The Issue The issues in this case are whether Respondents engaged in the unlicensed practice of contracting, and, if so, what penalty should be imposed.
Findings Of Fact The Department is the state agency responsible for, inter alia, licensing and monitoring general contractors. The Department headquarters are in Tallahassee, Florida. Part and parcel of the Department's duties is the sanctioning of persons who practice general contracting without a license. Morin is an individual living in Orlando, Florida. At all times relevant hereto, Morin was the registered agent and managing member of the LLC. As of the date of the final hearing, the LLC was no longer an active entity in Florida. No other members of the now-inactive LLC appeared at the final hearing. The Administrative Complaint filed by the Department makes the following allegations: Morin was not registered or certified to engage in the practice of contracting. The LLC was not registered or certified to engage in the practice of contracting. Respondents contracted with Scott Ghivizzani to construct a deck and boat dock in Lake County, Florida. Ghivizzani made a down payment to Respondent, but the deck and boat dock were never constructed. The down payment was never returned to Ghivizzani.1 The LLC is essentially a subsidiary of an entity also known as Barefoot Docks, but which operates in the state of Georgia. The Georgia entity advertises itself as a company which will construct, among other things, floating docks. At some point in time, the Georgia entity decided to create a limited liability company in Florida to handle its sales in this state. Morin, the company's primary salesman in Florida, became registered agent of the Florida entity, known and previously identified as Barefoot Docks of Florida, LLC. Morin resides in Florida and became a salesman for the LLC's products (primarily floating docks) in this state. Ghivizzani had contacted the LLC's representatives in Georgia concerning a floating dock. The Georgia representatives had referred Ghivizzani to Morin as their Florida contact. Thereafter, Ghivizzani dealt solely with Morin concerning the purchase. Ghivizzani ultimately signed a contract on June 14, 2005. The contract is entitled "Barefoot Docks Contract" and is signed by Ghivizzani. The total price of the contract was $49,500, with a deposit of $29,350 paid at the time of signing. The contract sets forth a general list of the component parts of the dock. Included in the contract was a provision in Section 5 saying, "All appropriate permitting will be handled by Barefoot Docks and no construction will begin until all permits are in effect. Owner will be charged all local and state permitting fees at final billing." The tone of the contract is a sufficient basis for Ghivizzani to believe that (1) there would be construction involved; and (2) Barefoot Docks was a licensed contractor. The contract did not, however, distinguish between the Georgia and Florida entities. The contract is not signed by the LLC or the Georgia entity. Morin does not dispute the general allegations in the Administrative Complaint except that the subject contract was between the LLC and Ghivizzani, i.e., that Morin was not individually bound by the contract. Further, Morin claims he was the agent of the LLC but did not individually contract with Ghivizzani. Also, Morin maintains that the LLC, of which he was a partial owner, merely sold Ghivizzani a prefabricated dock "kit" and agreed to assemble it for Ghivizzani, i.e., that it was not construction per se. The normal turnaround time for the LLC to put together a dock kit was about one month from the date it was ordered. In fact, another project completed by the LLC just across the lake from the Ghivizzani project took only about a month. The Ghivizzani project took six to eight months just to obtain a permit from the St. John's Water Management District. By the time this permit was issued, the LLC had essentially stopped doing business. The requisite city and/or county permits for this project were never obtained. The floating dock project necessarily required some electrical components. The electrical wiring component was not part of the original contract, but could be done at an additional cost to the owner. In that case, the LLC would have contacted an electrician to do the work. Ghivizzani's down payment was deposited by Morin into the LLC operating account. Morin at that time had access to the account as a member of the LLC and used a portion of the down payment to order component parts for the dock structure and to seek the necessary permits. Morin estimates that $9,000 to $10,000 of the deposit was used, leaving $19,000 to $20,000 of the deposit available. At some point in time, Ghivizzani decided to terminate the contract and asked Morin to return his deposit. Morin contacted the LLC's other members (who were both in Georgia) and was told that they would attempt to take money from another pending project in order to repay Ghivizzani. Morin attempted for several months to obtain the deposit as promised. After months of efforts by Morin to obtain Ghivizzani's down payment, the Georgia partners stopped returning Morin's calls. Morin realized at some point that the business had closed; at that time, there was no money in the LLC's bank accounts. None of the deposit was ever repaid to Ghivizzani. The materials and component parts of his dock were allegedly being held in the Georgia warehouse, but nothing was ever delivered to Ghivizzani. Ghivizzani had also paid the LLC to demolish an existing dock on the site. That work was done and paid for separately from the new dock purchase. Neither Morin nor the LLC has ever been licensed in the State of Florida to perform general contracting or electrical contracting.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Business and Professional Regulation finding that Respondent, Barefoot Docks of Florida, LLC, is guilty of the unlicensed practice of contracting. Inasmuch as the LLC is no longer active, imposition of a fine or other sanctions against it would be meaningless. However, its principals (Jim Peterson and Dennis Shaw) should be denied certification should they ever apply in this state. As for Respondent, Chad Morin, the mitigating facts support an administrative fine of $500. DONE AND ENTERED this 26th day of February, 2008, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN 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 26th day of February, 2008.
The Issue The issue in the case is whether the allegations of the Administrative Complaint filed by the Petitioner against the Respondent are correct, and, if so, what penalty should be imposed.
Findings Of Fact At all times material to this case, the Respondent was a Florida licensed professional engineer, holding license number PE 39759. In 2002, the Petitioner undertook an evaluation of the Respondent's design for construction of the Hunter's Creek Community Association Town Hall. The design was completed in 2001. The Respondent submitted the plans at the Petitioner's request and pursuant to a Final Order filed January 10, 2000, by the Florida Board of Professional Engineers. The Final Order required the Respondent to periodically submit a list of completed project designs to the Petitioner. The Petitioner selected project designs at random for review. The Final Order also directed the Respondent to comply with various statutory requirements. Following its review of the submitted plans and additional dialogue with the Respondent, the Petitioner brought the instant disciplinary proceeding against the Respondent. Section 1601.2.1 of the 1997 Standard Building Code requires that structures "be of sufficient strength to support the loads and forces encountered, or combinations thereof, without exceeding in any of its structural elements the stresses prescribed elsewhere in this code." Design of a structure must accommodate the various loads to a proposed structure. The "gravity load" is the weight of the structure itself. The "live load" is the transient weight of the objects (persons, furnishings, vehicles, etc.) within the structure. "Lateral loads" are horizontal forces generated against a structure by such natural forces as earthquakes or hurricanes. "Vertical loads" consist of uplift- type wind forces. Acceptable standards of engineering practice require that a professional engineer design the structure to accommodate the various loads without exceeding the allowable load values of the components. Essentially the allegations against the Respondent are that according to the plans submitted, allowable load capacities for certain materials specified in the plan were exceeded and that some materials were improperly specified. Insofar as is relevant to this proceeding, the plans specified use of Simpson H-3 framing anchors ("Simpson H-3 anchor") at three locations, a 49'-4" wall and two 20'-0" walls. The plans also specified use of Simpson MGT anchors at a number of locations. The Simpson H-3 anchor was an 18 gauge metal plate, commonly referred to as a "hurricane tiedown." The Simpson H-3 anchor was used to connect a wooden truss to a wooden sill plate or to the top part of a wall. The manufacturer identified the lateral load design capacity of each Simpson H-3 anchor as 125 pounds-per-linear- foot. The Simpson MGT anchor was a "medium girder tiedown" anchor. The Simpson MGT anchor consisted of a heavy-gauge metal plate and metal straps used to connect a masonry wall to a girder. At the hearing, the Petitioner presented the testimony of Joseph Berryman, P.E. Mr. Berryman testified that according to the project plans, 54 H-3 anchors were specified for the 49'-4" wall. Mr. Berryman testified that dividing the load calculation identified in the Respondent's plans by the specified number of anchors resulted in a load of approximately 245 pounds-per-linear-foot. Mr. Berryman testified that application of the same calculation to the load identified in the project plans for the two 20'-0" walls resulted in a load of approximately 380 pounds-per-connector. Mr. Berryman further testified, after additional review of the Respondent's documentation, that his original identification of the load to be accommodated at the two 20"-0" walls was incorrect and that the actual load per connector was in excess of his initial calculation. The Respondent provided testimony and evidence indicating that Mr. Berryman's analysis was overly conservative and failed to consider the load-carrying capacities of other structural elements. Such elements included the Simpson MGT anchors and portions of the building, such as walls and floors, that reduce the load being transferred to the Simpson H-3 anchors. The Respondent testified that the Simpson MGT anchor was capable of resisting a lateral load of 2,462 pounds. The Respondent offered the testimony of Wilbur Yaxley, P.E., who stated that the Simpson MGT anchor was capable of resisting a lateral load of 4,541 pounds. The manufacturer of the Simpson MGT anchor has not rated the device for lateral load resistance. There was no credible evidence that the Respondent accurately calculated the lateral load being applied to the H-3 anchors at the time of design. There was no credible evidence that any lateral load resistance calculation or testing was performed on the Simpson MGT anchor prior to construction of the structure at issue in this case. The Respondent further asserted that substantial load resistance was achieved through the "continuity" of the structure, but acknowledged that no calculations related to continuity were performed prior to construction of the project. Absent any credible evidence of reliable pre- construction calculation of the relevant load-bearing capacities of the Simpson MGT anchor or of the structural continuity of the design, Mr. Berryman's testimony regarding the plans submitted and the loads identified is accepted. Based on the plans submitted by the Respondent to the Petitioner, the evidence establishes that the actual design loads for the Simpson H-3 anchors at the 49'-4" wall and the two 20'-0" walls exceeded the allowable design loads of the anchors. The Petitioner further alleges that the Simpson MGT anchors were not "listed" at the time of permitting and construction and, therefore, could not have been installed in accordance with such listing. There is no credible evidence that any witness actually reviewed a "list" to determine whether or not the Simpson MGT anchors were listed. Notwithstanding building code references to "listed" materials, the evidence fails to establish the existence of such a list.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Board of Professional Engineers enter a final order finding Robert L. Plowfield, P.E., guilty of violating Section 471.033(1)(g), Florida Statutes (2004), and imposing a penalty of reprimand, $5,000 fine, two-year suspension, and a six-year probation. DONE AND ENTERED this 8th day of August, 2005, in Tallahassee, Leon County, Florida. S 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 8th day of August, 2005. COPIES FURNISHED: Douglas D. Sunshine, Esquire Florida Engineers Management Corporation 2507 Callaway Road, Suite 200 Tallahassee, Florida 32303 David P. Rankin, Esquire Law Office of David P. Rankin, P.A. 18540 North Dale Mabry Highway Lutz, Florida 33548 Paul J. Martin, Executive Director Board of Professional Engineers Florida Engineers Management Corporation 2507 Callaway Road, Suite 200 Tallahassee, Florida 32303-5267 Leon Biegalski, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-2202
The Issue The parties have stipulated that Ivan R. Dory is a small business party as defined in subsection 57.111(3)(d)1., Florida Statutes and that he was the prevailing small business party in DOAH Case Number 86-4511, pursuant to subsection 57.111(3)(d)3., Florida Statutes. The parties have also agreed that attorney's fees in the amount of $1,485.00 were incurred prior to the Department's voluntary dismissal. The Department contests the appropriateness of an award of additional fees and costs totaling $2,398.27, incurred after January 7, 1987, in pursuit of Petitioner's claim under section 57.111; Florida Statutes. The primary issue for resolution is whether the proceeding in DOAH Number 86-4511 had a reasonable basis in law or fact at the time that it was initiated, or whether special circumstances exist which would make an award of fees and costs unjust.
Findings Of Fact Ivan R. Dory is, and has been at all times material hereto a licensed professional engineer in the State of Florida, having been issued license number PE 0013587. (Administrative Complaint and Respondent's affidavit filed in Number 86-4511). On or about December 5, 1985, the Department received a Uniform Complaint Form signed by Gary G. Bloom, P.E. alleging that Ivan R. Dory, without permission, utilized plans prepared by Consul-Tech Engineering, Inc. in the preparation of "as built" drawings for a shopping center. The complaint by Bloom alleged that Consul-Tech was the engineer of record for the project and that firm should have been contacted by Dory. (Investigative Report). In the ensuing investigation, A. Louis Smith, Department Investigator, interviewed the subject, Dory, the complainant, an architect who was also involved in the shopping center project, and a representative from the Department of Environmental Regulation who had been involved in the permitting of the project in Orlando. He obtained information that Dory had been hired by Donald Fischer an architect and part-owner of the project, to assist in getting the permits for the water and sewage systems. This meant Dory had to inspect the constructed systems and certify that they had been completed in accordance with the permit plans. "As-built" drawings were forwarded by Dory to DER to show the modifications and changes in November, 1985. Smith also obtained copies of DER forms relating to the same project that indicated on 11/15/84, a year earlier, Ivan Dory provided an engineer's certification for a water system permit application. The application was marked "void" and was rejected by DER for failure to attach engineering plans and specifications. On 1/15/85, Richard Labinsky, P.E., from Consul-Tech Engineering, Inc. provided the engineer's certification for the shopping center project's water system. This time the permit was granted and the systems were apparently built. On November 8; 1985, after being retained by Donald Fischer for that purpose, Ivan Dory provided "as built" certification to DER regarding the water and sewage systems. On November 19, 1985, the District Engineer for DER in Orlando wrote to Ivan Dory and asked for clarification or an explanation of the 1984 and 1985 certifications and Dory's subsequent role in certifying the project "as built". Dory did not respond to the letter, but instead was provided a copy of Donald Fischer's response stating that Consul-Tech was hired to do the design work and Ivan Dory was hired to do the "as-built" certification. In the interview with Ivan Dory, Smith was told that Dory had contacted the project's engineer of record, Consul-Tech, and informed Gary Bloom that he had been retained. (Investigative Report, Deposition of A. Louis Smith, and Deposition of Ivan Dory) At the conclusion of the narrative portion of the Investigative Report, there is this comment: (INVESTIGATORS NOTE: In the documents obtained from DER, it was noted that the SUBJECT, on 11/15/84, before he had made any drawing of the IRIS project, signed and sealed a certification, a Statement by Engineer, that reads, "This is to certify that the engineering features of this system have been designed by me in accordance with Florida Administrative Code Rule 17 - 6/17 - 22..." (Exh. 3). It was further noted that the SUBJECT did effect the "As-Built" plans, after the COMPLAINANT's efforts (Exhs. 18 and 19.)) The investigative report dated May 21, 1986, referenced a series of attached exhibits, including the forms and correspondence described above, as well as two sets of plans for the shopping center water system: one sealed by Richard Labinsky, P.E., from Consul-Tech, dated 1/2/85; and the other (same plans) signed and sealed by Ivan Dory, with no date on the signature. On the latter set, Ivan Dory's company name was placed over the Consul-Tech logo, so that the Consul-Tech name was deleted. (Joint Statement exhibits Number 9 and 10) On or about July 31, 1986, a Probable Cause Panel of the Board of Professional Engineers found that, if subsequently proven, the factual allegations would constitute a violation of their disciplinary guidelines in Chapter 471, Florida Statutes. Pursuant to subsection 455.225(3), Florida Statutes, the Board directed the Department to file an Administrative Complaint against Ivan Dory and prosecute it pursuant to the provisions of Chapter 120. (Joint Statement in Lieu of Hearing). The Department filed its case number 0065485, styled DPR, Petitioner v. Ivan R. Dory, Respondent, on or about October 14; 1986. After Respondent requested a formal hearing and filed an answer, affirmative defenses and motion to dismiss, the case was referred to DOAH and assigned DOAH case number 86- 4511. (Joint Statement in Lieu of Hearing). The Administrative Complaint alleged, in pertinent part: * * * Respondent was hired by Goldenholz- Fischer Architects and Planners, P.A. (specifically by Donald Fischer)("Fischer") to effect certifications and "as-Built" drawings for a project known as Iris Shopping Center (Iris), located at 4502-4548 Curry Ford Road, Orlando, Florida. On or about November 15, 1984 Respondent signed and sealed a "Statement by Engineer" which was submitted to the Department of Environmental Regulation (DER) which stated in part: "This is to certify that the engi- neering features of this system have been designed by me in accor- dance with Florida Administrative Code Rule 17-6/17-22 and any applicable local requirements." These plans referred to in Respondent's "Statement by Engineer" were not prepared by him. The plans had been previously prepared by Richard M. Labinsky, the engineer of record for the Iris project, who was an engineer employed by another engineering firm previously hired by Fischer called Consul-Tech Engineering, Inc. of Ft. Lauderdale, Florida. Although Respondent subsequently prepared "As-Built" drawings for the Iris project, he knew that at the time he signed the "Statement by Engineer" for the DER on or about November 15, 1984 that he had not prepared the engineering plans for that project. Based on the foregoing allegations, Respondent is guilty of violating Section 471.033(1)(e), which prohibits a licensee from making or filing a report or record which he knows to be false. * * * Unknown to DPR, the Probable Cause Panel or to the investigator, A. Louis Smith, Ivan Dory had prepared an earlier set of drawings for the project, dated 10/30/84 and those drawings, not the ones prepared by Consul-Tech Engineering, Inc., were the subject of Dory's November 15, 1984, certification to DER. Those earlier drawings were prepared based upon an oral contract with Bernon D. Thomas, who represented himself to be the agent for the owner of the shopping center project. Bernon Thomas never paid for the drawings and later disappeared from the scene; the drawings were never delivered to Thomas. Nevertheless, somehow unauthorized by Dory, the November 15, 1984; signed certification was submitted to DER without the drawings. That application was rejected by DER, as stated in paragraph 3; above. These facts were provided in an affidavit by Ivan R. Dory- and were filed in Case Number 86-4511 on December 1, 1986. The subject drawings dated 10/30/84, were attached as an exhibit to the affidavit. In his deposition, Ivan Dory stated that he did not provide the drawings to the investigator, nor did he think that Mr. Smith had any reason to know they existed. (Dory Deposition, 2/26/87; P. 21). Through his attorney; Dory notified DPR of the actions it had taken in the case and demanded that DPR dismiss the case and pay Dory's attorney's fees and costs. DPR filed its Notice of Voluntary Dismissal on January 6, 1987. DPR has not paid any portion of Dory's attorney's fees or costs. (Joint Statement in Lieu of Hearing). Attorney's fees in the amount of $1,485.00 were incurred prior to DPR's filing of its Notice of Voluntary Dismissal in DOAH Case Number 86-4511. Fees in the amount of $2,340.00 and costs of $58.27 were incurred after voluntary dismissal, but in pursuit of fees. (Affidavit of Donald D. Karraker, filed 5/21/87; Joint Statement in Lieu of Hearing).
The Issue The issues in this case concern the question of whether Computer Resources, Inc., offered a responsive bid to the invitation from the State of Florida, Department of General Services, and the related question of whether it is entitled to the award of a contract for the provision of items 1 through 9 within the bid apparatus. In determining these issues, the testimony at hearing of Jerry Wensloff and Danielle Stark, witnesses for Computer Resources, Inc., has been considered. The testimony of George Banks and Bill Fox, called by the State of Florida, Department of General Services, has also been considered. Finally, the testimony of Mark Smith and Kent Coykendall, witnesses for Verbatim Corporation, has been considered. Joint Exhibits Nos. 1 through 9, Exhibit No. 1 of the State of Florida, Department of General Services, Verbatim Corporation's Exhibits Nos. 1 through 5 and Computer Resources, Inc.'s, Exhibits Nos. 1 through 4 have been examined. SUMMARY OF THE ARGUMENTS The State of Florida, Department of General Services urges the rejection of the Computer Resources, Inc., bid based upon its belief that the bid was unresponsive due to the fact that technical literature provided by that bidder was for different products than those described as being products offered in response to the bid invitation. Further, the Department believes that the bid was unresponsive because at the time the bid response was made, the products that were being offered by Computer Resources, Inc., were not current models. These alleged failures on the part of Computer Resources, Inc., in the perception of the State of Florida, Department of General Services, constitute material defects or departures from the bid requirements. Computer Resources, Inc., argues that its bid is responsive in terms of technical information provided and asserts that the products offered in response to the bid were current models. Verbatim Corporation has the same concerns expressed by the Department on the topic of the acceptability of Computer Resources, Inc.'s, bid and also asserts that testing done on some of the products which Computer Resources, Inc., would intend to offer pursuant to contract reveals that those products do not meet the bid specifications. Consequently, Verbatim wishes to have the contract for items 1 through 9 awarded to it as the lowest responsive bidder.
Findings Of Fact The State of Florida, Department of General Services ("DGS"), offered for bid its project number 407-250-440-B. This bid involved the purchase of single-sided and double-sided computer diskettes. Among those companies who responded to this invitation to bid were Computer Resources, Inc., ("CRI") and Verbatim Corporation ("Verbatim"). Having examined the bid responses in the subject project, DGS rejected the CRI bid as not responsive. The bid opening occurred on August 1, 1986. Given that CRI had been the low bidder by dollar amount, the rejection of its bid caused the Department to declare its intention to award the contract to Verbatim, the next lowest bidder. When confronted with the declaration of alleged unresponsiveness, CRI offered a timely challenge to that declaration by DGS. By way of relief, CRI requested an informal Section 120.57(2), Florida Statutes, hearing to resolve the dispute. Verbatim was not made aware of this proceeding to resolve the case by an informal hearing until that hearing had been convened by a hearing officer within DGS and conducted. Subsequently, upon the reconvening of the informal proceeding, it was determined that disputed facts existed between the parties and the case was referred to the Division of Administrative Hearings for conduct of a formal hearing in accordance with Section 120.57(1), Florida Statutes. That hearing before the Division of Administrative Hearings was held on June 19, 1987. More particularly, when DGS put the subject bid out by mailing on June 24, 1986, the invitation to bid sought responses for 33 different types of computer diskettes which would be made available for purchase by state agencies in Florida and others entitled or required to participate in the State of Florida's purchasing system administered by DGS. The total annual dollar volume of the contract approximated $800,000. Items 1 through 9, which are the items in contest in this dispute, represent the majority of the contract. CRI had initially protested the declaration of this alleged unresponsiveness on all items, 1 through 33. It subsequently withdrew its protest on items 10 through 33, leaving for consideration items 1 through 9. The invitation to bid specified two sizes of computer diskettes: 5 1/2 inch and 8 inch. Of the remaining items at issue, 1 through 9, an award could be made for all nine items or each of those nine items separately. Twenty-three vendors submitted bids in response to the invitation. Following bid opening on August 1, 1986, and its evaluation, DGS issued the bid tabulation on September 16, 1986. Fourteen bids were found responsive, Verbatim among them. The CRI bid was rejected based upon the Department's concerns that CRI had not provided published specifications for the products that it offered in response to the bid invitation. DGS also rejected the bid because it did not believe that CRI was offering a current model as called for in the bid document. The specific nature of those concerns is discussed in succeeding paragraphs. A substantial requirement within the bid specifications related to the necessity for the diskettes sought for purchase to attain a clipping level of at least 60 per cent. Basically, the clipping level is a measure of the diskettes ability to retain the electronic/magnetic signal originally fed to it. It corresponds to the amount of signal remaining on the diskettes following the initial signal transmittal. This is important because the higher percentage of retention represents better longevity in storage of data applied to the diskettes. In order to identify the retention capacity of the diskette, the diskettes are tested during the manufacturing process to determine their clipping level. DGS had raised the previous requirements which it had for clipping level of diskettes, from 40 per cent to 60 per cent, given the wide range of users who would be utilizing the diskettes and the fact that some of those users were less discriminating in their care of the diskettes and because the higher capacity in clipping level was seen as promoting a greater protection of data storage. The invitation to bid further described technical specifications which mandated that the diskettes provided under contract would achieve a 60 per cent "clipping level" for missing pulse and a 20 per cent "clipping level" for extra pulse. In particular, at paragraph 3.1.8 of the invitation to bid, it was specified that "Diskettes must be individually tested and certified to assure 60 per cent or more of the original clipping signal strength remaining on each bit recorded for retrieval. A copy of the manufacturer's published specifications shall be included in the bid." On the seventh page of the specifications, paragraph 3.1.9(A) set forth that the missing pulse should have no permanent errors on all tracks at 60 per cent clipping level. The invitation to bid contained a special condition which mandated that the bid responses be accompanied by technical literature on the products bid. This special condition stated: Technical literature is a requirement of this bid to accommodate an evaluation to assure that products offered meet or exceed the specifications attached hereto. Failure to provide such data with the bid may result in rejection of the bid. There is also set forth in the general conditions at paragraph 4e, entitled "Conditions and Packaging," as follows: It is understood and agreed that any item offered or shipped as a result of this bid shall be new (current model at the time of this bid). All containers shall be suitable for storage and shipment and all prices shall include standard commercial packaging. The requirement that the bidders submit technical literature to assist in evaluation of the products in their compatibility with bid specifications was critical, made the more so in that DGS was not in a position to test the clipping level. Nor was the end user in a position to determine the clipping level of the product bid. Should the diskettes fail to meet the 60 per cent clipping level, there would ensue a potential problem of the loss of data and the need to reenter that lost data into the system, assuming that there was some other source from which the data could be recaptured. These concerns prompted the requirement of paragraph 3.1.7 in the bid document which mandated that the diskettes must be 100 per cent individually certified or verified to be error free. In summary, the only assurance that DGS and its prospective users have that the diskettes are as billed, is the ability to examine the published specifications of the companies' bids and ascertain whether they are in accordance with bid specifications and upon the promise by the bidders in their responses that current products are being offered. Within its bid response, CRI, in its price sheet for items 1 through 9, describes the brand name of the products bid as being CRI brand. The identifying numbers for the products bid in these items utilized eight digits, the last three digits as to each item being constituted of the numbers 333. By contrast, the product specifications contained within the bid response of CRI in the lead sheet identified the product as CRI Opus and within the product specifications description found on sheets two through four identified the products as Opus brand. In both the lead sheet and sheets describing the particulars of the products it is indicated that these diskettes were manufactured by Computer Resources, Inc., Compared to the numbering system found in the pricing sheets, the first five digits were similar in the product specifications to those found in the pricing sheets; however, the product specification information did not include the suffix numbers, or final three numbers, 333. Given the circumstances set forth in the price listing and the product specifications as offered in CRI's bid response and the explanation of those materials presented at hearing, it is concluded that CRI intended to provide CRI brand products if awarded the contract for items 1 through 9. Nonetheless, in its product specification sheets the Opus brand product was being described. What had transpired, according to the CRI representative who submitted the product specification sheets, was that CRI brand product information was not available for submission with the bid materials tendered by CRI and as a consequence, this individual took product information pertaining to Opus brand products which described a 50 per cent clipping level for missing pulse and changed that 50 per cent to 60 per cent in an attempt to comply with the requirement for 60 per cent clipping level. An Opus brand product at 50 per cent clipping level was not acceptable. In effect, CRI tailored the product specification sheet pertaining to the Opus brand products in an effort to meet the particular requirements of the subject bid invitation. According to its witness, the product specifications or technical data that CRI intended to offer with its bid response was found in Joint Exhibit No. 5, admitted into evidence. It shows a 60 per cent clipping level. Per the employee for CRI involved in the preparation of the bid response in discussion, this is the set of materials that he wished to offer, thereby avoiding the necessity to white out the 50 per cent clipping level and substitute a 60 per cent clipping level. Interestingly, the Joint Exhibit No. 5 is the same as what was submitted with the exception that on the lead sheet of the Joint Exhibit No. 5 there are found the initials OEM, meaning original equipment manufacturer. OEM products which CRI was manufacturing at the relevant time were for the benefit of purchasers who used their own brand names, not the Opus brand name. The impact of the Joint Exhibit No. 5 does not change the difficulty that DGS would have in trying to ascertain whether Opus products or CRI products were being offered in response to the bid. Joint Exhibit No. 5 continues to give the impression that Opus is the brand which is being described, and not CRI. Moreover, given the facts that were adduced at hearing, there is a serious question about whether technical literature existed which showed Opus products at a 60 per cent clipping level, as opposed to a 50 per cent clipping level. Notwithstanding Computer Resources, Inc.'s, protestations to the contrary, while CRI and Opus are names that are associated with Computer Resources, Inc., the manufacturer, the brand names CRI and Opus are separate marketing lines and not synonymous. CRI is a brand name which Computer Resources, Inc., has selected in marketing its products for government purposes, such as under consideration here, and Opus is a brand name employed in the basic marketing of Computer Resources, Inc., products for sale other than in a setting such as found in this dispute. The problems with the CRI bid were made the more bewildering for DGS when review of the submission of Florida Ribbon and Carbon Office Products, another bidder in this project, revealed that it was offering a product manufactured by Computer Resources, Inc., known as Unicopy, which in the details of the product specifications were similar to the offering by CRI and set out a 50 per cent clipping level, which was found to be unacceptable. The Florida Ribbon and Carbon Office Products bid submission carried the same five-digit numbering code in identifying the Unicopy products in describing its product specifications that was found in the CRI product specifications for its Opus brand products. That bid response by Florida Ribbon and Carbon Office Products also attached certain sales information pertaining to Opus brand diskettes. Testimony pointed out that CRI was manufacturing diskettes with 50 per cent clipping level to be sold by Florida Ribbon and Carbon Office Products under the Unicopy brand. DGS, in the face of this information pertaining to Florida Ribbon and Carbon Office Products, was uncertain about the true capacity of the product offered by CRI. Was it 50 per cent or 60 per cent? The bid submission by CRI, in its compatibility sheets related to cross referencing with equipment of other manufacturers, listed Opus as the brand, not CRI. This enhanced the confusion about which products were being offered: Opus or CRI? None of the numbers employed in the system of identification for Computer Resources, Inc., pertaining to the diskettes which are at issue identify the clipping level of the product. The first five digits used in its number identification system describe the basic nature of the diskettes and the use of the suffix or latter three numbers describe packaging or routing information. Consequently, when DGS or its users refer to these numbers, they cannot ascertain what clipping level is found within the diskettes. The bid submission made by CRI did not explain the differing marketing ideas in the use of the CRI or Opus brands, nor did it explain how the numbering system works and whether there was any compatibility between a CRI product and an Opus product. An examination of the facts leads to the conclusion that Computer Resources, Inc., was not selling a product under the CRI brand name on August 1, 1986, bid opening day, which met the 60 per cent clipping level for missing pulse, such that technical specifications or product specifications for CRI brand could have been supplied with Computer Resources, Inc.'s, bid response. Petitioner's Exhibit No. 1 admitted into evidence, correspondence of December 26, 1985, from Jerry E. Wensloff to Tab of Nashville, says that Computer Resources, Inc., was dealing with a 60 per cent clipping level for system houses, software houses, etc. who ask for a 60 per cent clipping level in products which they ordered from Computer Resources, Inc., This does not equate to the manufacture of products under the CRI brand name which carried with them technical specifications describing a 60 per cent clipping level. The provision of the 60 per cent clipping level for these various purchasers was under what the letter describes as Computer Resources, Inc.'s, operation for supplying OEM, or original equipment manufacture. At the time of the correspondence, as stated in that correspondence, approximately 50 per cent of Computer Resources, Inc.'s, business as a manufacturer was OEM accounts wherein some demand of 60 per cent clipping level had been made by purchasers. On August 1, 1986, in the warehouse associated with the manufacturing plant for the type of diskette in question here, Computer Resources, Inc., was holding in inventory products under the Opus brand name. It had no stocks under the CRI brand name. Subsequently, Computer Resources, Inc., gained contracts with two state governments and began to make available diskettes under the CRI brand name. The standard packaging product which Computer Resources, Inc., was manufacturing on August 1, 1986, using the Opus brand name was at a 50 per cent clipping level. A sixty per cent clipping level product under the Opus brand was provided upon request. The Unicopy brand name associated with Florida Ribbon and Carbon Office Products was at a 50 per cent clipping level on August 1, 1986, in accordance with the arrangement between Computer Resources, Inc., and Florida Ribbon and Carbon Office Products. On August 1, 1986, the company known as Ashton Tate had an ongoing arrangement with Computer Resources, Inc., for the manufacture of diskettes with 60 per cent clipping level, which Computer Resources, Inc., described as an OEM account. Computer Resources, Inc., did not have other routine OEM accounts at that time or at the point of final hearing in this case. On August 1, 1986, the time when the bids were opened, the process which Computer Resources, Inc., employed for distinguishing differences in the diskettes in terms of clipping level response was through certification. Once the diskettes' performance was graded, the diskettes were placed in bins with a move ticket. In essence, this was a sorting process by clipping level following the manufacture of the diskettes. In August 1986, the manufacturing plant which produces the diskettes which are marketed by Computer Resources, Inc., did runs of diskettes at 60 per cent clipping level about ten days out of the month. Leftover products following the manufacture of 60 per cent clipping level for Ashton Tate would be used to fill other accounts that made specific request for that clipping level, but the leftover diskettes were not being separately marketed as a 60 per cent clipping level product. CRI had shipped sample diskettes to DGS on August 22, 1986, to demonstrate the nature of its products' appearance to the state. Further request was made by the state for sample products on March 19, 1987, and on March 24, 1987, those products were shipped to DGS. In the March 1987 shipment, the products that were shipped were label led as CRI products and carried with them a five digit model number corresponding to five digit model numbers provided in Computer Resources, Inc., product specifications submitted with the bid response. In addition to the boxes containing the diskettes, the diskettes themselves bore this product numbering system. The boxes and contents did not carry the suffix or last three digits found in the pricing sheet which had been submitted with the bid response of Computer Resources, Inc. On the other hand, a packing list did carry eight digit numbers, with the last three numbers being 353, a suffix which was different from that found in the pricing list of the bid submission by CRI. The suffix change was designed to distinguish the packaging of the CRI product. DGS had been concerned that Computer Resources, Inc., in submission of its CRI brand name, could not meet the 15-day delivery requirement which DGS had for shipment of the products at issue. In both the August 1986 and March 1987 shipments of CRI diskettes, the 15-day threshold was met. While CRI has shown the ability to ship a small amount of products under the CRI label on those two occasions, on August 1, 1986, at the place and time where the bid was opened, Computer Resources, Inc., was not making available any significant amount of 60 per cent clipping level products as called for by the items 1 through 9, either as a CRI brand or an Opus brand. It was stocking Opus products in the 50 per cent clipping level and its principal 60 per cent clipping level account was with Ashton Tate, which merchandise was already spoken for. Any other arrangement for provision of 60 per cent clipping level products was on an "as needed" basis. Verbatim obtained part of the sample diskettes which had been sent to DGS in March 1987. It obtained ten double-sided, double-density diskettes and twenty Single-sided, double-density diskettes. These diskettes had been specifically tested by Computer Resources, Inc., before sending them to the State of Florida and shown to perform, according to this testing, at a 75 per cent clipping level. Testing done by Verbatim in Sunnyvale, California, and Charlotte, North Carolina, revealed a number of failures below the 60 per cent clipping level. The California tests showed four out of ten failures for double-sided diskettes and one out of twenty failures for single-sided diskettes, whereas the North Carolina experience was three of ten of the double- sided diskettes failed and one of twenty single-sided diskettes failed. The equipment utilized by Computer Resources, Inc., for testing prior to shipment and the equipment in testing conducted by Verbatim was different. In addition, handling of the diskettes can adversely affect the performance of the diskettes in terms of signal retention. Conversely, at times testing can enhance that performance. On balance, given the adversarial posture of the private litigants in this cause, no conclusion is reached on the true capacity of the diskettes which were tested by Computer Resources, Inc., and Verbatim. The experiences in testing do point out the efficacy of the requirement that DGS be provided a clear statement of the technical information concerning the products bid by Computer Resources, Inc. In summary, Computer Resources, Inc., did not submit technical information and specifications associated with the brand of product that it intended to offer if the contract was awarded to it. Indeed, the technical information which it would have submitted had it had the time to prepare it was for a product brand different than the brand it had bid on this project. That is to say, the specifications offered at the time the bid was submitted were for Opus products and the specifications which it desired to offer at the time that the bids were submitted were also for Opus products, not CRI. Furthermore, there is some question on whether legitimate specifications existed pertaining to Opus products with a 60 per cent clipping level on August 1, 1986, the date of bid opening. In this circumstance, it is not appropriate that DGS allow the substitution of specifications as envisioned by the Joint Exhibit No. 5 pertaining to the Opus products or any other substitution of specifications. Taking into account the facial appearance of the bid response of Computer Resources, Inc., and the evidence which was presented at the final hearing which attempted to describe the significance of those materials, with particular emphasis on the confusion about brand names, model numbers, the inability to differentiate clipping levels by reference to product numbers provided by Computer Resources, Inc., and the confusion created for DGS as a consequence, the technical information provided by Computer Resources, Inc., is found to be inadequate. Likewise, Computer Resources, Inc., did not have a current model at the time the bids were opened on August 1, 1986, under the brand name CRI, the brand which it chose to operate under for the purpose of this bide which could be provided to DGS. It had the capacity to produce that quality of diskette and was producing it as what it described as OEM for the benefit of Ashton Tate and a few other smaller accounts. This, however, could not be considered a current model of CRI brand. Finally, the fact that the declaration of disqualification of the Computer Resources, Inc., bid causes additional expense to the State is not sufficient reason to declare the Computer Resources, Inc., bid responsive. Such an outcome runs contrary to the weight of the evidence and would be inappropriate.
The Issue The issue is whether the decision by the Florida Department of Corrections to award contracts for items numbered 2-5, 7-8 and 12 of Invitation to Bid No. 98-INST-7188 to Willo Products Company, Inc. should be upheld.
Findings Of Fact On June 16, 1998, DOC issued the ITB seeking bids for door locking control panels for prison doors at several correctional institutions throughout Florida. The control panels will operate the doors within the institutions, including security cell doors, and will replace existing systems at these correctional institutions. The ITB separated the work into fourteen items. Each item required the bidders to submit proposed costs for work, material and labor, to be performed at one or more dormitories within one or more correctional institutions. Each item contains a grand total cost for all work to be performed under that item. The ITB did not contain a place for a bidder to indicate the cumulative grand total for all fourteen items. The language of the ITB in section 5.0 of the specifications clearly reflects on its face that DOC would award contracts on an item-by-item basis. The ITB included the following specifications among others: 1.01 Introduction: The department has purchased sliding locking devices and other electronic security locks, for nine (9) institutions and (21) dormitories throughout the state. It has been determined that the existing control panels that operate the doors are not sufficient for the task. This ITB is for the purpose of procuring the appropriate control panels to operate the electro/mechanical sliding devises and other electro/mechanical locks manufactured by various security lock manufacturers. The successful bidder must have a minimum of three years experience in the manufacturing and installation of door locking control systems. The successful bidder shall furnish and install the control panels and will provide testing and training services, a one-year warranty, and spare parts. The department will initiate purchase order(s) for twenty one (21) dormitories upon a award of the bid. One dormitory will be the old style T-Dorm (Desoto CI), the remaining will be Butterfly style at various location. [sic] Depending on the availability of funds up to 33 controls panel at various locations may be purchased. (Emphasis added) Door Relay Modules: Door relays shall be mounted on circuit board modules, with each module providing door control functions for no more than one (1) door. Relays shall be 24VCD coil, SPDT, 10 amp rated contacts, and rated for a minimum of 1,000,000 mechanical operations. (Emphasis added) 3.06 Submittals: 3.0.6.1 Six (6) copies of manufacturer's data in the form of cut sheets and engineering drawings of all components required for the complete control system. Submittals shall be delivered to the Bureau of Design and Construction within ten (10) days of receipt of purchase order. Bidders shall submit cut sheets on their equipment with bid. (Emphasis added) 5.0 Contract Award(s) The department will award contract(s) to the responsible bidder(s) with the lowest cumulative GRAND TOTAL ITEM price on an item- by-item basis as specified on the price sheet (TABLE 1) for this ITB. Each item award represents all required labor and products for all dormitories requiring control panels at various correctional institutions on a facility-by-facility basis. In the event the low cost bidder is found non-responsive, the department may proceed to the next lowest cost responsive bidder and continue the award process. Per Florida Statutes (287.057 & 287.0945), a price preference of up to 5% may be given to any bid submitted by a certified MBE firm (that also meets all other bid requirements). 4. The ITB contained the following General Conditions among others: 6. MANUFACTURERS' NAME AND APPROVED EQUIVALENTS: Any manufacturers' names, trade names, information and/or catalog numbers listed in a specification are for information and not intended to limit competition. The bidder may offer any brand for which he is an authorized representative, which meets or exceeds the specifications for any item(s). MEASUREMENTS: Customary measurements appearing in these specifications are not intended to preclude bids for commodities with metric measurements. If bids are based on equivalent products, indicate on the bid form the manufacturer's name and number. Bidder shall submit with his bid, cuts, sketches, and descriptive literature, and/or complete specifications. Reference to literature submitted with a previous bid will not satisfy this provision. The Agency reserves the right to determine acceptance of item(s) as a approved equivalent. Bids which do not comply with these requirements are subject to rejection. Bids lacking any written indication of intent to bid an alternate brand will be received and considered in complete compliance with the specifications as listed on the bid form. The Agency is to be notified of any proposed changes in (a) materials used, (b) manufacturing process, or (c) construction. However, changes shall not be binding upon the Agency unless evidenced by a Change Notice issued and signed by the Agency Purchasing Director or Purchasing Agent. (Emphasis added) AWARDS: As the best interest of the State may require, the right is reserved to make award(s) by individual item, group of items, all or none, or a combination thereof; on a statewide basis with one or more suppliers; to reject any and all bids or waive any minor irregularity or technicality in bids received. When it is determined there is competition to the lowest responsible bidder, evaluation of other bids is not required. Bidders are cautioned to make no assumptions unless their bid has been evaluated as being responsive. All awards made as a result of this bid shall conform to applicable Florida Statutes. NONCONFORMANCE TO CONTRACT CONDITIONS: Items may be tested for compliance with specifications by the Florida Department of Agriculture and Consumer Services, or by others acceptable to the State. Items delivered not conforming to specifications may be rejected and returned at vendor's expense. . . . The ITB contained the following Special Condition among others: 12. SUBMISSION OF MANDATORY FORMS/LITERATURE * * * 4. Complete Technical Data on items other than as specified shall be provided with bid by the vendor, for evaluation purposes, otherwise bid will not be considered. Tomlinson submitted the lowest bid for all 14 items in the amount of $2,439,550.00. Willo submitted the second lowest bid for all 14 items in the amount of $2,479,653.00. On July 20, 1998, DOC posted a bid tabulation on which the low bid for each item was circled. The tabulation stated that the "circled price indicates intent to award." Willo submitted low prices on items 2-5, 7-8 and 12. Tomlinson submitted low prices on items 1, 6, 9-11 and 13-14. The total amount of the items for which Willo submitted the low price was $2,031,726.00. The total amount of the items for which Tomlinson submitted the low price was $399,550. Either Tomlinson or Willo submitted the low price and the second low price on every item. For every item on which Tomlinson submitted the second low price (2-5, 7-8 and 12), Tomlinson's price was within 5 percent of Willo's. Tomlinson is a custom control systems manufacturer and supplier certified by the State of Florida as a Minority Business Enterprise ("MBE"). Tomlinson developed and manufactures a single-door control module for controlling lock mechanisms on prison doors. Tomlinson has provided DOC hundreds of single-door control modules, either as a prime contractor or a subcontractor. Tomlinson first provided the single-door control modules to DOC pursuant to a subcontract on a renovation project. The specifications for that project called for a complicated multiple-door control panel that was problematic to troubleshoot and maintain. At that time, Tomlinson proposed the single-door control modules and DOC accepted the modification to the specifications. Since that time, every DOC project requiring door-locking control systems has called for a single-door system like the one developed by Tomlinson. Tomlinson filed its protest on August 3, 1998, alleging that DOC acted arbitrarily, capriciously and with favoritism to Willo by awarding it the contracts for items 2-5, 7-8 and 12. Tomlinson also contended that: (1) Willo's bid was non- responsive for failure to submit cut sheets with its bid; (2) Willo's relay module does not meet the specifications of the ITB; and (3) Willo does not meet the experience requirements of the ITB. Willo manufactures a variety of products for new construction and renovation projects. Willo's work is usually performed on a contact basis. Willo was founded in 1945. It has manufactured and installed door-locking control systems since 1981. Consequently, it meets the ITB's requirement for experience in manufacturing and installing door-locking control systems. The door-locking control systems manufactured and installed by Willo include relay logic systems. In 1997, Willo was awarded contracts in other states for projects utilizing relay logic systems, which are similar to the relay logic system required by the ITB. Subsequently, Willo fabricated and installed those systems. Willo intends to provide a relay logic system in connection with its award under the ITB. During the development of the ITB, Margaret Tomlinson, president of Tomlinson, inquired of DOC whether the ITB would contain a requirement for the successful bidder to acquire a payment and performance bond. She also requested that DOC permit work under the ITB to be contracted in portions so that smaller companies like Tomlinson could compete for the work. DOC decided to exclude a payment and performance bond from the ITB to allow smaller companies to compete. However, DOC was not inclined to award all fourteen items of work to a single contractor without a payment and performance bond because the work would amount to over two million dollars. Consequently, the agency determined that it would award contracts on an item-by- item basis, increasing the probability that multiple contractors would perform the substantial amount of work required under the ITB. Multiple contractors would decrease the risk of default. Additionally, DOC placed optional items within the ITB as a means to fix prices for a year because the agency did not have funding for all the projects. During the development of the ITB, Ms. Tomlinson requested that DOC include the standard MBE price preference language in the ITB. DOC commonly uses price preference language that is discretionary in nature, using the word "may" instead of "shall." The Minority Business Advocacy Assistance Office approved the use of the discretionary price preference language in the ITB. After DOC evaluated the bids, it decided not to apply the MBE price preference because Tomlinson, an MBE, was the low bidder on a portion of the bid. There was no necessity or basis to provide Tomlinson's prices additional consideration because its prices were very competitive. Manufacturers of the component parts of a system provide cut sheets containing technical specifications of those component parts. Section 3.0.6.1 of the ITB's specifications required bidders to submit cut sheets on their equipment with their bid. Willo did not submit a cut sheet with its bid. Instead, Willo bid the project per the specifications of DOC. Relying upon paragraph 12.4 of the special conditions and the signature block of the general conditions, Willo understood that it would be bound to provide the products outlined in the specifications. Tomlinson included with its bid a list of material, prepared by Ms. Tomlinson, entitled "Technical Specifications of Components." This list describes some of the parts that Tomlinson would use to perform work under the ITB; it was not a cut sheet provided by the manufacturers of the component parts. Tomlinson's list did not include information regarding the diodes that it uses on its relay module. Nonetheless, DOC determined that the failure to submit cut sheets was a minor irregularity that could be waived, and it did so. There is no evidence that DOC has ever rejected a bid due to a failure to submit a cut sheet. DOC assumes a bidder will provide material compliant with a bid's specifications unless the bidder identifies substitute material. DOC determines compliance with the specifications after it awards a contract to the lowest bidder when that bidder provides submittals to DOC. Accordingly, the failure of Tomlinson and Willo to submit cut sheets with their bids did not provide either of them a competitive advantage. Section 2.0.2.1 of the specifications requires, among other things, that the relays have 10-amp rated contacts. The specifications do not specifically identify a requirement for relay contacts to have an inductive load rating or a resistive load rating. Tomlinson's relays have 10-amp inductive load rated contacts. They meet the specification requirements. Willo's relays have contacts with a 5-amp inductive load/10-amp resistive load rating. Willo's relays are also compliant with the specifications. The relays will be used to control electromechanical door locks operated by motors or solenoids. Most of the motors used to move the security cell doors in this ITB were manufactured and installed by Willo. Willo's relays with 10-amp resistive load rated contacts are exactly the type of relay that DOC sought in the ITB's specifications. They are general-purpose relays that will work on any motor used to operate security cell doors. Late in 1997, locks on cell doors were being compromised, allowing inmates to get out of their cells. Pursuant to pressure from the legislature, DOC decided to correct the situation by replacing swinging cell doors with sliding cell doors manufactured and installed by Willo. Later, DOC personnel determined that the door-locking control systems at various correctional institutions also needed to be replaced in an expedited manner. Tomlinson's control system operates one cell door. During work on an unrelated project, Tomlinson provided DOC with drawings of its single-door control module and its control system. At that time, Willo's control system operated multiple doors. The single-door module is easier for DOC's staff to maintain and replace. Therefore, DOC was interested in the procurement and installation of single-door modules. DOC and Tomlinson discussed the possibility of Tomlinson entering into a SNAPS agreement with the Department of Management Services whereby Tomlinson would provide DOC with control systems for numerous dormitories. A SNAPS agreement allows a vendor to market its product to state agencies without competitive bidding. Ms. Tomlinson learned that a SNAPS agreement was not an appropriate vehicle for DOC to procure all of the door-locking control systems that it needed. She suggested that Tomlinson provide the work on a sole-source basis for approximately $40,000 a dormitory. Meanwhile, Willo provided DOC with a training session related to the installation of the sliding cell doors. During that meeting, DOC discussed its need for the control systems to operate the sliding doors. DOC furnished Willo with specifications for the work. DOC also showed Willo sample drawings of single-door control modules and control systems needed for the emergency work. These documents included schematics of various circuits, which were created by DOC's electrical engineer, and Tomlinson's control system interfacing with a steel door mechanism. Willo neither made copies nor kept copies of these drawings. DOC did not show Willo a picture of Tomlinson's single- door relay module. The Tomlinson document that was shown to Willo was a 24 VDC control system. This type of system is not unique. Rather, it is common, although components vary in size, shape and configuration. In time, DOC negotiated with Willo for the door-locking control systems for the following reasons: (1) Willo was on-site installing the security cell doors; (2) Willo had measured the building for the control panels; (3) Willo had determined the electrical requirement; and (4) Willo was the only company that could manufacture and install the control systems under an expedited schedule. Consequently, DOC issued an Emergency Purchase Order to Willo on December 11, 1997, for the manufacture and installation of control systems for ten dormitories at four correctional institutions. On January 27, 1998, DOC issued another Emergency Purchase Order to Willo further expediting the work to be performed at two dormitories. There is no credible evidence that DOC showed favoritism to Willo by the issuance of the Emergency Purchase Orders. Willo did not copy Tomlinson's drawing to develop its own single-door control panel. Using the specifications provided by DOC and decades of experience in building control systems, Willo manufactured a control system that met DOC's requirements. Ms. Tomlinson's testimony that Willo could not have created a single-door panel without reviewing the documents provided by DOC is not persuasive. Tomlinson's relay module is not unique. In fact, most relay logic controls are identical. More importantly, there is no credible evidence that DOC showed favoritism to Willo and bias against Tomlinson in regards to the ITB at issue here.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Corrections enter a Final Order awarding items 2-5, 7-8, and 12 to Willo. DONE AND ENTERED this 1st day of December, 1998, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 1st day of December, 1998. COPIES FURNISHED: F. Alan Cummings, Esquire Alejandro Espino, Esquire Cummings and Thomas, P.A. 1004 DeSoto Park Drive Tallahassee, Florida 32302-0589 Scott Clodfelter, Esquire Department of Corrections 2601 Blair Stone Road Tallahassee, Florida 32399-2500 Mary M. Piccard, Esquire Vezina, Lawrence and Piscitelli, P.A. 318 North Calhoun Street Tallahassee, Florida 32301 Louis A. Vargas, General Counsel Department of Corrections 2601 Blairstone Road Tallahassee, Florida 32399-2500 Harry K. Singletary, Jr., Secretary Department of Corrections 2601 Blairstone Road Tallahassee, Florida 32399-2500
The Issue The issue to be resolved in this proceeding concerns whether a permit should be issued, pursuant to Florida Administrative Code Chapter 62-701, Florida Administrative Code, authorizing TLA-Cambridge, LLC (“Cambridge”), to construct and operate a “waste processing facility” (“facility”) on a site (“site”) located in Miami-Dade County, Florida.
Findings Of Fact The Petitioners (Kate Wright, Joette Hill, and Jimmy Walker) are individuals who live in Miami-Dade County. The Respondent, DERM, is a division of Miami-Dade County. The Respondent, Cambridge, is a limited liability company authorized to do business in Florida. On January 4, 2008, Cambridge filed an application with DERM pursuant to Florida Administrative Code Rule 62-701.710, for the Permit authorizing the construction and operation of the facility. Cambridge’s application was reviewed by DERM pursuant to an agreement (“Operating Agreement”) that delegates certain authority from DEP to Miami-Dade County. The Operating Agreement requires DERM to follow DEP’s rules and procedures when determining whether to issue a permit for a waste processing facility. On August 18, 2008, DERM issued its ("Intent to Issue") the Permit to Cambridge. The Site Cambridge intends to construct and operate the facility on a site that is approximately 5.7 acres in size and located at 3250 N.W. 65th Street, in unincorporated Miami-Dade County, Florida. The site is owned by Florida East Coast Railway L.L.C. (“FEC”). Cambridge has entered into a 20-year lease agreement with FEC that authorizes Cambridge to use the site for the proposed facility. The site is located in an industrial warehouse district. Warehouses are adjacent to the north, south, and west sides of the site. The warehouses are served by trucks and railcars. A railroad track is adjacent to, and enters the south end of the site. Other warehouses, rail yards, and railroad tracks are located west of the site. The industrial district extends north, south, and west of the site. The eastern side of the site is bounded by N.W. 32nd Avenue, a four-lane road that runs in a north-south direction. Across the street from the site, on the east side of N.W. 32nd Avenue, is a business district. Even farther to the east is a residential area where the Petitioners live. The site previously was paved with asphalt and enclosed with a chain-link fence. An old gatehouse is located at the entrance to the site, where N.W. 65th Street dead-ends into the site. The Facility Cambridge intends to construct: (a) a one-story building (“transfer station”) that will be used to receive and process construction and demolition (“C&D”) debris; (b) a one- story office building; (c) a weigh station for weighing trucks; (d) extensions of the existing railroad tracks; and (d) a new railroad track that will pass through the transfer station. Cambridge also will renovate the gatehouse. The existing pavement on the site will remain intact, except where the new improvements will be located. The chain-link fence will be retained and enhanced to restrict access to the site. Trees and shrubs will be planted along N.W. 65th Street and N.W. 32nd Avenue to screen the public’s view of the facility and to help alleviate airborne dust. The Transfer Station will be approximately 30,000 square feet in size. It will have a roof, 4 walls, and a concrete floor that is 10 inches thick. The north side of the transfer Station will have 10 bay doors to allow access for trucks and one smaller utility door. There also will be one door on the southeast side and one door on the west side of the Transfer Station to allow railcars to move through the building. Proposed Operations C&D debris is the material that is generated when a building is constructed, renovated, or demolished. C&D debris includes concrete, lumber, wallboard, asphalt shingles, metal pipes, glass, plastic, and similar materials. Other types of solid waste cannot be accepted by the facility; they are prohibited by the Draft Permit. Cambridge’s customers will deliver C&D debris to the facility in trucks. The trucks will approach the facility from the west (i.e., the industrial district) on Northwest 65th Street and they will enter the site at the gatehouse. There will be no access to the site from Northwest 32nd Avenue. A trained attendant will perform a preliminary visual inspection of the trucks and interview the truck drivers at the gatehouse to determine whether the trucks are carrying C&D debris. If the gatehouse attendant determines that the truck is hauling garbage or other types of solid waste that cannot be accepted at the Transfer Station, the truck will be denied access to the site. Upon entering the site, some trucks will be weighed on the truck scales and then directed to the transfer station. Trucks that do not require weighing will proceed directly to the transfer station. A Cambridge employee will direct the truck to an appropriate bay door for entry into the transfer station. The truck then will back up an inclined grade into the transfer station, the tarpaulin (tarp) will be removed from the truck’s load, and the truck will dump the load onto the floor (i.e., “the tipping floor”) of the transfer station. The unloading and processing of C&D debris will only occur inside the transfer station. Cambridge will employ trained spotters and operators to process the C&D debris. DEP’s rules require that at least one spotter and one operator must be present whenever C&D debris is received at the facility. By comparison, Cambridge typically will have 4 to 6 spotters present whenever the facility is receiving C&D debris. Cambridge employees will spread the load on the tipping floor with mobile equipment and then determine how the load should be processed. “All incoming C&D debris shall be tipped, processed and stored entirely under roof in the enclosed building . . . and . . . evaluated through visual inspection by trained spotter(s) for any unacceptable solid waste (e.g., furniture, tires, etc.) or prohibited wastes (e.g., garbage, treated or painted wood, hazardous wastes, etc.)” in compliance with the Draft Permit. Unacceptable and prohibited wastes will be removed from the C&D debris and placed in separate containers (e.g., metal dumpsters), which will be removed from the site and taken to appropriate disposal facilities. Dense non-recyclable material (e.g., asphalt shingles) will be moved to an area on the tipping floor where it will be loaded directly into a railcar for transportation to a disposal site. Potentially recyclable material will be processed in a shredder, which will reduce the material to a size of approximately 12-inches by 12- inches. After the material is shredded, smaller pieces will be removed from the C&D debris with a mechanical screen and placed in a bunker with non-recyclable material. The remaining, larger materials will be placed on a conveyor belt. Recyclable materials (e.g., aluminum, copper, ferrous metal, clean lumber) will be removed from the conveyor by hand, placed in separate bunkers, and then hauled off-site and sold to recycling facilities. Materials that are not removed from the conveyor will be placed in a bunker with other non-recyclable materials. If necessary, Cambridge employees will drive a compactor over the non-recyclable materials to reduce the size and increase the density of the material. The non-recyclable materials will then be loaded into railcars inside the transfer station. The facility is designed to process C&D debris at a rate of 100 tons per hour, which equates to 1,000 tons (approximately 4,000 cubic yards) during a 10-hour operating day. The Draft Permit prohibits Cambridge from accepting more than 4,000 cubic yards per day. The facility has the capacity to process all of the C&D debris on the same day that it is delivered to the facility, so that the tipping floor can be empty at the end of each day. The Draft Permit requires Cambridge to process all of the C&D debris within 48 hours after it is delivered to the facility. . Recyclable and non-recyclable materials will be removed from the site quickly. Each container of recyclable material will be removed from the site when the container is filled, which typically will occur several times each week. When a railcar is filled with non-recyclable material, the railcar will be removed from the transfer station and staged on a railroad track on the south end of the site. The filled railcars will be removed from the site by FEC on a daily basis, Monday through Friday. The railcars will be taken to a landfill in Alabama where the C&D debris will be disposed. If rail service to the facility is interrupted and cannot be resumed in a timely manner, any railcars that are staged on the site will be taken back inside the transfer station. Cambridge will unload the cars and arrange for the C&D debris to be shipped by truck to an appropriate disposal facility. Under such circumstances, Cambridge will stop receiving C&D debris at the facility until rail service is resumed. Cambridge expects to recycle at least 9% of the C&D debris and hopes to recycle as much as 30%. The exact amount of material that will be recycled will depend on market conditions— i.e., whether there is a viable market for the materials in the C&D debris. Garbage The facility will receive only “de minimis” amounts of garbage as essentially accidental, very minor contents of loads of C&D debris. Cambridge’s gatehouse attendant and spotters will reject any truck that contains identifiable quantities of garbage. Nonetheless, a bag or small quantity of garbage may be hidden in a load of C&D debris that is dumped onto the tipping floor. If that occurs, the garbage will be removed from the C&D debris and placed in an enclosed container inside the transfer station. If garbage is mixed with a load of C&D debris on the tipping floor, the affected part of the load will be placed in an enclosed container. The garbage will be taken off-site for disposal, as quickly as necessary to ensure that the garbage does not generate objectionable odors. In all cases, Cambridge must remove the garbage (“Class I waste”) from the site within 48 hours, in compliance with the Draft Permit and related rules. Odors The facility will not cause objectionable odors in any off-Site areas because the C&D debris, recyclable materials, and non-recyclable materials received at the facility will not generate objectionable odors. Incidental garbage could be a potential source of objectionable odors, but garbage is prohibited at the facility, the facility will receive very little garbage, and Cambridge’s plan to segregate and quickly remove garbage will ensure that objectionable odors are not created inside the transfer station. In the unlikely event that objectionable odors occur outside of the transfer station, Cambridge will use a deodorizing or odor-neutralizing agent to treat any odorous portions of the tipping floor. If necessary, Cambridge also will use the "DustBoss," water-misting machines to spray odor control agents throughout the transfer station. The Petitioners’ expert witness, Joseph Fluet, agreed that Cambridge’s odor control plan, as described in the Respondent's testimony by Mr. Enriquez, would be adequate, if implemented. This is in addition to the operational plan proposed to DERMA and should be required to be implemented as a permit condition. Vectors The facility is not expected to attract rats, bugs, or other disease-carrying vectors because C&D debris is not a food source for vectors. Nonetheless, Cambridge will hire a professional pest control firm to take all necessary measures to control vectors on the site. These measures, combined with the other components of Cambridge’s operations plan, will control disease-carrying vectors on the site and thus ensure that the facility does not pose a public health hazard. Dust The Draft Permit provides that “dust resulting from the processing operation is not allowed beyond the property boundary [of the site].” The term “dust” in the Draft Permit is synonymous with “visible emissions” or “particulate matter” (“PM”). The Draft Permit also provides that a “dust control system shall be utilized to eliminate dust throughout the storage and working areas [inside the transfer station].” Cambridge will comply with these requirements by implementing a comprehensive dust control program at the facility. Dust Control Inside the Transfer Station The transfer station is fully enclosed on four sides and thus it can effectively control any dust that is generated by the activities conducted inside the transfer station. In order to minimize the potential for dust to escape from the transfer station, Cambridge will: (a) keep all of the transfer station’s doors closed at night and when the facility is not operating; (b) minimize the number of doors open during operations; and (c) require its staff to be judicious when deciding whether to open doors, and to give due regard to wind direction and velocity. Only three bay doors will be open during normal conditions when the facility is receiving and processing its maximum C&D volume of 1,000 tons per day (i.e., an average of approximately 15 trucks per hour). Fewer doors will be open when there are fewer delivery trucks or the wind hinders Cambridge’s ability to control the dust generated inside the facility. Cambridge will use two "DustBoss" machines to eliminate dust generated inside the transfer station. The DustBoss machines will spray a fine mist (fog) of water, which will physically impact and knock-down the dust in the air. The DustBoss machines will be deployed inside the transfer station, near the bay doors, but they can be moved within the building to where they are most effective. The DustBoss machines are fully adjustable--they can oscillate automatically or be directed toward a specific location where dust is being generated. The amount of mist generated by the DustBoss can be increased or reduced, as necessary. Each DustBoss machine is designed to blow mist up to 200 feet and control dust in an area up to 20,000 square feet. The two DustBoss machines in the transfer station will have the combined capacity to control dust in an area of approximately 40,000 square feet, which is substantially more capacity than is needed in the transfer station (30,000 square feet). Dust Control Outside Of The Transfer Station In order to minimize the potential for dust outside of the transfer station, Cambridge normally will require a hauler to keep its load of C&D debris covered with a tarp until the hauler’s truck is completely inside the transfer station. Cambridge may allow a hauler to remove its tarp immediately before the hauler’s truck enters the transfer station, but this will only occur if there are trucks waiting to enter and the winds are calm. The removal of a tarp, by itself, will not release a significant amount of dust because any dust that may have been on the tarp at a job site will be blown off while the truck is driving to the facility. To further minimize the potential for dust, Cambridge will use a piece of mobile equipment to collect and remove dust from the pavement outside of the building. This mobile equipment will be fitted with a moist broom and a water tank, thus allowing it to function like a street sweeper. Cambridge will use this equipment as often as necessary to control dust outside the transfer station. Mr. Fluet, the Petitioner's expert, agreed that using a "moist broom" to remove soil and mud on the site “would deal with virtually all the issues” concerning the control of dust outside the transfer station. Dust From Railcars Railcars will enter and leave the transfer station through two doors. These doors normally will be open only when Cambridge is bringing railcars into the building for loading or taking them outside after they are filled. The DustBoss misting system will prevent dust from escaping out of these railroad doors. The C&D debris will not be loaded above the sides of the railcars and thus will not be exposed to the wind when the railcars are taken outside the transfer station. In addition, the filled railcars will be covered with a mesh tarp before they are taken outside. The mesh tarp will prevent dust from blowing out of the railcars while they are staged on the railroad track next to the transfer station. The Ventilation System The transfer station will be equipped with an emergency ventilation system to prevent the build-up of carbon monoxide (“CO”) or nitrogen dioxide (“NO2”) on the tipping floor. The ventilation system will discharge CO and NO2 through exhaust fans located approximately 30 feet above the tipping floor on the north wall of the transfer station. Fresh air will be drawn into the building through louvers located approximately 27 feet above the tipping floor on the south side of the building. The ventilation system will turn on automatically if CO or NO2 sensors detect unsafe levels on the tipping floor. It is anticipated that such levels will not be reached and the ventilation system will operate “rarely, if ever.” The ventilation system also could be operated manually, but Cambridge does not intend to do so. Dust will not be emitted from the louvers at the transfer station. The DustBoss misting system will knock-down the dust inside the transfer station before the dust reaches the louvers, which are high above the tipping floor. Moreover, the louvers will be covered with a mesh that will further reduce the potential for dust emissions. Finally, the prevailing winds at the site are from the south/southeast and they will blow into the louvers (not out) most of the year, thus preventing dust from escaping. Reasonable Precautions To Prevent Fugitive Emissions DEP Florida Administrative Code Rule 62-296.320(4)(c), requires “reasonable precautions” to be used to control fugitive emissions of PM, such as the dust generated by truck traffic on the site. Cambridge will satisfy this requirement by: (a) having pavement on the site in areas where there will be truck traffic; (b) using mobile equipment and a moist broom to remove dust from the paved areas of the site; (c) planting vegetative buffers on the site; (d) placing mesh tarps on the railcars before the railcars are taken outside the transfer station; (d) limiting the height of the C&D debris in the railcars; and (e) keeping tarps on the delivery trucks when the trucks are outside the transfer station during windy conditions. Analysis Of Potential Airborne Emissions Dust may be generated inside the transfer station when C&D debris is unloaded, moved, processed, or loaded into trucks or railcars. Dust may be generated outside the station by vehicular traffic on the site. Cambridge quantified these potential PM emissions by using standard procedures and reference documents approved by the U.S. Environmental Protection Agency (“EPA”). Cambridge’s analysis was based on conservative (“worst-case”) assumptions, which were designed to overestimate the actual emissions from the facility. Using this approach, Cambridge determined that the maximum emissions of PM from the entire facility will be approximately 4 pounds per hour during those hours when the facility is operating. Four pounds per hour is approximately one ounce per minute. The insignificance of this emission rate can be appreciated by imagining three people standing in the bay doors of the transfer station (i.e., one person in each of the three open bay doors during normal operations) while each person pours one-third of one ounce (1/3 oz.) of flour into the air over a 60 second interval. This emission rate will result in total annual emissions of approximately 6 tons per year (TPY), but the instantaneous emissions will be negligible. Facilities that emit less than 10 TPY of PM are exempt from the DEP requirement to obtain an air permit. Consequently, Cambridge will not need a DEP air permit for the facility. A comparable facility would be a fast food restaurant, which has airborne emissions from cooking, but is not required to obtain a DEP air permit. The facility’s emissions of PM will be so small that Cambridge will not be required by DEP to prepare an analysis of the facility’s impacts on ambient air quality. An impacts analysis would not be required unless the facility’s PM emissions were expected to be greater than 250 TPY. There are no ambient air quality standards or other DEP requirements applicable to the airborne emissions from the facility, except for the requirement to use reasonable precautions to control fugitive emissions in the areas of the site located outside of the transfer station. There are no DEP emission limits or other standards applicable to the CO and NO2 emissions, if any, from the facility’s ventilation system. Florida Administrative Code Rule 62-296.711 governs crushing and grinding operations in certain areas of the state, but this rule is not applicable in Miami-Dade County. Similarly, DEP does not consider tailpipe emissions from mobile equipment and trucks on the site when DEP evaluates the airborne emissions from the facility. DERM will regulate the opacity (visible emissions) of the facility’s PM emissions (dust) at the property line. DERM also will regulate the mass emissions from the facility. The applicable DERM limit for opacity is 20% and the limit for mass emissions of PM is 40 pounds per hour. The facility will comply with these DERM standards. As noted above, there will be no visible emissions of PM at the property line or beyond and the mass emissions will be no more than 4 pounds per hour under worst-case conditions. The facility will have an insignificant impact on air quality on Northwest 32nd Avenue. The facility’s impacts on the ambient air quality on Northwest 32nd Avenue will not be measurable or discernable. The prevailing winds in Miami-Dade County are from the east and southeast most of the year. When the wind is from the east or southeast, the wind at the site will blow away from the Petitioners’ residences, which are located east-northeast of the site. For these reasons, it will be physically impossible for any dust or odor from the Site to reach the Petitioners’ residences approximately 90% of the time. The prevailing winds in Miami-Dade County blow from the north only about 4% or 5% of the year. Consequently, 95% or 96% of the time the facility will have no impact on the air quality at the Martin Luther King Park, which is located south of the site. Petitioners’ Allegations Regarding Dust The Petitioners’ witness, Mr. Fluet, acknowledged that “judicious use of the misters [DustBoss] and the door positions will effectively provide reasonable assurance” concerning the dust inside the transfer station. Nonetheless, the Petitioners are concerned because nothing explicitly prohibits Cambridge from opening more than three of the bay doors to the transfer station and causing excessive emissions of dust. The Petitioners’ concerns about this issue are not established by preponderant evidence, however, because (a) the Draft Permit prohibits Cambridge from causing visible emissions beyond the property boundary, (b) Cambridge has demonstrated that it will operate the facility in compliance with the Draft Permit, and (c) DERM will inspect the facility at least once each month to ensure that the facility is operated properly. Cambridge’s obligation to comply with the Draft Permit will effectively limit the number of doors that are open and the amount of dust that is emitted at any given time. Even if the bay doors are open, the enclosed design of the building prevents the wind from blowing through the transfer station. Further, Cambridge’s expert on air issues (David Buff) explained that, when the wind is calm, Cambridge will be able to control dust emissions effectively with the DustBoss machines, even if all the bay doors are open. His testimony in this regard, is accepted as persuasive. Mr. Fluet opined that Cambridge may manually turn on the ventilation system if the temperature inside the transfer station becomes too hot. Mr. Fluet acknowledged, however, that misting systems are used to cool the public at amusement parks and the mist from the DustBoss machines will have the same cooling effect in the transfer station. This acknowledgment somewhat belies his suggestion that the ventilation system will need to be activated. Mr. Fluet’s opinion also is countered by the fact that Cambridge’s application and witnesses have confirmed that the ventilation system will be used only for emergencies, and not for hot weather ventilation or evacuation of dust. Finally, even if it is assumed, hypothetically, that the ventilation system may be turned on for Cambridge’s convenience, the Petitioners failed to prove that the operation of the ventilation system will cause violations of any applicable air quality standard. Should such become the case, as revealed by the monthly inspections, the use of the filters referenced by Mr. Fluet should be implemented. Mr. Fluet expressed concern that contamination problems may occur if painted or treated wood is shredded at the facility. This concern has been alleviated because the Draft Permit and the Respondent's testimony shows that the acceptance for processing of painted or treated wood will be prohibited. Prohibited and unacceptable waste must be removed from the C&D debris stream and taken off-site for disposal. Leachate Water that comes in contact with C&D debris is deemed to be “leachate.” Since C&D debris is generally non-hazardous and not water soluble, C&D debris is not expected to produce leachate that is harmful to groundwater. The transfer station has been designed with a roof and four walls. The design of the station will minimize the potential for generating leachate and minimize the potential for standing water inside the facility. Cambridge’s “design strategy for the facility is to prevent contact between rainfall or stormwater and C/D materials [C&D debris] at all times, thereby entirely preventing the generation of leachate.” C&D debris is relatively dry material. If a container of C&D debris is exposed to rain before the container is brought to the facility, the rainwater typically will (a) be absorbed by the C&D debris or (b) leak out of the container before the container reaches the facility, because the containers used to collect C&D debris are not water-tight. Even if some liquid is spilled on the tipping floor with a load of C&D debris, the liquid will be absorbed by the C&D debris when the load is moved across the floor. Liquids normally will not be tracked into the transfer station by trucks. Trucks will enter the transfer station by slowly backing up an inclined grade, through the bay doors, and onto the tipping floor. Although some rainwater may be tracked into the station by the trucks or truck tires, it will only be a negligible amount. Even less water will be tracked out of the transfer station. The mist from the DustBoss machines is not likely to cause puddles to form on the tipping floor. The C&D debris will absorb any mist that lands on it. Mist landing on the tipping floor will be absorbed when the C&D debris is pushed across the floor. After each truck unloads, the tipping floor must be cleared to make space for the next truck. If there is a puddle on the floor, the C&D debris will be pushed through the puddle to absorb it. In the alternative, the puddle will be pushed into the C&D debris. Cambridge employees will monitor the tipping floor for liquids. The employees will use mobile equipment (i.e., a skid- steer) fitted with a rubber-edged blade to push the liquids, like a squeegee, if necessary. Since the facility will receive up to 1,000 tons of C&D debris per day, there will be a substantial amount of material available to absorb any liquids on the floor. The tipping floor will be equipped with a sump that can hold approximately 359 gallons of liquid. In the event there are liquids on the tipping floor, Cambridge’s employees can push the liquids into the sump by using the rubber-edged blade on the skid-steer equipment. The sump will be used rarely, if ever. One of Cambridge’s solid waste experts, Kenneth Cargill, testified that he had never seen liquids in the floor drain (sump) at a C&D debris transfer station in Ft. Myers, even though that transfer station is open on one side (170’ wide and 40’ high) and rain can blow onto the tipping floor. The sump in Ft. Myers is empty during the rainy season, as well as the dry season. If any liquids are collected in the facility’s sump, a third party contractor will pump the liquids out of the sump, as frequently as necessary, to ensure that the sump is never overtopped. Any liquids removed from the sump will be taken by the contractor to a permitted disposal facility, such as a wastewater treatment plant (“WWTP”). The liquid in the sump is not expected to upset the operation of the WWTP, so the DEP does not require the liquid to be tested before it is delivered to the WWTP. The railcars used to transport C&D debris from the facility will be fully sealed at the bottom. The railcars will not leak if rainwater falls into them. Mr. Cargill, Mr. Leonard Enriquez (Cambridge’s General Manager), and Mr. Hardeep Anand (the Chief of DERM’s Pollution Regulation and Enforcement Division (“PRED”)) collectively established that the Transfer Station is well-designed and has a generally satisfactory leachate control system. The leachate will be controlled and contained inside the Transfer Station by using an enclosed building, a concrete floor, a sump, a good operating plan, and diligent employees. Petitioners’ Contentions Regarding Leachate Mr. Fluet contended that (a) the leachate control system is not adequate, (b) leachate will escape from the transfer station and enter the environment, and (c) the tipping floor will not minimize standing water. According to Mr. Fluet, all of these problems will occur primarily because the tipping floor is flat—i.e., it is not sloped toward a drain and has no lip, berm or raised edge to contain liquids. It was undisputed, however, that the DEP rules do not require a sloped floor. Although Mr. Cargill always designs transfer stations with a sloped floor, he concluded that Cambridge’s transfer station is “well designed” and can be operated successfully by using conscientious employees. Indeed, even Mr. Fluet acknowledged he could operate the transfer station in compliance with the FDEP rules, without having a sloped floor. Mr. Fluet would install a “lip” (raised edge) around the tipping floor, but he agreed the transfer station could be operated in compliance with the applicable rules. Petitioners contend that the tipping floor must be washed weekly, and allege that this activity may result in water escaping from the transfer station. This contention is fatally flawed because (a) the DEP rules do not require routine washing of the floors at C&D debris transfer stations, (b) washing is not necessary to control odors, and (c) Cambridge plans to use other odor control measures, rather than washing, in the unlikely event there are odors at the facility. When asked whether Cambridge had provided reasonable assurances that it would minimize the amount of leachate produced in the Transfer Station, Mr. Fluet implied the answer is yes, “to a great extent by the fact that it’s [the transfer station] enclosed.” He also agreed that the design of the building (i.e., the roof) will minimize the amount of standing water on the tipping floor. Nonetheless, Mr. Fluet suggested that the use of the DustBoss machines may be inconsistent with Florida Administrative Code Rule 62-701.710(3), which requires an applicant to minimize standing water in a waste processing facility. He raised the possibility that liquids may accumulate on the tipping floor because the two DustBoss machines are capable of using approximately 30,000 gallons of water per hour while producing mist. He acknowledged, however, that “a lot” of the mist (water) will evaporate before it reaches the tipping floor. Mr. Fluet’s concerns about this issue are not entirely supported by the preponderance of the evidence. Mr. Cargill and Mr. Enriquez established that the mist will evaporate or be absorbed by the C&D debris. Moreover, the DustBoss machines can be adjusted to reduce the amount of mist that is produced and thus reduce the potential for creating puddles on the tipping floor. The DustBoss machines presumably will not need to run continuously at maximum capacity because the two machines have the combined capacity to cover approximately 40,000 square feet of building space, and the transfer station is only about 30,000 square feet. On balance, in consideration of this testimony concerning flexibility in use and management of the DustBoss machines, and Mr. Fluet's concern about standing water on the tipping floor, reasonable assurances can best be established by a slight design alteration to provide for a lip or berm around the tipping floor. The fact that the rail track traverses the building also serves to render this appropriate. The permit should be so conditioned. Mr. Fluet postulated that the DEP rules will be violated if rainwater (a) drips off of the C&D debris in the delivery trucks while the trucks are on the site and then (b) flows into the stormwater management system on the site or enters the groundwater. According to Mr. Fluet, the rainwater will constitute leachate, because the water came into contact with C&D debris, and the DEP rules prohibit the mixing of any leachate with stormwater or groundwater. Mr. Fluet conceded, however, that the same problem occurs at every transfer station in Florida when rainwater/leachate drips from delivery trucks. Mr. Fluet claimed that the C&D debris in Miami-Dade County will contain more demolition debris and residential waste than the C&D debris in other parts of Florida and thus the C&D debris in Miami-Dade County will produce worse leachate. However, Mr. Fluet acknowledged the C&D debris in Miami-Dade County already is being handled in the County’s existing C&D debris facilities and he has no evidence of groundwater contamination at any of those facilities. Moreover, Mr. Fluet could not identify any C&D transfer station where there were violations of DEP standards for groundwater or surface water because of the scenarios he described, or the concerns he raised about Cambridge’s Facility. Mr. Fluet's opinions were based on his expertise and experience. The Petitioners offered no empirical data to support their claims or concerns. Mr. Fluet admitted that he did “not perform any studies, calculations, or engineering analyses” concerning the proposed Facility. Mr. Fluet and the Petitioners did not quantify the amount of leachate that allegedly will be released into the environment from the tipping floor, or the amount of leachate that will drip from delivery trucks, or the amount of water that may accumulate on the tipping floor when the DustBoss machines are operating. They presented no information concerning the chemical constituents or chemical concentrations in any of the liquids that allegedly will be released under any of their potential scenarios. No data was presented concerning the quality of the liquids collected in the sumps at other transfer stations. They did not present any evidence demonstrating that DEP’s groundwater or surface water quality standards will be violated as a result of the quantity or quality of the leachate that allegedly will enter the environment as a result of the facility’s operations. Mr. Anand explained that DEP does not evaluate the possibility that rainwater will drip from delivery trucks, or that trucks will track liquids out of a transfer station, when DEP is determining whether to issue a permit for a waste processing facility pursuant to Florida Administrative Code Chapter 62-701. Even if these impacts were considered, the likelihood of these events causing contamination is “negligible.” Mr. Anand testified that DERM currently has eight (8) C&D debris transfer stations in Miami-Dade County. Groundwater monitoring data are collected at some of the sites, but DERM has no evidence of groundwater contamination at any of those sites. Similarly, Mr. Cargill was unaware of any cases in Florida where a transfer station for C&D debris caused contamination of groundwater or stormwater as a result of liquids dripping from the trucks that are entering or leaving the facility. C&D debris is not expected to be water soluble or hazardous. The leachate from C&D debris is not expected to cause groundwater contamination. Accordingly, the DEP rules do not require C&D debris to be placed inside water-tight containers when the C&D debris is stored at a job site. The DEP rules do not prohibit the permanent disposal of C&D debris in unlined disposal facilities. There is nothing to prevent rainwater from passing through the C&D debris and entering directly into the groundwater at a job site or an unlined C&D disposal facility. Given all of the foregoing facts, Mr. Cargill and Mr. Anand testified that the Cambridge Facility should have “little or no impact” on the quality of the soils, surface water, or groundwater at the site. Their testimony is credible, persuasive, and accepted. Comparison To Other Transfer Stations The design of the Cambridge Facility is a significant improvement over the typical design of a C&D debris transfer station. The measures that Cambridge will use to control dust and liquids at the facility are superior to the measures used to control dust and liquids at typical C&D transfer stations. There are 8 C&D debris transfer stations lawfully operating in Miami-Dade County. Only one of these facilities is enclosed. Some C&D debris facilities have a roof, but no walls. A transfer station within one mile of the site has no roof and no walls. At most transfer stations, dust is controlled by manually spraying the C&D debris with a hose. None of the transfer stations in Miami-Dade County use DustBoss machines to control dust. None of the facilities in Miami-Dade County use a moist broom and sweeper equipment on a routine basis to control dust. Although the existing facilities in Miami-Dade County comply with the DEP rules, the Cambridge facility has gone beyond the minimum requirements established by DEP. Stormwater Permits DEP issued an Environmental Resource Permit for the construction and operation of a stormwater management system serving the facility. Miami-Dade County issued a Class VI Drainage Permit for the construction and operation of an exfiltration trench that will handle the stormwater from the facility. No one challenged or otherwise appealed the DEP Environmental Resource Permit or the Miami-Dade County Class VI permit. Site Assessment A “Phase I” (preliminary) environmental assessment of the site was conducted by Cambridge and further investigations were recommended; however, Cambridge has not yet conducted a “Phase II” assessment or collected any field data. Mr. Fluet speculated about potential “indications” of contamination, but he had no data to prove that any contamination actually exists. In the absence of any field data, he admitted that “we don’t know” whether the site is a “Brownfield” site and “cannot speak” to whether the site is contaminated. Financial Assurance The cost of closing the facility was estimated by Cambridge to be approximately $231,000. Cambridge’s estimate did not include the cost of pumping the liquids (if any) out of the sump, which may be $2,000 to $3,000 (i.e., less than 1% of the financial assurance provided by Cambridge). This omission is insignificant, it can be corrected before Cambridge commences operations of the facility, and it does not warrant the denial of Cambridge’s application for the Permit. Irresponsible Applicant Cambridge Project Development, Inc., is the minority partner in Cambridge. TLA-Miami, Inc., is the managing partner. TLA-Miami, Inc., is an affiliate of Transload America, Inc. (“TLA”). None of these entities or their affiliates have previously owned or operated a solid waste management facility in Florida, or violated any environmental laws, permits, or other requirements in Florida. Pursuant to Florida Administrative Code Rule 62- 701.320(3), DEP considers the applicant’s prior operations in Florida when determining whether an applicant for a solid waste processing facility permit is an “irresponsible applicant.” The applicant’s operations in other states are not considered. In this case, DERM properly concluded that Cambridge is not an irresponsible applicant. Cambridge’s Operating Plan And Building Design Cambridge submitted a written operating plan (the “Operating Plan”) with its application to DERM. The Operating Plan sets forth Cambridge’s plan for operating the facility in compliance with the applicable DEP requirements. Additional details concerning Cambridge’s method of operation were provided by preponderant evidence at the hearing, in a de novo context. The Operating Plan satisfies the DEP requirements. During the hearing, Mr. Enriquez explained that the design of the transfer station will be better than the design initially proposed in Cambridge’s application to DERM. The sump will be bigger, the concrete in the tipping floor will be thicker, and the strength of the concrete will be greater than originally proposed. DEP’s Review Of Permit Applications The Petitioners contend that DEP and DERM should have evaluated a variety of issues that are of interest to the Petitioners. However, it was undisputed that DEP does not consider the following issues when deciding whether to issue a permit for a solid waste processing facility: zoning and comprehensive plan designations; land use compatibility; traffic; noise; public benefits; aesthetics; geotechnical issues, such as differential settlement; structural design issues, such as the structural design of a tipping floor or push wall; the adequacy of a fire control system; the adequacy of a ventilation system; the economic or ethnic makeup of the areas near a proposed site; whether the proposed location is the best site; or whether there is a need for the proposed facility. In the instant case, many of these issues were addressed by other governmental entities, such as the Building Department for Miami-Dade County. Public Notice Cambridge provided two notices to the public concerning the facility. On January 15, 2008, notice of Cambridge’s application was published. On August 26, 2008, notice of DERM’s proposed agency action was published. These notices satisfied the applicable DEP requirements. Reasonable Assurances Cambridge has provided reasonable assurances that the facility will be constructed and operated in compliance with all of the applicable DEP requirements in Florida Administrative Code Chapter 62-701, for a waste processing facility. Cambridge also has provided reasonable assurances that it will comply with all of the conditions contained in the Draft Permit, and established by the preponderant evidence.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that Department of Environmental Protection enter a Final Order granting Cambridge's application to construct and operate the facility on the site, including the conditions contained in the Draft Permit and in the above findings and conclusions, to include a design alteration providing for a slight lip or berm around the tipping floor, as supported by the preponderant, persuasive evidence. DONE AND ENTERED this 1st day of April, 2009, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF 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 COPIES FURNISHED: John J. Quick, Esquire Michelle D. Vos, Esquire Filed with the Clerk of the Division of Administrative Hearings this 1st day of April, 2009. Weiss Serota Helfman Pastoriza Cole & Boniske, P.L. 525 Ponce de Leon Boulevard, Suite 700 Coral Gables, Florida 33134 Peter S. Tell, Esquire Assistant County Attorney Miami-Dade County 111 Northwest 1st Street, Suite 2810 Miami, Florida 33128 David S. Dee, Esquire Young Van Assenderp, P.A. 225 South Adams Street, Suite 200 Tallahassee, Florida 32301 Lea Crandall, Agency Clerk Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 Tom Beason, General Counsel Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 Michael W. Sole, Secretary Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000
Findings Of Fact UCP is a non-profit organization incorporated in Florida. During tie years of 1979-1980 and 1980-1981, UCP entered into contracts with Petitioner, to serve as operator for two CETA programs. One of these programs was a Title VIII Young Adult Conservation Corps program in which the operator contracted to train economically disadvantaged youths in park restoration and development while developing recreational areas in rural low- income communities (Exhibits 1 and 3). The contract price of the 1981 contract which Petitioner proposes to cancel is $74,000. The other program contracted by UCP to operate proposes to train some 15 minority youths between the ages of 16 and 21 for positions in the Theatre/Journalism field and expose an additional 500 youths to the career opportunities available in these fields (Exhibits 2 and 4). The contract price of the 1981 contract which Petitioner proposes to cancel is $210,000 (Exhibit 2). The 1980 contracts for these programs were $85,000 and $315,000, respectively (Exhibits 3 and 4). Dr. Ed James was the founder (Exhibit 5) and first Chairman of UCP, is now Chairman Emeritus of UCP and participates in the contract (Exhibit 2) as Journalism Coordinator. This involves the planning and operation of the journalism project portion of the contract. James also owns Full Spectrum Video and Film, Inc. which, during the time these contracts were in effect, had offices in the same building as UCP. Full Spectrum Video and Film, Inc. sells video services and products. It has no full-time employees but employs salesmen on a commission basis. In addition to Dr. James as owner, a Tony Majors, who worked for UCP as Theatrical Director during the 1979-1980 contract period, was a Vice President of Full Spectrum Video and Film, Inc. Fred Bacon, during all times here relevant, was Executive Director of UCP. His duties include the day-to-day operation of UCP, whose primary activity is serving as operator under these CETA contracts. Bacon serves as purchasing agent and is in charge of obligating and disbursing the funds provided pursuant to these CETA contracts. During the earlier stages of these contracts Petitioner's employees who acted as contract managers frequently visited UCP to check their records and files and found no problems. These contract managers did not check fiscal procedures. In the latter part of the first contract period, Petitioner's Division of Independent Monitors also visited UCP to check records, including fiscal records, to ascertain that the operator was in compliance with federal regulations applicable to CETA contracts. During a visit in late February, 1980, by monitors from Petitioner, numerous discrepancies were noted in procurement practices, including potential conflicts of interest and inadequate bidding procedures. Also, it was noted that vehicle logs were mot properly maintained to show that these vehicles were used on official business only. In response to this monitor report the Respondent's Executive Director, in letter dated April 23, 1980, denied any impropriety, charged the monitors with bias and prejudice, and demanded an unbiased review. This response was reviewed by Petitioner's Contract Manager and, by letter dated May 23, 1980, the Acting Director of the Division of Employment and Training notified Respondent that its response had been found acceptable. At the time this letter was written, the Acting Director was unaware that Respondent had purchased office furniture and equipment from Allstate Office Supply and Equipment Co., a corporation established and owned by Bacon. Bacon's testimony regarding his lack of knowledge of the incorporators of Allstate, one of whom was his sister and the other an employee of UCP, and his lack of knowledge that James owned Full Spectrum Video and Film, Inc. at the time the equipment was leased and the video tapes purchased from Full Spectrum by Respondent, is not credible. The charges of bias and demand for conference visits led to additional visits to UCP by contract managers, monitors, and auditors. On February 5-9, 1981, the firm of Alexander Grant and Company conducted a Financial and Compliance audit for the period October 1, 1979 to September 30, 1980 and its report was admitted as Exhibit 16. This audit, inter alia, found the lack of a general ledger unacceptable for proper accounting. These visits also disclosed Respondent had entered into a lease with Full Spectrum Video and Film, Inc. in which video equipment having a value of slightly in excess of $6,000 was leased for ten months for $10,270, with the full amount paid in advance, and video tapes were purchased from Full Spectrum. It was also disclosed that camera and recording equipment had been leased from WXLT-Television in Sarasota for $15,000. Neither of these leases were supported by written bids and no bidding procedures had been established by Respondent. The contract (Exhibit 4) provides that training equipment would be rented. It would normally be expected that the rental cost of the equipment having a relatively long life would be considerably less than the purchase price. Accordingly, it was CETA policy to lease non-consumable equipment rather than purchase such equipment. In June, 1980, Dr. Charles Russell was appointed Director, Division of Employment and Training. He shortly learned of problems with UCP but found insufficient evidence to warrant refusal to review the contracts for 1981. However, additional audits were directed by Dr. Russell and, when evidence regarding conflicts of interest in the purchases from Allstate and Full Spectrum Video came to light, Russell issued the Agency Order to Cause. One of these audits was conducted by Petitioners Bureau of Independent Monitoring wherein UCP was found deficient in maintaining financial records and backup documents to support the expenditures noted. These deficiencies occurred principally in vehicular travel expenses and leases of expensive equipment (greater than $10,000) for which no adequate bidding procedure was established or documented. The mileage put on the vehicles and the costs incurred could not be corroborated by the vehicle logs maintained. No evidence was presented that fraudulent transactions occurred, that gas was purchased for use other than in the leased vehicles, or that the vehicles were used other than for official business. Newspaper publicity about some of the activities of Respondent resulted in the Auditor General of Florida sending auditors to audit Respondent's records. Part of this publicity included the disclosure that 13 participants in the Theatre program and eight staff members had been flown from Sarasota to New York on a field trip to see Broadway plays. It was also disclosed that $60 had been collected from the 13 participants and the $780 had not been returned although Petitioner had funded the total cost of this field trip. Exhibit 15 is a copy of checks dated 21 April 1981 refunding the $60 to each participant. Bacon's explanation for failure to return the money to the participants until shortly before the hearing was that it slipped his mind that these funds had been collected and not used. Respondent was authorized to submit, as a late-filed exhibit, the bank records relating to the handling of the $780 collected from the participants. By latter dated 26 May 1981, Petitioner, by and through his attorney, submitted a copy of a check dated April 7, 1981 drawn on UCP General Account payable to "Union of Concerned Parents-Trust" in the amount of $780; a copy of receipt for check deposit dated 041581 to UCP General Account in the amount of $780.00; a copy of a cashier's check dated April 7, 1981 drawn on UCP General Account payable to Union of Concerned Parents-Trust in the amount of $780; and copies of 11 checks dated April 21, 1981 drawn on UCP General Account in the amount of $60 and payable to individual payees. These latter checks were admitted into evidence during the hearing as Exhibit 15. The total shown refunded in Exhibit 15 is $660. Respondent also submitted two affidavits neither of which are the bank records authorized to be submitted as a late-filed exhibit. These affidavits are not admitted into evidence and will not be considered although the letter of 26 May 1981 with all attachments is identified as Exhibit 18. Exhibit 14 indicates the New York trip was taken Labor Day weekend. In 1980 Labor Day occurred 1 September. Presumably the money was collected during August 1980 and no record showing what happened to this $780 from the time of its collection until April 1981 has been presented. All checks disbursing either $60 or $780 were written on UCP General Account and no record has been presented showing the source of the $780 deposit dated 15 April 1981. It was only after the adverse newspaper publicity about the New York trip that the existence of the $780 came to light and it was subsequent to the charges here preferred that any money was refunded to the participants. From the records presented it cannot be determined that the $780 collected from 13 participants was the source of the funds refunded to the 11 payees of the $60 checks dated April 21, 1981. Upon their initial visit the Auditor General's agents were refused access to Respondent's records. When they appealed to Petitioner, Respondent's executive director was contacted by Petitioner and he agreed to allow the Auditor General access to his records if written authorization was received from Petitioner. A letter was sent to Respondent containing such authorization (Exhibit 17); however, when the auditors appeared after the letter had been received, Bacon again refused them access to the records unless UCP's attorney was present. Although Bacon testified the books and records would be shown to the Auditor General no time acceptable to both parties has been established. Respondent contends that the genesis of these charges here involved is political and that the primary, if not sole, purpose of the show cause order is to remove Dr. Ed James from the employ of UCP. To substantiate this contention Respondent called Wallace Orr, Secretary of the Department of Labor and Employment Security, to testify that he had told UCP and a member of the Board of Directors of Minority Ventures, Inc. that they should get rid of Ed James because of the disrupting influence he was having with their relations with the Department of Labor and Employment Security. Secretary Orr acknowledged making the statements plus telling UCP that if they didn't get rid of James he (Orr) might revoke their contracts. Orr attributed these comments to his concern for the viability of both organizations and to the difficulties created by James with his continual allegations of racial discrimination every time he contacted the Department of Labor on behalf of those organizations. The evidence was undisputed that the Order to Show Cause was instituted by Charles Russell in his capacity as Director, Division of Employment and Training, and as a result of reports he had received indicating UCP had violated federal regulations in their handling and disbursing CETA funds with which they were entrusted under the contracts. Respondent further contends that the contract between UCP and Allstate Office Supplies was in the best interest of UCP as were the transactions with Full Spectrum Video involving the purchase of video tapes and the lease of equipment. In support of that position Bacon testified that he had obtained an oral quote for the furniture needed from Bunko's at a price of approximately $3,000 and that he procured the furniture through Allstate at cost. Although this testimony was unrebutted neither was it corroborated by documents showing how much Allstate actually paid for the furniture. No record of Bunko's quote was available. Respondent justified awarding the contract to lease video equipment from Full Spectrum Video on the basis of a telephone call to a supplier in Miami, Image Devices Incorporated (IDI), and the receipt of a price list from IDI for renting equipment on a daily basis only. No effort was made to obtain a bid from a supplier in Tampa (or elsewhere) or from the manufacturer of the equipment. The testimony of Bacon that an important consideration was maintenance of the equipment, and the lease provided for maintenance of the equipment, is not borne out by the copy of the invoice contained in Exhibit 8 or the testimony of James that he didn't know how often repairs were required on the leased equipment although he was the only one to make repairs. Respondent likewise justified the $15,000 lease of equipment from WXLT-TV on the comparison of their quoted price with the daily rates contained in the catalog Bacon had received from IDI and without obtaining a quote from any other supplier. It is evident that contract managers and others in the employ of Petitioner made numerous visits to UCP to look over their procedures and assist UCP with potential problems and failed to recognize or discover accounting, organization and procurement errors being committed by Respondent; or, if these errors were recognized, their existence was not communicated to UCP. It further appears that the policy of making every effort to settle all problems if the operator promised future compliance with applicable regulations was discontinued shortly after Charles Russell assumed the duties of Director, Employment and Training. The contracts here involved provide the operator shall avoid organizational conflicts of interest; its personnel shall avoid personal conflict of interests and appearance of conflict of interest in the conduct of procurement activities; and that it shall establish monitoring procedures to ensure that its program is in compliance with the Act and the regulations.
The Issue Whether Respondent violated statutory and rule provisions relating to record-keeping requirements for licensed check cashers, and if so, what penalty should be imposed.
Findings Of Fact Petitioner, Office of Financial Regulation (the Office or Petitioner), is the state agency charged with administering and enforcing chapter 560, Florida Statutes, related to licensing of Money Services Businesses, a term that includes check-cashing businesses. Respondent, Capital City Check Cashing (Capital City or Respondent), has been a licensed check casher, pursuant to chapter 560, Part III, Florida Statutes, since March 2007. Capital City is located at 458 West Tennessee Street in Tallahassee, Florida. John O. Williams is the owner of Capital City and appeared as counsel for Capital City throughout these proceedings. Kane Fuhrman is the manager and sole employee of Capital City and directly provides check-cashing services to Capital City’s customers. Capital City Examination William Morin is employed by the Office as a Financial Examiner/Analyst Supervisor. On October 23 and 24, 2012, Mr. Morin conducted an examination of Capital City’s records for the period of January 1, 2010 through October 23, 2012. The examination was conducted on the premises of Capital City. Mr. Morin was accompanied by Matt Manderfield, a field analyst in training. Mr. Morin conducted the examination using an examination module designed by the Office as both a checklist of required records and an electronic notebook for recording the examiners notes. Mr. Fuhrman was present for the examination. Mr. Fuhrman provided voluminous records to Mr. Morin, which Mr. Morin scanned into his computer while on site at Capital City. Prior to leaving the premises on October 24, 2012, Mr. Morin explained to Mr. Fuhrman that some statutorily- required documents were missing and presented Mr. Fuhrman with a written records request. The written request indicates that the missing documents were needed by October 29, 2012. Through the records request, the Office sought the following documents for the examination period: (1) complete customer files for Capital City clients JNJ Service, LLC; Swift Delivery; Johnson Maintenance Service; and Charlie’s Electric Service; (2) copies of payment instruments cashed, including the back of the payment instruments showing endorsement; (3) daily electronic check-cashing logs; and (4) customer thumbprints on checks cashed. Customer Files Florida Administrative Code Rule 69V-560.704(4)(d) (2009),1/ reads as follows: (4) In addition to the records required in subsections (1) and (2), for payment instruments exceeding $1,000.00, the check casher shall: * * * (d) Create and maintain a customer file for each entity listed as the payee on corporate payment instruments and third party payment instruments accepted by the licensee. Each customer file must include, at a minimum, the following information: Documentation from the Secretary of State verifying registration as a corporation or fictitious entity showing the listed officers and FEID registration number. If a sole proprietor uses a fictitious name or is a natural person, then the customer file shall include the social security number of the business owner and documentation of the fictitious name filing with the Secretary of State. Articles of incorporation or other such documentation which establishes a legal entity in whatever form authorized by law. For purposes of this rule a sole proprietor operating under a fictitious name registered with the Secretary of State shall not have to present such documentation. Documentation of the occupational license from the county where the entity is located. A copy of the search results screen page from Compliance Proof of Coverage Query Page webpage from the Florida Department of Financial Services – Division of Workers’ Compensation website (http://www.fldfs.com/WCAPPS/Compliance_POC/ wPages/query.asp) Documentation of individuals authorized to negotiate payment instruments on the corporation or fictitious entity’s behalf including corporate resolutions or powers of attorney. Payment instruments for insurance claims where there are multiple payees shall be exempt from this provision provided that the maker of the check is an insurance company and the licensee has obtained and retained documentation as to the identity of the natural person listed as payee on such payment instrument. Capital City requires its customers to complete and sign a “Check Cashing Agreement” (Agreement). The second page of the Agreement is a form soliciting customer information, including the name, address, phone numbers, address, social security number, and driver’s license number of the conductor (the person cashing the check on a corporate check), as well as the name of the person’s employer, their business address and phone number. The form includes fields for information about the check being cashed, such as the check number and amount, as well as the payor and payee names. Customers are required to sign and date the Agreement, as well as place their thumbprint in a designated box on the face of the Agreement. By signing the Agreement, the customer agrees to release their personal and business information to a third-party verifier, to pay a fee for said verification, and to pay Capital City three times the face value of any instrument cashed which is returned for insufficient funds. During the on-site examination, Mr. Fuhrman provided to Mr. Morin the following documents for client, JNJ Service, LLC: a copy of an executed Agreement, copies of the photographic identification and social security card of the conductor, a copy of the face of a check for $4,471.68 cashed, a copy of the receipt for the check, and a printout from the Secretary of State’s Sunbiz website for corporate status of JNJ Service, LLC. The printout shows the FEIN number for JNJ Service, LLC, and reports corporate status as “Inactive” with last event shown “Administrative Dissolution for Annual Report” on September 23, 2011. During the onsite examination, Mr. Fuhrman provided to Mr. Morin the following documents for client, Swift Delivery, LLC: copies of the face of three checks cashed in amounts exceeding $1,000.00 and three accompanying executed Agreements. During the onsite examination, Mr. Fuhrman provided to Mr. Morin the following documents for client, Johnson’s Maintenance Service: copies of two checks cashed in amounts exceeding $1,000.00, accompanying executed Agreements, and copies of the photo ID and social security card of the conductor. During the onsite examination, Mr. Fuhrman provided to Mr. Morin the following documents for client, Charlie’s Electric: a copy of the face of a check cashed for $28,000.00, an executed Agreement, and a receipt for the check cashed. Prior to the examination, Capital City did not routinely keep copies of the corporate information from the Secretary of State’s website as part of the customer files. Prior to the examination, Capital City did not request, or otherwise obtain, the Articles of Incorporation for its corporate clients. Prior to the examination, Capital City did not request copies of its corporate clients’ occupational license. If a corporate client presented its occupational license, Capital City kept a copy. Prior to the examination, Capital City did not request, or otherwise obtain, information regarding its corporate clients’ compliance with workers’ compensation insurance requirements. On October 29, 2012, in response to Mr. Morin’s written records request, Mr. Fuhrman printed from the Secretary of State’s website, the corporate detail page for JNJ Service, LLC, Swift Delivery, LLC, Johnson Maintenance, Inc., and Charlie’s Electric Company, Inc. The information showed that JNJ Service, LLC, was an active corporation having been reinstated on September 10, 2012; Swift Delivery, LLC, had been administratively dissolved on September 23, 2011; Johnson Maintenance, Inc., had been administratively dissolved on September 26, 2008; and Charlie’s Electric Company, LLC, had been administratively dissolved on September 15, 2006. Following the examination, and in response to Mr. Morin’s records request, Mr. Fuhrman obtained articles of incorporation for JNJ Service, LLC, and Johnson Maintenance, Inc.; articles of organization for Swift Delivery, LLC; and a corporate reinstatement application for Charlie’s Electric Company, Inc., filed February 29, 2008. Following the examination, and in response to Mr. Morin’s request for information, Mr. Fuhrman checked the Office of Financial Regulation – Division of Workers’ Compensation website, and queried the name of each of its four corporate customers. Mr. Fuhrman’s queries returned “O records found” for each client. Mr. Fuhrman printed a screen shot of each query return. On November 5, 2012, Mr. Morin returned to Capital City and picked up a package of documents from Mr. Fuhrman, as well as the records request form whereon Mr. Fuhrman had written the types of records which were being provided. There was conflicting testimony regarding whether the documents Mr. Fuhrman obtained in response to the records request were included in the package Mr. Morin obtained from Mr. Furhman on November 5, 2012. The Office maintains that the documents were not furnished. Mr. Fuhrman was unable to testify with certainty that the documents obtained were in the package of documents he gave to Mr. Morin. Whether or not the documents were sent to the Office is a red herring, and the extent of testimony on this issue was largely irrelevant. The issue is whether the documents were maintained by Capital City in its customer files during the examination period, not whether Capital City was able to produce the documents following the examination. Capital City admitted that it did not maintain those documents during the examination period. As such, Capital City did not maintain customer files for JNJ Service, LLC; Swift Delivery, LLC; Johnson Maintenance Service; and Charlie’s Electric Company, Inc., in compliance with rule 69V-560.704(4) during the examination period. Subsequent to the examination, Capital City developed a checklist for compiling customer files on corporate customers who cash checks of $1,000.00 or more. The checklist includes all of the information required by rule 69V-560.704. Check Copies Florida Administrative Code Rule 69V-560.704(2) reads, in pertinent part, as follows: Every check casher shall maintain legible records of all payment instruments cashed. The records shall include the following information with respect to each payment instrument accepted by the registrant: A copy of all payment instruments accepted and endorsed by the licensee to include the face and reverse (front and back) of the payment instrument. Copies shall be made after each payment instrument has been endorsed with the legal name of the licensee. Endorsements on all payment instruments accepted by the check casher shall be made at the time of acceptance. Prior to the examination, Capital City did not keep copies of the backs of checks cashed. Rather, Capital City relied upon its bank to maintain copies of the checks cashed with endorsement. Capital City introduced at final hearing, a binder containing the copies of the backs of all checks cashed, with endorsements, by Capital City during the months of July, September, and October 2012. These records were provided to Respondent from its banking institution after the examination and after the Office filed its original Administrative Complaint. It is unclear whether Capital City, subsequent to the examination, has changed its practice of relying upon its bank to maintain copies of the backs of checks cashed. Mr. Williams testified both that “we decided, after the audit that, to be safe, we’d go ahead and keep the backs of the checks”2/ and “[w]e pay $75 a month so that the bank will produce these for us each month, and we pay extra if we have to produce them on demand during the middle of the month if we have any issues that involves law enforcement. But they are producible.”3/ Capital City’s decision, prior to the examination, not to maintain copies of the backs of checks cashed, was due in part to Mr. Williams’ belief that the governing statute allows a check casher to designate its bank as a third-party maintainer of records. Section 560.310(3), Florida Statutes (2012),4/ reads as follows: A licensee under this part may engage the services of a third party that is not a depository institution for the maintenance and storage of records required by this section if all the requirements of this section are met. Capital City’s bank is a depository institution. Capital City’s decision not to maintain copies of the backs of the checks, prior to the examination, was also due in part to Mr. Williams’ belief that “there is certain information that’s added to the back of checks after they go through the bank”5/ that was more helpful to law enforcement authorities interested in the checks. Capital City offered no testimony to identify what information on the backs of the checks existed at the time the checks were deposited, and what, if any, information was added during bank processing. Mr. Morin prepared a Report of Examination (Report) dated January 22, 2013, summarizing the findings of the October 2012 Capital City records examination. The Report was delivered to Kane Fuhrman, on behalf of Capital City, by certified mail. The Report contains the following with regard to maintenance of copies of the backs of checks cashed: 5. Section 560.1105 F.S./ Section 560.310(1)F.S./Rule 69V-560.704(2)(a), F.A.C. – The licensee failed to maintain copies of the backs of payment instruments cashed: (Exhibit I-XV, XIX) The licensee claims that the bank keeps copies of the backs of payment instruments cashed for them. This is also confirmed on the records request form where the licensee notes that their bank keeps these records. After receipt of the Report, Mr. Williams prepared a letter to the Office with responses to the findings.6/ The Office did not respond in any way to his letter. Mr. Williams testified that he understood the lack of response to mean that the Office accepted his explanation that Capital City’s bank was the designated record-keeper of copies of the backs of checks cashed. Electronic Log Florida Administrative Code Rule 69V-560.704(5) reads as follows: (5)(a) In addition to the records required in subsections (1) and (2) for payment instruments $1,000.00 or more, the check casher shall create and maintain an electronic log of payment instruments accepted which includes, at a minimum, the following information: Transaction date; Payor name; Payee name; Conductor name, if other than the payee; Amount of payment instrument; Amount of currency provided; Type of payment instrument; Personal check; Payroll check; Government check; Corporate check; Third party check; or Other payment instrument; Fee charged for the cashing of the payment instrument; Branch/Location where instrument was accepted; Identification type presented by conductor; and Identification number presented by conductor. Electronic logs shall be maintained in an electronic format that is readily retrievable and capable of being exported to most widely available software applications including Microsoft EXCEL. During the examination, Mr. Fuhrman provided Mr. Morin with copies of Capital City’s daily payment instrument log from August 1, 2012 through August 31, 2012. Each log displays the face value of each check cashed, the net amount of cash provided to the customer, and the fee charged to the customer. The Capital City daily logs provided to Mr. Fuhrman do not include the payee and payor name; the conductor name, if different from the payee; the type of payment instrument; or the identification type or number presented by the conductor. Capital City argues that all the information required to be on the payment instrument log was in the possession of Capital City, thus, it is in substantial compliance with the rule. In fact, Capital City introduced at final hearing a payment instrument log for checks over $1,000.00 accepted in August 2012. The log includes all the information required by the rule. The information used to complete the fields was pulled from Capital City’s customer files, which include the copies of the face of the checks, as well as copies of conductor’s photo identification and social security card. The fact remains that Capital City did not maintain an electronic payment instrument log which complied with rule 69V- 560.704(5), during the examination period. Customer Thumbprint Florida Administrative Code Rule 69V-560.704(4) reads, in pertinent part, as follows: In addition to the records required in subsection (1) and (2), for payment instruments exceeding $1,000.00, the check casher shall: Affix an original thumbprint of the conductor to the original of each payment instrument accepted which is taken at the time of acceptance[.] During the examination period, Capital City obtained customer thumbprints on the customer Agreement, rather than on the surface of the check cashed. Subsequent to the examination, Capital City has begun obtaining customer thumbprints on the surface of the checks cashed. Capital City failed to maintain customer thumbprints as required by rule 69V-560.704(4) during the examination period. Due Process Issues Capital City maintains that the Office conducted the records examination in a manner that violated Capital City’s right to due process of law. First, Capital City complains that the Office was required to conduct an examination of its records within the first six months after licensure, and that the Office’s failure to do so prevented Capital City from a thorough understanding of the applicable record-keeping requirements. Between 2008 and 2012, section 560.109(1) required the Office to examine all licensees within the first six months after licensure. See § 560.109, Florida Statutes (2011). The 2012 Legislature amended section 560.109 to delete the requirement for examination within six months of licensure. See ch. 12-85, § 2, Laws of Fla. The Office conducted the instant examination in October 2012, after the effective date of chapter 12-85, Laws of Florida. Next, Capital City argues that the Office failed to comply with its own examination procedures. Capital City introduced into evidence Petitioner’s publication titled, “Chapter 560 Money Services Businesses, Examiner Manual” (Manual). The Manual is dated “Revised September 2012.”7/ The Manual requires the examiner to conduct an Exit Interview with the licensee’s manager, and lists issues which must be covered, at minimum, with the licensee. Section XIV of the Manual provides, in pertinent part, as follows: XIV. Exit Conference When the Examiner has completed the examination, an exit interview will be held with the manager or his or her designated representative. The exit interview should consist of at least the following: Identification and discussion of any findings noted and corrective action that will be requested. The manager should be allowed the opportunity to refute any finding identified. The Examiner should not engage in a debate over the law. Reiterate that the Examiner is only a fact finder. Advise the licensee that an examination report will be prepared and sent to them or their main office. Notify the licensee that a written response to the examination is not required; however, the licensee should be encouraged to notify the Office of any and all corrective action taken. If they decide to make one, it will be part of the file. Respondent claims Mr. Morin did not provide a meaningful exit interview with Mr. Furhman in which he explained the requirements with which Capital City was not in compliance. The record establishes that Mr. Fuhrman was confused about the record-keeping requirements and what the Office considered to be “customer files.” During the examination on October 23, 2012, Mr. Morin gave a copy of rule 69V-560.704 to Mr. Fuhrman to assist with his understanding. Mr. Morin testified that he spoke with Mr. Fuhrman “in general” about the rule and explained they were the minimum requirements for customer files. Mr. Morin spoke “minimally” with Mr. Fuhrman about the purpose of the Capital City Check-Cashing Agreement relative to the customer file rule. Mr. Morin told Mr. Fuhrman that designating the bank as the record-keeper of copies of the backs of checks cashed did not satisfy the rule requirement. Finally, Mr. Morin “generally” discussed the requirements with Mr. Fuhrman on October 24, 2012, when Mr. Morin left the written records request with Mr. Fuhrman. The Examiner’s Manual further provides, in pertinent part, as follows: XVI. REVIEW OF EXAMINATION TARGET’S RESPONSE Although there is no direct requirement to respond to the Office concerning corrective actions taken or to refute any finding, the licensee may do so. If a licensee does respond, the following should be accomplished: The Examiner who performed the examination should review the response, complete the response evaluation, and make comments as appropriate if directed to do so by the AFM or his or her designee. It is not the Examiner’s responsibility to determine whether the action taken by the licensee was appropriate to correct the situation. If the action is deemed to be inappropriate or insufficient by the AFM or Examiner Supervisor to correct the situation, comments should be made as to what additional action may be needed. * * * d. The completed response evaluation should be attached to the response and delivered to the AFM. * * * f. The Regional Office may either file the response or may, if required, issue a risk based examination follow-up on the information in the response. Respondent maintains the Manual requires the Office to respond in writing to Capital City’s response to the Office’s Report of Examination. Respondent argues that if the Office had responded to his explanation that the bank maintains copies of the checks cashed, he would have provided the copies to the Office. Nothing in Section XVI of the Manual requires the Office to respond to a licensee’s response to the Report of Examination. Finally, Respondent argues that the Office applies a strict compliance, rather than substantial compliance, standard to review of licensee’s records, and fails to collect information relative to mitigating circumstances, which can be applied in determining appropriate penalties for violations. The first argument is strictly a legal argument which is dealt with in the Conclusions of Law. Findings relative to the second argument are contained herein. Andrew Grosmaire, Chief of the Office’s Bureau of Enforcement, calculated the administrative sanctions to be imposed on Respondent for each respective rule and statutory violation. A violation of the customer file rule is a level B offense according to Florida Administrative Code Rule 69V- 560.1000. Level B corresponds with a fine ranging from $3,500.00 to $7,500.00 per violation. Mr. Grosmaire recommended a fine of $7,500.00 because all four customer files, or 100%, were deficient. A violation of the requirement to maintain copies of the backs of checks cashed could have been penalized pursuant to section 560.114(1)(a), failure to comply with any order of the Office, which is a B-level offense. However, Mr. Grosmaire chose instead to charge Respondent under 560.1105, failure to maintain all records for five years, which is an A-level offense with a fine amount ranging from $1,000.00 to $3,500.00. See Fla. Admin. Code R. 69V-560.1000(150). Mr. Grosmaire recommended a fine of $3,500.00 because all of the records reviewed, or 100% of the sample, failed to meet the requirement for copies of backs of checks cashed. A violation of section 560.1105 can subject a licensee to revocation, even for a first offense, pursuant to rule 69V- 560.1000(4), but Mr. Grosmaire did not recommend revocation of Respondent’s license. A violation of the electronic log requirement is also a B-level offense. In this case, Mr. Grosmaire considered that the electronic log produced by Capital City contained four of the 11 fields required, and translated that to 64% compliance. Applying that percentage to the range of fines, Mr. Grosmaire recommended a fine of $6,000. A violation of the requirement to obtain thumbprints on the face of checks cashed is a B-level offense. Mr. Grosmaire recommended a fine amount of $7,500.00 because 100% of the check records reviewed failed to meet the thumbprint requirement. Mr. Grosmaire considered the aggravating and mitigating factors listed in rule 69V-560.1000(148). He determined that two aggravating factors applied: “(f) [w]hether, at the time of the violation, the licensee had developed and implemented reasonable supervisory, operational or technical procedures, or controls to avoid the violation;” and “(i) the length of time over which the licensee engaged in the violations[.]” Mr. Grosmaire determined that (f) applied because three out of four violations were found in 100% of the samples examined. He determined that (i) applied because the violations existed for the entire examination period. Mr. Grosmaire recommended a total fine of $24,500.00. Mr. Grosmaire determined that one mitigating factor applied – “no disciplinary history for licensee.” Mr. Grosmaire applied that factor in determining what term of suspension to impose on Respondent. Mr. Grosmaire recommended the minimum suspension of 33 days for all violations because Respondent had no disciplinary history. Mr. Grosmaire testified that he relied upon the aggravating and mitigating factors “that the examiner has identified, that I’ve seen in the report, or the mitigating circumstances I’ve seen in the report.”8/ Mr. Morin testified that, during his examination, he does not make a determination of whether there are aggravating or mitigating factors.9/
Recommendation Based upon the aforementioned Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner, Office of Financial Regulation, enter a final order: Finding that Respondent, Capital City Check Cashing, violated subsections 560.310(1), 560.310(2)(a), 560.310(2)(c), and 560.310(2)(d), Florida Statutes; and Florida Administrative Code Rules 69V-560.704(2)(a), 69V-560.704(4)(a), 69V- 560.704(4)(d), and 69V-560.704(5)(a). Imposing an administrative penalty against Respondent in the amount of $24,500.00, payable to Petitioner within 30 calendar days of the effective date of the final order entered in this case. Suspending Respondent’s license for 33 days. The undersigned retains jurisdiction in this matter to rule on Respondent’s Motion for Sanctions pursuant to section 57.105, Florida Statutes (2014), should Respondent be the prevailing party in the final order entered in this case. DONE AND ENTERED this 27th day of August, 2014, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of August, 2014.
Findings Of Fact The Parties Petitioner is a Florida corporation that provides software development and consulting services to various commercial entities and state agencies. It has its principal place of business in Jacksonville, Florida. Respondent is an agency of the State of Florida charged with the responsibility to regulate various professions and businesses licensed by the State of Florida. In carrying out its responsibilities it engages the services of outside vendors through competitive bidding. Respondent's principal business office is at 1940 North Monroe Street, Tallahassee, Florida. Intervenor is a California corporation that designs, manufactures and services equipment and systems for measurement, computation and communications, together with its consolidated subsidiaries. The RFP In 1993, Respondent was created by legislative action merging the Department of Professional Regulation and Department of Business Regulation. Respondent perceives that the merger was intended to improve the efficiency of the regulatory process and to facilitate accurate and efficient processing of consumer complaints. To further those purposes, on April 12, 1996 Respondent issued RFP 96-006. In the executive summary to the RFP prospective vendors who considered responding to the RFP were informed: This RFP has been developed in support of the merger for the purpose of acquiring contractor consulting service and software development to support the conversion of existing computer application systems for the Division of Florida Land Sales, Condominiums and Mobile Homes, the Division of Hotels and Restaurants, the Division of Pari-Mutual Wagering, and the conversion of regulatory, inspection, investigation and complaint processing for all the Business Regulation divisions, including the Division of Alcoholic Beverages and Tobacco. Through this Outcome Based RFP, the Department intends to contract with a vendor to not only provide analysis, system design, development, conversion, and selective consulting services, but serve as an integrator and primary contractor on this project. Contractor responding to this RFP will be expected to recommend services based on deliverable specified in this RFP. Since this is an Outcome Based RFP (see definition on Page 2), the Department will not be specifying unique contractor products and/or services or how the contractor is to design the system. In the RFP "Outcome Based RFP" was described as: A Request For Proposal in which the contractor's client will specify concepts, technology directions, size/number of things, and required results (primarily standards and system deliverables). The contractor will respond by recommending the design and proposed solutions -- how to get desired results, by what means (hardware, software, process, and contractor services), and for what cost. The purpose of the RFP was further described as: The purpose of this Outcome Based Request for Proposal (RFP) is to contract with a contractor (serving as integrator as well as contractor) to recommend (RFP bid response) and provide consultant services in conjunction with selected Department staff to: conduct an information management analysis study to identify the business functions performed as well as the data and information flows required to support these functions for the Divisions of Hotels and Restaurants, Land Sales and Condominiums, Pari-Mutual Wagering and regulatory, inspection, investigation and complaint management for all the Business Regulation Divisions, including Alcoholic Beverages and Tobacco, develop an integrated, data-driven information systems design that addresses the needs of the Business Regulation divisions and their information requirements, convert the business functions and data into the appropriate agency application system, develop detailed design and program specifications, modify existing applications and develop new applications necessary to support the system design, develop an implementation plan which provides a phased approach for migrating from the current environment to the planned environment, including system testing and training of agency personnel, provide post-implementation support for the resolution of problems. The contractor will be expected to contribute (under contract) a predetermined number of calendar months, not to exceed 26, towards systems analysis and design, specification and application development, conversion, testing, training, implementation and post- implementation support. The contractor will be responsible for designing, in detail, the methodology by which data files are to be converted from the multiple applications and various platforms and loaded into predefined relational data bases. The contractor will be responsible, under contract, for all services meeting the requirements of this RFP. All components proposed by the contractor must be at a turn-key level with 100 percent compatibility as far as integrating with installed hardware and software currently utilized by BPR. The scope of the work contemplated by the RFP through services performed by the contractor was to this effect: The Florida Department of Business and Professional Regulation (BPR) is requesting contractors to propose consulting services for system analysis, design, specification development, application, development, conversion, training, implementation and post- implementation support. The contractor will propose recommendations for products and services required and serve as an integrator/contractor. At minimum, this Business Regulation/Complaint Regulatory Management Conversion solution shall be capable of providing those services outlined within this RFP. The section addresses ten subject areas that must be addressed in contractor's proposal. Section III-A (Contractor Proposal Format) presents the required "Tab" format and refers backs to details in this section for the contractor to use. In the RFP an "Integrator" is defined as: The contractor who has total accountability, under contract, for all products and services being provided to a customer even those supplied by or acquired from other vendors and/or sub-contractors. In the RFP the term "Turn-Key" is defined as: Contractor is solely responsible for delivering a completed system with sign- ificant client involvement. Vendor awarded contract, will be responsible, under bond, for specified deliverables to the department, as well as being the integrator and contractor for the complete system as proposed which will include the roles of the contractor and appropriate involvement of BPR personnel. The RFP provided the vendors with instructions concerning the format for proposals, especially as it related to Tabs 1 through 24 and the need to complete those tabs consistent with the instructions. The vendors were reminded: [A]s required by Tab, the proposal will present specific consulting services that are recommended, and how these services will technically meet requirements as stated, and/or requirements developed and/or uncovered by the vendor that have been determined to be necessary for the project to be successful. Respondent provided a questionnaire to the vendors concerning the prospective vendors' commitment to the project. Those questions were to be answered "yes" or "no" with the opportunity for clarifying sentences to accompany the answers. The RFP instructed the vendors concerning the submission of cost information. It reminded the vendors that they should "submit firm costs to provide the state with the required deliverables, found in Section II of the RFP." The RFP described the manner in which the proposals would be evaluated through two separate committees, a "technical subcommittee" and a "vendor evaluation committee." The vendors were also reminded that the proposals would first be reviewed by the purchasing arm of the Respondent to assure that the vendors provided all mandatory documentation required by the RFP. In the instance where required documentation was missing the response would be determined "non-responsive." The evaluation process contemplated the "technical subcommittee" evaluating technology sections in responses to the RFP and providing those results to the "vendor evaluation committee." The latter committee would then evaluate other subject areas in the proposals and consolidate/finalize results from both evaluation processes into an overall rating. The RFP explained the subject areas that were to be considered by the two committees with particularity. The RFP described in detail the assignment of points and set forth the format for carrying out the evaluation process. The successful vendor would be selected upon the basis of the highest points awarded. The maximum points that could be received were 1950. The maximum points that could be received for the vendors' proposed costs were 250. The RFP sets terms and conditions and identifies mandatory requirements as: The state has established certain require- ments with respect to proposals to be submitted by proposers. The use of "are", "shall", "must" or "will" (except to indicate simple futurity) in the RFP indicates a requirement or condition. A deviation is material if the deficient response is not in substantial accord with this [sic] RFP requirements. Moreover, the RFP reminded the vendors that: Any proposal which fails to meet the mandatory requirements stated in this Request For Proposal shall be rejected. The RFP gives further instructions involving the rejections of proposals where it is stated: The department reserves the right to either make awards or to reject proposals by individual category, groups of categories, all or none, or a combination thereof. Any proposal which fails to meet the mandatory requirements stated in this Request For Proposal shall be rejected. Any proposal that contains material deviations or is conditional or incomplete shall be rejected. The department may waive an immaterial defect, but such waiver shall in no way modify the RFP requirements or excuse the proposer from full compliance with the RFP specifications and other contract requirements if the proposer is awarded the contract. The RFP refers to subcontracts where it states: The contractor is fully responsible for all work performed under the contract resulting from this RFP. The contractor may, with the consent of the department, enter into written subcontract(s) for performance of certain of its functions under the contract. The sub- contractors and the amount of the subcontract shall be identified in the contractor's response to this RFP. Subcontracts shall be approved in writing by the department's Executive sponsor, or designee, prior to the effective date of any subcontract. The Sub- contractor shall provide the Executive sponsor documentation in writing, on company letterhead, indicating known responsibilities and deliverables, with timeframes. No sub- contract which the contractor enters into with respect to performance under the contract resulting from this RFP shall in any way relieve the contractor of any respons- ibility for performance of its duties. All payments to sub-contractors shall be made by the contractor. Tabs 16, 17, 19, 20 and 21 require specific information about sub- contractors the vendor might employ in meeting the requirements in the RFP addressed under those tabs. In addition to the specific requirements in the RFP, paragraph 4 to the general conditions reminds the vendor to submit "firm prices." Paragraph 6 to the general conditions states that contract awards are made: As the best interest of the State may require, the right is reserved to reject any and all proposals or waive any minor irregularity or technicality in proposals received. Proposers are cautioned to make no assumptions unless their proposal has been evaluated as being responsive All awards made as a result of this proposal shall conform to applicable Florida Statutes. The RFP explained the manner in which addenda to the RFP would be provided, in which case the addenda would be in writing with the content and number of pages described and sent to each vendor that received the original RFP. The RFP also contemplated the possibility that Respondent might require the vendors to supplement their responses to the RFP with oral presentations to either of the evaluation committees. The RFP explained that there would be a bidders' conference to discuss the contents of the RFP, in view of any written inquiries from the vendors and recommended changes. On April 30, 1996 the bidders' conference was conducted. In this conference information was presented to the vendors and questions from the vendors were presented to Respondent, both oral and written. On May 10, 1996, addendum number 1 resulting from the bid conference was provided to the vendors. Through addendum number 1, Respondent more specifically informed the vendors concerning its expectations in the vendors' responses to the RFP. Additionally the addendum rescheduled certain events in the bid process. It changed the proposal due date and public opening of the technology portion of the proposal to June 7, 1996. The date for opening of proposals in the cost portion was changed to July 12, 1996. The date for posting of the intended award was changed to July 17, 1996. Two vendors responded to the RFP. Those vendors were Petitioner and Intervenor. In addition to the information provided through responses to the RFP, Respondent propounded written questions to the vendors as attachments A and B. Attachment A constituted common inquiry to the vendors. Attachment B was designed to solicit additional information unique to the respective vendors. Both vendors responded to the questionnaires on July 9, 1996. Both vendors' proposals were found responsive. The two committees performed their respective evaluations. Through this process Petitioner was awarded 1206.46 points. Intervenor was awarded 1321.39 points. As a consequence, on July 16, 1996 Respondent posted notice that it intended to award a contract to Intervenor. Respondent also sent a letter on that date notifying the Petitioner that it intended to contract with Intervenor. As described in the preliminary statement, and incorporated here, Petitioner gave notice and formally challenged the decision to award. In its opposition to the decision to award to the Intervenor, Petitioner does not allege that Respondent failed to implement the procedures for evaluation in scoring the competitor's. Rather, Petitioner challenges the results obtained in that implementation. Where Respondent found Intervenor responsive to certain alleged material requirements in the RFP, Petitioner asserts that Intervenor was not responsive to those material requirements. In performing their duties the committee members who evaluated the proposals had a week to prepare themselves to render their input. During that time they were allowed to review the responses to the RFP. Following that opportunity the evaluators were allowed to seek clarification on any items where there might be uncertainty, to include legal advice from the Respondent agency. In carrying out their assignment the evaluators compared the requirements in the RFP to the responses by the vendors. Through this process no evaluator indicated that either proposal was unresponsive. In their review function the evaluators also considered the answers to the questions that had been provided by the vendors on July 9, 1996. The evaluators had been instructed to review the requirements contemplated by Tabs in the RFP, to read the RFP and the addendum to the RFP. Petitioner specifically challenges Respondent's determination that Intervenor was responsive in meeting the following alleged requirements in the RFP: Did the Intervenor Fail to Submit an Outcome Based Proposal in Response to the RFP? The RFP contemplates the necessity that a vendor will submit a proposal that is Outcome Based as defined in the RFP and explained in other provisions within the RFP. The requirement to submit an Outcome Based Proposal is a material requirement. If a vendor does not meet that requirement, the failure to comply is a material deviation from the requirements in the RFP. If a vendor does not meet the requirement for providing an Outcome Based Proposal and the evaluators ignored that irregularity, their actions would be arbitrary. Tab 3 discusses: Business Regulation/Complaint Management Conversion Project Life Cycle Presentation: This section will present the overall scope of the project and the methodology. This section will need to specifically deal with how the vendor addressed the technical design requirements as spelled out in Project Scope. As described, this Tab was designed to have the vendor identify the overall scope of the proposal and the methodology to be employed in reaching the outcome required by the RFP. As Section 3-1 to its response Intervenor replied: Hewlett-Packard's (HP) approach is to provide BPR with both fixed price and 'time-boxing'. Time-boxing is defined as an allocation of consulting hours (3360) which will be delivered by HP technical consultants or sub- contractors. HP is proposing to fix price the Information Management Analysis Study, Integrated System Design, and Project Management. The remaining sections (Detail Design and Program Specification, Data Conversion Phase, Development, System Testing, Implementation, Training, Post-Implementation Support) will be time-boxed with a total of 3360 hours. HP has made suggestions as to the number of hours to be used for these sections. However the final allocation will be mutually agreed upon by HP's project manager and BPR's project manager. HP Professional Services Methodology Moving from a legacy computing model, to a distributed, open client/server computing environment, requires the organization to rethink the process, people, and technology requirements of the enterprise. Organiza- tional integration and effective evaluation of IT solutions tend to get lost in the rush to develop specific applications. If not lost, there is rarely a structured logical process that is followed in defining, designing, developing, implementing, and operating the solution. The remaining provisions within Section 3 to the Intervenor's response to the RFP detail the overall scope of the project and the methodology to be employed. In other respects the Intervenor's response to the RFP explains the manner in which it would reach the outcome contemplated by the RFP in all phases related to its proposed consulting services in this project. Facts were not presented that proved that the evaluators acted arbitrarily in determining that the Intervenor's proposal was based upon the required outcome in the project. Did the Intervenor Submit a Firm Price Proposal? The RFP creates a material requirement that a vendor complete Attachment "E" to the RFP. Attachment "E" provides cost information from the vendor. In every respect Intervenor has complied with that requirement. The evaluators were not arbitrary in determining that the requirement was met. Notwithstanding the use of "time-boxing" for certain phases in the project, the cost information submitted in Attachment "E" assigns a money amount for those phases. By that assignment the consulting hours that are "time-boxed" have an equivalent dollar figure which constitutes firm costs for those deliverables/phases in the project. The evaluators did not act arbitrarily in assigning 234 points to the Intervenor for its cost proposal. Did the Intervenor fail to Submit a List of Sub-contractors Whose Services will be used by the Intervenor? Tab 16, Corporate (vendor) qualifications and commitment; makes it incumbent upon the vendor to indicate the sources committed to the project in terms of personnel and other resources, to include sub-contractors involved with the project. Tab 17, Corporate (vendor) financials; requires the vendor to produce financial information about it and any sub-contractors involved with the project. Tab 19, Individuals proposed to work on contract; requires resumes of individuals who work for the vendor or a sub-contractor and information about key personnel of the vendor and sub-contractors. Tab 20, Contract and support services including post-implementation plan, requires; the vendor to indicate where its services will be provided by the vendor or sub-contractors. Tab 21, Contractor questionnaire; solicits information from the vendor about sub-contractors. As seen, in many provisions the RFP requires a vendor to identify information about sub-contractor whose services would be used by the vendor. These are material requirements. If the evaluators ignored the requirements, their actions would be arbitrary. In addressing intervenor's proposal, the evaluators acted arbitrarily. The problem is that Intervenor in many places in its response has left open the possibility that it would use sub-contractors without naming those sub- contractors and their contribution to the project. Ultimately, the lack of disclosure could provide the Intervenor with an advantage that Petitioner does not enjoy and potentially adversely impact the interests of the Respondent. The following are examples in response to the RFP where Intervenor has maintained its option to use sub-contractors without disclosing information about the sub-contractors: Section 1-3: "The Regulatory Management Conversion solution being proposed is comprised of world-class services from HP and our partners." The reference to partners is seen to include the possibility that sub-contractors might be used. Section 3-1, that has been commented on, referring to time-boxing, describes allocation of the 3360 consulting hours through delivery by the intervenor's technical consultants or sub-contractors. Section 10-2, refers to the implementation of the management plan which follows-up "sub- contractor's work." Section 12-2, refers to Intervenor and its training partners offering "standard and custom instructor led training, computer based training and net work based training." Training partners is taken to mean some persons who reasonably could be considered sub-contractors. Section 13-1, makes reference to third party services involved with the Intervenor's custom solution to the project needs. The reference to third party is equivalent to a sub-contractor. Section 16-9, referring to the flexibility in managing the engagement (project) describes partnering and involvement in sub-contracting. Section 21-2, in responses to the question- naire to Tab 21, Intervenor refers to its time- boxing approach for providing services, in which, according to Section 3-1, Intervenor leaves open the possibility that it would use sub-contractors to deliver the services. It is realized that on occasions in which Intervenor was required to provide contemporaneous and detailed information concerning its intentions to use sub-contractors, answers that it gave in association with Tabs 16, 17, 19 and 20 did not refer to sub-contractors. Consequently, one might assume that Intervenor did not intend to employ sub-contractors in this project notwithstanding references to unnamed sub-contractors found in other places in the response to the RFP. This raises the issue whether the lack of reference and response to the more specific questions about the use of sub-contractors overcomes the implications of the possibility that sub-contractors will be used that is made in response to other requirements in the RFP. That internal inconsistency should not favor an interpretation that creates advantage for Intervenor and potential difficulty for Respondent, which it does. For the evaluators to allow the conflict to remain is an arbitrary act. To seek to resolve the conflict would also constitute an arbitrary act as it would require an amendment to the Intervenor's response. The fact that Respondent must approve subcontracts before their effective dates does not satisfactorily mitigate the need to disclose subcontractor information with the response. Did Intervenor's Proposal Fail to Meet the Requirements in the RFP in the Technical Categories for Tabs 4 through 7, 10, 12, 14, 15 and 21? Petitioner made allegations concerning those issues associated with Intervenor's technical responses in those tabs. However, in the proposed recommended order Petitioner limited its discussion to Tabs 5, 6, 7 and 11. It is assumed that Petitioner abandoned its contentions concerning the remaining tabs described in the interrogatory. Tab 5, Integrated system design, states: In this section the vendor will present the methodology to be used in support of the RFP requirements. The evaluators found that Intervenor had met this requirement. It has not been shown that the evaluators acted arbitrarily in determining that the Intervenor had complied with requirements at Tab 5. Tab 6, Detail design and program specifications, states: In this section the vendor will present the methodology in support of the RFP requirements. Petitioner has failed to prove that the evaluators acted arbitrarily in concluding that the Intervenor met the requirements for Tab 6. Tab 7, Data conversion states: In this section vendor [sic] will provide a description of their approach to the data conversion phase. Petitioner has failed to prove that the evaluators acted arbitrarily in determining that the Intervenor met the requirements for Tab 7. Tab 11, Post-implementation support, states: In this section the vendor [sic] will provide a description of their approach to post-implementation support. Petitioner has failed to show that the evaluators acted arbitrarily in concluding that the Intervenor had met the requirements for Tab 11. Nor has it been shown in any respect that the evaluators acted illegally, fraudulently, or dishonestly. Was the Intervenor a responsible proposer? Petitioner alleged in its petition that the Intervenor was not a responsible proposer. Petitioner did not offer proof to sustain that allegation.
Recommendation Upon consideration of the facts found in the conclusions of law reached it is, RECOMMENDED: That a final order be entered which declares Intervenor to be unresponsive to the RFP and takes such other action as Respondent deems appropriate in pursuing this project. DONE and ENTERED this 10th day of October, 1996, in Tallahassee, Leon County, Florida. CHARLES C. ADAMS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 10th day of October, 1996. COPIES FURNISHED: Timothy G. Schoenwalder, Esquire Blank, Rigsby and Meenan, P.A. 204 South Monroe Street Tallahassee, Florida 32301 R. Beth Atchison, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399 Mary C. Piccard, Esquire Cummings, Lawrence and Vezina, P.A. Post Office Box 589 Tallahassee, Florida 32302-0589 Lynda L. Goodgame, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Richard T. Farrell, Secretary Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Forida 32399-0792
