The Issue The issue in the case is whether the Petitioner received appropriate compensation for telephone service interruptions and whether the Respondent and the Intervenor have acted appropriately under applicable statutes and administrative rules in resolving the Petitioner’s complaint.
Findings Of Fact Calvin "Bill" Wood resides on Schaefer Lane in Lake Wales, Florida, and receives local telephone service from GTE. GTE is a telecommunications service provider doing business in Florida and regulated by the PSC under the authority of Chapter 364, Florida Statutes, and Chapter 25, Florida Administrative Code. In May 1997, the Petitioner began to experience telephone service problems, including line static and service outages. According to GTE records reviewed by PSC personnel, GTE responded to the Petitioner’s reports of telephone service problems. GTE attempted to identify and repair the causes of the problems over an extended period of time. The GTE records, as reviewed by the PSC personnel, indicate that the Petitioner’s problems continued and that he frequently reported the trouble to GTE. GTE’s "trouble reports" and summaries characterize the Petitioner’s service problems as "miscellaneous" and "non-service affecting" at times when the Petitioner’s complaint was a lack of dial tone. The inability to obtain a dial tone is a service- affecting problem. A GTE installation and repair manager testified that technicians will identify a problem as "miscellaneous" and "non- service affecting" when they are unable to identify the cause of a problem, or when the problem is intermittent and is not active at the time the technician tests the line. Notations on records suggest that frequently the problems were not apparent at the time of testing. In any event, the Petitioner’s telephone service problems continued through the summer and fall of 1997. By the end of 1997, the Petitioner complained that one of his neighbors was often unable to call him. On December 30, 1997, the Petitioner filed a complaint with the PSC Consumer Affairs Division, alleging that his telephone service was inadequate, specifically that the neighbor could not call him, and that his phone did not ring. The Petitioner’s complaint was tracked in the PSC Consumer Affairs Division computer system. At the time the complaint was filed, the PSC complaint tracking systems were not integrated between PSC divisions, resulting in individual consumer complaints being routed to various PSC personnel who were unaware that the consumers problems were already being investigated by other PSC personnel. PSC consumer complaints are now handled by an integrated docketing system. Beginning after the filing of the complaint of December 30, 1997, the PSC began to inquire into the Petitioner’s telephone problems. In response to contact from the PSC, GTE acknowledged that service problems existed and indicated that lightning possibly damaged the Petitioner’s telephone service. GTE stated that the main cable providing service to the Petitioner would be replaced. By letter dated February 3, 1998, the Petitioner advised GTE and the PSC that he would withhold payment of his telephone bill until such time as his phone service was functioning and the neighbor could call him without problem. On February 11, 1998, GTE made repairs to the Petitioner’s "drop wire" and connection. GTE also examined the Petitioner’s owner-supplied telephone equipment and determined that it was defective. The Petitioner agreed to acquire another telephone. On February 12, 1998, GTE personnel visited the Petitioner’s home to determine whether the service had been restored. At that time, the Petitioner asked them to check with the neighbor whose calls were not being received by the Petitioner. On February 12, 1998, GTE personnel visited the neighbor and determined by observation that the neighbor’s calls to the Petitioner were being misdialed. On February 26, 1998, GTE installed new cable to serve the Petitioner but were unable to connect his telephone to the new cable because GTE’s "serving cable pairs" were defective. Weather-related problems prevented the company from correcting the defective "serving cable pair" problem on February 27, and apparently on any subsequent day prior to March 9, 1998. GTE provided a credit of $1.78 on the Petitioner’s February 1998 telephone bill for the time the phone was out of service. GTE also provided a $25 credit as part of GTE’s "Service Performance Guarantee." The "Service Performance Guarantee" provides a $25 credit to a GTE customer when the customer-reported service issue is not resolved within 24 hours. On March 9, 1998, GTE personnel visited the Petitioner and found that earlier in the day, the Petitioner’s home had been destroyed by a tornado. The GTE personnel testified that they advised the Petitioner to contact them when his electrical service was restored and the telephone would be reconnected. The Petitioner testified that he told the GTE personnel he intended to live in a camper trailer he would place next to his house and testified that the GTE personnel told him they would return to connect his phone service. The GTE personnel did not hear from the Petitioner and did not immediately return to connect phone service. The Petitioner did not contact GTE to advise that his electrical service had been restored. The next day, March 10, 1998, GTE notified the Petitioner that his telephone service would be disconnected for nonpayment of an outstanding balance in excess of $600. The GTE notice established a deadline of March 19, 1998, for payment. On March 11, 1998, the Petitioner requested that his calls be forwarded to his neighbor’s home. GTE complied with the request and began forwarding the Petitioner’s calls on March 13, 1998. On March 23, 1998, GTE personnel attempted to visit the Petitioner and ascertain the situation, but the Petitioner’s private drive was barricaded. The GTE representative assumed that the condition of the property was not suitable for reconnection of telephone service. By letter to the PSC dated March 25, 1998, the Petitioner complained that the phone service to his property had not been restored. On March 25, 1998, the Petitioner’s telephone service was disconnected for nonpayment of the outstanding balance on his account. On March 27, 1998, GTE advised the Petitioner that his telephone service would be "permanently" disconnected if the outstanding balance of $664.02 were not paid. GTE provided another $25 SPG credit on the Petitioner’s March 1998 bill. On April 2, 1998, the Petitioner informed the PSC that he had no telephone service and requested an informal conference to resolve the matter. The Petitioner offered to escrow his telephone payments until his service was repaired to his satisfaction. On the same day, GTE notified the PSC that the Petitioner had the outstanding unpaid balance. Because the Petitioner’s complaint was still pending and the PSC had not proposed a resolution, the Petitioner’s request for an informal conference was premature. In subsequent letters, the Petitioner continued to seek an informal conference prior to completion of the investigation. The PSC did not act on the requests. There is no evidence that the Petitioner disputed the amount due on his telephone bill. The Petitioner’s decision to withhold payment of the bill was service-related. The PSC does not have authority to prevent a service provider from disconnecting service for nonpayment of undisputed telephone service charges. On April 4, 1998, GTE "permanently" disconnected the Petitioner’s telephone service for nonpayment. By letter to the PSC dated April 6, 1998, the Petitioner requested assistance in obtaining telephone service, asserting that a heart condition required access to a telephone. There is no evidence that prior to April 6, 1998, the Petitioner had advised either GTE or the PSC of any existing heart condition. By rule, GTE is required to maintain customer access to an emergency 911 communications system except where telephone service is "permanently" disconnected. Other than after the "permanent" disconnection of his telephone service, there is no evidence that the Petitioner lacked access to the emergency 911 system. By letter to the PSC dated April 8, 1998, the Petitioner alleged to the PSC that several of his neighbors were having telephone problems and were, for a variety of reasons, unable to contact the PSC to complain. The Petitioner attempted to involve a number of his neighbors in his complaint, but none of the neighbors filed a complaint with the PSC, and there is no evidence that the neighbors complained to GTE about any service problems. There is no evidence that any resident of Schaefer Lane filed a telephone service complaint with the PSC. There is no evidence that the Petitioner is authorized to represent his neighbors or neighborhood in this matter. On April 17, 1998, GTE offered to reconnect the Petitioner’s local telephone service and block all toll calls if he would agree to arrange payment of the outstanding balance. The Petitioner apparently refused the offer, but on April 20, 1998, GTE reconnected the local service and activated the toll block. GTE waived the $55 reconnection charge and suspended collection procedures pending resolution of the complaint the Petitioner filed with the PSC. On May 9, 1998, the Petitioner made payment of the outstanding balance of his telephone bill. The toll block should have been removed from the Petitioner’s telephone service at that time, but it was not. On May 13, 1998, the Petitioner notified the PSC that the toll block remained on his phone. The PSC notified GTE that the toll block was still active. GTE apparently did not act on the information. On May 29, 1998, the PSC tested telephone lines at the Petitioner’s home and at the home of the calling neighbor. The technicians detected no telephone line problem in any location. The PSC technician attempted to complete numerous calls from the neighbor’s home to the Petitioner. The technician’s calls were completed without incident. The neighbor was asked to dial the Petitioner’s number. The PSC technician observed that the neighbor misdialed the Petitioner’s telephone number on each of three attempts. GTE eventually provided and installed a "big button" telephone for the neighbor. GTE also provided speed-dialing service at no charge to the neighbor and instructed him on use of the service. The Petitioner asserts that the PSC technician violated PSC administrative rules by traveling with GTE personnel to the Petitioner’s and neighbor’s homes on May 29. The evidence fails to establish that the transportation constituted a violation of any administrative rule. By June 1, 1998, with the toll block still activated, the Petitioner filed a complaint with the PSC concerning the service disconnection and the toll block. The June 1, 1998, complaint was assigned to the Telecommunications Division and the PSC again relayed the complaint to GTE. GTE removed the toll block on June 4, 1998. At this point, the PSC realized that the Petitioner had filed two separate complaints and the agency combined the investigations. It is unclear as to the reason GTE did not remove the toll block after the PSC relayed the matter to them on May 13, 1998; but there is no evidence that it was done to retaliate against the Petitioner. Despite the toll call block, the Petitioner was able to make long distance calls by using a calling card. After GTE removed the block, GTE credited the Petitioner with the difference between the cost of the calls made using his calling card and the cost of the calls that would have been made using the regular long distance carrier had the toll block not been in place. GTE issued service credits of $2.14 and $1.65 on the Petitioner’s June bill for out-of-service claims. The Petitioner asserted that there were times when callers were unable to reach him, but the evidence fails to establish that failed calls were the result of service problems. The Petitioner had numerous telecommunications and computer devices attached to the line. Use of devices, including computers and fax machines, can result in an incoming call not being completed. The Petitioner also acknowledges that he sometimes does not answer the telephone. The PSC technician testified that as of May 29, 1998, he considered the service problem resolved. Tests on the Petitioner’s telephone lines revealed the lines to be in working order. Numerous calls placed to the Petitioner from the neighbor’s house and other locations were completed without incident. In mid-June 1998, the technician recommended that the case be closed. By letter dated June 17, 1998, the PSC advised the Petitioner of the informal resolution of the case and advised him of his right to request an informal conference. On August 18, 1998, the Petitioner informed the PSC that the neighbor was able to complete calls to him and considered that matter resolved, but asked for an informal conference. The PSC staff, attempting to negotiate a settlement of the dispute, did not convene an informal conference until May 12, 1999. The matter was not resolved at the May 12, 1999, conference. On July 15, 1999, the PSC staff filed its recommendation for action at the PSC’s Agenda Conference on July 27, 1999, at which time the PSC referred the dispute to the Division of Administrative Hearings. The Petitioner has previously asserted that he is entitled the $25 SPG credit for each time he called GTE to complain about his telephone service. There is no evidence that the Petitioner is entitled to any SPG credits beyond those he has already received. The evidence establishes that the Petitioner’s service- related problems were intermittent, required extensive "troubleshooting" to locate, and were repaired as soon as was practicable. The Petitioner’s monthly local telephone service charge is $10.86, or approximately 36 cents per day. The PSC staff calculates that the Petitioner is due a maximum "out-of-service" credit of $16.46 allowing for a period of approximately 46 days of credit. GTE has issued total credits in the amount of $110.57, including two $25 SPG credits and waiver of the $55 reconnect fee. Subtracting the $105 attributable to the two SPG’s and the reconnect fee credit from the total of $110.57 leaves the remainder of $5.57, which is the total of the three "out-of-service" credits ($1.78, $1.65 and $2.14) the Petitioner has received. Based on the PSC staff determination that the Petitioner was due a maximum of $16.46 in "out-of-service" credit, it appears that the Petitioner should receive an additional credit of $10.89.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Florida Public Service Commission enter a final order requiring GTE to provide a credit of $10.89 to the Petitioner. DONE AND ENTERED this 10th day of May, 2000, in Tallahassee, Leon County, Florida. WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 10th day of May, 2000. COPIES FURNISHED: Calvin "Bill" Wood 10577 Schaefer Lane Lake Wales, Florida 33853 Kimberly Caswell, Esquire Post Office Box 110, MC FLTC0007 Tampa, Florida 33601-0110 Donna Clemons, Esquire Florida Public Service Commission 2540 Shumard Oak Boulevard Tallahassee, Florida 32399-0850 William D. Talbott, Executive Director Public Service Commission 2540 Shumard Oak Boulevard Tallahassee, Florida 32399-0850 Rob Vandiver, General Counsel Public Service Commission 2540 Shumard Oak Boulevard Tallahassee, Florida 32399-0850 Blanca Bayo Director of Records and Reporting Public Service Commission 2540 Shumard Oak Boulevard Tallahassee, Florida 32399-0850
The Issue Whether disciplinary action should be taken against Respondent for alleged violations of Sections 489.127(1) and 489.531(1), Florida Statutes.
Findings Of Fact Respondent, is the sole owner of Expeditior’s Home Improvement Agency. Expeditor’s represents various contractors in the area and markets various home improvement products and services to a homeowner. Respondent is not licensed and has never been licensed to engage in construction or electrical contracting in the State of Florida. Nor did Petitioner’s business possess a certificate of authority to practice as a qualified business in contracting. In the past the company was paid by the homeowner for a construction project and would subsequently hire licensed contractors to do the work. However, that type of arrangement constituted contracting for which Respondent was not licensed. After a complaint for unlicensed contracting by Petitioner in November 2003, Respondent changed his manner of doing business in order to comply with the licensure statutes. Currently, Respondent solicits business for a contractor for which the contractor pays Respondent. The contractor is paid by the homeowner for the work the contractor performs. At about the same time, Respondent revised his forms and business cards to reflect the contractor who will be doing the work, and a disclosure statement stating that Expeditor’s is not a licensed contractor and is acting as a sales agent for the contractor listed in the contract. References to contracting activities were removed from the face of the contract. In December, 2003, Respondent through Expeditor’s employed Saleem Ahmad as an independent contractor/salesman for the company. Respondent had known Mr. Ahmad through a company, similar to Expeditor’s, that they had both been employed by. As a sales representative of Expeditor’s, Mr. Ahmad was given Expeditor’s form proposals/contracts and business cards. At the top of the contract forms were the words “Vinyl Siding, Security Replacements Windows, Sunrooms . . . New Home Construction.” At the bottom of the forms were the words, “Networking Qualified Licensed & Insured Contractors.” Similarly, Mr. Ahmad possessed a business card indicating Expeditor’s engaged in work that included vinyl siding, sunrooms, windows, roofing, fencing, and new home building. Mr. Simmons also had a similar business card. The forms and cards possessed by Mr. Ahmad were the forms that Expeditor’s current forms replaced. The evidence was not clear whether Mr. Ahmad had been given the new forms. Around February 9, 2004, Mr. Ahmad, acting as an apparent agent of Expeditor’s contracted with Mr. Clarence Gavin to, inter alia, replace two windows, install a kitchen counter top and cabinets, four ceiling fans, and remount a water heater. The contract price for the work was $19,875. Such work required a licensed contractor. The contract was written on an Expeditor’s proposal form and listed Calvin Hall as the Architect. The evidence was not clear whether Mr. Hall was an architect. However, the evidence did demonstrate that Mr. Hall was a licensed contractor and was the contractor against who Mr. Gavin was filing the complaint. Mr. Simmons never saw the contract Mr. Ahmad had written for the Gavin job. Likewise, he never saw any money Mr. Gavin may have paid for the job. Indeed, Mr. Simmons was unaware of the Gavin contract or job until the investigation in this matter. Apparently, Mr. Ahmad was defrauding Mr. Simmons and misusing old Expeditor’s business forms. However, the evidence was clear that Respondent did not intentionally engage in unlicensed contracting. Therefore, the Administrative Complaint should be dismissed.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended a Final Order be entered finding Respondent not guilty of violating Sections 489.127 (1) (f) and 489.531 (1), Florida Statutes (2004), and dismissing the Administrative Complaint. DONE AND ENTERED this 3rd day of May, 2006, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER 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 3rd day of May, 2006. COPIES FURNISHED: Brian A. Higgins, Esquire Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 C. Erica White, Esquire 327 Office Plaza Drive, Suite 211 Tallahassee, Florida 32301 John Washington, Hearing Officer Office of the General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Josefina Tamayo, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
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.
Findings Of Fact Each of the Petitioners and the Intervenor in these consolidated cases are duly certificated telephone companies operating in the State of Florida subject to the jurisdiction of the Florida Public Service Commission under Chapter 364, Florida Statutes. These telephone companies, and others operating in the State of Florida, provide for the division of intrastate toll revenues through bilateral written agreements ("toll settlement agreements") between each of these companies and Southern Bell. There are apparently 16 of these separate bilateral toll settlement agreements between Southern Bell and other telephone companies operating in the State of Florida. Each of these agreements is on file with the Public Service Commission as required by law. Under these agreements each of the small telephone companies periodically report to Southern Bell their costs an revenues associated with intrastate long distance calls. Southern Bell then determines each company's share of the revenue pool generated pursuant to the intrastate toll settlement agreements, and effects the distribution of funds by sending a check to some companies and a bill to others. The amount credited or charged to individual telephone companies by Southern Bell is based at least in part on the "rate of return" language contained in each company's agreement with Southern Bell. Each toll settlement agreement contained in the record in this proceeding contains the following identical "rite of return" provision: Rate of Return--the rate of return to be applied to the intrastate average investment base will be the intrastate rate of return achieved by the Bell Company for the study period calculated in a manner consistent with the investment and cost items included in [the individual telephone company's] cost study. On May 21, 1982, the Public Service Commission issued its Order No. 10813 entitled "Notice of Proposed Agency Action" which, in part, recited the aforementioned faces and, further, under the heading "Policy Determination" set, forth the following: Upon review of these agreements, the Commission concludes that the Basis of Settlement renders these agreements to the public interest because it creates an inequitable system of cross-subsidization among local subscribers of the telephone companies. Rates are set prospectively for telephone companies based on expenses and revenues experienced during an approved test year. Sufficient revenues must be generated from services to allow the utility to achieve on its investment the rate of return authorized in the rate case. However, the settlement agreement distributes the tolls on the basis of a rate of return other than the company's authorized rate of return, i.e. on Southern Bell's achieved rate of return. As a result a company automatically will be either overearning or underearning with respect to toll revenues, depending on whether its authorized rate of return is lesser or greater than Southern Bell's achieved rate of return. If the company is overearning on the toll revenues, then revenues generated by local services will be reduced a corresponding amount. But if the company is underearning on the toll revenues, then revenues generated by local service will have to be increased to make up the difference. Because the toll revenues being distributed to the local companies are from a common pool, ratepayers of these 'underearning' companies are subsidizing the ratepayers of the 'overearning' companies. This is inequitable and contrary to the basic thrust of ratesetting as embodied in Chapter 364. Therefore we conclude that the current basis of distributing toll revenues renders the agreements detrimental to the public interest. Thus, the Commission hereby gives notice of its proposal to disapprove all settlement agreements as detrimental to the public interest that they provide for cross-subsidization among ratepayers. To not be detrimental to the public interest, toll settlement agreements must provide for settlements that do not create such cross-subsidization among the local ratepayers of the various companies. To avoid such cross-subsidization, the toll settlement agreements must compensate each company for its cost of providing intrastate toll service. This cost of service includes the cost of capital, as well as operating expenses, taxes, and investments. With respect to the equity component of the cost of capital, the return on equity must recognize the financial leverage of the company. If this proposed agency action is not protested as provided for in Chapter 25-22, F.A.C., and as explained below, the Commission will issue an order constituting final agency action disapproving all toll settlement agreements effective 30 days from the date of the order. This order will in addition direct the companies to modify the agreements and to submit the modified agreements to the Commission for review within that 30 days. The modification of the settlement agreement will result in the loss of revenues to some companies, and the gain of revenues to financial impact of this redistribution to ensure that companies do not overearn or underearn as a result of this action. This proposed agency action addresses only the detrimental effect of using the Bell Company's achieved rate of return, and no other aspects of the settlement agreements. (Emphasis added.) On May 28, 1982, the Public Service Commission caused to be published in the Florida Administrative Weekly the following notice: NOTICE is hereby given that pursuant to Section 364.07, Florida Statutes, the Public Service Commission has issued proposed agency action to disapprove all existing agreements for the division of intrastate toll revenues, on the ground that they are detrimental to the public interest because they provide for cross-subsidization among ratepayers. If by June 11, 1982, the Commission does not receive from an affected person a petition on proposed agency action, as provided in Chapter 25-22, FAC, then the proposed agency action will become final agency action. A copy of the proposed agency action may be obtained from the Commission Clerk, 101 East Gaines Street, Tallahassee, Florida 32301. It is undisputed that the Public Service Commission did not prepare an economic impact statement in conjunction with the issuance of its "Notice of Proposed Agency Action", the Commission otherwise follow the procedural requirements contained in Section 120.54, Florida Statutes, concerning the adoption of a "rule." By Final Order dated April 22, 1982, in Division of Administrative Hearings' Case Nos. 81-2201R and 81-2202R, Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, declared a rule proposed by the Public Service Commission pursuant to Section 364.07, Florida Statutes, invalid on the grounds that it failed to contain any finding that toll settlement agreements were detrimental to the public interest, and further, that the proposed rule invalidly attempted to prescribe the mechanics to be followed by telephone companies in dividing monies contained in the intrastate toll revenue pool.
Findings Of Fact Respondent is licensed by Petitioner to operate its business at 13 S. E. Sixth Street, Fort Lauderdale, Florida. Although Respondent has attempted to qualify to operate a branch office, Petitioner has neither approved nor licensed Respondent to operate a place of business other than at the aforestated address. The 1979-80 edition of the Yellow Pages telephone directory published by Southern Bell Telephone and Telegraph Company for the Hollywood, Florida, area carried a listing for Checkmate lnternational Detective Agency, which listing recites 9481 S. W. 49th Street, Cooper City, Florida, as the Respondent's address, and 434-1926 as the Respondent's telephone number. The listing does not include the address at which Respondent is licensed. The identical advertisement appears in the 1980-81 Yellow Pages directory published by Southern Bell Telephone and Telegraph Company for the Hollywood, Florida, area. The address in Cooper City listed as the business address for Checkmate International Detective Agency is the home of Mr. Mutnich and his employee, Cyndee Heyl. Although Mr. Mutnich insists he did nothing to cause the erroneous listing and even spoke to some unidentified person at some unidentified time regarding the error, he presented no evidence to show any specific efforts on behalf of Respondent to correct the erroneous listing or to prevent the advertised telephone number from being provided to callers by Directory Assistance or to disconnect the telephone number after the listing first appeared. Additionally, no evidence was presented to show efforts made to either delete the advertisement from the following year's directory or to change or disconnect the telephone number. Respondent has further failed to present any testimony or documentation showing any definitive action to prevent this same "erroneous" listing from appearing in any editions of the telephone directory to be printed in the future. In accordance with Petitioner's policy, the fine assessed against the Respondent in the amount of $100 is the amount normally levied by the Division for a first offense.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED THAT: A final order be entered requiring Respondent to pay to the Petitioner the amount of $100 by a date certain. RECOMMENDED this 26th day of June, 1980, in Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: W. J. Gladwin, Jr., Esquire Assistant General Counsel Department of State The Capitol Tallahassee, Florida 32301 Mr. Steven T. Barnes, Chief Bureau of License Issuance Department of State The Capitol Tallahassee, Florida 32301 Mr. Thomas Mutnich Checkmate International 13 South East Sixth Street Fort Lauderdale, Florida The Honorable George Firestone Secretary of State The Capitol Tallahassee, Florida 32301
Findings Of Fact Petitioner is Mary A. Barber doing business as Data Phone, a sole proprietorship. Respondent is the School Board of Volusia County, a collegial public body which governs the School District of Volusia County, a constitutional district existing under Article IX, Section 4, of the Constitution of Florida. Prior to 1994, Respondent did not obtain telephone cabling services through the competitive bidding process. Instead, Respondent secured these services through a letter agreement with J. P. McCarthy doing business as American Phone Wire and Repair (American Phone), a sole proprietorship. Pursuant to that agreement, American Phone charged a minimum service charge of 45 dollars for the first hour of each service call. In 1993, Respondent's purchasing department noticed that the volume of telephone cabling services warranted competitive bidding. Respondent's telecommunications division and purchasing department initially developed specifications for the award of a contract based on a set of specifications from Pinellas County, Florida. They also consulted with the existing vendor, J. P. McCarthy. The early drafts of the specifications provided for a minimum charge per service call. However, the final specifications did not reference a minimum charge. On September 30, 1994, Respondent issued its Bid Request E-540 for telephone cabling equipment and services. In due course, Respondent awarded a contract to American Phone, with an initial expiration date of June 30, 1996. Section 3.11 of the bid specifications provided that the contract was subject to extension for two additional one-year periods, by mutual agreement of the parties. American Phone fulfilled its contractual obligations to Respondent through the services of J. P. McCarthy and the subcontractors that he engaged including Petitioner. Mr. McCarthy died in December 1995. In January 1996, Petitioner inquired as to Respondent's intentions regarding the extension of the contract, or the invitation of new bids, at the initial expiration of American Phone's contract on June 30, 1996. Respondent informed Petitioner that it would rebid the contract at the end of the initial term of the existing contract. J. P. McCarthy's widow gave Petitioner the first opportunity to purchase American Phone after Mr. McCarthy's death. Petitioner believed that American Phone was not transferable because it was a sole proprietorship. Therefore, she elected not to purchase it. In March 1996, Troy Masters, a former employee of Respondent, purchased the business of American Phone. The question whether American Phone was a sole proprietorship which died with its proprietor and therefore was not subject to purchase is collateral to these proceedings. There is no evidence indicating that American Phone is not currently a viable business entity. On May 10, 1996, Chester Rodriguez terminated his employment with Respondent as a computer technician. That same day he became a partner in American Phone, consummating prior negotiations with Troy Masters. Also on May 10, 1996, Respondent issued its Bid Request 2E-625 for telephone cabling equipment and services. Respondent sent Invitations to Bid to approximately 47 potential vendors including Petitioner. The general conditions of the bid specifications provided that "the Board may accept or reject any or all bids or parts of bids and may waive formalities, technicalities or irregularities. The judgment of the Board on such matters shall be final." Inter alia, the specifications provided: CONTRACTOR QUALIFICATIONS Contractor shall have a minimum of four (4) qualified technicians available to handle the Board's needs. Contractor must have someone on staff who is an active member of Building Industry Consulting Service International, Inc. (BICSI). This staff member must be available for implementation in the design and installation of cabling as required by the Board. Membership and registration certificate must accompany the bid. Contractor must have a minimum of five (5) years Bell System or equivalent experience. On June 4, 1996, at the appointed hour of 2 p.m., Olga Buckley publicly opened the sealed bids. Ms. Buckley is a buyer in Respondent's purchasing department. She opened the bids in alphabetical order according to the identity of the bidder as disclosed on the outside of the sealed bid envelope. Sealed bids with no identification were placed at the end of the stack. Twenty-two of the sealed bids contained statements of "no bid." Ms. Buckley checked the other five bids for conformity to a bid checklist which Respondent had included in the specifications. Three of the five submitted bids did not contain all of the required items on the bid checklist. The two remaining complete bids belonged to Petitioner and American Phone. Each of these bids contained the names and resumes of at least four technicians which the bidder would employ or subcontract in order to perform the Respondent's assigned work. American Phone's bid quoted twenty-five dollars ($25) per hour of technician time and a twenty (20) percent discount off the supply list. Data Phone's bid quoted twenty-eight dollars ($28) per hour of technician time. After opening the bids, Ms. Buckley conferred with Robert McDonald, manager of Respondent's telecommunications division. They determined that American Phone had submitted the lowest acceptable bid. Support staff prepared the bid tabulation and recommended action in accordance with Ms. Buckley's and Mr. MacDonald's evaluation. Next Linda Romine, Respondent's senior buyer, reviewed the bid responses and the bid tabulation for correctness. After Ms. Romine completed her review, the tabulation was posted on June 5, 1996 at approximately 3:56 p.m. On June 7, 1996, Petitioner submitted a Notice of Protest. That same day Petitioner discussed the substance of her protest with Tom Sims, Respondent's Purchasing Director. First, Petitioner claimed that the apparent low bidder, American Phone, had previously engaged in the practice of charging an initial forty-five dollar ($45) service charge for each service call, in addition to the hourly rate for technician time. As a result of this service charge, Petitioner claimed that the computation of the apparent low bid, based solely on the hourly rate, was inaccurate because American Phone intended to continue invoicing the service charge. Second, Petitioner indicated her belief that the bid specification language in Section 2.0, pertaining to contractor qualifications, required the contractor personally to have a minimum of five (5) years Bell System or equivalent experience. She voiced her opinion that neither American Phone, as the contractor, nor its principals had the requisite experience. Third, Petitioner expressed her view that the requirement for a contractor to belong to the BICSI was meaningless. She thought Respondent included this requirement to exclude all venders except J. P. McCarthy. Mr. Sims was unaware that American Phone had ever charged a forty-five dollar ($45) service charge. Between June 7, 1996 and June 10, 1996, Mr. Sims and his staff examined approximately 1000 invoices that American Phone submitted to Respondent under its previous 1994 contract. The purpose of this examination was to ascertain whether American Phone had charged a minimum service charge of forty-five dollars ($45) for each service call under the contract. The examination confirmed that American Phone had charged a minimum service charge under its 1994 contract, consistent with its practice under the previous letter agreement, even though the 1994 contract did not authorize a minimum service charge. Mr. Sims then contacted Chester Rodriguez of American to inquire whether American Phone intended to charge forty-five dollars ($45) for each service call in addition to the hourly rate shown in its 1996 bid. As a result of his investigation, Mr. Sims determined that American Phone never intended its 1996 bid to include any minimum charge for service calls. Mr. Sims determined further that, if the average number and length of service calls under the proposed 1996 contract was distributed similarly to the average number and length of calls under the existing contract, American Phone's bid, with a forty-five dollar ($45) service charge for the first hour of technician time, would still be approximately 8,000 dollars lower than the bid of Petitioner. The greater weight of the evidence indicates that the forty-five dollar ($45) service charge formerly billed by American Phone was not in addition to the hourly rate for the first hour of technician time. Examination of American Phone's invoices from the preceding years reveals that approximately 12 percent of the invoices showed a minimum service charge but no hourly charges for the first hour. Eighty-eight percent of the service calls were more than one hour. If vendors base their bid on a minimum service charge for the first hour of technician time, they will in all likelihood charge a lower rate for each subsequent hour of the service call. Revision of the bid specifications in this case to allow such bids would be to Respondent's advantage. It also would lead to a greater number of bidders. Mr. McDonald had never seen the 1994 contract. He did not know that the 1994 contract did not authorize the minimum service charge. After his investigation, Mr. Sims advised Mr. McDonald that American Phone's 1994 contract did not authorize any minimum charge for service calls. Mr. Sims also informed Mr. Rodriguez that Respondent would not approve further invoices for such minimum charges under the existing contract. Any action that Respondent may take to correct the overpayment of invoices that American Phone submitted under the existing contract is not at issue here. When Respondent developed the bid specifications concerning contractor qualifications, it construed the requirement of five years' Bell System or equivalent experience as applicable to the subcontractors or employees of the named contractor. During his investigation of issues raised in Petitioner's protest, Mr. Sims contacted several vendors by telephone seeking their interpretation of the language. Every vendor other than Petitioner construed the language similarly to Respondent. During these conversations, Mr. Sims inquired whether the vendors thought the requirement for a contractor to be a member of BICSI was meaningful. The answers to this question were mixed. Mr. Sims got mixed answers when he asked the vendors how they would apply a minimum service charge and handle overtime hours. Respondent's staff posted a revised "tabulation" on June 11, 1996 showing the same computations as the initial tabulation but with the notation that there was "no recommendation" among the vendors. The revised tabulation also stated that "[d]ue to clarification of specifications a re-bid will be submitted." On June 12, 1996 Petitioner (through counsel) filed a Notice of Protest of the revised tabulation. On June 13, 1996 Respondent held a pre-bid workshop with prospective vendors, including Petitioner, for the purpose of discussing revisions to the specifications following the decision to reject all bids under Bid Request 2E- 625B. On June 21, Petitioner filed, pro se, a formal protest asserting that (1) if American Phone bid included an undisclosed service charge of 45 ($45) dollars per call, her bid was actually the lowest; (2) American Phone did not have five years' Bell System or equivalent experience; (3) the principals of American Phone failed to show a minimum of three accounts serviced within the previous three years because they had only been in business since March 1996; and (4) the principals of American Phone were barred from any contractual relationship with Respondent by virtue of Section 112.3185(4), Florida Statutes. On June 24, 1996, Petitioner filed, through counsel, a second formal protest. The second formal protest challenged the initial tabulation showing that American Phone was apparent low bidder, and the requisite experience of American Phone under the specifications, but omitted the remaining complaints of Petitioner's pro se formal protest of June 21, 1996. On June 25, 1996 Respondent approved the recommendation of its staff to reject all bids with respect to Bid Request 2E-625, and to invite new bids under Bid Request 2E-625B, after revising the specifications. Mr. Rodriguez served in the United States Air Force from 1982 to 1988. While he was in the armed services, Mr. Rodriguez obtained telephone communications skills and training in equipment repair. From 1988 to May 1996, he worked for Respondent as a computer technician. Mr. Rodriguez also worked on weekends, moonlighting, for American Phone for approximately a year and a half. He had five years of Bell System equivalent experience. Although Mr. Rodriguez previously worked for Respondent, he was never employed in the Telecommunications Division which was the procuring division for the subject bid. He was never the supervisor nor under the supervision of Robert McDonald. Mr. McDonald never made a promise to Mr. Rodriguez or gave him any reason to expect that American Phone would receive a new or renewal contract from Respondent. Mr. Rodriguez had no expectation that Mr. McDonald would advocate the renewal of the existing contract with American Phone. Before Mr. Rodriguez resigned his position with Respondent, he informed his superiors that he intended to acquire an interest in American Phone. He also told them that American Phone would bid on a contract with Respondent. Mr. Rodriguez's superiors informed him that he could not simultaneously be an employee of the Respondent and a vendor of services to the Respondent. Troy Masters and Chester Rodriguez were employees of the Respondent until March and May, respectively, of 1996. They worked in the data processing under the supervision of the Manager of Technical Services in the Management of Information Services Division, Department of Central Services. Robert McDonald worked in the Telecommunications Division of the Department of Central Services. Petitioner presented no evidence that American Phone participated in competitive bidding for contractual services which were within the responsibility of Masters or Rodriguez while they were employees of Respondent.
Recommendation Based upon the foregoing findings and conclusions, it is recommended that the protest of Petitioner in this matter be dismissed. DONE and ENTERED this 11th day of October, 1996, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD 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 11th day of October, 1996. COPIES FURNISHED: C. Allen Watts, Esquire Cobb, Cole and Bell, P.A. Post Office Box 2491 Daytona Beach, Florida 32115-2491 James R. Tanner, Esquire 339 South Ridgewood Avenue Daytona Beach, Florida 32114 Joan Koval, Superintendent School Board of Volusia County Post Office Box 2118 Deland, Florida 32721-2118 Frank T. Brogan, Commissioner Department of Education The Capitol, Plaza Level 08 Tallahassee, Florida 32399-0400 Michael Olenick, Esquire Department of Education The Capitol, Plaza Level 08 Tallahassee, Florida 32399-0400
The Issue Whether the Department of Corrections? action to withdraw its Intent to Award and to reject all replies to ITN 12-DC-8396 is illegal, arbitrary, dishonest, or fraudulent, and if so, whether its Intent to Award is contrary to governing statutes, rules, policies, or the solicitation specifications.
Findings Of Fact The DOC is an agency of the State of Florida that is responsible for the supervisory and protective care, custody, and control of Florida?s inmate population. In carrying out this statutory responsibility, the Department provides access to inmate telephone services. On April 15, 2013, the DOC issued the ITN, entitled “Statewide Inmate Telephone Services, ITN 12-DC-8396,” seeking vendors to provide managed-access inmate telephone service to the DOC. Responses to the ITN were due to be opened on May 21, 2013. The DOC issued Addendum #1 to the ITN on April 23, 2013, revising one page of the ITN. The DOC issued Addendum #2 to the ITN on May 14, 2013, revising a number of pages of the ITN, and including answers to a number of vendor questions. EPSI, GTL, and Securus are providers of inmate telephone systems and services. Securus is the incumbent contractor, and has been providing the Department with services substantially similar to those solicited for over five years. No party filed a notice of protest to the terms, conditions, or specifications contained in the ITN or the Addenda within 72 hours of their posting or a formal written protest within 10 days thereafter. Replies to the ITN were received from EPSI, GTL, Securus, and Telmate, LLC. Telmate?s reply was determined to be not responsive to the ITN. Two-Part ITN As amended by Addendum #2, section 2.4 of the ITN, entitled “ITN Process,” provided that the Invitation to Negotiate process to select qualified vendors would consist of two distinct parts. In Part 1, an interested vendor was to submit a response that described certain Mandatory Responsiveness Requirement elements, as well as a Statement of Qualifications, Technical Response, and Financial Documentation. These responses would then be scored using established evaluation criteria and the scores would be combined with cost points assigned from submitted Cost Proposals. In Part 2, the Department was to select one or more qualified vendors for negotiations. After negotiations, the Department would request a Best and Final Offer from each vendor for final consideration prior to final award decision. The ITN provided that the Department could reject any and all responses at any time. High Commissions and Low Rates Section 2.5 of the ITN, entitled “Initial Cost Response,” provided in part: It is the Department?s intention, through the ITN process, to generate the highest percentage of revenue for the State, while ensuring a quality telephone service with reasonable and justifiable telephone call rate charges for inmate?s family and friends similar to those available to the public-at- large. Section 2.6 of the ITN, entitled “Revenue to be Paid to the Department,” provided in part that the Department intended to enter into a contract to provide inmate telephone service at no cost to the Department. It provided that, “[t]he successful Contractor shall pay to the Department a commission calculated as a percentage of gross revenues.”1/ The commission paid by a vendor is the single largest expense in the industry and is an important aspect of any bid. Contract Term Section 2.8 of the ITN was entitled “Contract Term” and provided: It is anticipated that the initial term of any Contract resulting from this ITN shall be for a five (5) year period. At its sole discretion, the Department may renew the Contract in accordance with Form PUR 1000 #26. The renewal shall be contingent, at a minimum, on satisfactory performance of the Contract by the Contractor as determined by the Department, and subject to the availability of funds. If the Department desires to renew the Contracts resulting from this ITN, it will provide written notice to the Contractor no later than thirty days prior to the Contract expiration date. Own Technology System Section 3.4 of the ITN provided in part: The successful Contractor is required to implement its own technology system to facilitate inmate telephone service. Due to the size and complexity of the anticipated system, the successful Contractor will be allowed a period of transition beginning on the date the contract is executed in which to install and implement the utilization of its own technology system. Transition, implementation and installation are limited to eighty (80) days. The Department realizes that some "down time" will occur during this transition, and Respondents shall propose an implementation plan that reduces this "down time" and allows for a smooth progression to the proposed ITS. GTL emphasizes the language stating that the successful contractor must implement “its own” technology system, and asserts that the technology system which EPSI offers to install is not owned by it, but by Inmate Calling Solutions, LLC (ICS), its subcontractor. However, EPSI demonstrated that while the inmate telephone platform, dubbed the “Enforcer System,” is owned by ICS now, that EPSI has a Master User Agreement with ICS and that an agreement has already been reached that before the contract would be entered into, a Statement of Work would be executed to create actual ownership in EPSI for purposes of the Florida contract. GTL alleges that in EPSI?s reply, EPSI relied upon the experience, qualifications, and resources of its affiliated entities in other areas as well. For example, GTL asserts that EPSI?s claim that it would be providing 83 percent of the manpower is false, since EPSI has acknowledged that EPSI is only a contracting subsidiary of CenturyLink, Inc., and that EPSI has no employees of its own. While it is clear that EPSI?s reply to the ITN relies upon the resources of its parent to carry out the terms of the contract with respect to experience, presence in the state, and personnel, EPSI demonstrated that this arrangement was common, and well understood by the Department. EPSI demonstrated that all required capabilities would be available to it through the resources of its parent and subcontractors at the time the contract was entered into, and that its reply was in conformance with the provisions of the ITN in all material respects. EPSI has the integrity and reliability to assure good faith performance of the contract. Call Recording Section 3.6 of the ITN, entitled “Inmate Telephone System Functionality (General),” provided in part: The system shall provide the capability to flag any individual telephone number in the inmate?s „Approved Number List? as „Do Not Record.? The default setting for each telephone number will be to record until flagged by Department personnel to the contrary. Securus alleges that section 3.6 of the ITN implements Department regulations2/ and that EPSI?s reply was non-responsive because it stated that recording of calls to specific telephone numbers would be deactivated regardless of who called that number. Securus alleges that this creates a security risk because other inmates calling the same number should still have their calls recorded. EPSI indicated in its reply to the ITN that it read, agreed, and would comply with section 3.6. While EPSI went on to say that this capability was not connected to an inmate?s PIN, the language of section 3.6 does not mention an inmate?s PIN either. Read literally, this section requires only the ability to “flag” any individual telephone number that appears in an inmate?s number list as “do not record” and requires that, by default, calls to a telephone number will be recorded until it is flagged. EPSI?s reply indicated it could meet this requirement. This provision says nothing about continuing to record calls to that same number from other inmates. Whether or not this creates a security risk or is what the Department actually desired are issues which might well be discussed as part of the negotiations, but this does not affect the responsiveness of EPSI?s reply to section 3.6. Furthermore, Mr. Cooper testified at hearing that EPSI does have the capability to mark a number as “do not record” only with respect to an individual inmate, at the option of the Department. EPSI?s reply conformed to the call-recording provisions of section 3.6 of the ITN in all material respects. Call Forwarding Section 3.6.8 of the ITN, entitled “System Restriction, Fraud Control and Notification Requirements,” provided that the provided inmate telephone services have the following security capability: Ability to immediately terminate a call if it detects that a called party?s telephone number is call forwarded to another telephone number. The system shall make a “notation” in the database on the inmate?s call. The system shall make this information available, in a report format, to designated department personnel. In response to an inquiry noting that, as worded, the ITN did not technically require a vendor to have the capability to detect call-forwarded calls in the first place, the Department responded that this functionality was required. Securus alleges that EPSI is unable to comply with this requirement, citing as evidence EPSI?s admission, made some months before in connection with an RFP being conducted by the Kansas Department of Corrections, that it did not yet have this capability. EPSI indicated in its reply to the ITN that it read, agreed, and would comply with this requirement. As for the Kansas solicitation, EPSI showed that it now possesses this capability, and has in fact installed it before. EPSI?s reply conformed to the call-forwarding provisions of section 3.6.8 of the ITN in all material respects. Keefe Commissary Network Section 5.2.1 of the ITN, entitled “Respondents? Business/Corporate Experience,” at paragraph e. directed each vendor to: [P]rovide and identify all entities of or related to the Respondent (including parent company and subsidiaries of the parent company; divisions or subdivisions of parent company or of Respondent), that have ever been convicted of fraud or of deceit or unlawful business dealings whether related to the services contemplated by this ITN or not, or entered into any type of settlement agreement concerning a business practice, including services contemplated by this ITN, in response to a civil or criminal action, or have been the subject of any complaint, action, investigation or suit involving any other type of dealings contrary to federal, state, or other regulatory agency regulations. The Respondent shall identify the amount of any payments made as part of any settlement agreement, consent order or conviction. Attachment 6 to the ITN, setting forth Evaluation Criteria, similarly provided guidance regarding the assessment of points for Business/Corporate Experience. Paragraph 1.(f) provided: “If any entities of, or related to, the Respondent were convicted of fraud or of deceit or unlawful business dealings, what were the circumstances that led to the conviction and how was it resolved by the Respondent?” Addendum #2. to the ITN, which included questions and answers, also contained the following: Question 57: In Attachment 6, Article 1.f. regarding respondents “convicted of fraud, deceit, or unlawful business dealing . . .” does this include associated subcontractors proposed in this ITN? Answer 57: Yes, any subcontractors you intend to utilize on this project, would be considered an entity of and related to your firm. As a proposed subcontractor, ICS is an entity of, or related to, EPSI. There is no evidence to indicate that ICS has ever been convicted of fraud or of deceit or unlawful business dealings. There is no evidence to indicate that ICS has entered into any type of settlement agreement concerning a business practice in response to a civil or criminal action. There is no evidence to indicate that ICS has been the subject of any complaint, action, investigation, or suit involving any other type of dealings contrary to federal, state, or other regulatory agency regulations. The only evidence at hearing as to convictions involved “two individuals from the Florida DOC” and “two individuals from a company called AIS, I think that?s American Institutional Services.” No evidence was presented that AIS was “an entity of or related to” EPSI. Conversely, there was no evidence that Keefe Commissary Network (KCN) or anyone employed by it was ever convicted of any crime. There was similarly no evidence that KCN entered into any type of settlement agreement concerning a business practice in response to civil or criminal action. It was shown that KCN “cooperated with the federal government in an investigation” that resulted in criminal convictions, and it is concluded that KCN was therefore itself a subject of an investigation involving any other type of dealings contrary to federal, state, or other regulatory agency regulations. However, KCN is not an entity of, or related to, EPSI. KCN is not a parent company of EPSI, it is not a division, subdivision, or subsidiary of EPSI, and it is not a division, subdivision, or subsidiary of EPSI?s parent company, CenturyLink, Inc. EPSI?s reply conformed to the disclosure requirements of section 5.2.1, Attachment 6, and Addendum #2 of the ITN in all material respects. Phases of the ITN Section 6 describes nine phases of the ITN: Phase 1 – Public Opening and Review of Mandatory Responsiveness Requirements Phase 2 – Review of References and Other Bid Requirements Phase 3 – Evaluations of Statement of Qualifications, Technical Responses, and Managed Access Solutions3/ Phase 4 – CPA Review of Financial Documentation Phase 5 – Review of Initial Cost Sheets Phase 6 – Determination of Final Scores Phase 7 – Negotiations Phase 8 – Best and Final Offers from Respondents Phase 9 – Notice of Intended Decision Evaluation Criteria in the ITN As amended by Addendum #2, the ITN established scoring criteria to evaluate replies in three main categories: Statement of Qualifications (500 points); Technical Response (400 points); and Initial Cost Sheets (100 points). It also provided specific guidance for consideration of the commissions and rates shown on the Initial Cost Sheet that made up the pricing category. Section 6.1.5 of the ITN, entitled “Phase 5 – Review of Initial Cost Sheet,” provided in part: The Initial Cost Proposal with the highest commission (percentage of gross revenue) to be paid to the Department will be awarded 50 points. The price submitted in Table 1 for the Original Contract Term, and the subsequent renewal price pages for Table 1 will be averaged to determine the highest commission submitted. All other commission percentages will receive points according to the following formula: (X/N) x 50 = Z Where: X = Respondents proposed Commission Percentage to be Paid. N = highest Commission Percentage to be Paid of all responses submitted. Z = points awarded. * * * The Initial Cost Proposal with the lowest telephone rate charge will be awarded 50 points. The price submitted in Table 1 for the Original Contract Term, and the subsequent renewal price pages for Table 1 will be averaged to determine the highest commission submitted. All other cost responses will receive points according to the following formula: (N/X) x 50 = Z Where: N = lowest verified telephone rate charge of all responses submitted. X = Respondent?s proposed lowest telephone rate charge. Z = points awarded. The ITN as amended by Addendum #2 provided instructions that initial costs should be submitted with the most favorable terms the Respondent could offer and that final percentages and rates would be determined through the negotiation process. It included the following chart:4/ COST PROPOSAL INITIAL Contract Term 5 years ONE Year Renewal TWO Year Renewal THREE Year Renewal FOUR Year Renewal FIVE Year Renewal Initial Department Commission % Rate Proposed Initial Blended Telephone Rate for All Calls* (inclusive of surcharges) The ITN, including its Addenda, did not specify selection criteria upon which the determination of best value to the state would be based. Allegation that EPSI Reply was Misleading On the Certification/Attestation Page, each vendor was required to certify that the information contained in its reply was true and sufficiently complete so as not to be misleading. While portions of its reply might have provided more detail, EPSI did not mislead the Department regarding its legal structure, affiliations, and subcontractors, or misrepresent what entity would be providing technology or services if EPSI was awarded the contract. EPSI?s reply explained that EPSI was a wholly owned corporate subsidiary of CenturyLink, Inc., and described many aspects of the contract that would be performed using resources of its parent, as well as aspects that would be performed through ICS as its subcontractor. Department Evaluation of Initial Replies The information on the Cost Proposal table was reviewed and scored by Ms. Hussey, who had been appointed as the procurement manager for the ITN. Attempting to follow the instructions provided in section 6.1.5, she added together the six numbers found in the boxes indicating commission percentages on the Cost Proposal sheets. One of these boxes contained the commission percentage for the original five-year contract term and each of the other five boxes contained the commission percentage for one of the five renewal years. She then divided this sum by six, the number of boxes in the computation chart (“divide by six”). In other words, she calculated the arithmetic mean of the six numbers provided in each proposal. The Department had not intended for the commission percentages to be averaged in this manner. Instead, they had intended that a weighted mean would be calculated. That is, they intended that five times the commission percentage shown for the initial contract term would be added to the commission percentages for the five renewal years, with that sum then being divided by ten, the total number of years (“divide by ten”). The Department did not clearly express this intent in section 6.1.5. Mr. Viefhaus testified that based upon the language, Securus believed that in Phase 5 the Department would compute the average commission rate the way that Ms. Hussey actually did it, taking the arithmetic mean of the six commission percentages provided by each vendor, and that therefore Securus prepared its submission with that calculation in mind.5/ Mr. Montanaro testified that based upon the language, GTL believed that in Phase 5 the Department would “divide by ten,” that is, compute the weighted mean covering the ten-year period of the contract, and that GTL filled out its Cost Proposal table based upon that understanding. The DOC posted a notice of its intent to negotiate with GTL, Securus, and EPSI on June 3, 2013. Telmate, LLC, was not chosen for negotiations.6/ Following the Notice of Intent to Negotiate was this statement in bold print: Failure to file a protest within the time prescribed in Section 120.57(3), Florida Statutes, or failure to post the bond or other security required by law within the time allowed for filing a bond shall constitute a waiver of proceedings under Chapter 120, Florida Statutes. On June 14, 2013, the DOC issued a Request for Best and Final Offers (RBAFO), directing that Best and Final Offers (BAFO) be provided to the DOC by June 18, 2013. Location-Based Services The RBAFO included location-based services of called cell phones as an additional negotiated service, requesting a narrative description of the service that could be provided. The capability to provide location-based services had not been part of the original ITN, but discussions took place as part of the negotiations. Securus contends that EPSI was not a responsible vendor because it misrepresented its ability to provide such location-based services through 3Cinteractive, Inc. (3Ci). EPSI demonstrated that it had indicated to the Department during negotiations that it did not have the capability at that time, but that the capability could easily be added. EPSI showed that due to an earlier call it received from 3Ci, it believed that 3Ci would be able to provide location- based services to it. EPSI was also talking at this time to another company, CTI, which could also provide it that capability. In its BAFO, EPSI indicated it could provide these services, explained that they would require payments to a third- party provider, and showed a corresponding financial change to their offer. No competent evidence showed whether or not 3Ci was actually able to provide that service on behalf of EPSI, either at the time the BAFO was submitted, or earlier. EPSI showed that it believed 3Ci was available to provide that service, however, and there is no basis to conclude that EPSI in any way misrepresented its ability to provide location-based services during negotiations or in its BAFO. Language of the RBAFO The RBAFO provided in part: This RBAFO contains Pricing, Additional Negotiated Services, and Value Added Services as discussed during negotiation and outlined below. The other specifications of the original ITN, unless modified in the RBAFO, remain in effect. Respondents are cautioned to clearly read the entire RBAFO for all revisions and changes to the original ITN and any addenda to specifications, which are incorporated herein and made a part of this RBAFO document. Unless otherwise modified in this Request for Best and Final Offer, the initial requirements as set forth in the Department?s Invitation to Negotiate document and any addenda issued thereto have not been revised and remain as previously indicated. Additionally, to the extent that portions of the ITN have not been revised or changed, the previous reply/initial reply provided to the Department will remain in effect. These two introductory paragraphs of the RBAFO were confusing. It was not clear on the face of the RBAFO whether “other specifications” excluded only the pricing information to be supplied or also the specifications indicating how that pricing information would be calculated or evaluated. It was not clear whether “other specifications” were the same thing as “initial requirements” which had not been revised. It was not clear whether scoring procedures constituted “specifications.” While it was clear that, to the extent not revised or changed by the RBAFO, initial replies that had been submitted -- including Statements of Qualifications, Technical Response, Financial Documentation, and Cost Proposals -- would “remain in effect,” it was not clear how, if at all, these would be considered in determining the best value to the State. In the RBAFO under the heading “PRICING,” vendors were instructed to provide their BAFO for rates on a provided Cost Proposal table which was virtually identical to the table that had been provided earlier in the ITN for the evaluation stage, including a single square within which to indicate a commission rate for the initial five-year contract term, and five squares within which to indicate commission rates for each of five renewal years. The RBAFO stated that the Department was seeking pricing that would provide the “best value to the state.” It included a list of 11 additional services that had been addressed in negotiations and stated that, “in order to provide the best value to the state,” the Department reserved the right to accept or reject any or all of these additional services. It provided that after BAFOs were received, the Negotiation Team would prepare a summary of the negotiations and make a recommendation as to which vendor would provide the “best value to the state.” The RBAFO did not specify selection criteria upon which the determination of best value to the State would be based. In considering commission percentages as part of their determination as to which vendor would receive the contract, the Negotiation Team decided not to consider commissions that had been listed by vendors for the renewal years, concluding that the original five-year contract term was all that was assured, since renewals might or might not occur. On June 25, 2013, the DOC posted its Notice of Agency Decision stating its intent to award a contract to EPSI. Protests and the Decision to Reject All Replies Subsequent to timely filing notices of intent to protest the intended award, Securus and GTL filed Formal Written Protests with the DOC on July 5 and 8, 2013, respectively. The Department considered and compared the protests. It determined that language in the ITN directing that in Phase 5 the highest commission would be determined by averaging the price for the original contract term with the prices for the renewal years was ambiguous and flawed. It determined that use of a table with six squares as the initial cost sheet was a mistake. The Department determined that the language and structure of the RBAFO could be read one way to say that the Department would use the same methodology to evaluate the pricing in the negotiation stage as had been used to evaluate the Initial Cost sheets in Phase 5, or could be read another way to mean that BAFO pricing would not be evaluated that way. It determined that the inclusion in the RBAFO of a table virtually identical to the one used as the initial cost sheet was a mistake. The Department determined that the language and the structure of the RBAFO could be read one way to require further consideration of such factors as the Statement of Qualifications and Technical Response in determining best value to the State, or could be read another way to require no further consideration of these factors. The Department prepared some spreadsheets demonstrating the varying results that would be obtained using “divide by six” and “divide by ten” and also considered a spreadsheet that had been prepared by Securus. The Department considered that its own Contract Manager had interpreted the Phase 5 instructions to mean “divide by six,” while the Department had actually intended the instructions to mean “divide by ten.” The Department had intended that the Negotiation Team give some weight to the renewal-year pricing, and had included the pricing table in the RBAFO for that reason, not simply to comply with statutory requirements regarding renewal pricing. The Department determined that the way the RBAFO was written and the inclusion of the chart required at least some consideration of ten-year pricing, and that vendors had therefore been misled when the Negotiation Team gave no consideration to the commission percentages for the renewal years. Specifically, based upon the Securus protest, the Department determined that the RBAFO language had been interpreted by Securus to require that the Phase 5 calculation of average commission percentage be carried over to evaluation of the pricing in the BAFOs, which Securus had concluded meant “divide by six.” The Department further determined that based upon the GTL protest, the RBAFO language had been interpreted by GTL to require the Department to consider the renewal years in pricing, as well as such things as the Statement of Qualifications and Technical Response in the BAFO stage. The Department determined that had “divide by six” been used in evaluating the BAFOs, Securus would have a computed percentage of 70 percent, higher than any other vendor. The Department concluded that the wording and structure of the ITN and RBAFO did not create a level playing field to evaluate replies because they were confusing and ambiguous and were not understood by everyone in the same way. Vendors naturally had structured their replies to maximize their chances of being awarded the contract based upon their understanding of how the replies would be evaluated. The Department concluded that vendor pricing might have been different but for the misleading language and structure of the ITN and RBAFO. The Department did not compute what the final award would have been had it applied the scoring procedures for the initial cost sheets set forth in section 6.1.5 to the cost elements of the BAFOs. The Department did not compute what the final award would have been had it applied the scoring procedures for the Statement of Qualifications and Technical Response set forth in section 6.1.3 to the BAFOs. Ms. Bailey testified that while she had originally approved the ITN, she was unaware of any problems, and that it was only later, after the protests to the Notice of Intended Award had been filed and she had reviewed the specifications again, that she had come to the conclusion that the ITN and RBAFO were flawed. Following the protests of the intended award by GTL and Securus, on July 23, 2013, the DOC posted to the Vendor Bid System a Notice of Revised Agency Decision stating the DOC?s intent to reject all replies and reissue the ITN. On August 5, 2013, EPSI, GTL, and Securus filed formal written protests challenging DOC?s intended decision to reject all replies. Securus subsequently withdrew its protest to DOC?s rejection of all replies. As the vendor initially notified that it would receive the contract, EPSI?s substantial interests were affected by the Department's subsequent decision to reject all replies. GTL alleged the contract had wrongly been awarded to EPSI and that it should have received the award, and its substantial interests were affected by the Department's subsequent decision to reject all replies. The Department did not act arbitrarily in its decision to reject all replies. The Department did not act illegally, dishonestly, or fraudulently in its decision to reject all replies. EPSI would likely be harmed in any re-solicitation of bids relative to its position in the first ITN, because potential competitors would have detailed information about EPSI?s earlier reply that was unavailable to them during the first ITN. An ITN requires a great deal of work by the Department and creates a big demand on Department resources. The decision to reject all replies was not undertaken lightly. The State of Florida would likely benefit in any new competitive solicitation7/ because all vendors would be aware of the replies that had been submitted earlier in response to the ITN, and bidders would likely try to improve upon those proposals to improve their chances of being awarded the contract.
Recommendation Upon consideration of the above findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Corrections issue a final order finding that the rejection of all replies submitted in response to ITN 12-DC-8396 was not illegal, arbitrary, dishonest, or fraudulent, and dismissing all four protests. DONE AND ENTERED this 1st day of November, 2013, in Tallahassee, Leon County, Florida. S F. SCOTT BOYD 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 1st day of November, 2013.
The Issue At issue is whether Respondent committed the offenses set forth in the Administrative Complaints and, if so, what penalty should be imposed.
Findings Of Fact Petitioner, the Department of Business and Professional Regulation (Department), is the state agency charged with the duty and responsibility of regulating the practice of contracting and electrical contracting pursuant to Chapters 20, 455, and 489, Florida Statutes. At all times material to the allegations of the Administrative Complaints, Lamar "Marty" Campbell was not licensed nor had he ever been licensed to engage in contracting as a State Registered or State Certified Contractor in the State of Florida and was not licensed, registered, or certified to practice electrical contracting. Mr. Campbell readily acknowledges that he has not had training or education in construction or contracting and has never held any licenses related to any type of construction or contracting. At all times material to the allegations of the Administrative Complaints, Johnston Handyman Services did not hold a Certificate of Authority as a Contractor Qualified Business in the State of Florida and was not licensed, registered, or certified to practice electrical contracting. Respondent, Lamar Campbell, resides in Gulf Breeze, Florida. After Hurricane Ivan, he and his roommate took in Jeff Johnston, who then resided in Mr. Campbell's home at all times material to this case. Mr. Johnston performed some handywork in Respondent's home. Mr. Johnston did not have a car, a bank account, or an ID. Mr. Campbell drove Mr. Johnston wherever he needed to go. At some point in time, Mr. Campbell drove Mr. Johnston to obtain a handyman's license in Santa Rosa County. Mr. Campbell did not apply for the license with Mr. Johnston and Mr. Campbell's name does not appear on this license. The license is in the name of Johnston's Handyman Services. Mr. Campbell is a neighbor of Kenneth and Tracy Cauley. In the summer of 2005, which was during the period of time when Mr. Johnston resided in Mr. Campbell's home, the Cauleys desired to have repairs done on their home to their hall bathroom, master bathroom, kitchen and laundry room. With the help of Mr. Campbell and others, Mr. Johnston prepared various lists of repairs that the Cauleys wanted performed on their home. In August 2005, Mr. Johnson and Mr. Campbell went to the Cauley's home and the proposed repairs were discussed with the Cauleys. There are documents in evidence dated August and October, 2005, which the Cauleys perceive to be contracts for the repairs to be done in their home. However, these documents are not contracts but are estimates, itemizing both materials and labor. The documents have the word "Estimate" in large bold type at the top and "Johnston Handyman Services" also at the top of the pages. The list of itemized materials includes electrical items, e.g., light fixtures and wiring. Also in evidence are documents dated August and October, 2005, with the word "Invoice" in large bold letters and "Johnston Handyman Services" at the top of the pages. Both Mr. and Mrs. Cauley acknowledge that Mr. Johnston performed the vast majority of the work on their home. However, at Mr. Johnston's request, Mr. Campbell did assist Mr. Johnston in working on the Cauley residence. Between August 5, 2005, and October 11, 2005, Mrs. Cauley wrote several checks totaling $24,861.53. Each check was written out to Marty Campbell or Lamar Campbell.1/ Mr. Campbell acknowledges endorsing these checks but asserts that he cashed them on behalf of Mr. Johnston, who did not have a bank account or identification, and turned the cash proceeds over to Mr. Johnston. Further, Mr. Campbell insists that he did not keep any of these proceeds. The undersigned finds Mr. Campbell's testimony in this regard to be credible. Work on the project ceased before it was finished and Mr. Johnston left the area. Apparently, he cannot be located. The total investigative costs, excluding costs associated with any attorney's time, was $419.55 regarding the allegations relating to Case No. 06-2764, and $151.25 regarding the allegations relating to case No. 06-3171, for a total of $570.80.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is, RECOMMENDED: That the Department of Business and Professional Regulation enter a final order imposing a fine of $1,000 for a violation of Section 489.127(1), Florida Statutes; imposing a fine of $500 for a violation of Section 489.531(1), Florida Statutes, and requiring Respondent, Lamar Campbell, to pay $570.80 in costs of investigation and prosecution. DONE AND ENTERED this 9th day of March, 2007, in Tallahassee, Leon County, Florida. S BARBARA J. STAROS 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 9th day of March, 2006.
