The Issue Whether Florida Moving Systems, Inc. should be certified as a minority business enterprise by the Respondent, pursuant to Section 288.703(1) and (2), Florida Statutes and the applicable rules implementing the statute.
Findings Of Fact Claudia Deneen and Thomas B. Deneen, husband and wife, and another partner purchased the applicant company with joint funds in 1988. Subsequently, the business was incorporated and the name changed to Florida Moving Systems, Inc. Prior to the time of the incorporation of the business, David P. Astolfi bought out the original partner and obtained a 25 percent share in the incorporated business. Claudia Deneen, Thomas B. Deneen and David P. Astolfi presently serve as the Directors of the applicant corporation. Neither Thomas B. Deneen nor David P. Astolfi qualify for classification as a "minority." In 1992, Claudia Deneen obtained her husband's stock in the corporation without consideration, but for prior services rendered. Claudia Deneen now holds 75 percent of the outstanding stock in her name. While Claudia Deneen was out on maternity leave in 1992, Thomas Deneen ran the business. Claudia and Thomas Deneen, as well as David Astolfi each have authority to individually sign business checks. Astolfi who serves as Vice President for Sales, is paid $1100 weekly, Thomas Deneen who serves as President, is paid $1500 weekly. Claudia Deneen who serves as Vice President, Secretary/Treasurer, and chief purchasing agent, is paid $1000 weekly when money is available. Both Claudia and Thomas Deneen signed and guaranteed the business leases. All three Directors, Claudia and Thomas Deneen and Astolfi, share common ownership in a similar business called Florida Distribution Systems, Inc. which is housed adjacent to the applicant. Thomas Deneen signs 90 percent of applicant's payroll checks. Business decisions are made jointly by all directors. Claudia Deneen is the chief purchasing agent for the corporation and maintains control over the purchase of goods, equipment and services. She also participates in the hiring and firing of personnel and the setting of all employment policies. Petitioner's offer of proof, consisting of business letters or recommendation, all recommended both Claudia and Thomas Deneen as a team, not individually.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application for Minority Business Certification filed by Florida Moving Systems, Inc. on January 17, 1994, be DENIED. DONE and ENTERED this 1st day of September, 1995, in Tallahassee, Florida. DANIEL M. KILBRIDE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of September, 1995. APPENDIX The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on proposed findings of fact submitted by the parties. Proposed findings of fact submitted by Petitioner. Petitioner did not submit proposed findings of fact. Proposed findings of fact submitted by Respondent. Accepted in substance: paragraphs 1-13. COPIES FURNISHED: Claudia Deneen Vice President and Secretary/Treasurer 4317 Fortune Place West Melbourne, Florida 32904 Joseph L. Shields, Esquire Senior Attorney 107 West Gaines Street 201 Collins Building Tallahassee, Florida 32399-2005 Crandall Jones Executive Administrator Collins Building, Suite 201 107 W. Gaines Street Tallahassee, Florida 32399-2000
The Issue The issue presented is whether the Department acted fraudulently, arbitrarily, illegally, or dishonestly in proposing to award to Intervenor, The Weitz Company, Inc., a contract for Project No. DGS-88114000.
Findings Of Fact On February 18, 1992, Respondent Department of General Services issued its Invitation to Bid on Project No. DGS-88114000, the construction of the Fort Pierce Regional Service Center. The bid package contained a copy of the Department's Advertisement for Bids, together with the bid specifications, evaluation criteria, and criteria for award of the contract. The Department's Advertisement for Bids identified the project, advised that sealed bids would be received and opened at 2:00 p.m. on March 12, 1992, stated that the Bid Tabulation and Notice of Award Recommendation would be posted at 4:00 p.m. on that same date, and contained the following language: MINORITY PROGRAM: In accordance with Florida Statute 287.057(6), at least 21 percent of the project contracted amount will be expended with DGS certified minority business enterprises. If 21 percent is not attainable, the Division of Building Construction will recognize Good Faith Efforts by the Bidder. The Bidder is advised to review these requirements in the Section B-13B "Employment of and Reporting of DGS Certified Minority Business Enterprises Participation" immediately, in order to schedule the necessary tasks to accomplish Good Faith Efforts. Page 2 of the bid package was the Invitation to Bid form letter which contained the identical language as that quoted above. Section B-13B found on page 14 of the bid package under Instructions to Bidders provides as follows: B-13B EMPLOYMENT OF AND REPORTING OF DGS CERTIFIED MINORITY BUSINESS ENTERPRISE PARTICIPATION Florida Statute 287.042 and the Department of General Services Rules 13-8 and 13-9, encourages the employment of and requires the reporting of DGS Certified Minority Business Enterprise (MBE) participation in state contracting. The Department has as its goal to spend twenty-one percent (21 percent) of construction contracts with DGS certified minority business enterprises. The overall goal for construction contracts are as follows: 4 percent Black Americans 6 percent Hispanic Americans and 11 percent American Women The Division Director of the Division of Building Construction recognizes the need to take affirmative actions to insure that Minority and Women business enterprises and minority and women employees are given the opportunity to participate in the performance of the Division of Building Constructions' construction programs. This opportunity for full participation in our free enterprise system by traditionally, socially and economically disadvantaged persons is essential to obtain social nd [sic] economic equality and improve the functioning of the State economy. Accordingly, it is the policy of the Division of Building Construction to foster and promote the full participation of such individuals and business firms in the State's building construction program. The Contractor, by bidding on this Contract, acknowledges his understanding and support for the social policy herein stated and pledges to fully cooperate with the State in the implementation of this policy, and further to exert a good faith effort to solicit and obtain the participation of such individuals and firms as subcontractors, suppliers and employees on this Contract. Prior to the execution of a contract, the bidder shall provide the following information on his contract or subcontracts for all DGS certified minority business firms to be utilized on the project: * * * Contractor's Schedules of Values and Requests for Partial Payments shall also reflect the payments made to each MBE subcontractor, using the name, minority vendor code, type of business and amounts. The contractor shall make a good faith effort to use services or commodities of minority business enterprises by: Attending any presolicitation or prebid meetings that were scheduled by the division to inform minority business enterprises of contracting and subcontracting opportunities; Advertising in general circulation, trade association, and/or minority-focus media concerning the subcontracting opportunities; Providing written notice to a reasonable number of specific minority business enterprises that their interest in the contract was being solicited in sufficient time to allow the minority business enterprises to participate effectively; Following up initial solicitations of interest by contacting minority business enterprises or minority persons to determine with certainty whether the minority business enterprises or minority persons were interested; Selecting portions of the work to be performed by minority business enterprises in order to increase the likelihood of meeting the minority business enterprise goals, including, where appropriate, breaking down contracts into economically feasible units to facilitate minority business enterprise participation; Providing interested minority business enterprises or minority persons with adequate information about the plans, specifications, and requirements of the contract or the availability of jobs; Negotiating in good faith with interested minority business enterprises or minority persons, not rejecting minority business enterprises or minority persons as unqualified without sound reasons based on a through [sic] investigation of their capabilities; and Effectively using services of available minority community organizations; minority contractors' groups; local, state, and federal minority business assistance offices; and other organizations that provide assistance in the recruitment and placement of minority business enterprises or minority persons. Prior to the issuance of the Invitation to Bid, the St. Lucie County Democratic Executive Committee directed a letter to Governor Lawton Chiles concerning the high rate of unemployment in the construction industry in the Fort Pierce and St. Lucie County area. That letter requested that language be included in the invitation for bids for the Fort Pierce Regional Service Center specifying that priority be given to the available resident work force, first, from within the city of Fort Pierce and, second, from within St. Lucie County. That correspondence reached the Department of General Services, with the result that the following language was included within the bid specifications on page 14a: B-13C EMPLOYMENT OF LOCAL LABOR, SUBCONTRACTORS AND MATERIAL SUPPLIERS The procurement by General Contractors and Sub- contractors of persons for skilled and unskilled worker positions, the sub-contracting by General Contractors for Sub-contractor services and the purchase by General Contractors and Sub-contractors of materials, equipment, supplies and services is highly encouraged to the maximum extent possible, to be from persons residing within or businesses located within Ft. Pierce and St. Lucie County. A Pre-bid Conference was conducted on February 28, 1992. The Minutes from the Pre-bid Conference reflect that Addendum No. 1 to the bid specifications provided to potential bidders a copy of the Department's Minority Business Enterprise Construction Directory listing DGS-certified minority business enterprises as of December 1991. Those Minutes also contain the following entry: Highlights of front-end of Project Manual * * * Page 14, Paragraph B-13B for reporting minority participation stipulates 21 percent goal: 4 percent Black 6 percent Hispanic 11 percent American Women Contractors must thoroughly document their good effort. Procedure for documenting good effort can be obtained from Susan Hodge. * * * K. Page 89 - Post Bid Qualifications: Form is to be completed and submitted within 7 days after Bid Opening. A few of the lowest Bidders will probably be required to submit this form. At 2:00 p.m. on March 12, 1992, the Department received and opened eleven bids for the construction of the Fort Pierce Regional Service Center. Two of those bids were from Petitioner D. I. C. Commercial Construction Corp. (hereinafter "D.I.C.") and from Intervenor The Weitz Company, Inc., (hereinafter "Weitz"). At 3:00 p.m. on March 12 the Department posted its Bid Tabulation and Notice of Award Recommendation. That Bid Tabulation reflected that The Weitz Company of West Palm Beach submitted the lowest bid, in the amount of $5,545,800, and that D.I.C. Commercial Construction of Fort Pierce submitted the second lowest bid, in the amount of $5,553,600. The Bid Tabulation and Notice of Award Recommendation further provided as follows: This is to advise you that the Division of Building Construction, Department of General Services, State of Florida, Has recommended that the contract for the referenced project be awarded to the firm of: THE WEITZ COMPANY, INC. in the amount of $5,545,800.00, accepting the BASE BID AND ALTERNATE #1 AND #2, determined to be the lowest acceptable qualified bid. Any bidder disputing the contract award recommendation must file . . . . Written notice of protest within seventy-two (72) hours after posting of this notice. A formal written protest by petition in compliance with Rule 13-4.12, Florida Administrative Code, and Section 120.53(5), Florida Statutes, within ten (10) days after the date on which he filed the notice of protest. * * * The Executive Director of the Department of General Services, State of Florida plans to act on the above recommendation after expiration of the seventy-two (72) hour notice period. That proposed bid award took into consideration only the amount bid by each of the eleven bidders. In making its proposed bid award, the Department gave no consideration to its bid specifications that required the inclusion of at least 21 percent participation by subcontractors who were DGS-certified minority business enterprises (hereinafter "MBEs"), and which "highly encouraged to the maximum extent possible" the use of "persons residing within or businesses located within Ft. Pierce and St. Lucie County." On March 16, 1992, D.I.C. timely filed its Notice of Protest to the proposed award of the contract to Weitz. On March 26, 1992, D.I.C. timely filed its Formal Notice of Protest to that proposed bid award. Since the Weitz bid did not achieve the required 21 percent MBE participation, Weitz was required to submit documentation of its "good faith effort" to the Department along with other post-award qualification documentation. Weitz submitted its "good faith effort" documentation on March 16, 1992. Although the Department was aware that a Notice of Protest had been filed on March 16, the Department commenced its "good faith effort" review on March 17, 1992. Weitz's good faith submittal recited that it had achieved a total DGS- certified MBE participation of 13.6 percent in its attempt to reach the goal of at least 21 percent. Of the required classes of 4 percent Black Americans, 6 percent Hispanic Americans, and 11 percent American Women, Weitz reported it had achieved 3.2 percent, 8.9 percent, and 1.5 percent respectively. One of the MBEs included within the percentage of Hispanic Americans was improperly included since that minority subcontractor is an Asian subcontractor, which is a different certification classification and not one of the types of minorities specifically required to be included in this project. That Asian subcontractor represented almost one-half of the Hispanic participation claimed by Weitz. Accordingly, Weitz failed to achieve the required overall percentage and failed to achieve the required percentage in any of the three categories. Weitz's submittal also showed that it had included within its achieved percentages of participation subcontractors who were not yet DGS-certified, by listing three of those subcontractors under the heading of "pending minority certification." Although one of those did become certified by the time of the formal hearing in this cause, the other two have never applied for certification. Although the bid specifications use the language DGS-certified MBE subcontractors for inclusion in the 21 percent participation requirement, it is clear that D.I.C., Weitz, and the Department believed that the bid specifications meant certified or certifiable. The Department's policy is that the MBE must be certified by DGS, not on the date of bid submittal, but by the time that the Department enters into the construction contract with the prime contractor. It is also clear that the Department began tracking the efforts of Weitz's subcontractors to become certified by DGS and became involved in the certification process for Weitz's subcontractors who were not yet DGS-certified. Although Weitz had received 21 bids from DGS-certified MBEs, it chose to use the bids of only five. The bids of the others were rejected because Weitz had made the prior determination that it would use the bid of a DGS- certified MBE only if that subcontractor submitted the low bid for that particular portion of the work. In other words, Weitz's focus was on submitting the lowest possible bid rather than on submitting a bid which included the required MBE participation goal. On the other hand, when D.I.C. received and reviewed its bid package, it made the determination that the Department's requirement of at least 21 percent minority participation was easily achievable. Accordingly, D.I.C. did not prepare any "good faith effort" documentation since the bid specifications clearly stated that the Department would consider good faith efforts only if the 21 percent goal were not attainable. D.I.C. made the decision that it would include the required percentage, both overall and in each individual category, in its bid submittal and that, if it could not, it would simply not submit a bid on this construction project. D.I.C. included in its bid the bids of MBE subcontractors who it believed were either DGS-certified or certifiable for a total participation of 26.5 percent. Included within that overall participation D.I.C. exceeded the required percentage for Black Americans, exceeded the required participation for Hispanic Americans, and fell barely short of meeting the required participation for American Women. After D.I.C. filed its Notice of Protest, although the Department freely communicated with Weitz and Weitz's subcontractors in the Department's efforts to certify those subcontractors to be used by Weitz who were not certified, the Department ceased communication with D.I.C. and D.I.C.'s subcontractors. Further, the Division of Building Construction of the Department commenced and continued in its efforts to review Weitz's "good faith" submittal. The Department further rejected communication from the supervisor in its own Minority Business Enterprise Assistance Office regarding the Department's good faith efforts review. When conducting its good faith review, the Department looked only at the documentation submitted by Weitz. It made no effort to ascertain if there were things that Weitz could have done that Weitz chose not to do. Further, in conducting its good faith effort review, the Department reviewed Weitz's documentation under the belief that there was no specific MBE goal for this project. The Department's belief that there was no required MBE participation for this project, contrary to the bid specifications, was based upon the fact that the Legislature had given the Department a goal of at least 21 percent minority participation with the breakdown for the three categories of MBEs listed in the bid specifications as an overall Department goal. Although not disclosed in the bid specifications, the Department looked to meet its goal through the totality of its construction contracts and not pursuant to any individual contract. By March of 1992, the Department had already exceeded its statutorily-imposed goal by 140 percent for that fiscal year. Further, it was the Department's policy and practice to include in its reports to the Legislature concerning whether the Department had met its own statutorily- imposed MBE participation goal the participation of all minority subcontractors in all of the Department's construction contracts without regard to whether those subcontractors were DGS-certified by the time that the Department entered into those construction contracts with the prime contractors. In reviewing Weitz's good faith efforts, the Department utilized the criteria set forth in the bid specifications. It looked at each of the eight criteria listed in the bid specifications and then looked at the documentation submitted by Weitz to ascertain if there had been an effort to comply. The first criterion considers whether the contractor attended presolicitation meetings scheduled by the agency to inform minority business enterprises of the subcontracting opportunity. Since the Department held no such meeting regarding this construction project, none of the bidders could have met this criterion. The second criterion relates to advertising in general circulation, trade association, and/or minority-focus media. Weitz ran an ad one time only on Sunday, March 1, in the Palm Beach Post and in the Fort Lauderdale News/Sun- Sentinel. Weitz placed no other ads. The third criterion requires providing written notice to a reasonable number of specific minority business enterprises that their interest is being solicited in sufficient time to allow them to participate effectively. Weitz sent 98 letters throughout the state of Florida to MBEs listed in the Department's December 1991 directory. That letter was dated February 25, 1992. The fourth criterion requires following up initial solicitations by contacting MBEs or minority persons to determine with certainty whether they are interested. Weitz sent a follow-up letter dated March 4 to the same 98 addressees as its prior letter. The fifth criterion requires selecting portions of the work to be performed by MBEs to increase the likelihood of meeting the MBE goals, including, where appropriate, breaking down contracts into economically feasible units to facilitate MBE participation. Weitz's documentation reflected that the work of several trades had been broken down into smaller units. The sixth criterion requires providing interested MBEs or minority persons with adequate information about the plans, specifications, and requirements of the contract or the availability of jobs. The advertisement placed by Weitz gave no information other than that it was seeking bids from certified MBEs for construction of the Regional Service Center in Fort Pierce, that the bid deadline was March 12, and that plans were available for review at Weitz's office in West Palm Beach. The first letter sent by Weitz advised the recipient of the square footage of the project, that Weitz might assist subcontractors on their bonding requirement, and that plans were available for review at Weitz's office in West Palm Beach and at local plan rooms, or full sets of plans and specifications could be purchased from Weitz at a price of $300 a set. The letter further gave the names of two persons at Weitz's office who could be contacted. The follow-up letter sent by Weitz contained the same information. The seventh criterion requires negotiating in good faith with interested minority business enterprises or minority persons and not rejecting them as unqualified without sound reasons based upon a thorough investigation of their capabilities. The Weitz documentation contained a statement saying that it had not rejected any minorities as being unqualified. The eighth criterion requires effectively using services of available community organizations; minority contractors' groups; local, state, and federal minority business assistance offices; and other organizations that provide assistance in the recruitment and placement of minority business enterprises or minority persons. Weitz sent letters to six organizations in the state of Florida stating that it was seeking proposals for the Fort Pierce Regional Service Center, that it had contacted those companies listed in the December 1991 directory, that plans were available for review at Weitz's office in West Palm Beach and at local plan rooms, and that the recipients should refer any known interested persons to Weitz. It is clear that Weitz made an effort to obtain minority participation. It did not, however, use its "best ability and effort" to obtain minority participation. Weitz's efforts did result in the receipt of a substantial number of bids from DGS-certified MBEs. It does not, however, appear that Weitz used its best effort to assist interested MBEs to participate in the construction project since it did not use any subcontractor's bid unless it was the low bid. Weitz's documentation contains a copy of each of the letters sent to the 98 businesses in the state of Florida and also contains some notations of telephone contact between Weitz and some MBEs. The documentation does not support the proposition, however, that Weitz used its best efforts to work with individual MBEs to solicit their interest; to ascertain with certainty their level of interest; to make the plans and bid specifications available to them; to organize the scope of work into smaller units, if necessary, to enable MBEs to effectively participate in the bidding process; and, most importantly, to utilize bids received by those MBEs. Although the bid specifications specifically stated that the minority participation was to be at least 21 percent and, if that 21 percent was not attainable, the Department would consider good faith efforts, the Department made no independent determination of whether 21 percent DGS-certified MBE participation on this project was attainable. Contrary to the language of the bid specifications, the Department interpreted the criteria to be a requirement that the bidder either attain 21 percent or submit good faith efforts. Since Weitz was the apparent low bidder by price, and since Weitz did not achieve the 21 percent participation, the Department assumed that such level of participation could not be attained and that Weitz could instead submit its "good faith effort." Although a provision was specifically written into the bid specifications for this project that the bidders were encouraged to use local labor from the Fort Pierce and St. Lucie County areas, the Department developed no criteria by which to judge whether the bidders attempted to comply with that bid specification. Additionally, the Department failed to review the bids received for this construction project to see if efforts had been made to include local labor. In essence, this bid specification was ignored by the Department. Although Weitz included in its "good faith effort" submittal a statement that it would utilize local labor by using its own employees, Weitz is located in West Palm Beach, not in St. Lucie County or in Fort Pierce. Although Weitz further included a statement that it might utilize up to twelve companies located in that area, the Department made no determination as to the number of qualified companies located there. The Department was not aware of the fact that Weitz had solicited only by letter two DGS-certified subcontractors in St. Lucie County and only three DGS-certified subcontractors in surrounding counties. On the other hand, D.I.C. had expended extensive efforts to involve businesses in the Fort Pierce and St. Lucie County area. Although Weitz attached to its Petition to Intervene in this proceeding a list of St. Lucie County firms which were encouraged to submit bids and a list of other firms who employ a majority of St. Lucie County employees on projects located in Fort Pierce which were encouraged to submit bids, those documents were never presented to, or considered by, the Department when it evaluated Weitz's bid. Section B-21 of the bid specifications provides, in essence, that the contract would be awarded to the bidder submitting the lowest bid. Weitz's bid was slightly lower than that of D.I.C.--a difference of $7,800 on bids of over five and a half million dollars. D.I.C.'s bid could have been $60,000 lower if it had not sought to comply with the 21 percent MBE requirement set forth in the bid specifications. Its bid would have been lower if it had, like Weitz, rejected all bids from DGS-certified MBE subcontractors who were not also the lowest bidder in that particular trade. D.I.C.'s belief that the Department would require compliance with all provisions in the bid specifications caused D.I.C.'s bid to be higher than that of Weitz, which placed emphasis on the lowest price rather than the lowest price plus effective effort at meeting the MBE participation specification. By focusing on one bid specification and not on all of the bid specifications, the Department gave Weitz an unfair advantage over other bidders. By allowing Weitz to submit "good faith effort" rather than comply with the 21 percent minimum participation requirement, the Department, in essence, allowed Weitz to make a subjective determination that the 21 percent requirement was not attainable. It was the Department's duty under the bid specifications to make its own objective determination that the 21 percent bid specification was not attainable before the alternative consideration of "good faith effort" became relevant to the bid award recommendation. The Department could have, for example, looked at the other bids submitted to see if the other bidders had attained the 21 percent participation requirement. Under the Department's approach, i.e., relying solely on Weitz's representation and considering only Weitz's bid, it is possible that the other bidders attained the 21 percent requirement and that only Weitz did not comply with that bid specification. The Department's procedure rendered the 21 percent bid specification meaningless, which fact was not known in advance by all of the bidders. By failing to determine whether the goal for MBE participation set forth as a bid specification was attainable, the Department failed to determine whether Weitz had complied with all bid specification requirements. Accordingly, the Department did not in fact make a determination that Weitz was a responsive bidder by meeting all bid specifications. Further, the Department made no determination in fact as to whether any of the other bidders, including D.I.C., were responsive to the Department's own bid specifications. Accordingly, there has been no determination that Weitz, or any other bidder, is the lowest responsive bidder. Similarly, the Department made no determination as to whether Weitz had complied with Section B-13C of the bid specifications which provided that bidders were "highly encouraged to the maximum extent possible" to utilize persons residing within or businesses located within Fort Pierce and St. Lucie County. D.I.C., with offices in Fort Pierce, submitted a bid which included 67 percent local participation. Weitz, with offices in West Palm Beach, submitted a bid representing that it would utilize its own employees for 15 percent of the contract (a different bid specification) and represented that it would probably utilize up to a dozen local companies. Since it is clear that Weitz solicited subcontractors from all over the state of Florida, Weitz made no showing that it had attempted "to the maximum extent possible" to utilize persons and businesses from Fort Pierce and St. Lucie County. Additionally, Weitz's single advertisement in the two newspapers chosen by it does not show an intent to obtain local participation since the Fort Lauderdale News/Sun-Sentinel is not sold in either Fort Pierce or St. Lucie County and the Palm Beach Post is obtainable in Fort Pierce only at 7-11 convenience stores and in newspaper vending machines. The Department made no determination as to whether Weitz, or any other bidder, was responsive to this bid specification. Further, the Department did not advise bidders that it might not enforce this bid specification in the same manner that the Department did not advise all bidders that it might not enforce the 21 percent bid specification. In short, the procedures utilized by the Department in evaluating the bids submitted for this project did not afford fair and equal review of all bids submitted. Further, Weitz was given a competitive advantage by the Department's determination that Weitz should be given the bid award based solely on the Weitz bid being the lowest submitted.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered rejecting all bids on Project No. DGS- 88114000 for the Fort Pierce Regional Service Center. RECOMMENDED this 25th day of June, 1992, at Tallahassee, Florida. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of June, 1992. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-2370BID Petitioner's proposed findings of fact numbered 1-4, 7-14, 17, 20, 29, 30, 33, 35, 36, 39, 43, 45-48, and 55 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed findings of fact numbered 5, 6, 15, and 18 have been rejected as not being supported by the weight of the competent evidence in this cause. Petitioner's proposed findings of fact numbered 16, 21-28, 34, 37, 38, 40, 42, 49-52, and 54 have been rejected as being unnecessary to the issues involved herein. Petitioner's proposed findings of fact numbered 19 and 53 have been rejected as being irrelevant to the issues under consideration in this cause. Petitioner's proposed findings of fact numbered 31, 32, 41, and 44 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Respondent's proposed findings of fact numbered 1, 2, 4, 7, 8, 11, 17, 19, 21, 22, 24-28, and 37 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed findings of fact numbered 3, 5, 6, 20, 29, 31, 33, 35, 36, and 38-41 have been rejected as not being supported by the weight of the competent evidence in this cause. Respondent's proposed findings of fact numbered 9, 10, 12-14, and 34 have been rejected as being unnecessary to the issues involved herein. Respondent's proposed findings of fact numbered 15, 16, 18, 30, and 32 have been rejected as being irrelevant to the issues under consideration in this cause. Respondent's proposed finding of fact numbered 23 has been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Intervenor's proposed findings of fact numbered 1 and 10 have been adopted either verbatim or in substance in this Recommended Order. Intervenor's proposed findings of fact numbered 2, 3, 7, 12, 15, and 16 have been rejected as not being supported by the weight of the competent evidence in this cause. Intervenor's proposed findings of fact numbered 4-6, 8, 9, 11, 13, and 14 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. COPIES FURNISHED: Melinda S. Gentile, Esquire Ruden, Barnett, McClosky, Smith, Schuster & Russell, P.A. 200 East Broward Boulevard Post Office Box 1900 Fort Lauderdale, Florida 33302 Stephen S. Mathues, Esquire Department of General Services Knight Building, Suite 309 2737 Centerview Drive Tallahassee, Florida 32399-0950 Bruce G. Alexander, Esquire Boose Casey Ciklin Lubitz Martens McBane & O'Connell Suite 1900 515 North Flagler Drive Post Office Box 024626 West Palm Beach, Florida 33402 Neil H. Butler, Esquire Butler & Long, P.A. Post Office Box 839 Tallahassee, Florida 32302 Ronald W. Thomas Executive Director Department of General Services Knight Building, Suite 307 2737 Centerview Drive Tallahassee, Florida 32399-0950 Susan Kirkland, General Counsel Department of General Services Knight Building, Suite 309 2737 Centerview Drive Tallahassee, Florida 32399-0950
The Issue Whether Petitioner is entitled to be certified as a minority business enterprise.
Findings Of Fact West Construction, Inc., is a Florida corporation that is engaged in the construction business. The focus of the business is the renovation and new construction of commercial buildings. Petitioner has been certified as a minority business enterprise by several local governmental entities. Petitioner regularly bids on governmental contracts. Petitioner's application to the Respondent for certification as a minority business enterprise was denied. Petitioner is a "small business" as that term is defined by Section 288.703(1), Florida Statutes. 1/ At the time of the formal hearing, Martha A. Morgan owned 51 percent of the issued shares of stock in West Construction, Inc., served as one of two members of the Board of Directors, and was the President, Treasurer, and Assistant Secretary of the corporation. Ms. Morgan is an American woman. 2/ At the time of the formal hearing, Donald West owned the remaining 49 percent of the authorized and issued shares of stock, served as the other member of the Board of Directors, and was Vice-President and Secretary of the corporation. Mr. West is not a "minority person". Ms. Morgan and Donald West have been married to each other since 1985. West Construction, Inc. was incorporated by Donald West and his father in 1977 after they had operated as a partnership for several years. The corporation is authorized to issue 1,000 shares of common stock. When it was incorporated, a total of 200 shares of stock were issued, with Donald West and his father each being issued 100 shares of stock. When Donald West's father retired in 1984, the corporation repurchased his 100 shares of stock and distributed to him an amount equal to 50 percent of the assets of the business. This distribution adversely impacted the corporation's ability to secure performance bonds for projects. After that repurchase, the only issued shares of stock were the 100 shares that had been issued to Donald West in 1977. Prior to her marriage to Mr. West in 1985, Ms. Morgan had her own separate assets. She contributed these assets to the marriage. The marital assets were thereafter used to obtain performance bonds for the corporation and served as security for other obligations of the company. Ms. Morgan is a college graduate with a degree in Business Administration. Her experience includes working as a certified legal assistant for a land development company. In 1985, Ms. Morgan started working for West Construction doing accounting, posting, and general record keeping. In 1989, she began to take a more active role in the affairs of West Construction in that she did more of the day to day bookkeeping, including payroll and accounting. Since December 1992, Ms. Morgan has been licensed by the State of Florida as a certified building contractor. Ms. Morgan became the majority owner of the company on January 1, 1993, when Donald West transferred to her 51 of his 100 shares of stock in the corporation. Donald West remained the only other stockholder with 49 shares of stock. Effective January 1, 1993, Ms. Morgan became the President, Treasurer, and Assistant Secretary of the corporation. Ms. Morgan and Mr. West became the only two members of the board of directors of the corporation. One of the reasons for the transfer of stock was to qualify the corporation for certification as a minority business enterprise. The consideration for the transfer of the stock to Ms. Morgan was the contribution she had made to the marital assets and the work she had done on behalf of the corporation. There was no separate payment of money by Ms. Morgan for this stock. Donald West has been in the construction business all of his adult life. He has a degree from the University of Florida in building construction and has a general contractor's license and a building contractor's licensed from the State of Florida. Mr. West's construction licenses were used to qualify the firm for construction work between 1977 and December 1992, when Ms. Morgan obtained her building contractor's license. Ms. Morgan's license has been used to qualify the corporation since she obtained it. Ms. Morgan is in charge of managing the finances of the company. Ms. Morgan keeps the company books, pays the bills, and invests any profits. She is responsible for payroll, insurance, bonding, accounts receivables, and billings. Both Ms. Morgan and Mr. West have the authority to sign checks, make withdrawals and deposits on company accounts, and execute bank documents. Both have the authority to draw on a line of credit that has been established by the company, but neither has had the need to do so. Mr. West has the authority to sign company checks, but he seldom does so. Ms. Morgan and Mr. West are jointly and severally liable as indemnitors on the company's bond, and their personal assets, including the jointly owned marital assets, act as security for this risk. Both serve as guarantor's on the company's line of credit. At the time of her application for certification, Mr. West and Ms. Morgan were paid the same salary. Between that time and the formal hearing, Ms. Morgan had increased her salary so that she was being paid $3,000 per month and Mr. West was being paid $2,000 per month. Ms. Morgan testified that she determined her own salary without consulting Mr. West. Ms. Morgan arranged for the financing of the latest vehicle purchased by the company, she determined that the building out of which the company operates should be financed. She made the decision as to how the company's idle capital would be invested. In addition to Mr. West and Ms. Morgan, the company has two other full time employees who were employed by Mr. West before Ms. Morgan became an owner, officer and director of the company. One of these employees is a carpenter and the other is a general laborer. Mr. West is the direct supervisor for these two employees. Ms. Morgan reviews submittals from subcontractors and works as the liaison between subcontractors and the project architect. Mr. West supervises the work of subcontractors. Ms. Morgan is also responsible for finding projects for the company to bid upon. The company subscribes to two services that provide information to potential bidders as to public works projects. Ms. Morgan reviews that information and determines the projects upon which the company will bid. Ms. Morgan obtains and reviews the bid packages, secures any other information she deems necessary by communicating with the contract letting agency or architect, and attends the pre-bid meeting. Both Mr. West and Ms. Morgan work on the company's bid. Mr. West's role is to prepare quantitative takeoffs from the bid plans. Ms. Morgan determines the overhead by factoring in the amount of current business undertaken by the company, the complexity of the project, and the difficulty of the project. Both Mr. West and Ms. Morgan attend pre-construction meetings. Ms. Morgan usually signs the company bids and any resulting contracts as its president and uses her license to qualify the company. Both Ms. Morgan and Mr. West develop the company's work schedule. Despite being licensed as a certified building contractor, Ms. Morgan has never supervised a construction project from beginning to conclusion. The actual construction projects undertaken by the company are supervised and managed by Mr. West. Both Ms. Morgan and Mr. West order materials and supplies for construction projects. Ms. Morgan would have to hire someone to manage the construction projects if Mr. West were not available. The management of this family run company is divided between Ms. Morgan and Mr. West. Petitioner established that Ms. Morgan takes a meaningful role in the management of the affairs of the corporation, but it is also clear that Mr. West takes a meaningful role. The managerial functions performed by both stockholders are essential to the operation of the company. One was not established to be more important than the other. It is found that Petitioner failed to establish that Ms. Morgan exercises dominate control of the affairs of the business.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission on Minority Economic and Business Development enter a final order that denies West Construction, Inc.'s application for certification as a minority business enterprise. DONE AND ENTERED this 16th day of June, 1995, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of June, 1995.
Findings Of Fact Upon consideration of the testimony received at the hearing, the following relevant facts are found: Power Line Engineering, Inc. was originally formed in 1983 by Roger Sloan, who initially held 100 percent of the stock. The business of the corporation is the installation of overhead power lines and street lights. In August of 1986, approximately 52 percent of the corporation's stock was transferred to LaVerne Sloan, Roger Sloan's wife, and 10 percent was transferred to Scott Austin. Roger Sloan retained the remainder of the shares. The testimony was unclear as to how many directors the corporation has, and no documentary evidence was offered at the hearing. Roger Sloan is the president, Scott Austin is the vice-president and LaVerne Sloan is the secretary/treasurer of the corporation. It appears that these three individuals are also the sole directors of the petitioner. Roger Sloan is the chief estimator and does most of the public relations work for the company. He solves problems in the field and does cost estimating for bids. Most of the equipment owned by the company was purchased by him prior to August of 1986. Scott Austin is in charge of the field work and he consults with Roger Sloan if there are problems in the field. He also helps with the bid work. It is his view that he and Mr. and Mrs. Sloan are partners in running the company. LaVerne Sloan is the general manager in the office. While the company uses an accountant for the book work, she signs all the checks, except during emergencies, and all purchases are approved by her. She also makes decisions as to whether union or nonunion employees are utilized on jobs. However, if there are problems with employees in the field, Mr. Austin and Mr. Sloan make the decision regarding their retention. LaVerne Sloan assembles the bid packages and does some public relations work for the company. She is a full-time employee for the petitioner. The evidence was unclear as to the amount of time, if any, that LaVerne Sloan was employed by the petitioner prior to August of 1986. Roger Sloan, LaVerne Sloan and Scott Austin talk together each day and discuss what has happened that day with respect to the business. While the application for certification as a Minority Business Enterprise was not offered into evidence, LaVerne Sloan stated that she applied in September of 1986.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the petitioner's application for certification as a Minority Business Enterprise be DENIED. Respectfully submitted and entered this 13th day of August, 1987, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of August, 1987. COPIES FURNISHED: LaVerne Sloan Power Line Engineering, Inc. Post Office Box 671 Plant City, Florida 33566 Sandra E. Allen Department of General Services Office of General Counsel Room 452, Larson Building Tallahassee, Florida 32399-0955 Ronald W. Thomas Executive Director Department of General Services Room 133, Larson Building Tallahassee, Florida 32399-0950
Findings Of Fact Anthony Charles Fabian, a journeyman electrician, is the president of Fabian's Electrical Contracting, Inc. (FEC). Mr. Fabian owns 51 percent of the stock in FEC. FEC was incorporated in 1984 and since that time has been continuously engaged in the electrical contracting business. In 1987, FEC applied for and received certification as a minority business enterprise (MBE). Mr. Fabian has at all times maintained he is entitled to MBE status as a Hispanic American. Mr. Fabian was born in Tampa, Florida and lived in a Hispanic neighborhood there until he was six years old. During the time he resided in Tampa, Mr. Fabian's neighbors, family, and friends used Spanish as their predominant language. The family culture was Cuban as was that of the area where the family resided. At age six Mr. Fabian moved from Tampa to Pensacola, Florida. Mr. Fabian later moved from Pensacola to Tallahassee mid-way through his sixth grade. School mates in Pensacola and Tallahassee called him various ethnic nicknames, all related to his Hispanic ancestry. Such names included: "Julio," "Taco," "Spic," "El Cubano," and "Cuban Wheatman." Other than an affection for Cuban food, Mr. Fabian currently has no cultural practices to tie him to his Hispanic heritage. Mr. Fabian does not speak Spanish. Mr. Fabian does not reside in a predominantly Hispanic community. Mr. Fabian does not practice the religious faith of his progenitors. Mr. Fabian does not instruct his child in any Cuban cultural practice. Mr. Fabian does not know of any Spanish cultural aspect that came to him from his family. Mr. Fabian has never been refused work because of his Hispanic heritage. Mr. Fabian's mother has no Hispanic progenitors. Mr. Fabian's father, also born in Tampa, Florida, has the following ancestors: his father (Mr. Fabian's grandfather) was born in Spain, his mother (Mr. Fabian's grandmother) was born in Key West. Mr. Fabian's grandmother, Anna Rodriguez Fabian, who Mr. Fabian spent time with in Tampa spoke Spanish and claimed Cuban heritage as both of her parents had immigrated from there to Key West. For this reason, Mr. Fabian maintains he is a Cuban from Tampa. None of Mr. Fabian's grandparents was born in Mexico, South America, Central America, or the Caribbean. He has never claimed otherwise. Sometime after FEC obtained certification as a MBE, the Department adopted what is now codified as Rule 60A-2.001(8), Florida Administrative Code. Such rule defines "origins" as used in Section 288.703(3)(b), Florida Statutes, to mean that a Hispanic American must substantiate his cultural and geographic derivations by at least one grandparent's birth. In July, 1992, when FEC submitted its recertification affidavit, the Department notified Mr. Fabian that he had failed to establish that at least one of his grandparents was born in one of the applicable geographic locations. Accordingly, Mr. Fabian was advised his request for recertification would be denied. Approximately eleven other persons have been denied minority status because they were unable to substantiate origin by the birth of a grandparent. Of those eleven, none had been previously certified. FEC is the only formerly certified MBE which has been denied recertification because of the rule. However, when FEC was granted certification in 1987 it was not based upon the Department's agreement that Mr. Fabian met the statutory definition of a Hispanic American. Such certification was issued in settlement to the preliminary denial of certification since the word "origins," as used in the statute, had not as yet been defined by rule. Additionally, the recertification of FEC was based upon Department error and not an agreement that Mr. Fabian met the "origins" test. Finally, in 1991, the Department cured the rule deficiencies to create parallel requirements for certification and recertification for MBE status. When FEC submitted its recertification affidavit under the current rule, the request was denied. Mr. Fabian has been aware of the Department's position regarding his requests for recertification from the outset; i.e. since 1987. The Department promulgated the "origins" rule in response to a number of applications for MBE status from persons with distant relations or ancestors within the minority classifications. The necessity for an "origins" rule was demonstrated since the Department needed a clear standard, which staff and the public could recognize as the dividing line for who would and would not qualify as a Hispanic American, and since the purpose of the program is to provide preferences in contracting to businesses run by individuals who have been disadvantaged. In deciding to use the grandparent test, the Department looked to outside sources. Since there was no legislative history resolving the "origins" issue, the Department sought guidance from dictionary definitions and statutory uses in other contexts. In promulgating the rule, the Department gave notice to outside sources, including groups listed in the publication Doing Business in Florida, such as the Department of Commerce, Bureau of Commerce, small business development centers, community development corporations, local minority business certification offices, and the Minority Business Advocate's office. At the public hearing conducted for the purpose of receiving input regarding the grandparent test, no one offered opposition to the "origins" definition. Mr. Fabian is not a black American as defined in Section 288.703(3)(a), Florida Statutes.
Findings Of Fact At all times pertinent to the issues herein, the Department had the authority to certify those firms who qualified as MBE's for the purpose of contracting with it under the provisions of Chapter 13-8, F.A.C. When an application for MBE status is received at the Department's certification office in Tallahassee, it is assigned to one of five certifying officers who reviews it and determines whether it is complete as submitted or requires additional documentation. This is called a desk audit review. In the event all required documents have not been submitted with the application, they are requested in writing and the applicant has thirty days to provide them. Failure to do so results in denial of the application. If, on the other hand, all the required documentation is present, a decision is then made as to whether an on-site visit of the applicant's operation is necessary. If so, Department personnel go to the site and look to see if the business can qualify as an MBE. If an on-site visit is appropriate, but for some reason cannot be made, Department personnel try to get the required information by phone. The decision to approve or deny certification is made, based on the reviewing certifying officer's recommendation, by the certification manager who, before making a decision, personally reviews the file and, if appropriate, sends it to the Department's legal staff for additional review. Once the legal staff has made its recommendation, if the decision is made to deny the application, a letter of denial is sent to the applicant who may then appeal that decision. An application must meet all criteria set out in Rule 13-8, F.A.C. to be certified as an MBE. Each application is looked at on a case by case basis to see if those criteria are met. In the instant case, the denial was based on the Department's concern over several factors. These are related to Rule 13- 8.005(3), F.A.C. and included A question as to whether the business was actually controlled by Ms. Hogan. The nature of the corporate structure. The application of Chapter 47, F.A.C., dealing with the construction industry. The ability of both Hogan and Perretta to sign business checks. Whether Ms. Hogan had the technical and mechanical capability, skills and training to run a construction company, and Whether Ms. Hogan could effectively control such areas as financing, purchasing, hiring and firing, and the like. In arriving at its decision to deny Petitioner's application, the Department relied only on those matter submitted with the application. It did not ask for or seek any information about the company and its operation beyond that initially provided. Notwithstanding her recommendation in this case, Ms. Freeman has previously recommended the certification of numerous woman owned businesses as MBEs. On April 6, 1990, Ms. Hogan, as owner of E.C. Construction, Inc., a licensed general contractor qualified under the license of Carmen M. Perretta, applied to the Department for certification as a woman owned MBE. The application form reflected Ms. Hogan as the sole owner of the business, a corporation created under the laws of Florida. Ms. Hogan was listed on both the Articles of Incorporation, (1989), and the application form in issue here as the sole officer and director of the corporation, as well. Mr. Perretta was to be merely an employee of the firm, E.C. Construction, Inc.. In that regard Ms. Hogan claims, and it is so found, that the letters, "E. C." in the corporate name do not stand for Elinor and Carmen. Instead, they stand for Elite and Creative. Ms. Hogan is a 63 year old widow who professes a long-standing interest in building, design and decorating. In 1950, she and her husband started a floor covering business in another state which they operated for nineteen years. In 1969 they moved to Florida where her husband started a lawn maintenance business in Sarasota. She worked full time as a nurse at a local hospital and still found time to assist her husband in every aspect of their business including marketing, bookkeeping, public relations, etc. Her husband took ill in early 1986 and from that time on and after his death in May, 1988, until the business was sold almost a year later, she exercised complete control. She still runs a wedding supply and stationery business from her home. She sold the lawn business because she wanted to break the emotional links with the past and since she had some experience in construction, design and remodeling of her own home, went into the construction business establishing the Petitioner firm. In the few preceding years, she had designed and supervised several construction projects in the area in which she attended to financing, hiring the1 subcontractors, and supervision of the work. She also took some courses in design and has taken other courses and seminars in financing, accounting, marketing, advertising and operating a small business. Ms. Hogan and her husband met Mr. Perretta in 1987 when they put an addition on their house and she was impressed by his talents. When she decided to look into going into the construction business, she turned to him for advice and ultimately recruited him as the corporation's qualifying agent. Notwithstanding the fact that neither the corporate documents nor the application for MBE status so reflect, Ms. Hogan's lawyer now indicates that Perretta was also made a Vice-President of the firm, but his authority was limited to those actions necessary to meet the minimum compliance requirements of Florida law. When confronted with this discrepancy, Ms. Hagan claimed that the corporate papers and the application were in error and that she didn't know what they meant when she signed them. Ms. Hogan claims to be in full and complete control of all corporate activities, and to delegate to Mr. Perretta those responsibilities and functions, relating to the actual construction, that he is best qualified to carry out. She claims she does not share dominant control of the daily business activities of the firm though the evidence indicates both she and Mr. Perretta can individually sign corporate checks. In that regard, she claims he has signed only 19 of more than 500 checks issued by the firm since its inception. They have an understanding he will sign checks only for the purchase of materials, and then only in an emergency situation. He claims to no longer use that authority. The Department introduced no evidence to the contrary. Ms. Hogan admits to not having formal construction training or experience but, based on her other experience, believes she is qualified to run a business. Under her leadership the company has reportedly secured over one million dollars in contracts and for the most part, has performed them successfully. Under oath she claims to negotiate the contracts, prepare the estimates and deal with contracting customers in all the projects in which the company is engaged. She claims to have made those contractual decisions independent of Mr. Perretta to whom she is not accountable. Yet, as was seen, the Articles of Incorporation wrongfully indicate her as the only officer when Mr. Perretta was actually a Vice-President, and she claims not to have known that. This gives rise to some doubt as to her business credentials. In reality, Mr. Perretta actually directs and supervises the actual construction work at all job sites and schedules the subcontractors and materials to insure their presence at the job when needed. When changes are required, Mr. Perretta gives the necessary information to Ms. Hogan who prepares the change orders, including the typing, and forwards them as appropriate. Ms. Hogan has also entered into an agreement, dated June 25, 1989, with Mr. Perretta whereby, in lieu of salary as qualifying agent and field superintendent for the company, he is to receive 40% of the gross profits of each construction project. He gets a periodic draw against that percentage. In addition, in May, 1989, Ms. Hogan, as President, and Mr. Perretta, as Vice- President, entered into an agreement with Raymond Meltzer to retain him as general manager of E.C.'s Designer Structures division. Under the terms of the agreement, Mr. Meltzer was to have "absolute, unlimited and exclusive authority" to conduct all affairs of the division, except to incur debt other than short term debt to subcontractors. Mr. Meltzer was to have the right to draw checks on a separate E.C. account in a bank of his choosing, and was to receive 95% of all monies received as a result of the activities of that division. E.C. was to obtain the required permits or licenses for projects and to provide such supervision as is required by law. Though Petitioner did not incorporate under the name Designer Structures, nor did it register that name under the fictitious name statue, it continues to do business under that name. When it does, business is not conducted out of E.C.'s office, but from Meltzer's office instead. This is not consistent with Petitioner's MBE application which reflects only one office. Petitioner submitted at the hearing a notarized statement dated December 8, 1990, from Mr. Meltzer in which he admits to seeking to originally use Mr. Perretta and E.C. primarily as a qualifying agent for his own construction activities. The terms of the agreement referenced above tend to confirm that arrangement. Nonetheless, he is of the opinion that Ms. Hogan possess excellent business acumen and administrative abilities, and, he claims that, based on his initial meeting with her, he abandoned his plans to set up his own business and went into a business relationship with her. The evidence indicates he develops the work for the division and gets 95% of the fee. Ms. Hogan claims to be considering terminating the arrangement since it has not proven to be a lucrative one. She is apparently not aware the agreement specifically states it is for a three year term and carries options to renew. Though both Petitioner's application for MBE status and its bonding application indicate E.C. has no employees, Ms. Hogan testified that both Mr. Perretta and Mr. Meltzer are employees. She claims to use only subcontractors in the accomplishment of company projects and this appears to be so. She claims to have the strength of character and the will. to manage, hire and fire subcontractors as required. There is other evidence in the record, however, to indicate that Mr. Perretta actually schedules the subcontractors and materials to insure their presence at the job site when needed. It is found that there are no other employees who do direct, hands on contracting work, but while there may be a question of word meaning, it is clear that both Perretta and Meltzer qualify as employees. E.C.'s application for MBE status also indicates that it had not executed any promissory notes, yet there is a note for $3,500.00 from E.C. to Mr. Perretta, dated May 10, 1989, on which no payments have been made. Though Ms. Hogan claims to be fully in charge of running the business side of the operation, she is apparently also unaware of certain basic facts other than those previously mentioned. In addition to the inconsistencies regarding the office structure and her mistake concerning the employee status of Mr. Perretta and Mr. Meltzer, as well as her error regarding the loan, she was also in error as to the company's net worth. Whereas she indicated it was set at about $30,000.00, the company's most current financial statement reflects net worth at just above, $6,000.00, revealing her estimate to be 80% off. She also did not know the character of Mr. Perretta's license, (Class E.C. owns very little construction equipment and Ms. Hogan rents all needed equipment as indicated to her by Mr. Perretta. The lack of ownership is not significant, however. The one piece of equipment the company owns is a transit level which was purchased at Mr. Perretta's insistence. He has also donated to the company some used office equipment from his prior business as a contractor. He was not paid for it. Other equipment, in addition to office space, was furnished by Mr. Meltzer.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that a Final Order be issued in this case denying E.C. Construction, Inc.'s application for certification as a Minority Business Enterprise. RECOMMENDED this 22nd day of January, 1991, in Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of January, 1991. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 90-5217 The following constituted my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of fact submitted by the parties to this case. FOR THE PETITIONER: None submitted FOR THE RESPONDENT: & 2. Accepted and incorporated herein. Accepted. & 5. Accepted and incorporated herein. Accepted and incorporated herein. & 8. Accepted and incorporated herein. 9. & 10. Accepted 11. - 13. Accepted and incorporated herein. 14. & 15. Accepted and incorporated herein. Rejected as to her prior experience though it was limited. Accepted and incorporated herein. - 20. Accepted and incorporated herein. Accepted. - 24. Accepted. Accepted and incorporated herein. & 27. Accepted and incorporated herein. 28. & 29. Accepted. Not proven. - 33. Accepted and incorporated herein. 34. & 35. Accepted and incorporated herein. Unknown but accepted. Accepted. Accepted and incorporated herein. COPIES FURNISHED: Guy Brisson, Personal Representative E. C. Construction, Inc. 105 Island Circle Sarasota, Florida 34232-1933 Dannie L. Hart, Esquire Joan V. Whelan, Esquire Department of General Services Suite 309, Knight Building 2737 Centerview Drive Tallahassee, Florida 32399-0950 Ronald W. Thomas Executive Director Knight Building Koger Center 2737 Centerview Drive Tallahassee, Florida 3399-0950 Susan Kirkland General Counsel DGS Suite 309, Knight Building Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950
Findings Of Fact Petitioner Coggin and Deermont, Inc. (C&D) has forty-odd employees. The company owns a building and, among other equipment, bulldozers, loaders, scrapers, graders, draglines, and dump trucks. Respondent's Exhibit No. 1. C&D clears, grubs, grades, and otherwise prepares roadbeds and constructs roads through the stage called "base work." C&D has qualified as a prime contractor with respondent Department of Transportation. The firm also builds culverts and storm drainage structures, including head walls, and does other concrete work. After Mr. Deermont died, at age 94, his partner carried on their road- building business with the help of Ralph C. Carlisle, a 25-year employee, and, until recently, president of C&D. Mr. Coggin died last year at 88, and the Carlisle family decided to acquire the rest of C&D's stock. Mr. Carlisle's wife Bertha, nee Lopez, had inherited Six Thousand Dollars ($6,000) from her father, who, like her mother, was born in Mexico. Blonde and blue-eyed, Mrs. Carlisle herself was born in the United States, on April 26, 1929. Petitioner's Exhibit No. 1. FAMILY BUYS COMPANY On February 10, 1982, the Carlisles bought all of C&D's stock Mr. Carlisle did not already own. They used Bertha's inheritance to make a Six Thousand Dollar ($6,000) cash payment and executed a promissory note in the amount of One Hundred Seventy-three Thousand, Three Hundred Twenty-five Dollars ($173,325), Petitioner's Exhibit No. 3, for the balance of the purchase price. The note was secured by a mortgage encumbering three parcels of real estate owned jointly by Ralph C. and Bertha L. Carlisle. Petitioner's Exhibit No. 2. The expectation is that income from C&D will make it possible for Mr. and Mrs. Carlisle to make the installment payments promised in Petitioner's Exhibit No. 3. C&D owes some Ninety Thousand Dollars ($90,000) to various banks. Mr. and Mrs. Carlisle are personally liable for some, if not all, of C&D's debt. They are not obligated to begin installment payments on the note they executed to pay for the stock until March 10, 1983. Mrs. Carlisle paid Two Hundred Twenty-five Dollars ($225) per share for her stock. (T. 58.) Only one hundred (100) shares are outstanding. Respondent's Exhibit No. 1. Mrs. Carlisle holds fifty-one percent (51 percent) of C&D's stock, and her husband holds thirty-four percent (34 percent). Mr. and Mrs. Carlisle have two sons, Ralph C. III and Richard D., to whom they gave ten percent (10 percent) and five percent (5 percent) of C&D's stock, respectively. All the Carlisles are directors of the corporation. Dividends have not been paid since the Carlisles took over. At some point, the Carlisles "decided [they] were going to apply for minority business enterprise [certification] and use [Mrs. Carlisle's] ethnic origin." (T. 64.) PRESIDENT'S DUTIES Mrs. Carlisle did not bring any particular expertise to C&D, even though she had accompanied her husband on some of his travels for C&D (without compensation). After graduation from high school, attendance at "business school," and two years as a clerk in a stock broker's office, she married Mr. Carlisle and began a twenty-five-year career as a housewife, which was interrupted recently by a two-year stint as an interior designer in a gift shop. (T. 65.) When she became majority stockholder, Mrs. Carlisle voted herself president of C&D. She succeeded her husband in that office. Her salary is One Thousand, One Hundred Twenty-Five Dollars ($1,125) weekly, and his is Eight Hundred Ninety-five Dollars ($895) 1/ weekly. They "combine" their salaries. (T. 90.) Machinery is not Mrs. Carlisle's strong point; she has some difficulty distinguishing among the different types of heavy equipment C&D uses. Field operations are not her primary concern. As a matter of company policy, she ordinarily visits job sites only in the company of her husband. (T. 63, 66- 67.) Her routine upon returning from site inspections she described as follows: [W]hen I come back I always check my mail and my phone calls or--something like that. Most of the time when I go out on the job, like I say, it's quite a distance away from home and I go back to the office and check to see what problems we have had, I have had. He checks his desk and I check my desk. And then we'll go on home and that's when we confer with our sons again. And business starts all over again. (T. 67-68.) She also buys most of the office supplies and signs weekly payroll checks, which are prepared by an employee and countersigned both by her husband and Patricia Kirkland, who keeps C&D's books. Mrs. Carlisle has only limited knowledge of basic accounting concepts. (T. 85-86.) She acts as C&D's "EEO representative," (T. 53) a task she took over from a secretary, Mrs. Cook. Mrs. Carlisle has other duties in connection with bid preparation. She reads some ten newspapers published in Chipley, Florida, and surrounds "to see which jobs are going to be coming up" (T. 50) and orders the plans for jobs C&D might be interested in; she and her husband ["he's the engineer and has all the experience . . ." (T. 51)] inspect the site; she inquires by telephone of "salesmen and people to get the prices" (T. 52) for pipe, concrete, and other materials, but does not negotiate prices. According to Mrs. Carlisle, her "husband is the one that is doing all of the figuring on the job," (T. 52) but Mrs. Carlisle works at figuring, particularly when she travels with her husband to Tallahassee. MINORITY OWNERS Both sons work for C&D and had held salaried positions with C&D before the Carlisles bought out the other owners. Their combined experience amounted to less than five years. The older boy, Ralph C. III, serves as corporate treasurer and as general superintendent "overseeing all the work that the company has under construction" (T. 20) and overseeing maintenance. He has power to hire and fire and has exercised it. As treasurer, he reviews a treasurer's report prepared by Mrs. Kirkland and signs rental agreements. He can operate every piece of equipment C&D owns. He has never supervised a road-building project from start to finish, but he worked on one project as a timekeeper and grade man from start to finish. He worked for C&D for a year after he graduated from high school. Since then he has had two years of college; he took math, engineering, and accounting courses. After college, he worked for Ardaman & Associates in Tallahassee for eight or nine months taking soil samples, before returning to C&D in February of 1982. He is paid Two Hundred Twenty-Five Dollars ($225) weekly. Richard D. works as foreman of a six-man crew, at a salary of One Hundred Seventy Dollars ($170) per week, and has full authority in the field in his father's absence, including the power to hire and fire the men he supervises. He began at C&D as a laborer. He has finished 60 hours of drafting technology courses at a junior college and may graduate in December. EFFECTIVE CONTROL As vice-president and general manager, answerable only to his wife, Ralph C. Carlisle has charge of C&D and manages day-to-day operations. He is trained as an engineer and does surveying for C&D. He is "the job estimator" (T. 90); he stakes out jobs and prepares cost reports. Richard D. Carlisle testified as follows: Q: Who do you report to? A: My daddy. Q: Do you receive instructions from him? A: Mostly. And I receive instructions from my brother and my mother. She will help us out. (T. 13.) Ralph C. Carlisle III testified, as follows: Well, basically I have the control of field supervising. If I make a decision in the field and it doesn't work then I ask [my father] to make a decision. That way he has a little more experience than I do, not a little more, a lot more. I make ninety- nine per cent of the decisions in the field. (T. 28-29.) He explained the lines of authority at C&D in these words: Totally to my mama, I'm totally responsible to her. But in the meantime I'm still re- sponsible to my daddy too. What I'm saying is, basically I do not have to report my day to day activities to anybody. If I have to, if there is something that arises I tell my mama first, being the stockholder, if she is available. If not then I go over it with my daddy. Basically my daddy and I have a little conference every evening on the field activ- ities, which my mama is also in on. We have a little conference every evening. We do report our activities to each other every evening. When it gets right down to it we don't have to. When asked whether decisions she makes in the field are joint decisions, Mrs. Carlisle answered: Yes. Just really because I'm president of the company that still doesn't mean -- that still means that we share it. My husband has a lot of say so just like I do. He has more knowledge in this field than I have. And this is what he is educated in too. (T. 70.) Mrs. Carlisle does not make policy for C&D by herself. (T. 76.) Mr. Carlisle is involved with all technical decisions. (T. 91.) The four owners live together as a family and discuss business at home as well as on the job.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent deny petitioner's application for certification as a minority business enterprise. DONE AND ENTERED this 9th day of September, 1982, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of September, 1982.
Findings Of Fact Respondent is the governmental agency responsible for certifying persons as minority business enterprises. Petitioner applied for certification as a minority business enterprise. Petitioner is a minority business enterprise within the meaning of Section 288.703(2), Florida Statutes. 1/ Petitioner is a small business concern, domiciled in Florida, and organized to engage in commercial transactions. Petitioner is a Florida corporation wholly owned by Ms. Sandra A. Pichney, vice president, and by Mr. D.B. Young, president. Petitioner engages in the roof consulting business. Ms. Pichney owns 51 percent of Petitioner's outstanding stock. Ms. Pichney is a member of a minority group for purposes of Chapter 288. The remaining 49 percent of Petitioner's outstanding stock is owned by Mr. Young. Mr. Young is a licensed architect. No professional license is required for Petitioner to engage in the business of roof consulting. Petitioner has all of the occupational licenses required to engage in the commercial transactions required to conduct its business. Ms. Pichney has 16 years experience in the roof consulting business. Ms. Pichney controls the daily management and operations of Petitioner's business. Ms. Pichney: manages and operates the office; and is responsible for payroll, accounts receivable, and general financial matters. Ms. Pichney conducts field visits, estimates jobs, reviews projects, and rewrites specifications. Ms. Pichney is the person who signs checks for Petitioner in the ordinary course of Petitioner's trade or business. Mr. Young is authorized to sign checks but only signs checks in emergencies. Ms. Pichney hires and fires personnel. Ms. Pichney consults with Mr. Young, but the ultimate responsibility is born by Ms. Pichney. Ms. Pichney reviews specifications and design work for specific projects and makes amendments where appropriate. Original specifications and design work are prepared by Mr. Young and other personnel. Mr. Young, and other personnel, can be terminated by Ms. Pichney without cause. Mr. Young can be terminated as an employee at any time by Ms. Pichney, without cause. Mr. Young has no employment agreement or shareholder agreement with the company. The board of directors are comprised of Ms. Pichney and Mr. Young. Any director may be dismissed by a majority of the shareholders. As the majority shareholder, Ms. Pichney can terminate Mr. Young, as a director, without cause. Ms. Pichney and Mr. Young receive salaries and monthly draws. Although salaries are equal, monthly draws and dividends are distributed in proportion to the stock ownership of each shareholder. Ms. Pichney has exclusive use of the company car. Ms. Pichney's stock ownership has increased over the last two years because Mr. Young has been unable to attend to the demands of Petitioner's business due to Mr. Young's divorce. Ms. Pichney has properly reported the increase in stock ownership, for purposes of the federal income tax, and has, and will, pay the requisite income tax on her increased stock ownership. Ms. Pichney and Mr. Young consult with each other in making significant decisions in the ordinary course of Petitioner's business. However, the ultimate responsibility for those decisions is born by Ms. Pichney.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order granting Petitioner's application for certification as a minority business enterprise. RECOMMENDED this 22nd day of July, 1995, in Tallahassee, Florida. DANIEL MANRY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of July, 1995.
The Issue Whether Expedient Services, Inc. should be certified as a minority business enterprise by the Respondent, pursuant to Section 288.703(1) and (2), Florida Statutes and the applicable rules implementing the statute.
Findings Of Fact Petitioner is a Florida corporation founded prior to 1978 by five minority owners who purchased all of the stock originally issued. The primary business of the corporation was to provide janitorial services for corporate and governmental clients. In 1978, Harvey Hughes was hired as president and CEO. As part of his compensation package, Hughes purchased a minority interest in the corporation at par value. Hughes continues to serve in that capacity to the present day. Beginning after 1983, the five original stockholders, on separate occasions, sold their shares back to the corporation leaving Hughes as the sole stockholder with 833 shares outstanding. In the late 1980's, Hughes' son, Carl Hughes, joined the company as Vice-President and began the process of changing the type of services the corporation provided. He became a minority shareholder in 1991. Sherry Hughes has served as a member of the Board of Directors and Secretary/Treasurer to the Corporation for many years. In addition, she is employed by the Corporation as its Human Resources Director. In 1992, for past services rendered and no additional consideration, Horace Hughes transferred 450 shares, or 54 percent of the outstanding shares, to Sherry Hughes, his wife. Fifty-Four percent of the Petitioner/applicant is presently owned by Sherry Hughes, a woman. The Petitioner's current business is the repair and sales of computers and peripheral equipment. The majority owner, Sherry Hughes, is not a computer technician. She cannot diagnose a computer which needs repairs. The corporation hires computer technicians. Sherry Hughes does not hire technicians, as that duty has been delegated to the Service Manager, Vincent Schneider. Additionally, Schneider usually does the firing when needed. Payroll for Petitioner is done by an employee, Kathy Levann. Mrs. Hughes purchases office supplies and leaves the purchasing of technical supplies to a buyer. The company presently has three male Directors and two women Directors, including Sherry Hughes. All the Directors are authorized to sign corporate checks. For their work, Sherry Hughes is paid $5.00 hourly; Horace Hughes is paid $12-14 hourly and Carl Hughes is paid $12-15 hourly. All are stockholders. Horace Hughes, as President, signed the lease for the business location. Horace Hughes signed the affidavit for insurance on the business vehicles. Horace Hughes signed for a business loan in the financed amount of $70,302.71, both as President and Guarantor at SunTrust Bank. Horace Hughes is authorized by corporate resolution to borrow money on behalf of the corporation. Carl Hughes entered into the agreements with various computer dealers on behalf of the Petitioner. Sherry Hughes does not handle invitations to bid. Carl Hughes handles all invitations to bid, cost estimating and negotiations. Applicant has not established by competent evidence that Sherry Hughes exercises a real, substantial continuing ownership and control of the applicant corporation. Other than her salary, no evidence was introduced to establish that Sherry Hughes receives income commensurate with the percentage of her ownership in the company. Sherry Hughes failed to establish that she shares in all of the risk through her role in decision-making, negotiations, and execution of documents as either an individual or officer of the corporation.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application for Minority Business Certification filed by Expedient Services, Inc. on April 7, 1995, be DENIED. DONE and ENTERED this 12th day of June, 1996, in Tallahassee, Florida. DANIEL M. KILBRIDE, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of June, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-5067 The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on proposed findings of fact submitted by the parties. Proposed findings of fact submitted by Petitioner. Petitioner did not submit proposed findings of fact. Proposed findings of fact submitted by Respondent. Accepted in substance: paragraphs 1-18. COPIES FURNISHED: Horace Hughes, President Expedient Services, Inc. Post Office Box 5400 Titusville, Florida 32783-5400 Joseph L. Shields General Counsel Commission on Minority Economic and Business Development 107 West Gaines Street 201 Collins Building Tallahassee, Florida 32399-2000 Veronica Anderson Executive Administrator Commission on Minority Economic and Business Development Collins Building, Suite 201 107 West Gaines Street Tallahassee, Florida 32399-2000
The Issue Whether the Petitioner should be certified as a minority business enterprise (MBE) by the Minority Business Advocacy and Assistance Office of the Department of Labor and Employment Security (Department).
Findings Of Fact The Petitioner, All Kinds of Blinds, was incorporated in the State of Florida on January 15, 1999, as All Kinds of Blinds of So. Fla., Inc. The President of the Petitioner is Angela Conroy, a female. Mrs. Conroy owns 51 percent of the company. The remaining 49 percent of the company is owned by Phillip Conroy, Angela’s husband. Mr. Conroy also serves as the company’s vice president and secretary. On June 2, 1999, Mrs. Conroy executed a Florida Statewide and Inter-local Minority Business Enterprise Certification Application that was filed with the Department. The application identified Angela Conroy as the person who makes policy, financial decisions, signs payroll, signs surety bonds and insurance, and makes contractual decisions for the Petitioner. The application also identified Phillip Conroy as the person who makes personnel decisions and signs payroll for the Petitioner. Mr. Conroy is authorized to sign checks on behalf of the company. According to the application, the Petitioner performs various functions regarding the sales, consultation, service, and installation of all types of window coverings. Mrs. Conroy sought MBE certification as an American woman with majority ownership of the Petitioner. Mrs. Conroy has ten years of experience in this type of business but was reluctant to let her former employer know that she was opening her own business. Accordingly, Mrs. Conroy authorized Mr. Conroy to execute applications and various papers on behalf of the Petitioner. She relied on his business experience to guide her through the start-up process. An initial loan in the amount of $4,000 from the couple’s joint bank account was the start-up funds for the Petitioner. Mr. Conroy does the installations for the Petitioner. He performs other functions for the company as may be necessary. He also owns and operates an air conditioning filter company that leased a vehicle also used for the Petitioner’s business. Mr. Conroy maintained that his name appears on records pertaining to the Petitioner as a convenience for his wife. Mr. Conroy is a white male.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Labor and Employment Security, Minority Business Advocacy and Assistance Office, enter a final order denying the Petitioner’s application for MBE certification. DONE AND ENTERED this 28th day of April, 2000, in Tallahassee, Leon County, Florida. J. D. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of April, 2000. COPIES FURNISHED: Angela Conroy All Kinds of Blinds 123 North Congress Avenue Suite 328 Boynton Beach, Florida 33426 Joseph L. Shields, Senior Attorney Department of Labor and Employment Security 2012 Capital Circle, Southeast Suite 307, Hartman Building Tallahassee, Florida 32399-2189 Mary Hooks, Secretary Department of Labor and Employment Security 2012 Capital Circle, Southeast Suite 301, Hartman Building Tallahassee, Florida 32399-2189 Sherri Wilkes-Cape, General Counsel Department of Labor and Employment Security 2012 Capital Circle, Southeast Suite 307, Hartman Building Tallahassee, Florida 32399-2189
