99-003619 W. R. Fairchild Construction Co., Llc vs. Department Of Transportation Status: Closed Recommended Order on Thursday, December 23, 1999.

Summary: Petitioner`s application for a certificate of qualification should be deemed timely filed.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

W. R. FAIRCHILD CONSTRUCTION )

CO., LLC, )

)

Petitioner, )

)

vs. ) Case No. 99-3619

)

DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

_________________________________)

RECOMMENDED ORDER

A formal hearing was held in this matter on December 1,

1999, in Tallahassee, Florida, by the Division of Administrative

Hearings, before its Administrative Law Judge, Suzanne F. Hood.

APPEARANCES

For Petitioner: F. Alan Cummings, Esquire

W. Guy McKenzie, Esquire

Cummings & Snyder, P.A.

1004 DeSoto Park Drive

Tallahassee, Florida 32301

For Respondent: Brian A Crumbaker, Esquire

Brian F. McGrail, Esquire

Department of Transportation

Haydon Burns Building

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0450

STATEMENT OF THE ISSUE

The issue is whether Respondent properly d enied

Petitioner's application for a certificate of qualification,

pursuant to Chapter 337, Florida Statutes, and Rule 14-22,

Florida Administrative Code, for failure to timely file the

application.

PRELIMINARY STATEMENT

By letter dated May 24, 1999, Res pondent Department of

Transportation (Respondent) denied the application of Petitioner

W.R. Fairchild Construction Co., LLC (Petitioner) for a

certificate of qualification to bid on Respondent's construction

contracts in excess of $250,000. Petitioner requested an

informal administrative proceeding to contest Respondent's

denial by letter dated June 16, 1999.

On August 26, 1999, Respondent referred this matter to the

Division of Administrative Hearings. A subsequent Notice of

Hearing scheduled the case for formal hearing on December 1,

1999.

During the hearing, the parties offered seven joint

exhibits that were accepted into evidence. Petitioner and

Respondent each presented the testimony of three witnesses.

The Transcript of the proceeding was fil ed on December 10,

1999. The parties filed their Proposed Recommended Orders on

December 15, 1999.

FINDINGS OF FACT

1. Petitioner is a family-owned construction firm located

in Hattiesburg, Mississippi. It primarily acts as a contractor

on pile driving projects. Petitioner is also involved in

property management, oil, pre-stressed concrete, and general

construction.

2. Respondent selects its highway and bridge contractors

from those who qualify under Section 337.14(1), Florida

Statutes, and Rule 14-22.002(2), Florida Administrative Code.

Petitioner has been a qualified bidder and construction

contractor in Florida for Respondent continuously since the

early 1940s.

3. Contractors desiring to bid on state highway

construction contracts in excess of $250,000 must apply annually

to Respondent for a certificate of qualification. The

application must be accompanied by the applicant's most recent

annual financial statement, showing its financial condition no

more than four months before Respondent receives the

application. The application directs applicants to "mail" the

completed forms to Respondent's Contracts Administration Office.

4. Respondent sent Petitioner a Notice of Expiration of

Qualification on or about February 3, 1999. The notice advised

Petitioner of the following:

Your qualification with this Department will

expire on 04/30/99. Pursuant to Florida

Statutes, your pre-qualification application

must be 'filed' with the Department within

four (4) months of the ending date of your

financial statement. Filing is defined as

receipt of the application by the Contracts

Administration Office.

Enclosed are two copies of the application

form. Please return an original and one (1)

copy of the application and all attachments.

Please be advised all information must be

filed in duplicate.

In preparing your new application, please

carefully follow the instructions on the

application form and those enclosed with

this notice. Additional reference material

and a copy of Rule 14-22, F.A.C., are also

enclosed for your convenience.

5. Petitioner mailed its 1999 application for

qualification, together with its most recent audit report dated

December 31, 1998, to Respondent's Contracts Administration

Office on April 27, 1999.

6. Petitioner's fiscal year ends on December 31. An

independent accounting firm begins preparing Petitioner's audit

report shortly thereafter.

7. The accounting firm's field work for Petitioner's 1998

audit was not complete until March 10, 1999, the date of the

audit certification. This certification means there were no

material changes in Petitioner's financial condition up to that

date.

8. There was no material change in Petitioner's financial

condition over the holiday weekend from Thursday, December 31,

1998 to Monday, January 4, 1999. Changes in the amount of

interest earned by Petitioner or charged against it during this

brief interval would not make a difference in anyone's decision

process. Any significant change up to March 10, 1999, would

have been disclosed by the accounting firm in the December 31,

1998, audited financial statement.

9. The same accounting firm has been auditing Petitioner's

books for at least 15 years. Petitioner is in very sound

financial condition.

10. The Board of Governors of the United States Postal

Service has set no more than three days as the standard for

delivery of first class mail between Hattiesburg, Mississippi,

and Tallahassee, Florida. This standard is not a guarantee.

However, 90-94 percent of the time, the postal service delivers

first class mail within two or three days throughout the

country, as measured by an internal service measurement

standard.

11. The postal service also contracts with Price-

Waterhouse to perform an independent external service

measurement system called EXFC. Under that system, the postal

service scored 100 percent on test mailings, delivered to

Tallahassee from Mississippi within three days, over the past

three years.

12. The post office in Tallahassee, Florida, provides

dedicated carrier service for the delivery of first class mail

to state agencies five days a week. The postal service also

delivers mail on Saturdays for the agencies that request weekend

delivery.

13. The postal service delivers Respondent's mail to its

mailroom between 7:30 and 9:00 a.m. on weekdays. Respondent

also receives mail on the weekends. Respondent's security guard

pushes the weekend mail cart into the building on the weekends.

14. Respondent's mailroom staff sorts incoming mail and

places it in various bins for each mail station by 11:00 a.m.

each week day. The mail stations send individuals down to the

mailroom to pick up the mail from their assigned bin. If a

station has not picked up its mail by 2:30 p.m., mailroom

personnel deliver it to that station.

15. Occasionally, first class mail is placed in the wrong

bin and delivered to the wrong mail station. That mail is

retrieved by the mailroom staff sometime after 2:30 p.m. and

delivered to the correct office. At the end of the business

day, no first class mail remains in the mailroom for delivery

within the building. There is no evidence that first class mail

intended for the Contracts Administration Office has ever been

misdelivered.

16. Bessie White, Administrative Assistant in the

Contracts Administration Office, picks up the mail for her

office from bin number 55. After she opens the mail, she stamps

qualification applications and financial statements using an

electric date and time clock. Ms. White saves envelope postal

markings by cutting them out and attaching them to the

applications. She then distributes the mail to various

personnel in her office.

17. The date and time clock that Ms. White uses to stamp

incoming mail has to be reset manually when a calendar month

ends in less than 31 days. April 30, 1999, was a Friday. Ms.

White did not reset the date and time clock at the end of the

business day. She did not work on the weekend of May 1-2, 1999.

18. On Monday, May 3, 1999, Ms. White dated and time

stamped Petitioner's application and financial statement before

she reset the clock on the stamp machine. Consequently, the

date and time stamp erroneously reflected that Petitioner's

application and financial statement were received on Sunday, May

2, 1999, at 11:42 a.m.

19. Ms. White distributed Petitioner's application and

financial statement to the appropriate staff member in her

office. Later that day, she reset the date and time clock to

reflect the correct date of May 3, 1999. She did not go back to

correct the erroneous stamps on mail, including Petitioner's

documents, which she had already distributed.

20. Ms. White discovered the error on Petitioner's

application and financial statement seven months later, after

Petitioner filed its protest in this matter. At that time, she

made a handwritten notation on the documents, indicating their

receipt on May 3, 1999.

21. Petitioner mailed its 1999 application for

qualification and its audited financial statements with a

reasonable expectation that Respondent would receive them within

three days, on or before April 30, 1999. Petitioner relied upon

the postal service standard, and its own experience, in

anticipating delivery of the documents within that time frame.

22. Petitioner has an affiliate company located in

Monticello, Florida. The Florida affiliate normally receives

mail from Petitioner within three days. The record here

contains no explanation for the delay by one business day in the

receipt of Petitioner's application by Respondent's Contracts

Administration Office.

23. Petitioner mailed similar applications to Georgia,

Arkansas, Missouri and Louisiana on April 27, 1999. All of

these applications were approved.

24. Respondent sent Petitioner a Notice of Intent to Deny

Application for Qualification by certified mail on May 24, 1999.

Respondent made this decision because the financial statements

accompanying the application were dated more than four calendar

months prior to the date the application was filed.

25. Respondent counts calendar months in making its

decision whether a qualification application is timely. In this

case, Respondent took the position that the four-month time

period ended on April 30, 1999, 120 days after December 31,

1999. 1./ If Petitioner's fiscal year had ended on June 30,

1999, Respondent would have required Petitioner to file its

application within 123 days, on or before October 31, 1999.

26. In determining whether a qualification application is

timely, Respondent does not allow the five-day grace period for

service by mail as set forth in Rule 28-106.403, Florida

Administrative Code, and adopted by Respondent in Rule 14-

22.0011, Florida Administrative Code.

27. Respondent approves over 400 qualification

applications a year. It denies an average of 20 applications

because they are late. When an application is denied as

untimely, the applicant has an opportunity to furnish Respondent

with an audited interim financial statement.

28. An interim audit requires the same work and

preparation as a regular annual audit. An interim audit would

cost Petitioner between $25,000 and $30,000. Performing and

filing an interim audit would also cause a three-month delay in

the processing of Petitioner's application.

CONCLUSIONS OF LAW

29. The Division of Administrative Hearings has

jurisdiction over the parties and the subject matter of this

proceeding. Sections 120.569 and 120.57(1), Florida Statutes.

30. Petitioner has the burden of proving, by a

preponderance of the evidence, that its qualification

application should be approved. Florida Department of

Transportation v. J.W.C. Co. Inc. , 396 So. 2d 778 (Fla. 1st DCA

1981).

31. Section 337.14(1), Florida Statutes, provides as

follows in pertinent part:

Any person desiring to bid for the

performance of any construction contract in

excess of $250,000 which the department

proposes to let must first be certified by

the department as qualified pursuant to this

section and rules of the department. The

rules of the department shall address the

qualification of persons to bid on

construction contracts in excess of $250,000

and shall include requirements with respect

to the equipment, past record, experience,

financial resources, and organizational

personnel of the applicant necessary to

perform the specific class of work for which

the person seeks certification. . . . Each

applicant seeking qualification to bid on

construction contracts in excess of $250,000

shall furnish the department a statement

under oath, on such forms as the department

may prescribe, setting forth detailed

information as required on the application.

Each application for certification shall be

accompanied by the latest annual financial

statement of the applicant completed within

the last 12 months. If the annual financial

statement shows the financial condition of

the applicant more than 4 months prior to

the date on which the application is

received by the department, then an interim

financial statement must also be submitted.

The interim financial statement must cover

the period from the end date of the annual

statement and must show the financial

condition of the applicant no more than 4

months prior to the date on which the

application is received by the department.

Each required annual or interim financial

statement must be audited and accompanied by

the opinion of a certified public accountant

or a public accountant approved by the

department.

32. Rule 14-22.002(2), Florida Administrative Code,

provides as follows in part:

Each application shall be accompanied by the

latest annual audited financial statements

of the applicant completed within the last

12 months. . . . If the audited annual

financial statements show the financial

condition of the applicant more than four

months prior to the date on which the

application is filed with the Contracts

Administration Office, then audited interim

financial statements must also be submitted.

. . . These annual and interim financial

statements must be audited and accompanied

by the opinion of a Certified Public

Accountant.

33. Rule 14-22.0011(3), Florida Administrative Code,

states that "the provisions of Rule 28-106.103, F.A.C., shall

apply in computing any period of time prescribed by this rule

chapter."

34. Rule 28-106.103, Florida Administrative Code, allows

for five days to be added to the time limits when service has

been made by U.S. Mail.

35. Respondent's qualification application form has been

adopted by Rule 14-22.015, Florida Administrative Code. The

form directs applicants as follows:

MAIL COMPLETED FORMS TO:

Contracts Administrative Office

Florida Department of Transportation

605 Suwannee Street, Mail Station 55

Tallahassee, Florida 32399-0455

36. Petitioner had a reasonable expectation that

Respondent would receive the application and financial statement

on or before April 27, 1999. Petitioner should not be penalized

for conditions beyond its control, which resulted in

Respondent's receipt of the documents on the next business day.

37. Moreover, Petitioner presented persuasive evidence

that Respondent's receipt of the application on May 3, 1999,

provided Respondent with a statement of the company's financial

condition within four months of the application filing date.

There was no material change in the company's financial

condition over the New Year's holiday weekend. The company

conducted no business activities from Thursday, December 31,

1998 to Monday, January 4, 1999. Any material change would have

been disclosed on the financial statement, which was certified

on March 10, 1999.

38. This is not a case where a filing deadline is

necessary to assure fair competition or evenhanded

administration of the award of contracts. The purpose of the

four-month requirement in Section 337.14(1), Florida Statutes,

and Rule 14-22.002(2), Florida Administrative Code, is to insure

that Respondent has reasonably current data from which it can

determine if the contractor is in sound financial condition.

39. The four-month period is flexible, depending on the

date of the applicant's fiscal year-end date. Respondent also

has a flexible schedule for reviewing the application and

financial statement to determine whether the contractor is

qualified. See Rule 14-22.002(1), Florida Administrative Code.

The additional five days for time limits when service is by U.S.

Mail is another example of the flexibility that Respondent

allows when computing time periods prescribed by its rules. A

one-day mail delay is insignificant when viewed in the overall

context of the rules and the varying times allowed for receipt

and processing of applications.

40. Under the facts of this case, Petitioner should not be

prevented from being qualified to perform construction projects

for Respondent based solely on a strict and hypertechnical

interpretation of Section 337.14(1), Florida Statutes. A

complete application mailed as directed with allowance for

normal mail delivery time, and arriving at the Contracts

Administration Office only one day late, should be accepted as

timely filed. Petitioner has cited no persuasive authority

requiring a contrary result. 2/

41. The disqualification of a contractor, which has

performed satisfactorily for Respondent for over fifty years

because the application was one day late, is unreasonable.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED:

That Responde nt enter a final order approving Petitioner's

application for a certificate of qualification.

DONE AND ENTERED this 23rd day of December, 1999, in

Tallahassee, Leon County, Florida.

___________________________________

SUZANNE F. HOOD

Admi nistrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed w ith the Clerk of the

Division of Administrative Hearings

this 23rd day of December, 1999.

ENDNOTES

1/ In Tony DePaul & Sons, Inc. v. Department of Transportation ,

DOAH Case No. 95-2944(October 16, 1995), Respondent denied an

application for qualification because Tony DePaul & Sons, Inc.

failed to include audited financial statements with its

application, which was filed on April 27, 1995. In that case,

Tony DePaul & Sons, Inc.'s fiscal year, like Petitioner's in

this case, ended on December 31, 1994. Respondent and Tony

DePaul & Sons, Inc. stipulated at a final administrative hearing

that the deadline for receipt of the financial statements was

May 1, 1995. Tony DePaul & Sons, Inc. did not file its

financial statements until May 11, 1995. If Respondent agreed

in the instant case that Petitioner's application was due on May

1, 1999, the complete application would have been timely filed

on May 3, 1999, because May 1, 1999 fell on a Saturday.

2/ Among other distinguishing facts, the applicants in Wood-

Hopkins Contracting Company v. Department of Transportation ,

DOAH Case No. 82-508BID(March 24, 1982) and Basic Asphalt and

Construction Corporation v. Florida Department of

Transportation , DOAH Case No. 84-3563BID(February 8, 1985) were

required to file their financial statements showing their

financial condition no more than 120 days prior to the date of

filing the application. After these cases were decided, Section

337.14(1), Florida Statutes, was amended to require filing of

the financial statements showing the applicant's financial

condition no more than four months prior to the date of filing

the application.

COPIES FURNISHED:

F. Alan Cummings, Esquire

William Guy McKenzie, Esquire

Cummings & Snyder, P.A.

1004 DeSoto Park Drive

Tallahassee, Florida 32301

Brian A, Crumbaker, Esquire

Brian F. McGrail, Esquire

Department of Transportation

605 Suwannee Street

Haydon Burns Building, Mail Station 58

Tallahassee, Florida 32399-0450

Thomas F. Barry, Secretary

Department of Transportation

Haydon Burns Building

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0450

Pamela Leslie, General Counsel

Department of Transportation

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0450

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.