The Issue The issue in this case is whether Banknote Corporation Of America, Inc.'s challenge to the Department of Highway Safety and Motor Vehicle's proposed award of a contract to American Banknote Company pursuant to Invitation to Bid No. 84- 91 should be upheld. Necessarily involved in the resolution of this issue is a determination of whether the bid proposal submitted by Banknote Corporation of America should be rejected as non-responsive.
Findings Of Fact Based upon the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, the following findings of fact are made. On February 11, 1991, the Department of Highway Safety and Motor Vehicles (the "Department") released Invitation to Bid 084-91 (the "ITB") seeking bids for the printing of certain motor vehicle title certificate forms. The ITB was promulgated by the Division of Purchasing of the Department of General Services ("DGS") after the Department received an authorized request for a purchase order from the Department's Division of Motor Vehicles. The request for a purchase order contained certain specifications indicating how the Division of Motor Vehicles wanted the title certificates to be manufactured. The title documents which are the subject of the ITB are used in Florida as proof of ownership of a motor vehicle or mobile home. The Florida Statutes require the Department to provide a secure title document to protect the public from counterfeiting and to provide some confidence in the title documents for lenders and others who rely upon the documents as proof of ownership. See, Section 319.23(10), Florida Statutes. The Department has been issuing a "secure" title or banknote type title since approximately 1982. The basic specifications for the contract for printing these documents have been virtually unchanged since that time. The company to whom the Department proposes to award the contract, ABC, has held the contract for the production of automobile title certificates in Florida since 1982, with the exception of one year when the award went to United States Banknote Company. United States Banknote Company has subsequently merged with ABC and is now the holding company for ABC. ABC is the second largest security printing company in the world and the largest in North America. ABC produces secure documents for the federal government, including U.S. Treasury checks, as well as all other checks issued by the United States Government, Social Security Cards, postage stamps and food stamps. The company also prints gas rationing coupons for NATO Forces in Europe, travelers checks for major issuers around the world such as American Express, stocks and bonds, foreign currency and other documents that require high security in their production. ABC produces motor vehicle title certificates in at least twenty one states. The company was founded in the late 1700's and has been continuously involved in the printing of government documents and high security documents since that time. It is one of only a few high security printing companies in the world. The unique characteristics of the security printing industry are discussed in more detail below. The form of the ITB had been used by the Division of Purchasing of DGS on at least two occasions in the past. The evidence did not establish how many responsive bids had been received in previous years when the contract for printing title certificates was let out for bid. The Department's procedure for issuing a title are highly automated and require the use of a continuous form document. The items of bid specified by the ITB are two series of motor vehicle title forms, denominated "A" and "B". Both of these items are to be "One part; regular pin-feed marginal punched continuous strip". To authorize the release of the ITB, the Department checked the availability of funding with the Department's Bureau of Budget to determine which fiscal year would qualify for the additional printing of title certificates within the budget. Advertising was purchased in the Florida Administrative Weekly and a bidders' list was obtained from the Division of Purchasing. BCA was not on the list of registered bidders obtained from the Division of Purchasing. At the hearing, BCA's absence from the State Vendor Data Base was cited by the Department's representatives as an additional reason for the disqualification of BCA's bid. It does not appear that BCA's absence from this list was known and/or considered at the time the Department decided to disqualify BCA's bid. 1/ Paragraph 23 of the General Conditions of the ITB provided as follows: PUBLIC PRINTING: A bidder must have at the time of the bid opening a manufacturing plant in operation which is capable of producing the items of the bid, and so certify upon the request of the agency. * * * CONTRACTS NOT TO BE SUBLET: In accordance with Class B Printing Laws and Regulations printing contracts cannot be sublet. General Condition 23 of the ITB is part of the form document prepared by DGS and applies to all public printing contracts that are set out for bid in the state. It is clear that this General Condition does not take into account the very unique characteristics of high security printing industry which are discussed in more detail below. The second paragraph of the Special Condition of the ITB entitled "Security Markings" provided: All bidders must submit with their bid a letter stating that they will insert their own secret markings and will be able to prove titles were produced in their own plant. (emphasis added.) General Condition 8 of the ITB provided as follows: Any questions concerning conditions and specifications shall be directed in writing to this office for receipt no later than ten (10) days prior to the bid opening. Inquiries must reference the date of bid opening and bid number. No interpretation shall be considered binding unless provided in writing by the State of Florida in response to requests in full compliance with this provision. Any actual or prospective bidder who disputes the reasonableness, necessity or competitiveness of the terms and conditions of the Invitation to Bid, bid selection or contract award recommendation, shall file such protest in form of a petition in compliance with Rule 13A-1.006, Florida Administrative Code. Failure to file a protest within the time prescribed in Section 120.53(5), Florida Statutes, shall constitute a waiver of proceedings under Chapter 120, Florida Statutes. A separate paragraph of the Special Conditions entitled "Interpretations/Disputes" provided as follows: In addition to General Condition 8, the following shall prevail. Failure to challenge the specifications of the Invitation to Bid within the time prescribed in Section 120.53(5), Florida Statutes (1985),[sic] and Rule 15-2.003(2)(b), [sic] Florida Administrative Code, will constitute a waiver of proceedings under Section 120, Florida Statutes. The 1985 version of Section 120.53(5) did not specifically address the deadline for filing a protest of the specifications in an invitation to bid. However, in 1990 the legislature amended the statute to clearly state that a protest of the specifications had to be filed within 72 hours after receipt of the specifications. No questions regarding the specifications or general conditions were received by the Department within the time frame set forth in General Condition 8. No formal protest of those conditions was filed within the timeframe set forth in Section 120.53(5), Florida Statutes (1990 Supp.). The ITB contained the following Special Conditions: Security Due to the nature of these forms, the successful bidder must maintain strict security on the premises by a recognized security force. The minimum in-plant security must be maintained while producing forms and until turned over to the common carrier. The following minimum security shall prevail: 24 hour guard service must be maintained by a certified security firm approved by this Department. Said security can be of vendor's employees or outside security force, but must be approved by the Department. If bidder uses a type of security system other than guard service, this should be outlined in an affidavit and if satisfactory with the Department will be approved. Each production run must be made under close supervision and initialed by supervisor. All press pull-ins, trim and waste must be shredded immediately in an electric shredder at press. All negatives and plates must be maintained under lock and key by plant supervisor when not in use. Unauthorized personnel must not be permitted in "Restricted Areas" within the plant. Upon expiration of contract, plates must be destroyed. This will be done in the presence of a representative from this Department if we make prior request. This Department reserves the right to spot check the running of the forms to see if proper security is being carried out. EACH BID MUST CONTAIN AN OUTLINE OF SECURITY BIDDER PROPOSES TO FURNISH. THIS MUST BE IN AFFIDAVIT FORM ON VENDOR'S LETTERHEAD, SIGNED WITH SIGNATURE NOTARIZED. LOCATION OF PRINTING PLANT MUST BE INCLUDED IN THIS CERTIFICATION. (Emphasis and capitalization in original) * * * Bid Award. It is anticipated award will be made to the responsive lowest bidder on an "all or none" basis. The Department of Highway Safety and Motor Vehicles reserves the right to reject any or all bids and to waiver [sic] any minor irregularity or technicality in bids received. * * * Minor Bid Exceptions. This Department reserves the right to waive minor deviations or exceptions in bids providing such action is in the best interest of the State of Florida. Minor deviations/exceptions are defined as those that have no adverse effect upon the State's interest and would not affect the amount of the bid by giving a bidder an advantage or benefit not enjoyed by other bidders. Thirteen Bidder Acknowledgments were returned to the Department in response to the ITB, but only two actual bids were received. Those two bids were submitted by BCA and ABC. At least seven of the other eleven companies that returned Bidder Acknowledgments indicated the reason they did not submit a bid was their inability to manufacture the title documents in accordance with the specifications. Each of the bids included a certification that the bidder "agree[s] to abide by all conditions of this bid... and that the bidder is in compliance with all requirements of the Invitation to Bid, including but not limited to certification requirements in submitting a bid to an agency for the State of Florida. ..." Each bidder had to submit a bid bond and be prepared to provide a performance bond upon award of the contract. BCA's bid was in the amount of $429,502.08. ABC's bid was in the amount of $451,000.00. At the bid opening on March 5, 1991, the Department was notified by ABC that BCA did not have the ability to manufacture the items of bid at its own plant. As a result, ABC suggested that BCA was not in compliance with the requirements of the ITB and BCA's bid should be deemed non-responsive. Mr. Rothman of the Department telephoned BCA and spoke with Philip Hurwitz, a Vice President of Manufacturing and the person who signed the Bidder Acknowledgment on behalf of BCA. Mr. Hurwitz informed Mr. Rothman that while BCA had the ability to produce the required printing plates, BCA did not presently have the in-house ability to print the items of bid in the form required. After learning these facts, the Department issued its Notice of Intended Award and Bid Tabulation, naming ABC as the successful bidder. BCA filed a Notice of Protest on March 5, 1991 and a Formal Written Protest on March 11, 1991. In order to properly evaluate the evidence in this case, it is important to understand certain characteristics of the security printing business. The creation of a "secure" document requires highly specialized personnel and elaborate security measures. There are very few security printing companies in the world. The objective of creating a "secure" document is to make it as difficult as possible for that document to be counterfeited. The intaglio method of printing is used because of the difficulty of creating intaglio printing plates. An intaglio document is a document that when printed has a raised or embossed surface. The engraving or creation of intaglio plates is the key to security printing. Without the intaglio plate, a security document cannot be produced. In order to create "secure" documents such as the Series A and Series B motor vehicle certificates requested by the ITB, a security printer first creates the artwork, then creates an intaglio printing plate, then produces the offset printing plates. All these plates are then used with an intaglio press to produce a high security document. There are two types of output by intaglio printers (in other words, two types of intaglio documents,) sheet intaglio and web intaglio. Sheet intaglio are documents printed in separate sheets. Web intaglio is when a document is printed in a continuous form. Since the ITB calls for a continuous form document, web intaglio printing is required. There are very few web intaglio printing presses in the world. While there is apparently one other company in the United States that has such a press, that company, Midwest Banknote, only recently acquired its web intaglio press and did not bid on this project. Other than ABC, no other company with web intaglio printing capabilities bid on this project. In fact, the evidence indicates that there only a couple of other companies in the world that have web intaglio presses. Because of the highly technical processes necessary for security printing and the costly and specialized equipment involved, it is very common in the security printing business for security printers to work with each other. This cooperation has been accomplished without any compromising of security. For example, ABC has worked with BCA and Canadian Banknote Company Ltd. ("Canadian Banknote") often in the past. BCA is a Delaware corporation which began its operations upon taking control of an old ABC plant, called the Ramapo Plant, in Suffern, Rockland County, New York, on April 19, 1990. BCA was created when, in the Fall of 1989, the United States Department of Justice required the creation of a stand-alone security printer as a condition to approval of the merger between United States Banknote and ABC. A stand-alone security printer means a security printer that is capable of producing all items of high security printing. BCA was specifically established to maintain competition in the security printing industry. BCA is a full fledged stand-alone security printer, with both origination capability and production capability. Origination capability is the ability to create or manufacture intaglio printing plates from which intaglio documents can be printed. BCA does not currently have a web intaglio press. Therefore, it contracts with another high security printer when web intaglio documents are required. BCA has printed and continues to print high security documents using the intaglio process and has produced, among other things, stocks and bonds, gift certificates, automobile titles, and certificates of origin. BCA has also done work for the United States Department of State on visas as well as work on consular birth certificates. BCA has printed automobile titles at its Suffern, New York Ramapo Plant for the State of New Hampshire and has recently been awarded a three year printing contract for automobile titles for the State of Kansas. The automobile titles for Kansas will be continuous form documents and Canadian Banknote will do the actual printing of the certificates based upon plates produced by BCA. BCA is capable of creating the artwork as well as the intaglio plates from which the Series A and Series B title certificates would be printed. All of this work would be done at its Suffern, New York plant. The security provided at BCA's Ramapo plant in Suffern, New York, conforms to the security requirements contained in the ITB. The Department has inspected the Ramapo Plant and found security conditions there were acceptable. Under BCA's proposal, the Series A and Series B title certificates would be printed by Canadian Banknote from intaglio plates created by BCA. Canadian Banknote has one of the few web intaglio presses in North America. BCA's intent to have the printing of the title certificates done by Canadian Banknote was not set forth in its response to the ITB. Canadian Banknote's name, address, qualifications and abilities were not included as part of BCA's response and BCA did not submit any affidavits or statements from Canadian Banknote regarding security. No written contract exists between BCA and Canadian Banknote for the printing of the motor vehicle title certificates in the event that BCA is awarded the bid. In its response to the ITB, BCA provided a description of the security system at its Suffern, New York plant. No explanation or details were given regarding security at Canadian Banknote. At the hearing in this cause, a representative of Canadian Banknote testified. He confirmed the unique characteristics of the high security printing business. He also provided information indicating that Canadian Banknote can meet the security requirements necessary to produce secure documents. However, that evidence was not presented to the Department as part of BCA's response to the ITB and, therefore, is an improper supplement to BCA's bid proposal. At the time of the submission of a response to the ITB by BCA, Canadian Banknote was unaware that BCA was submitting a proposal. No requests had been made of Canadian Banknote to supply details regarding the security of its plant for purposes of the ITB. Canadian Banknote never reviewed the plan of security that was part of the response to the ITB submitted by BCA nor was Canadian Banknote consulted concerning the plan of security prior to the submission of a price by BCA. If Canadian Banknote undertook to print the title certificates for BCA, it is conceivable that Canadian Banknote would subcontract some of nonsecurity aspects of the printing from BCA to other printing companies. BCA's intention to have the title certificates printed by Canadian Banknote is contrary to the provisions of General Condition 23 of the ITB and the Special Condition entitled "Security Markings". Canadian Banknote was formed in 1897 and has been in operation almost 100 years. The Canadian Banknote plant used to be owned by ABC. Canadian Banknote was affiliated with ABC until 1976. Canadian Banknote is a high security printer and has in place the surveillance, employment standards, and physical security that are typical of the high security printing business. In addition, high security is provided in the accountability of documents. Canadian Banknote produces banknotes, passports, traveler's checks, bonds, stock certificates, vital statistic documents and a variety of other documents where security is required. Canadian Banknote has printed banknotes for the Central Bank of Canada for many years. The evidence established that BCA can arrange for secure shipment of the plates to Canadian Banknote in a sealed crate by either dedicated or bonded courier. The offset and intaglio plates would be sent separately. This method of transporting plates is in keeping with industry standards. BCA has contracted with at least one other state for the printing of automobile title certificates using continuous form (web intaglio) printing where the plates are prepared by BCA and the printing is done by Canadian Banknote. There is no indication of any security problems in this arrangement. The Department contends that in order to meet the conditions of the ITB, a bidder must own the plant where the certificates are to be printed. The Department also contends that the terms of the ITB prevent the subletting of any portion of the contract. The evidence demonstrates that, aside from ABC, none of the other companies from whom bids were solicited could comply with these conditions. In fact, there is at most one other company in the United States and only a couple of companies in the entire world who could possibly produce the intaglio plates and print continuous form (web) intaglio certificates. None of the other companies with that capability were solicited to submit a bid on this project. The ITB requirements that a bidder have a plant capable of producing the items of bid and that no portion of the contract can be sublet have been included as conditions in the ITB since at least 1982. It was not until sometime after the bid opening in March of 1991 that the Department's representatives became aware that only ABC and perhaps one other company in the United States had the in-house capability to print web intaglio documents. After BCA's bid proposal was determined to be non-responsive, the only responsive bid to the ITB was from ABC. ABC's bid proposal anticipates that ABC would do all of the work. If subletting of the contract were allowed, ABC may have been able to reduce the amount of its bid proposal by subletting the continuous form web lithographic printing (the first part of the production of motor vehicle title certificates) to a non-security printer that had lower overhead costs. ABC did not explore such possibilities prior to submitting its proposal because of the provisions of General Condition 23 in the ITB. ABC actually prints the automobile title certificates at a location that is different from the site where the plates are engraved. Therefore, when new plates are prepared, they must be transported and appropriate security is arranged for the transportation of the plates to the printing plant. Such transportation is in accordance with industry standards and does not violate the security provisions of the ITB. After BCA was disqualified and the Department determined that only one responsive bid was received, the Department requested permission from DGS to award the bid to the one responsive bidder, ABC. DGS halted their evaluation of the request when BCA filed its Notice of Intent to Protest. DGS has indicated that it will not take any further action on the request until the protest is resolved. While the Department contends that it examined the reasons why only one responsive bid was received, no formal report was prepared. The evidence at the hearing in this cause established that the reason why only one responsive bid was received is because of the extremely limited number of high security printing companies and the even fewer number of companies with the ability to print web intaglio documents in-house. The Department is concerned that permitting any portions of the contract to be sublet could compromise the security of the title documents and/or reduce the accountability of the successful bidder. When a contract is issued for the production of title certificates, the Department inspects the plates and places its markings on the documents involved. If printing of the documents was allowed to be sublet, the Department would also have to inspect the security of the company doing the printing and verify the security of the transportation methods. The evidence established that the security of the title documents could be maintained even if a bidder were permitted to sublet the actual printing of the documents to another high security printer.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department enter a Final Order finding the bid submitted by BCA to be non-responsive to the ITB and assessing costs in the amount of $440.00 against Petitioner. In addition, the Department should seek approval from DGS to enter into negotiations with ABC regarding the award of the contract. In the absence of a favorable negotiation, the Department should enter a Final Order rejecting all bids and opening the contract up for new bids under terms and conditions that will encourage competitive bids from several sources. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 11th day of June, 1991. J. STEPHEN MENTON 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 11th day of June, 1991.
Findings Of Fact On or about January 31, 1974, the Petitioner purchased a certain tract of property from Rio Branco Corporation. As a part of the purchase price, the Petitioner executed a secured promissory note, and a purchase money mortgage. A copy of the mortgage and the promissory note were received in evidence as Joint Exhibit 1. Although the promissory note is in the form of a direct obligation for the Petitioner to pay the face amount of the note to Rio Branco Corporation, its obligations were limited. The note provides in Paragraph 12 as follows: "Mortgagor, (Petitioner] assumes no corporate liability for the payment of the debt evidenced by this note and mortgage. Mortgagee [Rio Branco Corporation] waives any corporate liability and agrees to look solely to the property securing such debt for payment thereof." Petitioner apparently defaulted on the mortgage and the promissory note, and a foreclosure suit was initiated by Rio Branco Corporation. Petitioner was named as the defendant in this suit which was filed in Sarasota County, and given case number CA-75-1107. Prior to the completion of the foreclosure action, Petitioner executed a quitclaim deed conveying its interest in the subject property back to Rio Branco Corporation. The quitclaim deed was executed in lieu of foreclosure. A copy of the quitclaim deed was received in evidence as Joint Exhibit 2. The Petitioner stipulated that, it executed Joint Exhibit 2 in order to prevent any deficiency from being entered following a judicial sale in connection with the foreclosure proceeding. Despite the stipulation it is apparent that Rio Branco Corporation could not have enforced any such deficiency against the Petitioner due to the above quoted provision of the promissory note. The quitclaim deed was apparently recorded by a representative of Rio Branco Corporation. Through a proposed notice of assessment dated September 9, 1976, the Respondent is seeking to impose documentary stamp taxes, documentary surtaxes, penalties and interest in the total amount of $745.13 upon Petitioner. It is not clear whether the Respondent is also seeking to impose the same taxes upon the grantee of the quitclaim deed, Rio Branco Corporation. Respondent contends that the Petitioner is liable for the documentary stamp taxes on the quitclaim deed, and that the amount of consideration for the deed is the amount of mortgage debt extinguished as a result of execution of the deed. Petitioner contends that as the grantor of the instrument, it has no responsibility for paying documentary stamp taxes, and that further no consideration was given for the deed as a matter of law since no debt which the Petitioner could have been forced to pay was extinguished.
Findings Of Fact The Department is an agency of the State of Florida charged, inter alia, with administering and regulating the Aid to Families with Dependent Children benefit program (AFDC) and the so-called "food stamp" program, by which it is an agent of the federal agency which funds 100 percent of the food stamp benefit program, the United States Department of Agriculture, Food Nutrition Service (hereinafter "FNS"). The Petitioners are resident, non-citizen, aliens, who are political asylum applicants and who have, as yet, not been granted AFDC benefits and, in some cases, food stamp benefits. They allege that they are similarly situated to applicants for such benefits involved in court decisions cited hereinbelow and that the precedential effect of such decisions should be applied to grant them benefits. They assert that the Department's failure to grant benefits based upon those court decisions, in essence, amounts to the espousal of a policy of non-acquiescence in those court decisions, which policy is an "unpromulgated rule" and, therefore, in violation of Sections 120.535 and 120.56, Florida Statutes. The Department customarily views appellate court decisions as precedential in nature and applicable to persons similarly situated to the litigants in the relevant court decisions. The Department has no established policy which it follows when reviewing court decisions. Decisions are reviewed by the Department's legal counsel, its policy section, the assistant secretary for economic services, the relevant federal agency, the secretary of the Department, and ultimately, even the legislature. The Department does not have a policy of failing to comply with court decisions. The court decisions, the applicability of which, and the Department's position with regard to which is at issue in this case are: Department of Health and Rehabilitative Services v. Solis, 580 So.2d 146 (Fla. 1991); Zayas v. Department of Health and Rehabilitative Services, 598 So.2d 257 (Fla. 1st DCA 1992); Chandler v. Department of Health and Rehabilitative Services, 593 So.2d 1183 (Fla. 1st DCA 1992); Alexander v. Department of Health and Rehabilitative Services, 590 So.2d 1081 (Fla. 1st DCA 1991); and Wistedt v. Department of Health and Rehabilitative Services, 551 So.2d 1236 (Fla. 1st DCA 1989). These decisions will be referenced in abbreviated form throughout the remainder of this Final Order. Although the Solis decision was decided in May of 1991, the Department has not yet extended it to other asylum applicants in Florida. Initially, the Department had concerns about what direction the legislature would want it to take regarding funding benefits in the manner envisioned in the Solis decision. The Department sought legislative direction by posing three options to the legislature: (1) Amend the statute relied upon in the Solis decision; (2) Authorize the Department in proviso language to amend Section 4.1.I.b. of the AFDC state plan to insure federal financial participation; (3) Expand the benefits to asylum applicants through 100 percent state general revenue funds, without federal financial participation. The legislature did not choose any of those options and instead passed proviso language which prohibits the Department from amending Section 4.l.I.b. of the AFDC state plan and providing permissive language allowing the Department to extend benefits from general revenue, state funds to individuals similarly situated to Solis. The purpose of the AFDC state plan is to determine and establish the state's policies for which it receives federal financial participation funds. Those portions of the AFDC state plan which directly affect the public are promulgated in rules. The Department can have a benefits-related policy which is not embodied in the state plan, however, such a policy would not receive federal participatory funds in its support but rather would have to be funded with 100 percent state-generated, general revenue funds. Although the Department can change its policies based upon a court decision, it cannot receive federal financial participation if the federal agency involved determines that the court decision was not in accordance with federal statutory, regulatory, or decisional law. The Department has not extended the Solis decision to other asylum applicants because of unresolved issues, such as how to separate the funds involved and account for them; the programing of the Florida computer system necessary to accomplish the result; addressing various concerns expressed by "legal services"; the diversion of staff and resources necessitated by the devastation caused by Hurricane Andrew; the determining of the effect of the Solis decision on other programs, if implemented; determining how to capture the information required to be reported to federal agencies; constant agency reorganization with changes in departmental leadership; determining whether the state general revenue asylum applicant program would be different from the federal AFDC program, and determining for which other benefits asylum applicants might be eligible. The funding of asylum applicant benefits, such as those involved herein, from 100 percent state generated general revenue is a new and unique program for the Department. A rule has been drafted to address the Solis decision situation, but concerns have been raised by the representatives of asylum applicants ("legal services") which have delayed the rule-making process. The Department has taken steps to implement the Solis decision, however, including the drafting of rules, developing change requests for the Florida computer system, preparing training material and discussing how to account for the different funding of similar programs (i.e., federal AFDC funding vs. general revenue funded AFDC-like assistance, if Solis type asylum applicants are to be funded without changing the AFDC state plan). Although there are still unresolved issues surrounding implementation of the asylum applicant program, the Department intends to, and is moving ahead, with implementation. It has not established an exact date when it will extent the benefit of the Solis decision to other asylum applicants, similarly situated, but it intends to implement that decision and expects that the implementation will take approximately three to six months. The decision in Zayas v. Department of Health and Rehabilitative Services, 598 So.2d 257 (Fla. 1st DCA 1992), has not been implemented or given precedential effect. This is because the United States Department of Agriculture's Food and Nutrition Service (FNS) made a determination that the court decision conflicts with federal law as interpreted by that federal agency. The Department does not intend to extent the benefit of the Zayas decision to others similarly situated because it has complied with the federal agency directive to the Department not to change its policy concerning food stamp entitlement. The decision in Zayas is based upon an interpretation of a federal statute, as stipulated by the parties. The federal agency that administers the food stamp program (FNS) has refused to fund implementation of the Zayas decision because that agency has opined that that decision was not in accordance with the relevant federal regulations. The FNS also concluded that Ms. Johnson, one of the Petitioners, was not, in fact, eligible for food stamps as a "separate household". The food stamp program is 100 percent federally funded by the FNS, and the Department's policies are, by necessity, based upon the federal regulations in Title VII, Code of Federal Regulation (CFR). The Department thus bases its policy regarding determination of separate household status, for food stamp purchases, on those food stamp regulations appearing in Title VII, CFR. The Department's policies regarding the food stamp program and separate household status determinations are embodied in its rules. Specifically, Rule 10C- 1.1.201(4), Florida Administrative Code, incorporates the federal food stamp regulations. If the Department fails to notify the FNS of a pending lawsuit, then the FNS will not participate financially for that individual involved in that lawsuit. If the Department notifies FNS of a food stamp lawsuit, the FNS would provide benefits to the plaintiff if eligibility is determined. If the FNS determines that a court decision is contrary to the relevant federal law and regulation, it will not fund implementation of that program on a statewide basis, regardless of whether it was notified in advance of the pending lawsuit. The Department has considered various options concerning application of court decisions regarding federal food stamp policies to individuals similarly situated, including attempting to enjoin the federal agency or trying to get cases filed in federal court, consideration of suing the federal agency for injunctive relief, and seeking legislative direction and assistance. The Department has also considered the option of requesting the legislature for authority to amend Section 4.1.I.B. of the AFDC state plan. The First District Court of Appeal held in Wistedt v. Department of Health and Rehabilitative Services, 551 So.2d 1236 (Fla. 1st DCA 1989), that Hearing Officers must consider all evidence admitted without objection in a de novo hearing. The only testimony or evidence on this subject shows that the Department's Hearing Officers will consider any evidence admitted without objection. The court in the Wistedt decision determined that the Hearing Officer had taken actions which conflicted with his obligations under the Code, specifically the Department's current Rule 10-2.057(3), .060(1), and .066, Florida Administrative Code, by improperly failing to consider certain evidence at hearing. That situation, however, involved the Hearing Officer in one case, with which the Wistedt court was confronted. That situation in the Wistedt decision, coupled with the dearth of any evidence in this proceeding that the Department is not complying with that court decision, and the fact that none of the Petitioners alleged that they are similarly situated to the appellant in the Wistedt case, shows that, indeed, the Department is complying with the Wistedt decision. There is no evidence of any policy of non-compliance therewith. The Wistedt decision did not require a change in the Department's rules to implement it because it simply involved an application of the Department's current rules. The decision in Chandler v. Department of Health and Rehabilitative Services, 593 So.2d 1183 concerned application of the Department's Rule 10C- 1.085(5)(c), Florida Administrative Code. That provision provided: Any person no longer receiving AFDC will be requested to make repayment at the rate of 5 percent of the person's net monthly income unless repayment at that rate would result in available income to the person's assistance group of less than 95 percent of the AFDC payment standard for the size of the assistance group. The Chandler decision dealt with the question of "undue hardship", as it relates to determination of the rate a person no longer receiving AFDC must reimburse the Department for overpayment. The court in that case held that the Department's application of the above-mentioned rule created a conclusive presumption of no undue hardship, because the appellant in that case was not given an opportunity to rebut the presumption in an administrative hearing. The court did not find the presumption in the rule itself, but in the fact that the Hearing Officer in that case did not consider the appellant's evidence indicating hardship. The court stated that conclusive presumptions violate due process if they cannot be rebutted in a fair manner. After the Chandler decision, the Department promulgated Rule 10C- 1.900, Florida Administrative Code. This rule amended the rule referenced first above, which had been addressed in the Chandler decision and thus allowed persons no longer receiving AFDC benefits to negotiate a repayment schedule. The new rule further provides that any individual affected by the rule can request an administrative hearing. Thus, an individual has the opportunity to rebut any conclusive presumption in a fair manner. These changes were adopted specifically in order to comply with the Chandler decision. Its repeal of Rule 10C-1.085, addressed in the Chandler decision, was effective December 7, 1993. The repealed language was replaced with Rule 10C-1.900(4)(a)3., Florida Administrative Code, which states that "any person no longer receiving AFDC shall negotiate a repayment agreement with the Department". The Department also added Rule 10C-1.900(4)(a)4., Florida Administrative Code, which states that "any person affected by the preceding subparagraphs 10C-1.900(4)(a)1.-3. is entitled to a departmental review or hearing pursuant to Sections 120.57, F.S., and 409.285, F.S." The reasons an individual may request such a hearing is a non- exhaustive list and, therefore, the reasons, including the reason of extreme hardship at issue herein, are not placed on the notice of the right to a hearing. The Department did not give any guidance or written procedures to Hearing Officers concerning extreme hardship situations because it felt to do so would create a conclusive presumption concerning extreme hardship, prohibited in the Chandler decision. In recoupment efforts concerning AFDC overpayments, HRS personnel automatically apply no lower than a rate of 5 percent in order to recover an overpayment from a recipient. That recoupment rate and recoupment is only suspended if the recipient requests a fair hearing within 30 days from the date of the overpayment notice, which notifies them of the right for a hearing and the time constraint. Rule 10C-1.900(4)(a), Florida Administrative Code, establishes an initial statement as to recovery rates and then provides for an individual to request a hearing. The Department does not specifically inform recipients that they may be able to obtain a recovery rate of less than 5 percent by the fair hearing process nor does it specifically inform them that Hearing Officers are not required to apply a minimum 5 percent recovery rate. The notice of adverse action concerning recoupment of overpayments merely provides a general statement of the right to request a hearing in order to contest the proposed adverse action. Section 409.335, Florida Statutes, gives the Department the authority to establish a policy and cost-effective rules to be used in the recoupment of overpayments. The Department's own Hearing Officers consider hardship on an individual basis as it is raised when it is appropriate. They interpret the Chandler decision and make their own determination concerning what amounts to extreme hardship and whether that is present in a given case pending before them. Some cases have been remanded by Hearing Officers to the local department level to evaluate the extreme hardship issue in a given case. The case of Alexander v. Department of Health and Rehabilitative Services, 597 So.2d 1081 (Fla. 1st DCA 1991), holds that the Department may not qualify its offers to provide assistance in obtaining client verification concerning food stamp entitlement to those situations in which it is difficult or impossible for the household involved to provide the desired verification of its own volition. The case thus stands for the proposition that where verification by the proposed food stamp recipient is incomplete, the Department has an obligation to offer and provide assistance without the qualification that it be difficult or impossible for the household to do it on its own. The Department is of the view that at the time of the entry of the Alexander decision, its policy and rule were already consistent with the proposition espoused by the court in that case. Upon further review, however, it elected to amend its rule to more clearly meet the requirement of the Alexander case. The Department thus amended its rule in compliance with the Alexander decision at Rule 10C-1.602, Florida Administrative Code. The notice that that final rule had been filed was published on January 14, 1994 in the Florida Administrative Weekly at Volume 20, No. 2. Petitioners' counsel stipulated that if that proposed rule became a rule, the Department would then be in compliance with Alexander. Consequently, that being the case, the Department is in compliance with the Alexander decision. In order to better insure that the Zayas decision and other decisions involving food stamp eligibility are complied with and that funds to provide benefits for successful food stamp applicant/litigants are available from the FNS, the Department, through its general counsel's office, by memorandum dated November 12, 1993 to the district legal counsel has required them to notify the economic services staff attorney of the Department of any food stamp eligibility lawsuits which are filed in order that the legal staff of the Department can insure that FNS is apprised of such lawsuits in accordance with 7 CFR 272.4(e). Because of this action, if rulings favorable to food stamp applicants are made by a court, federal benefits will be available to such a prevailing litigant. Petitioners, Yolanda and Yanari Gonzalez, are asylum applicants, who are indigent. They were denied AFDC benefits because of their immigration status by written notice, which held them to be ineligible aliens and not entitled to such benefits. Petitioner, Alexia Molina, is over the age of 21, single, without minor children, and suffers from severe spondylolistheses. She is appealing her denial of disability benefits by the Social Security Administration. Petitioner Molina does not customarily purchase and prepare food for home consumption since she eats all of her meals in restaurants. She sometimes eats in the same restaurant as her brother. On such occasions, she orders her own meal and gets a separate check for it. Although she and her brother get separate checks, he pays for both checks for such restaurant meals. She is not on a special diet, but both her parents with whom she resides are diabetics. Although Petitioner Molina's parents cannot eat sweets and sugars, they can still eat practically all of the foods that Petitioner Molina eats. Petitioner Molina's brother lends her financial assistance funds for some of her expenses and pays her share of the rent and utilities and for her personal items. Petitioner Molina considers herself to have a separate social life from her parents, with separate friends and separate activities from her parents and other family members. She considers herself separate from her family. Although she considers herself separate from her family, she is not really separate, as she relies financially upon her brother and is dependent upon her mother for transportation and for certain elements of her personal care, such as dressing, grooming, and bathing. She does not purchase and eat her food separately from her brother. She is not the sole occupant of her home, and her parents did not move in with her. In fact, she has never lived separate and apart from her parents. Petitioner Molina's doctor did not order to live with someone else. She has always lived with her parents. Intervenor, Solange Daniel, is an indigent AFDC recipient. She was charged with AFDC overpayments based upon an HRS error on or about June 14, 1993. Intervenor Daniel has a utility expense obligation, which her brother pays for her, and a rent obligation of $475.00 per month, of which her sister pays $100.00 for her. Intervenor Daniel's total expenses are $405.00 per month. Her actual income and resources are $487.00 in public assistance and $465.00 in food stamp benefits. Therefore, her available monthly cash assistance after expenses is $82.00. Thus, there are sufficient unencumbered funds to support recoupment of the overpayment of AFDC benefits at the rate of 5 percent. Intervenor Daniel's financial situation has not been shown to rise to the level of extreme hardship. She was also advised of her right to request a hearing and did request a fair hearing to appeal the decision concerning her AFDC overpayment recoupment. Petitioner, Kimberly Johnson, is over the age of 21, is single, without minor children, and suffers from multiple sclerosis. She receives disability benefits and must use a wheelchair to travel great distances. She also uses a walker for ambulation. Petitioner Johnson on occasion has needed and received assistance from her mother in getting and out of the bathtub. She lived independently, however, and received food stamp benefits herself until her multiple sclerosis worsened and her doctor had to recommend that she move in with a family member, which she did. Petitioner Johnson is not on a special diet, although she eats a reduced fat, low calorie diet recommended by her physician. She has thus lost 195 pounds. She sometimes does not adhere to her diet, however, and has abandoned it at various times. She uses the same refrigerator and pantry as her mother but labels her own food with her name. She socializes separately from her mother and considers herself independent from her mother and considers her personal life to be separate from her mother's. Pursuant to requirements of the FNS, Petitioner Johnson was not deemed entitled by the Department to be in a separate food stamp household from her mother for separate food stamp entitlement purposes. The Department did not follow the Zayas decision in processing Petitioner Johnson's food stamp case. It processed her case as directed by the federal agency charged under federal law with regulating and enforcing the food stamp laws and requirements and with 100 percent of the funding responsibility for such benefits. Petitioner Johnson and her mother share a single, common residence with a common entrance and common household living areas. Petitioner Johnson shares a kitchen with her mother and they prepare food with the same utensils, cook on the same stoves and ovens, and store food in the same areas. The food stamp office of the Department made a determination as to whether Petitioner Johnson and her mother actually live together based upon the fact that they share the same household facilities referenced above and pay one utility bill for the house, which account is in Petitioner Johnson's mother's name and charged to her mother.
