general contractor qualified under the license of Carmen M. Perretta, applied to the Department for certification as a woman owned MBE. The application form reflected Ms. Hogan as the sole owner of the business, a corporation created under the laws of Florida. Ms. Hogan was listed on both the Articles of Incorporation, (1989), and the application form in issue here as the sole officer and director of the corporation, as well. Mr. Perretta was to be merely an employee of the firm, E.C. Construction, Inc.. In that regard Ms. Hogan claims, and it is so found, that the letters, "E. C." in the corporate name do not stand for Elinor and Carmen. Instead, they stand for Elite and Creative. Ms. Hogan is a 63 year old widow who professes a long-standing interest in building, design and decorating. In 1950, she and her husband started a floor covering business in another state which they operated for nineteen years. In 1969 they moved to Florida where her husband started a lawn maintenance business in Sarasota. She worked full time as a nurse at a local hospital and still found time to assist her husband in every aspect of their business including marketing, bookkeeping, public relations, etc. Her husband took ill in early 1986 and from that time on and after his death in May, 1988, until the business was sold almost a year later, she exercised complete control. She still runs a wedding supply and stationery business from her home. She sold the lawn business because she wanted to break the emotional links with the past and since she had some experience in construction, design and remodeling of her own home, went into the construction business establishing the Petitioner firm. In the few preceding years, she had designed and supervised several construction projects in the area in which she attended to financing, hiring the1 subcontractors, and supervision of the work. She also took some courses in design and has taken other courses and seminars in financing, accounting, marketing, advertising and operating a small business. Ms. Hogan and her husband met Mr. Perretta in 1987 when they put an addition on their house and she was impressed by his talents. When she decided to look into going into the construction business, she turned to him for advice and ultimately recruited him as the corporation's qualifying agent. Notwithstanding the fact that neither the corporate documents nor the application for MBE status so reflect, Ms. Hogan's lawyer now indicates that Perretta was also made a Vice-President of the firm, but his authority was limited to those actions necessary to meet the minimum compliance requirements of Florida law. When confronted with this discrepancy, Ms. Hagan claimed that the corporate papers and the application were in error and that she didn't know what they meant when she signed them. Ms. Hogan claims to be in full and complete control of all corporate activities, and to delegate to Mr. Perretta those responsibilities and functions, relating to the actual construction, that he is best qualified to carry out. She claims she does not share dominant control of the daily business activities of the firm though the evidence indicates both she and Mr. Perretta can individually sign corporate checks. In that regard, she claims he has signed only 19 of more than 500 checks issued by the firm since its inception. They have an understanding he will sign checks only for the purchase of materials, and then only in an emergency situation. He claims to no longer use that authority. The Department introduced no evidence to the contrary. Ms. Hogan admits to not having formal construction training or experience but, based on her other experience, believes she is qualified to run a business. Under her leadership the company has reportedly secured over one million dollars in contracts and for the most part, has performed them successfully. Under oath she claims to negotiate the contracts, prepare the estimates and deal with contracting customers in all the projects in which the company is engaged. She claims to have made those contractual decisions independent of Mr. Perretta to whom she is not accountable. Yet, as was seen, the Articles of Incorporation wrongfully indicate her as the only officer when Mr. Perretta was actually a Vice-President, and she claims not to have known that. This gives rise to some doubt as to her business credentials. In reality, Mr. Perretta actually directs and supervises the actual construction work at all job sites and schedules the subcontractors and materials to insure their presence at the job when needed. When changes are required, Mr. Perretta gives the necessary information to Ms. Hogan who prepares the change orders, including the typing, and forwards them as appropriate. Ms. Hogan has also entered into an agreement, dated June 25, 1989, with Mr. Perretta whereby, in lieu of salary as qualifying agent and field superintendent for the company, he is to receive 40% of the gross profits of each construction project. He gets a periodic draw against that percentage. In addition, in May, 1989, Ms. Hogan, as President, and Mr. Perretta, as Vice- President, entered into an agreement with Raymond Meltzer to retain him as general manager of E.C.'s Designer Structures division. Under the terms of the agreement, Mr. Meltzer was to have "absolute, unlimited and exclusive authority" to conduct all affairs of the division, except to incur debt other than short term debt to subcontractors. Mr. Meltzer was to have the right to draw checks on a separate E.C. account in a bank of his choosing, and was to receive 95% of all monies received as a result of the activities of that division. E.C. was to obtain the required permits or licenses for projects and to provide such supervision as is required by law. Though Petitioner did not incorporate under the name Designer Structures, nor did it register that name under the fictitious name statue, it continues to do business under that name. When it does, business is not conducted out of E.C.'s office, but from Meltzer's office instead. This is not consistent with Petitioner's MBE application which reflects only one office. Petitioner submitted at the hearing a notarized statement dated December 8, 1990, from Mr. Meltzer in which he admits to seeking to originally use Mr. Perretta and E.C. primarily as a qualifying agent for his own construction activities. The terms of the agreement referenced above tend to confirm that arrangement. Nonetheless, he is of the opinion that Ms. Hogan possess excellent business acumen and administrative abilities, and, he claims that, based on his initial meeting with her, he abandoned his plans to set up his own business and went into a business relationship with her. The evidence indicates he develops the work for the division and gets 95% of the fee. Ms. Hogan claims to be considering terminating the arrangement since it has not proven to be a lucrative one. She is apparently not aware the agreement specifically states it is for a three year term and carries options to renew. Though both Petitioner's application for MBE status and its bonding application indicate E.C. has no employees, Ms. Hogan testified that both Mr. Perretta and Mr. Meltzer are employees. She claims to use only subcontractors in the accomplishment of company projects and this appears to be so. She claims to have the strength of character and the will. to manage, hire and fire subcontractors as required. There is other evidence in the record, however, to indicate that Mr. Perretta actually schedules the subcontractors and materials to insure their presence at the job site when needed. It is found that there are no other employees who do direct, hands on contracting work, but while there may be a question of word meaning, it is clear that both Perretta and Meltzer qualify as employees. E.C.'s application for MBE status also indicates that it had not executed any promissory notes, yet there is a note for $3,500.00 from E.C. to Mr. Perretta, dated May 10, 1989, on which no payments have been made. Though Ms. Hogan claims to be fully in charge of running the business side of the operation, she is apparently also unaware of certain basic facts other than those previously mentioned. In addition to the inconsistencies regarding the office structure and her mistake concerning the employee status of Mr. Perretta and Mr. Meltzer, as well as her error regarding the loan, she was also in error as to the company's net worth. Whereas she indicated it was set at about $30,000.00, the company's most current financial statement reflects net worth at just above, $6,000.00, revealing her estimate to be 80% off. She also did not know the character of Mr. Perretta's license, (Class E.C. owns very little construction equipment and Ms. Hogan rents all needed equipment as indicated to her by Mr. Perretta. The lack of ownership is not significant, however. The one piece of equipment the company owns is a transit level which was purchased at Mr. Perretta's insistence. He has also donated to the company some used office equipment from his prior business as a contractor. He was not paid for it. Other equipment, in addition to office space, was furnished by Mr. Meltzer.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that a Final Order be issued in this case denying E.C. Construction, Inc.'s application for certification as a Minority Business Enterprise. RECOMMENDED this 22nd day of January, 1991, in Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of January, 1991. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 90-5217 The following constituted 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: None submitted FOR THE RESPONDENT: & 2. Accepted and incorporated herein. Accepted. & 5. Accepted and incorporated herein. Accepted and incorporated herein. & 8. Accepted and incorporated herein. 9. & 10. Accepted 11. - 13. Accepted and incorporated herein. 14. & 15. Accepted and incorporated herein. Rejected as to her prior experience though it was limited. Accepted and incorporated herein. - 20. Accepted and incorporated herein. Accepted. - 24. Accepted. Accepted and incorporated herein. & 27. Accepted and incorporated herein. 28. & 29. Accepted. Not proven. - 33. Accepted and incorporated herein. 34. & 35. Accepted and incorporated herein. Unknown but accepted. Accepted. Accepted and incorporated herein. COPIES FURNISHED: Guy Brisson, Personal Representative E. C. Construction, Inc. 105 Island Circle Sarasota, Florida 34232-1933 Dannie L. Hart, Esquire Joan V. Whelan, Esquire Department of General Services Suite 309, Knight Building 2737 Centerview Drive Tallahassee, Florida 32399-0950 Ronald W. Thomas Executive Director Knight Building Koger Center 2737 Centerview Drive Tallahassee, Florida 3399-0950 Susan Kirkland General Counsel DGS Suite 309, Knight Building Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950
Findings Of Fact Vedder and Associates Incorporated's (VAI's) application for minority certification dated January 22, 1992 was received by the Department of Management Services on January 27, 1992. Petitioner's application for minority certification was denied by the Department of Management Services in a letter dated May 22, 1992. VAI was established in October of 1991 and offers as its principal service "land surveying." VAI is licensed to do business in Florida and is fifty-one percent (51 percent) owned by Kathleen Vedder, a Caucasian female, and forty-nine percent (49 percent) owned by John Vedder her husband, a Caucasian male. Kathleen A. Vedder and John F. Vedder were the sole directors of the corporation at the time of certification denial, with Kathleen A. Vedder serving as president/secretary and John F. Vedder serving as vice-president/treasurer. On September 16, 1992, after the denial of certification, John Vedder resigned as a director of VAI. No business reason was offered for this decision. Kathleen Vedder, the minority owner, is presently the sole director of the corporation. As sole director, she represents a majority of the board of directors. She continues to serve as president and secretary. John Vedder continues to serve as treasurer. It is not clear if he still serves as vice- president. (See Findings of Fact 5-11 and 28-29). At all times material, Kathleen Vedder has owned 51 percent of the stock through a greater monetary investment than John Vedder, who owns 49 percent of the stock. At all times material, Kathleen Vedder has served as the principal officers, president and secretary. At all times material, Kathleen Vedder has made up at least 50 percent of the board of directors. Since September 16, 1992, she has made up 100 percent of the board of directors. At all times material, John Vedder has served as a principal officer, treasurer. Up until September 16, 1992, John Vedder made up 50 percent of the board of directors. Thereafter, he did not serve on the board. At all times material, Article VII of VAI's Articles of Incorporation have permitted an increase or decrease in the board of directors as permitted by the bylaws, but never less than one director. At all times material, Item III of VAI's bylaws have provided that corporate officers hold office at the "satisfaction" of the board of directors; that the president shall be the chief executive officer; and that subject to any specific assignment of duties by the board of directors, the vice-president, the secretary, and the treasurer act under the direction of the president. VAI was formed by the purchase of assets from the Perry C. McGriff Company, which had employed Kathleen and John Vedder. Kathleen Vedder began her career with the surveying firm of Keith & Schnars, P.A., in Fort Lauderdale in 1976. She was the administrative assistant to the President. In 1981 she and John Vedder moved to Gainesville to manage the Perry C. McGriff Company, a wholly owned subsidiary of Keith & Schnars. John Vedder handled the surveying aspects of the business, and Kathleen Vedder handled most of the management of the company other than the surveying portion, including purchasing, handling business accounts and financial affairs, client relations, insurance, and correspondence. This continued until 1991 when the assets of the Perry C. McGriff Company were sold to VAI. Kathleen Vedder now performs for VAI basically the same functions as she did for the predecessor company with certain additions. John Vedder served as the director of survey for the Perry C. McGriff Company which employed both Mr. and Mrs. Vedder prior to the formation of VAI. In his position as director of survey at Perry C. McGriff Company, he was responsible for all contracts and negotiations and coordination of personnel to ensure timely completion of contracts. His background by education, training, and experience is extensive in the technical applications to perform land surveying. The business of VAI essentially began on December 6, 1991. Prior to that date, husband and wife had discussed the purchase of the McGriff assets. Kathleen Vedder discussed the purchase of the business with her husband and informed him that she wanted to run the business. He accepted this relationship and her role as "boss" because he hated working in the office and wanted nothing to do with running the business. Kathleen Vedder contacted the old Perry C. McGriff clients and facilitated the transition from the old company to the new company. The Perry C. McGriff Company was purchased for $100,000 with a $15,000 down payment and the remainder to be paid over 7 years. Funds for the original purchase price of the assets were obtained by cashing Kathleen Vedder's 401K plan, two IRA's, and by loans against her life insurance policies for an investment of $57,185.62 by Kathleen Vedder and $25,682.25 of marital assets held with her husband, John Vedder. John Vedder participated in the negotiations to buy Perry C. McGriff Company. John Vedder provided input and expertise regarding the assets of Perry C. McGriff Company which were to be purchased, whether survey equipment was acceptable, and the vehicles to be purchased. John Vedder discussed and consulted with Kathleen Vedder regarding the financial aspects of the purchase of Perry C. McGriff Company. He discussed with her the starting salaries of employees to be hired/transferred to VAI, and the leasing and location of business premises for VAI and purchase of furniture. Kathleen Vedder established the corporate policies, the accounting procedures, the job costing, and the standard management practices of the new company. Kathleen Vedder, as VAI president, made all of the final decisions regarding implementation of the new business such as renting the office, moving the assets purchased from the old Perry C. McGriff Company, establishing lines of insurance, determining the manner and location of the survey records purchased, and hiring the staff. Kathleen Vedder and John Vedder made it clear to all of the employees from the beginning of the company that she was the "boss". The takeover of Perry C. McGriff Company by VAI was explained to former employees during a field visit by John Vedder. His explanation was made at Kathleen Vedder's direction and took place while these employees were already in the field, during a time of transition, in a spirit of damage control when Kathleen and John Vedder were concerned that rumors might affect the new company's ability to retain good personnel from the old company and over concern that some might have trouble working for a woman. Kathleen Vedder hired six employees initially from the old Perry C. McGriff Company. Kathleen Vedder set the initial pay scale for the employees of the company and maintained the documentation relevant to this function. The additional four persons hired by the company since it began were Robert Henderson, Tom Crossman, George Gruner, and Doug Zimmerman, each of whom were hired by Kathleen Vedder who interviewed them, who set their wages and benefits, and who described their job functions to them as new employees. VAI has a business license posted on its premises issued by the City of Gainesville, Florida, in the name of John Vedder, authorizing the performance of land survey services. VAI currently employs eight permanent employees and the qualifying agent is John F. Vedder, who serves as a principal officer, treasurer. He holds a land survey license issued by the State of Florida, Department of Professional Regulation, Land Surveying Board. In order to be qualified as a licensed land surveying corporation, a principal officer must be a licensed land surveyor. The participation of John Vedder or another duly-licensed land surveyor is required to satisfy the requirements of Chapter 472 F.S., for a qualifying agent. Under that statute, the qualifying agent must have a license as a land surveyor and hold a position as a principal officer in VAI. If John Vedder were to lose his professional land surveyor license, there would be three licensed land surveyors remaining with the company, and it would be possible for VAI to continue if one of these were designated as a principal officer. Kathleen Vedder holds no license or certification other than a notary public. In terms of any special needs or requests, such as medical needs, all employees are required to report to Kathleen Vedder. Kathleen Vedder earns $14.50 per hour. The survey party chiefs, including John Vedder, now earn $13.00 per hour. These amounts are commensurate with Kathleen Vedder's percentage of VAI ownership of fifty-one percent (51 percent). The evidence is conflicting as to whether another crew chief earned more than John Vedder in one year due to a higher rate of pay or more hours worked in that period. No one in the company draws any bonus, commission or has any particular insurance coverage as a benefit of employment. The company has not posted any dividends or distributed any proceeds from business investments or engaged in any profit sharing. The corporation has, as a risk of doing business, the liability connected with its $85,000.00 promissory note to Keith & Schnars, P.A. It also has the risk associated with premises liability, with motor vehicle liability, with general errors and omissions liability, and with professional liability. Kathleen Vedder has procured insurance to cover all these risks. These premiums are paid by the corporation. There has been no additional ownership interest acquired by anyone since the inception of the corporation. There are no third party agreements. There are no bonding applications. The company has not at any time entered into an agreement, option, scheme, or created any rights of conversion which, when exercised, would result in less than fifty-one percent (51 percent) minority ownership and minority control of the business by Kathleen Vedder. Kathleen Vedder controls the purchase of the goods, equipment, business inventory and services needed in the day-to-day-operation of the business. Kathleen Vedder expressly controls the investments, loans to and from stockholders, bonding, payment of general business loans, and payments and establishment of lines of credit. The corporate business account of VAI contains the signatures of John Vedder and Kathleen Vedder on the bank signature card. Only one signature is required to transact business. Of the 823 checks issued by VAI since it began, John Vedder signed one at Kathleen Vedder's direction when it was not possible for her to be in two places at once, and Kathleen Vedder signed 822 checks. Although he is treasurer, John Vedder professed to know nothing of VAI's finances and deferred to Kathleen Vedder in all matters of financing from the very beginning. Nonetheless, the corporate documents list the treasurer as the chief financial officer in ultimate charge of all funds. Kathleen Vedder has knowledge of only the minimum technical standards required for a survey. In her certification interviews, Mrs. Vedder did not know how to establish true north or how a line survey would establish true north. She lacks basic survey knowledge and could not identify Polaris as the north star or state the standard measurement (length of a chain) for a surveyor. Identifying Polaris is not particularly important in modern surveying. Kathleen Vedder is capable of doing the necessary paper search and telephone call regarding underground utilities for surveyors in the field. Kathleen Vedder has extensive experience in the production of a surveying product and is able to manage the surveyors who perform the technical aspects of the business. Upon acquisition of the assets and formation of the new company, Kathleen Vedder began directing the two field crews newly employed by VAI to the various projects and work which she had scheduled. This direction has primarily been in the timing and coordination of projects and is commensurate with some of the work previously done by John Vedder when he was director of survey for the predecessor company, Perry C. McGriff Company. (See Finding of Fact 14). Technical problems involving a particular site do not arise very often so as to require a discussion among the land surveyors of the company but if they do, the professional land surveyors jointly or singly make all technical surveying decisions. Surveys must be signed by a registered land surveyor pursuant to Chapter 472 F.S. John Vedder provides Kathleen Vedder technical advice, coordinates field crews' work, makes decisions pertaining to technical work which is not within Kathleen Vedder's abilities, consults with Kathleen Vedder once a week concerning the general financial picture of VAI, and does some job estimating and quality control. Kathleen Vedder rarely visits work sites in the field. Employees in the field report to John Vedder whenever they have a problem and report to Kathleen Vedder if the problem is in the nature of project coordination. John Vedder is responsible for training and working with employees and providing technical training required for the performance of land surveys. He does computer aided drafting (CAD) and provides technical assistance to the CAD operator, which Kathleen Vedder cannot do, however she works it afterward on her computer. Kathleen Vedder does not work in the field, and of the two, John Vedder performs the majority of work in the field. Kathleen Vedder defers to John Vedder to handle technical matters because he has more experience. Party Chief John Vedder supervises his crew. Party Chief Louis Crosier supervises his crew. Kathleen Vedder supervises Louis Crosier and John Vedder and a third crew chief when one is used, usually Robert Henderson. Kathleen Vedder established a fee schedule for the company and a method of formulating the estimates and bids which the company would propose to prospective clients. John Vedder is not knowledgeable in this area. When a job comes in, the prospective client initially contacts Kathleen Vedder. If a client calls requesting a survey, Kathleen Vedder does the research and provides the estimate or bid without further input from any surveyor if the survey requested is a standard routine survey. If the job is complex, Kathleen Vedder requires man hour estimates from two land surveyors, one of whom is often John Vedder. She takes these estimates and applies previous histories, experience, and adjustments in order to prepare the final bid or survey estimate. Once she has received the man-hour estimate, Kathleen Vedder reviews it, compares it with previous surveys, applies a job costs analysis to it, applies any other known costs to it, and presents the final estimate or bid. There is a difference between compiling the work hours necessary for the estimate and compiling the estimate itself. Kathleen Vedder has the ultimate responsibility for finalizing complex estimates and bids. Kathleen Vedder makes presentations as a part of her function which involve technical presentations of the survey services rendered by VAI. In the fourteen month period since the business began, Kathleen Vedder has given approximately eight presentations of a technical nature to prospective clients, including the Florida Department of Transportation (DOT). Kathleen Vedder is capable of complying with DOT bid specifications to submit material on a DOS disc. DOT has qualified VAI under its Disadvantaged Business Enterprise program. Petitioner's witnesses skilled in land surveying consistently testified that without Kathleen Vedder's skilled contributions to the firm, technical land surveying could be accomplished but the firm would not show a profit. Rule 13A-2.005(3)(d)(4), requires minority owners to have managerial, technical capability, knowledge, training, education and experience to make decisions regarding the business. In interpreting this rule, the Respondent agency relies on Barton S. Amey v. Department of General Services, DOAH Case No. 86-3954, (RO 3/5/87; FO 4/21/87), aff'd Fla. DCA February 11, 1988, No. 87-235. The agency has no further refinement by way of rule or policy which applies specifically to the land surveying industry. It does not require the minority owner to have a land surveying license per se. It does not require the minority business owner to have an extensive knowledge of surveying.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended that a final order be entered certifying Vedder Associates, Incorporated as a Minority Business Enterprise. RECOMMENDED this 7th day of June, 1993, at Tallahassee, Florida. ELLA JANE P. DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of June, 1993. APPENDIX TO RECOMMENDED ORDER 92-3763 The following constitute specific rulings, pursuant to S120.59(2), F.S., upon the parties' respective proposed findings of fact (PFOF). Petitioner's PFOF: The so-called "stipulated facts" is accepted, as stipulated, but not as to the inserted conclusion of law/argument. 1-19 Accepted except to the degree it is unnecessary, subordinate, or cumulative. 20-21 Accepted, but not dispositive, subordinate. Rejected as a conclusion of law or argument. Accepted, but not dispositive, subordinate. Rejected as a conclusion of law or argument. 25-33 Accepted as modified to more closely conform to the record, and to eliminate mere leal argument, conclusions of law, and unnecessary, subordinate, or cumulative material. Also testimony was to 823 checks. Rejected as stated as not supported by the greater weight of the credible evidence. Accepted, except to the degree it is unnecessary, subordinate or cumulative. Rejected as out of context, a conclusion of law, or argument. 37-46 Accepted, as modified, except to the degree it is unnecessary, subordinate, or cumulative. 47-48 Rejected as out of context, a conclusion of law, or argument. 49-53 Covered to the degree necessary in Finding of Fact 65, otherwise irrelevant and immaterial to a de novo proceeding under Section 120.57(1) F.S. 54-56 Accepted except to the degree unnecessary, subordinate, or cumulative. 57 Rejected as out of context, a conclusion of law, or argument. 58-60 Accepted except to the degree unnecessary, subordinate, or cumulative. Petitioner's "factual conclusions" are rejected as proposed conclusions of law not proposed findings of fact. Respondent's PFOF: 1-10 Accepted except to the degree unnecessary or cumulative. 11 Rejected as subordinate. 12-14 Rejected as stated as argument. Covered in Findings of Fact 27-30, absent argument, conclusions of law, and erroneous statements not supported by the greater weight of the credible competent evidence. Rejected as argument. Mostly accepted except to the degree it is unnecessary, subordinate or cumulative. However, the job estimating as stated is not supported by the record nor the argument of "day-to-day business." 17-19 Accepted as modified to conform to the record evidence, and except to the degree it is unnecessary, subordinate, or cumulative. 20 Rejected as argument. 21-22 Accepted but incomplete, irrelevant and immaterial in a de novo Section 120.57(1) F.S. proceeding. Also, the footnote is rejected as mere argument. 23-24 Rejected as argument. Accepted, but not complete or dispositive; unnecessary and cumulative. Accepted to the degree stated except to the degree unnecessary, subordinate, or cumulative. She also did more. Rejected as partially not supported by the record; other parts are rejected as unnecessary, subordinate, or cumulative. Accepted except to the degree unnecessary, subordinate, or cumulative or not supported by the record. Accepted in part and rejected in part upon the greater weight of the credible, competent record evidence. Rejected as argument. Rejected as stated as not supported by the greater weight of the credible, competent record evidence, also unnecessary, subordinate, or cumulative. Accepted except to the degree it is unnecessary, subordinate, or cumulative. Rejected as argument 34-35 Accepted in part. Remainder rejected as stated as not supported by the greater weight of the credible, competent record evidence, and as a conclusion of law contrary to Mid State Industries, Inc. v. Department of General Services, DOAH Case No. 92-2110 (RO 9/14/92). 36 Rejected as argument. 37-38 Accepted in part, and rejected in part because not proven as stated. Rejected as argument. Rejected as stated because out of context or not supported as stated by the greater weight of the credible, competent record evidence. Rejected as argument. Accepted, except to the degree unnecessary, subordinate or cumulative. Rejected as argument. 44-46 Rejected as subordinate. 47,(No #48),49 Accepted except to the degree unnecessary, subordinate, or cumulative. 50-55 Rejected as subordinate or unnecessary or as conclusions of law or argument. COPIES FURNISHED: Peter C. K. Enwall, Esquire Post Office Box 23879 Gainesville, FL 32602 Terry A. Stepp, Esquire Department of Management Services Koger Executive Center Suite 309, Knight Building 2737 Centerview Drive Tallahassee, FL 32399-0950 William H. Lindner, Secretary Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950 Susan B. Kirkland, Esquire Department of Management Services Koger Executive Center Suite 309, Knight Building 2737 Centerview Drive Tallahassee, FL 32399-0950
Findings Of Fact Anthony Charles Fabian, a journeyman electrician, is the president of Fabian's Electrical Contracting, Inc. (FEC). Mr. Fabian owns 51 percent of the stock in FEC. FEC was incorporated in 1984 and since that time has been continuously engaged in the electrical contracting business. In 1987, FEC applied for and received certification as a minority business enterprise (MBE). Mr. Fabian has at all times maintained he is entitled to MBE status as a Hispanic American. Mr. Fabian was born in Tampa, Florida and lived in a Hispanic neighborhood there until he was six years old. During the time he resided in Tampa, Mr. Fabian's neighbors, family, and friends used Spanish as their predominant language. The family culture was Cuban as was that of the area where the family resided. At age six Mr. Fabian moved from Tampa to Pensacola, Florida. Mr. Fabian later moved from Pensacola to Tallahassee mid-way through his sixth grade. School mates in Pensacola and Tallahassee called him various ethnic nicknames, all related to his Hispanic ancestry. Such names included: "Julio," "Taco," "Spic," "El Cubano," and "Cuban Wheatman." Other than an affection for Cuban food, Mr. Fabian currently has no cultural practices to tie him to his Hispanic heritage. Mr. Fabian does not speak Spanish. Mr. Fabian does not reside in a predominantly Hispanic community. Mr. Fabian does not practice the religious faith of his progenitors. Mr. Fabian does not instruct his child in any Cuban cultural practice. Mr. Fabian does not know of any Spanish cultural aspect that came to him from his family. Mr. Fabian has never been refused work because of his Hispanic heritage. Mr. Fabian's mother has no Hispanic progenitors. Mr. Fabian's father, also born in Tampa, Florida, has the following ancestors: his father (Mr. Fabian's grandfather) was born in Spain, his mother (Mr. Fabian's grandmother) was born in Key West. Mr. Fabian's grandmother, Anna Rodriguez Fabian, who Mr. Fabian spent time with in Tampa spoke Spanish and claimed Cuban heritage as both of her parents had immigrated from there to Key West. For this reason, Mr. Fabian maintains he is a Cuban from Tampa. None of Mr. Fabian's grandparents was born in Mexico, South America, Central America, or the Caribbean. He has never claimed otherwise. Sometime after FEC obtained certification as a MBE, the Department adopted what is now codified as Rule 60A-2.001(8), Florida Administrative Code. Such rule defines "origins" as used in Section 288.703(3)(b), Florida Statutes, to mean that a Hispanic American must substantiate his cultural and geographic derivations by at least one grandparent's birth. In July, 1992, when FEC submitted its recertification affidavit, the Department notified Mr. Fabian that he had failed to establish that at least one of his grandparents was born in one of the applicable geographic locations. Accordingly, Mr. Fabian was advised his request for recertification would be denied. Approximately eleven other persons have been denied minority status because they were unable to substantiate origin by the birth of a grandparent. Of those eleven, none had been previously certified. FEC is the only formerly certified MBE which has been denied recertification because of the rule. However, when FEC was granted certification in 1987 it was not based upon the Department's agreement that Mr. Fabian met the statutory definition of a Hispanic American. Such certification was issued in settlement to the preliminary denial of certification since the word "origins," as used in the statute, had not as yet been defined by rule. Additionally, the recertification of FEC was based upon Department error and not an agreement that Mr. Fabian met the "origins" test. Finally, in 1991, the Department cured the rule deficiencies to create parallel requirements for certification and recertification for MBE status. When FEC submitted its recertification affidavit under the current rule, the request was denied. Mr. Fabian has been aware of the Department's position regarding his requests for recertification from the outset; i.e. since 1987. The Department promulgated the "origins" rule in response to a number of applications for MBE status from persons with distant relations or ancestors within the minority classifications. The necessity for an "origins" rule was demonstrated since the Department needed a clear standard, which staff and the public could recognize as the dividing line for who would and would not qualify as a Hispanic American, and since the purpose of the program is to provide preferences in contracting to businesses run by individuals who have been disadvantaged. In deciding to use the grandparent test, the Department looked to outside sources. Since there was no legislative history resolving the "origins" issue, the Department sought guidance from dictionary definitions and statutory uses in other contexts. In promulgating the rule, the Department gave notice to outside sources, including groups listed in the publication Doing Business in Florida, such as the Department of Commerce, Bureau of Commerce, small business development centers, community development corporations, local minority business certification offices, and the Minority Business Advocate's office. At the public hearing conducted for the purpose of receiving input regarding the grandparent test, no one offered opposition to the "origins" definition. Mr. Fabian is not a black American as defined in Section 288.703(3)(a), Florida Statutes.
