95-005904 Ernest Smalis, D/B/A E. Smalis Painting Company, Inc. vs. Department Of Transportation Status: Closed Recommended Order on Friday, February 23, 1996.

Summary: By applicant failing to timely respond to two requests for additional information, application deemed to be incomplete and properly denied.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

E. SMALIS PAINTING COMPANY, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 95-5904

)

DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

__________________________________)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard by telephonic hearing before

the Division of Administrative Hearings by its assigned Hearing Officer, Donald

R. Alexander, on January 11 and 22, 1996.

APPEARANCES

For Petitioner: Ernest Smalis, pro se

4037 Liberty Avenue

Pittsburg, Pennsylvania 15224

For Respondent: Murray M. Wadsworth, Jr., Esquire

Department of Transportation

Haydon Burns Building

Tallahassee, Florida 32399-0458

STATEMENT OF THE ISSUE

The issue in this case is whether petitioner's application for contractor

qualification should be approved.

PRELIMINARY STATEMENT

This matter began on August 23, 1995, when respondent, Department of

Transportation, issued its notice of intent to deny application for

qualification filed by petitioner, E. Smalis Painting Company, Inc. As grounds

for denying the application, respondent advised that the application "was

incomplete when received" and that petitioner "failed to respond to (its)

written requests dated July 14, 1995 and August 3, 1995 for the necessary

information." Thereafter, petitioner requested a formal hearing to contest the

proposed action. The matter was referred by respondent to the Division of

Administrative Hearings on December 1, 1995, with a request that a Hearing

Officer be assigned to conduct a hearing.

By notice of hearing dated December 12, 1995, a final hearing was scheduled

on February 1, 1996, in Tallahassee, Florida. At the parties' request, the

hearing was rescheduled to January 11, 1996, at the same location. On January

10, 1996, the parties agreed to conduct the hearing by telephone. A continued

hearing by telephone was held on January 22, 1996.

At final hearing, petitioner presented the testimony of its president and

owner, Ernest Smalis, who also represented the corporation in this proceeding.

Respondent presented the testimony of Tom Kayser, Charles Goodman, Larry Walls

and Juanita Moore, all employees of the contracts administration office. Also,

it offered respondent's exhibits 1-5. All exhibits were received in evidence.

The transcript of hearing (two volumes) was filed on February 6, 1996.

Proposed findings of fact and conclusions of law were due by February 21, 1996.

The same were filed by respondent on February 13, 1996. A ruling is made on

each proposed finding in the Appendix attached to this Recommended Order.

FINDINGS OF FACT

Based upon all of the evidence, the following findings of fact are

determined:

1. On or about June 21, 1995, petitioner, E. Smalis Painting Company,

Inc., filed its application for contractor qualification with respondent,

Department of Transportation (DOT). If approved by DOT, the qualification would

enable petitioner to bid for the performance of road, bridge, or public

transportation construction contracts in excess of $250,000.00.

2. In the footnote section of the financial statements attached to the

application, petitioner's certified public accountant listed the following

"Contingencies":

The Company was cited by the Occupational

Safety & Health Administration (OSHA) for over

200 instances of violations with a penalty of

$5,200,000. The penalty was large because OSHA

classified most violations as "Willful." The

citations have been contested to the Occupational

Safety & Health Review Commission (OSHRC) and the

Company is await-ing a decision. The Company has

contended that it has not willfully violated any

OSHA standards and that many of the violations

were based on incorrect sampling or incorrect

facts.

If the willful classification is eliminated

by the judge and many of the violations elimin-

ated, the penalty could be reduced to less than

$300,000. The Company is very hopeful that the

judge's decision will be favorable and the

penalty reduced to less than $100,000.

3. After being filed with DOT, the application was sent to DOT's contracts

administration office (office), which has the responsibility of reviewing all

such applications. That office noted the large contingencies ($5.2 million) and

became concerned with the financial capability of the applicant if the

contingencies materialized. This concern was valid since the law (s. 337.14(3),

F.S.) requires that an applicant possess "the necessary financial resources to

perform the desired work."

4. Since the OSHA citations referred to in the financial statements were

not attached to the application, the office made a determination that the

application was "incomplete," and so advised petitioner by letter sent by

fascimile on July 14, 1995. The letter asked that petitioner "provide copies of

the OSHA citations . . . by August 2, 1995 so that Department (can) complete the

processing of your company's application for qualification."

5. When petitioner did not respond to this request, on August 3, 1995, DOT

again requested by certified mail, return receipt requested, that petitioner

"provide copies of the OSHA citations." This letter further advised petitioner

that such information must be filed with DOT "within ten days of your receipt of

this letter." The evidence shows the letter was received by petitioner on

August 7, 1995. This meant petitioner had to respond to the second inquiry by

August 17, 1995.

6. When a response was not filed by the due date, on August 23, 1995, DOT

issued its notice of intent to deny the application on the ground petitioner had

submitted an incomplete application and had failed to respond to DOT's requests

for additional information. That notice prompted petitioner to initiate this

proceeding.

7. At hearing, petitioner stipulated that it received both letters from

DOT and did not respond to DOT's requests for additional information before the

established due date. In addition, petitioner made no request for an extension

of time in which to comply with the request. It contended, however, that the

information requested by DOT was irrelevant to a determination on whether it was

qualified and was not the type of information typically required from other

applicants. It argues, then, that the application was "complete" as originally

filed.

8. Through uncontradicted testimony DOT established that its request for

copies of citations was relevant to a determination of whether petitioner

possessed the necessary financial ability to work on state projects. Respondent

further established that such information would always be required in cases

where the applicant disclosed such a potential liability. Therefore, once DOT

became aware of the potential penalties through an examination of the financial

statements, it had the authority and discretion to request copies of the

citations. Therefore, the application was not complete by the August 17, 1995

due date, and petitioner's incomplete application was properly denied.

CONCLUSIONS OF LAW

9. The Division of Administrative Hearings has jurisdiction over the

subject matter and the parties hereto pursuant to Section 120.57(1), Florida

Statutes.

10. As the party seeking approval of its application, petitioner has the

burden of proving its entitlement to qualification by the preponderance of the

evidence. See, e. g., Florida Department of Transportation v. J. W. C. Co.,

Inc., 396 So.2d 778, 787 (Fla. 1st DCA 1981).

11. Section 337.14, Florida Statutes, governs this dispute. Subsection

(4) provides in relevant part as follows:

(4) . . . In the event the department finds

that an application is incomplete or contains

inadequate information or information which

cannot be verified, the department may request

in writing that the applicant provide the

necessary information to complete the appli-

cation or provide the source from which any

information in the application may be verified.

If the applicant fails to comply with the initial

written request within a reasonable period of

time as specified therein, the department shall

request the information a second time. If the

applicant fails to comply with the second

request within a reasonable period of time as

specified therein, the application shall be denied.

12. Rule 14-22.002(1)(g), Florida Administrative Code, further defines

this procedure in the following manner:

(g) In the event the Department finds an

application is incomplete or contains

1inadequate or inaccurate information needed

for processing of the application, the Depart-

ment shall verbally request or request in

writing that the applicant provide the necessary

information or the source for verification of

the information. If the requested information

is not provided within 20 days, of the initial

request, the Department shall request the infor-

mation a second time in writing express delivery,

delivery receipt. If the information is not

provided within 10 days of receipt of the second

request, the application shall be denied.

13. Under the foregoing statute, if an application is incomplete, and DOT

requests additional information, the "application shall be denied" if the

applicant fails to comply with the second request within the specified time

period. Under these circumstances, then, DOT has no discretion except to deny

the application. Because petitioner failed to respond to the second request for

information by the established due date, and failed to establish that its

application was complete with the initial filing, the application must be

denied.

14. Even though denial of the application is required under the foregoing

rationale, such denial is without prejudice to petitioner reapplying for

qualification at a later date in a manner that conforms with the statute and

rule.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is

RECOMMENDED that the Department of Transportation enter a final order

denying petitioner's application for contractor qualification.

DONE AND ENTERED this 23rd day of February 1996, in Tallahassee, Florida.

____________________________________

DONALD R. ALEXANDER, Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 23rd day of February 1996.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-5904

Petitioner's proposed findings have been adopted in substance, albeit in

substantially altered form.

COPIES FURNISHED:

Ben G. Watts, Secretary

Department of Transportation

Attn: Diedre Grubbs, Agency Clerk

Haydon Burns Building

605 Suwannee Street

Tallahassee, Florida 32399-0450

Mr. Ernest Smalis, President

E. Smalis Painting Company, Inc.

4037 Liberty Avenue

Pittsburg, Pennsylvania 15224

Murray M. Wadsworth, Jr., Esquire

Department of Transportation

Haydon Burns Building, Mail Station 58

Tallahassee, Florida 32399-0458

Thornton J. Williams, Esquire

Department of Transportation

562 Haydon Burns Building

Tallahassee, Florida 32399-0450

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit to the agency written exceptions to this

Recommended Order. All agencies allow each party at least ten days in which to

submit written exceptions. Some agencies allow a larger period within which to

submit written exceptions. You should contact the Department of Transportation

concerning its rules on the deadline for filing exceptions to this Recommended

Order. Any exceptions to this Recommended Order should be filed with the

Department of Transportation.