BROWARD OFFICE OFTHE INSPECTOR GENERAL MEMORANDUM To: tvf- · John W. Scott, Inspector General /) tvf-Broward Office of the Inspector Generaf--'/ Date: June20,201 2 : Subject: OIG

BROWARD OFFICE OFTHE INSPECTOR GENERAL

MEMORANDUM

To: Pamela Madison, Acting Director, Broward O ffi ce of Economic and Small Business Development

From: John W. Scott, Inspector General /)tvf-Broward Office of the Inspector Generaf--'/

Date: June20,201 2

Subject: OIG Final Report Re: Vendor's Sclteme to Misrepresent County Business Enterprise Program Subcontractor Participation, Ref. 0/G 11-025

Attached please find the fina l report of the Broward Offi ce of the Inspector General (OIG) regarding the above-captioned matter. The OIG investi gati on determined that a subcontractor, Stanford and Sons Trucking Company (Stanford), orchestrated a scheme to cause the misrepresentation of County Business Enterpri se (C BE) participation to the Office of Economic and Small Business Development (OESBD) in connection with an approx imately $6.5 million doll ar public works project for the insta llation of underground water and wastewater utilities. As a result of its scheme, tanford over $400,000 in payments for which it was not eligible to receive. The investi gation also determined that tanford was assisted in its scheme by the Spearhead Development Group, Inc., which is owned by Donovan Amritt, the brother of Stanford Amritt, Jr. , the owner o f tanford. Finall y, the investi gation determined that the prime contractor, Giannetti Contracting Corporation, acquiesced in Stanfo rd 's scheme.

The OIG investi gation a lso revea led defi ciencies in the OE BD"s admi nistration of the CBE program. However, the OIG acknowledges that, pursuant to the release of O IG Final Report 11 0 12 (addressing the gross mismanagement of the Small Business Enterprise certification program), the County has advanced plans to revise ordinances and admini strati ve poli cies in an attempt to address various OES BD de fi c iencies.

Attachment

cc: Honorable John E. Rodstrom, J r., Mayor, Broward County and Members, Broward Board of County Commissioners

Bertha Ilcnry, County Admini stra to r Joni Armstrong Coffey, County Attorney Individua ls previous ly provided a Preliminary Report (under separate cover)

John W. Scott. Inspector General

One North University Drive. Suite Ill • Plantation. Florida 33324 • (954)357-7873 • Fax 954-357-7857

www.browardig.org • 954-357-TIPS

http:www.browardig.org

BROWARD OFFICE

OF THE INSPECTOR GENERAL

FINAL REPORT

===========================================================

OIG 11-025

JUNE 20, 2012

Vendor’s Scheme to Misrepresent County Business

Enterprise Program Subcontractor Participation

BROWARD OFFICE OF THE INSPECTOR GENERAL

OIG 11-025

June 20, 2012

Page 1 of 15

FINAL REPORT RE: VENDOR’S SCHEME TO MISREPRESENT

COUNTY BUSINESS ENTERPRISE PROGRAM

SUBCONTRACTOR PARTICIPATION

SUMMARY

This is the second report in a series of Broward Office of the Inspector General (OIG) investigations

relating to Broward County’s Office of Economic and Small Business Development (OESBD)

programs. In December 2011, the OIG began an investigation into allegations that a subcontractor

was submitting, and causing to be submitted, false payment reports to the OESBD in connection with

an approximately $6.5 million dollar Broward County Water and Wastewater Services (WWS) public

works project (Project) administered pursuant to the County Business Enterprise (CBE) Program.

The OIG investigation substantiated the allegations. We determined that the Stanford and Sons

Trucking Company (Stanford), which was not eligible to participate in the Project as a CBE,

orchestrated a scheme to cause the misrepresentation of CBE participation to the OESBD and acquire

over $400,000 in payments that were allocated for a valid CBE subcontractor. In April 2011, the

prime contractor, Giannetti Contracting Corporation (Prime), was awarded a County contract for the

Project, which consisted of the installation of underground water and wastewater utilities. The

contract required that the Prime ensure 15% CBE participation on the Project, 5.76% of which the

Prime then assigned to a certified CBE (Certified CBE) selected by Stanford. In December 2011,

while the project was ongoing, the Prime submitted reports to the OESBD representing that the

Certified CBE had participated in the Project and had been paid $369,530.71 for its work. However,

the OIG investigation revealed that although the Prime had drafted a check in that amount for payment

to the Certified CBE, the Certified CBE had not, in fact, performed any work on the Project, and had

never had any communications with the Prime prior to the issuance of the check. Instead, Stanford,

who had been communicating with the Prime, arranged for the Certified CBE to be identified as the

required CBE subcontractor, but performed the work itself—for which it expected to be paid. In

furtherance of its scheme, Stanford attempted to pressure the Certified CBE into endorsing the check

and passing-through the payment. In addition, Stanford urged the Certified CBE to falsely represent to

the OESBD that it, rather than Stanford, had performed the work on the Project.

The investigation further determined that after the Certified CBE declined to falsely report to the

OESBD that it had participated in and been paid for services on the Project, the Prime sought and

received approval from the OESBD to replace it with another CBE, the Spearhead Development

Group, Inc. (Spearhead). The replacement was permitted despite the fact that the work in question had

been completed and Spearhead had not performed any of it. Spearhead immediately accepted the full

payment previously ascribed to the Certified CBE, and then forwarded virtually all the money to

Stanford, along with a subsequent amount of approximately $57,000 for work that was later performed

by Stanford. OIG Special Agents determined that the owner of Spearhead, Donovan Amritt, is the

brother of Stanford Amritt, Jr., the owner of Stanford.


FINAL REPORT RE: VENDOR’S SCHEME TO MISREPRESENT COUNTY

BUSINESS ENTERPRISE PROGRAM SUBCONTRACTOR PARTICIPATION

OIG 11-025

June 20, 2012

Page 2 of 15

Finally, the investigation determined that the Prime acquiesced in Stanford’s scheme. When

questioned by OIG Special Agents, the officers of the Prime indicated they were aware that the

Certified CBE had not performed the work assigned to it, but stated their belief that it was

subcontracting the work out to Stanford.1 Nonetheless, the officers admitted that the Prime had never

had any communications with the Certified CBE and that the original check, although made out to the

Certified CBE, had been given to Stanford. In addition, the officers admitted that they were aware

most of the proceeds would be passed through to Stanford. Further, despite contractual requirements

that the Prime obtain a written subcontract from each subcontractor, the Prime was unable to produce

any written subcontracts with the Certified CBE, with Stanford, or with Spearhead.

Although the evidence in this matter shows that no legitimate second tier sub-contracting arrangement

existed between any CBE and Stanford, the OIG investigation also revealed that CBEs have been

provided with inadequate guidance by the County with regards to second-tier subcontracting. The

CBE ordinance does not contain the same language relating to a “commercially useful function” which

acts as a guide for certified small businesses who interact with the OESBD. Further, no administrative

order or operating procedures have been developed or amended to explicitly regulate the CBEs in this

regard. However, the OIG acknowledges that, pursuant to the release of OIG Final Report 11-012

(addressing the gross mismanagement of the Small Business Enterprise certification program), the

County has advanced plans to revise ordinances and administrative policies in an attempt to address

various OESBD deficiencies.

OIG CHARTER AUTHORITY

Section 12.01 of the Charter of Broward County empowers the Broward Office of the Inspector

General to investigate misconduct and gross mismanagement within the Charter Government of

Broward County and all of its municipalities. This authority extends to all elected and appointed

officials, employees and all providers of goods and services to the County and the municipalities. On

his own initiative, or based on a signed complaint, the Inspector General shall commence an

investigation upon a finding of good cause. As part of any investigation, the Inspector General shall

have the power to subpoena witnesses, administer oaths, require the production of documents and

records, and audit any program, contract, and the operations of any division of the County, its

municipalities and any providers.

The Broward Office of the Inspector General is also empowered to issue reports, including

recommendations, and to require officials to provide reports regarding the implementation of those

recommendations.

1 The arrangement wherein a subcontractor further subcontracts out work to a third entity will be referred to as “second-tier

subcontracting” for the purposes of this report.




OIG 11-025

June 20, 2012

Page 3 of 15

ENTITIES AND INDIVIDUALS COVERED IN THIS REPORT

Giannetti Contracting Corporation

The Prime, a Florida general contracting corporation, is the prime contractor on WWS UAZ 308,

Project No. 9051, a water, sewer and storm water project in Dania Beach, valued at $6,488,292. As of

early 2012, the Prime has completed three projects and is currently participating in five open County

projects valued at over $38 million dollars.

Stanford and Sons Trucking Corporation

Stanford is a Broward County roadway contractor owned by Stanford Amritt, Jr. (Mr. Amritt).

Stanford is listed by OESBD as providing hauling, asphalt, excavation and underground services, and

had been certified in one of the County’s business development programs since the mid-1990’s. The

company was certified as a CBE from November 16, 2007 through November 14, 20102, when its

certification expired. Stanford no longer meets the CBE certification requirements because its gross

revenues exceed the CBE maximum.

Spearhead Development Group, Inc.

Spearhead is owned by Donovan Amritt (Mr. Donovan Amritt) and has been certified as a CBE since

March 11, 2011. It is listed as providing general contracting, site development, demolition and

hauling services.

Stanford Amritt, Jr.

Mr. Amritt is a Florida licensed underground and excavation contractor, the owner of Stanford, and

the brother of Mr. Donovan Amritt.

Donovan Amritt

Mr. Donovan Amritt is a Florida licensed general contractor, and the owner of Spearhead, and the

brother of Mr. Amritt.

2 Stanford was originally certified in 2007 as a Community Disadvantaged Business Enterprise (CDBE); such designation

was reclassified in 2009 to a CBE. Although Stanford no longer qualifies for CBE certification, it retains its

Disadvantaged Business Enterprise (DBE) certification.




OIG 11-025

June 20, 2012

Page 4 of 15

RELEVANT GOVERNING AUTHORITIES AND BACKGROUND

County Business Enterprise Program

The CBE Program is governed by Section 1-81.1-5 of the Code of Broward County, referred to as the

Act of 2009. The Act of 2009 establishes a program by which certain companies can be certified as

CBEs. Those companies then become eligible for subcontracting possibilities set aside exclusively for

CBE participation. To attain certification, a business entity must meet the following criteria:

a. Does not (combined with any and all affiliated entities) have in excess of $5 million in average annual gross revenue calculated over the previous three (3) calendar years.

These maximum average gross revenue figures shall be indexed annually

commencing October 1, 2009, using the Council for Community and Economic

Research's ACCRA Cost of Living Index as applied in Broward County;

b. No person with an ownership interest (direct or indirect, legally beneficial) in the entity (or in any affiliated entity) has a personal net worth exceeding $750,000; and

c. Has a continuous operating presence in Broward County.

The Act of 2009 explicitly charges OESBD with the responsibility of administering and enforcing the

CBE Program. Since the adoption of the Act in 2009, no Administrative Orders or Standard Operating

Procedures have been enacted or amended to explicitly address the CBEs.

Contract for WWS UAZ 308, Project No. 9051

On April 5, 2011 the Prime was awarded the contract for the Project for $6,488,292. The contract

required 15% CBE participation. In its bid, the Prime committed to subcontract an amount equal to

5.76% of the contract to the Certified CBE, and a total of 9.24% to two other CBEs. (See January 28,

2011 CBE Participation Evaluation, attached as Exhibit 1) Specifically, the contract documents state:

12. “The successful Bidder agrees to enter into a formal contract with the CBE contractors

which are listed on the Schedule of CBE Participation upon execution of the contract with the

COUNTY.”

28.1. “CONTRACTOR shall have a continuing obligation to notify COUNTY and

CONSULTANT of any change in subcontractors.”

54.2.2. “CONTRACTOR agrees to enter into contracts with CBE subcontractors which are

listed on the Schedule of CBE Participation upon execution of this Agreement and to provide

copies of its contracts with such persons to the Contract Administrator and the Broward

County Small Business Development Division. Contractor may not deviate from the CBEs

delineated on Exhibit 6, CBE Performance Commitment, without the prior approval of the

SBDD (or designee).” (See relevant portions of the contract documents, attached as Exhibit 2).




OIG 11-025

June 20, 2012

Page 5 of 15

INVESTIGATION

This investigation was predicated on information alleging that CBE-designated work was performed by

Stanford, a non-CBE, but that the Prime was submitting reports to OESBD indicating payments were made

to the Certified CBE. The investigation uncovered a scheme orchestrated by Stanford to cause CBE

participation in the Project to be misrepresented and, thereby, subvert the terms of County’s contract with

the Prime.

The investigation involved the review of substantial documentation by OIG Special Agents including, but

not limited to, OESBD materials such as contract and bid records pertaining to the Project, Letters of Intent

(LOIs), and monthly utilization reports (MURs); administrative authorities governing business enterprise

certification and participation; and bank records and other financial documents. OIG Special Agents also

conducted interviews of witnesses including officers of the Prime, County staff, Mr. Amritt, and Mr.

Donovan Amritt.

OIG Review of the Project and Subcontractor Participation

The OIG review revealed that even before the Project began, Stanford was disqualified from participating

because it had lost its CBE certification. Nevertheless, as described below, Stanford obtained over $400,000

in County funds from the Project as a result of its scheme to falsely represent that qualified CBEs, rather

than Stanford, had actually been the participants.

1. Stanford’s Disqualification as the Subcontractor for the Project

In November 2010, the Prime submitted its bid on the Project. At that time, the Prime

identified Stanford as one of the three CBEs to which it would subcontract a total of 15% of

the value of the Project. (See December 15, 2010 CBE Participation Evaluation, attached as

Exhibit 3) Specifically, Stanford was identified as a 5.76% participating CBE, offering

excavation and installation of roadways, grading and paving. However, prior to award of the

contract, the OESBD advised the Prime that Stanford had lost its CBE certification.

2. Stanford Provides the Certified CBE as Stand-in

According to officers for the Prime, they then asked Stanford for a recommendation for a

replacement CBE. Stanford recommended the Certified CBE, which would pick up the full

percentage CBE participation originally assigned to Stanford. Thereafter, on or about January

27, 2011, the Prime forwarded an LOI to the OESBD which memorialized its intent to utilize

the Certified CBE to provide hauling and road excavation services on the Project, despite the

fact that it had never communicated with the Certified CBE. (Exhibit 4) Instead, stated the

officers, Stanford had exclusively communicated with the Certified CBE and arranged to

provide the LOI to the Prime.

The officers for the Prime also stated that they believed Stanford had made the proper

arrangements with the Certified CBE, although they admitted that they knew that Stanford was




OIG 11-025

June 20, 2012

Page 6 of 15

going to provide the subcontracting work for the Project. However, they stated, it was their

belief that Stanford was second-tier subcontracting the work from the Certified CBE. They did

not enter into a written contract with the Certified CBE.3

3. Stanford Performs All of the Work Designated for the Certified CBE

At all times, from the beginning of the Project through January 2012, the Prime communicated

only with Stanford concerning work on the Project. Both Mr. Amritt and officers for the Prime

admitted to OIG Special Agents that the Certified CBE had never actually participated in the

Project. Additionally, the OIG examined over 200 daily logs provided by the Prime’s on-site

personnel, none of which identified either the Certified CBE or Spearhead as being present on-

site.

4. Stanford Attempts to Pass the $369,530.71 Payment through the Certified CBE

In December 2011, an OESBD official received an MUR from the Prime reporting a

$369,530.71 payment to the Certified CBE. (Exhibit 5) The MUR purported to document that

the Prime had complied with the CBE contractual requirement as it pertained to the Certified

CBE. Officers for the Prime stated that it had drafted a check in that amount made payable to

the Certified CBE, and that the check was given to Stanford for delivery.4

On December 14, 2011, the Certified CBE received an e-mail from an OESBD official

requesting confirmation of receipt of the $369,530.71 payment from the Prime, as well as

confirmation that the Certified CBE had actually performed the work specified. (Exhibit 6)

The Certified CBE did not respond to the e-mail. The OIG investigation determined that,

despite knowing that the Certified CBE never participated in the Project, Stanford urged it to

accept the Prime’s payment, keep a small portion, and pass-through the remainder back to

Stanford. The Certified CBE refused to act as a pass-through.

5. Stanford Provides the Prime with Spearhead as a Substitute CBE, Which Passed the Payment Back to Stanford

Stanford then suggested that the Prime replace the Certified CBE with Spearhead, another CBE

which was owned by Mr. Amritt’s brother, Donovan Amritt. Stanford represented that

Spearhead would be willing to replace the Certified CBEs participation, and accept the pending

payment. Further, Stanford represented that it could do additional work on the project as a

purported subcontractor for Spearhead.

3 In January 2012, after the Certified CBE’s refusal to pass-through the monies to Stanford, the Prime did enter into a

formal contract with it to provide future aggregate hauling services on the Project, albeit of a minor nature. 4 Although, as discussed below, Mr. Amritt admitted receiving the check and attempting to negotiate it through the

Certified CBE, it has not been produced to the OIG.




OIG 11-025

June 20, 2012

Page 7 of 15

Thereafter, the Prime sent the OESBD an MUR reporting that the $369,530.71 paid to the

Certified CBE was a “previous payment in error.” (Exhibit 7) The Prime also forwarded

paperwork requesting a reduction of the work assigned to the Certified CBE, and the

reassignment of that work to Spearhead. (Exhibit 8)

The OIG review of financial records revealed that the Prime issued two checks to Spearhead

totaling $427,548.11. The first, bearing the date of November 28, 2011, in the amount of

$369,530.71—the exact amount of the previous check made payable to the Certified CBE—

was deposited by Spearhead, but not until January 11, 2012. (Exhibit 9) Two days later, on

January 13, 2012, Spearhead issued a $364,530.71 check to Stanford. (Exhibit 10) As work

continued on the Project, the Prime issued a second check to Spearhead, dated February 1,

2012, in the amount of $58,017.40. (Exhibit 11) On February 10, 2012, Spearhead issued a check

for $57,017.40—exactly $1,000 less—to Stanford. (Exhibit 12)

Deficiencies in the Administration of the CBE Program

Although it is difficult to prevent the misconduct of individuals determined to undermine a program or

policy by falsely representing the facts, the OESBD’s CBE Program would benefit from explicit

guidance that might prevent misapplication in instances where the entities involved are acting in good

faith.

1. Failure to Enact Policies Governing CBE Second-Tier Subcontracting

An extensive analysis of the ordinances, administrative orders, operating procedures, and

contract documents relating to the CBE program reveals that there is presently no written

guidance in place which explicitly restricts CBE second-tier subcontracting to non-CBE

entities. The CBE application does not contain any language prohibiting such arrangements,

and interviews of the acting director of the OESBD and other OESBD officials revealed that

the department does not provide the CBEs with any guidance or training on this issue.5 By

contrast, the OIG found that language addressing this specific issue has existed for other

business certifications. Specifically, the 2004 business development programs contained a

requirement that the certified subcontractors engage in a “commercially useful function.” The

2004 Administrative Order (AO) and Standard Operating Procedures (SOPs) that governed

those certifications expanded upon the requirement by requiring the following:

“Consistent with normal industry practices, an M/WBE [Minority and Women-Owned Business Enterprise] may enter into subcontracts. If an M/WBE contractor subcontracts a

5 Interviews with representatives of current and former CBEs revealed that the only information they received regarding

the CBE Program was gleaned from the CBE application. To the best of their knowledge, there are no informational

seminars offered by the County, no brochures, handbooks or any material in any format provided by the County

contemporaneous with the application and certification process that delineate the responsibilities of CBEs, including

limitations on second-tier subcontracting. OESBD staff stated that the County presents workshops for CBEs, but the

OIG’s review of those materials revealed no guidance relating to second-tier subcontracting.




OIG 11-025

June 20, 2012

Page 8 of 15

significantly greater portion of the work of the contract than would be expected on the basis

of normal industry practices, an M/WBE shall be presumed not to be performing a

commercially useful function. An M/WBE may present evidence to refute this.”

“A M/WBE performing subcontract work shall not subordinate more than 49 percent of the amount of the subcontract work.”

“A M/WBE shall not subordinate any part of the agreed-upon subcontract work back to the Prime contractor.”

OESBD officials stated their belief that the “commercially useful function” requirement, and

the accompanying guidelines, do apply to CBEs. However, no mention of the criteria is made

in the Act of 2009. The OIG also notes that the AO and SOPs have not been amended since

2004 and do not explicitly appear to apply to CBEs. Thus, regardless of whether OESBD has,

in fact, applied the criteria to CBEs, CBEs have not received unambiguous written notice of the

criteria or the restrictions.

There are also no requirements or procedures currently in place for a CBE to report the use of

subcontractors, either CBE or non-CBE, to the Prime or the OESBD. In fact, the OESBD does

not require the CBE to ever file any reports with OESBD, other than an acknowledgement

from the CBE that it provided services on the project and received payment from the Prime.

2. Lack of Systemic Checks to Ensure that CBEs Are Not Used as Pass-Throughs

The contract for the Project required the Prime to enter into formal signed contracts with each

CBE subcontractor and to provide copies of them to the OESBD, but the OIG investigation

determined that the OESBD never requested copies of the signed subcontracts. Had it done so,

of course, it would have discovered that none existed.6

In addition, due to limited resources, the OESBD understandably cannot routinely conduct

field inspections to ensure compliance. Unfortunately, the OESBD has failed to avail itself of

an additional, readily available resource for program monitoring. Presently, a Field Inspector

(Inspector), an employee of the County’s contracted engineering consultant, daily visits a

project site for the purpose of reviewing and monitoring the technical aspects of the project,

and prepares a daily report (DR) which contains information on the progress of the project, and

includes a comment on the contractor and subcontractor companies performing on-site work

each day. The Inspector assigned to the Project informed OIG Special Agents that his DRs

indicate Stanford—but not the Certified CBE or Spearhead—was regularly working on-site.

6 OESBD staff have asserted that the LOI operates as a contract between a prime contractor and a CBE, so that –despite the

contract’s explicit language to the contrary—there were no further requirements that the Prime enter into formal written

contracts with its designated CBE subcontractors.




OIG 11-025

June 20, 2012

Page 9 of 15

The Inspector also stated that no one from the County ever sought to confirm if the Certified

CBE or any other CBE was working on the Project. In addition, he stated that no County

official has ever made such inquiry in the past. Nor did OESBD staff conduct any review of

the Inspector’s DRs, which would have raised significant questions about the Certified CBEs

participation, as well as the propriety of substituting it with Spearhead after the work in

question had been completed.

INTERVIEW SUMMARIES

As a part of the investigation, OIG Special Agents conducted numerous witness interviews. Significant

interviews are summarized below:

1. Interview of the Owner of the Certified CBE

The owner of the Certified CBE (Owner) stated that sometime in January 2011, he was asked by

Mr. Amritt, a longtime associate and former employer, if the Certified CBE would be interested in

providing aggregate hauling services for the Prime on the Project. The owner stated that he agreed

to participate, and in furtherance of that participation, executed the acknowledgement of the

January 27, 2011 LOI (Exhibit 4).

The Owner stated that some months later, Mr. Amritt notified him that the contract for the Project

had been awarded. The Owner further stated that at the conclusion of a discussion regarding the

prices the Certified CBE would charge, Mr. Amritt told him that the prices were too high, and that

he was going to use a cheaper hauler.

The Owner stated that he heard nothing more about the Project until December 14, 2011, when he

received an email form an OESBD official requesting confirmation of receipt of a $369,530.71

payment from the Prime, as well as confirmation that the Certified CBE had actually performed

the work specified. After receiving the email, the owner received a telephone call from Mr.

Amritt, who asked to meet with him. The Owner stated that he then met with Mr. Amritt, who told

him that the Prime was going to, or had, issued a check to the Certified CBE for approximately

$369,000, purportedly for aggregate hauling and roadway construction services rendered for the

Project. The Owner further stated that Mr. Amritt admitted that the work had actually been

performed by Stanford. Mr. Amritt then asked the owner to accept the Prime’s check, deposit it

into the Certified CBE’s account, and write Stanford a check back for the full amount minus an

amount the Owner “believed he would have profited” had the Certified CBE actually performed

the work. The Owner stated that after considering the request, he contacted Mr. Amritt and

informed him that he would neither accept the check, nor acknowledge that the Certified CBE had

performed any work on the Project.

The Owner stated that during the ensuing weeks, both Mr. Amritt and Stanford employees called

him and urged him to accept the Prime’s check. The owner also stated that during those

conversations, Mr. Amritt and his employees offered him additional inducements, including

increasing the monetary compensation for the Certified CBE’s acknowledgement of participation,




OIG 11-025

June 20, 2012

Page 10 of 15

and offering to find new work for it on the Project. In return for the inducements, the Owner

explained, he would be expected to negotiate the Prime’s payment as previously explained by Mr.

Amritt, and to “show on paper” that the Certified CBE had subcontracted the already completed

work to Stanford. The Owner stated that he again refused to collaborate with Mr. Amritt and his

company in that manner.

The Owner stated that in the first week of January 2012, the Certified CBE entered into a formal

contract with the Prime to provide only hauling services, with the expectation of receiving $70,000

worth of work, which represents approximately one percent CBE participation on the Project. The

Owner further stated that since that time, the Certified CBE has provided approximately 90,000

worth of hauling services for the Prime.

2. Interviews of the Officers of the Prime Contractor

As part of the investigation, OIG Special Agents interviewed the president, Rick Giannetti

(President), vice-president, Nicholas Apostol (Vice-President), and the chief operating officer

(COO) for the Prime. The President and the Vice President stated that they rarely visited the

Project worksite, and never discussed with the COO whether the Certified CBE was actually

participating in the Project. The President and the Vice-President also stated that they never met

the Owner, and never received any invoices from the Certified CBE. They further stated that they

believed that Stanford, which was the only entity responsible for hauling with which they

communicated, was a subcontractor of the Certified CBE.

The President and the Vice-President acknowledged that in December 2011, the Prime issued a

check payable to the Certified CBE in the amount of approximately $369,000, but gave it to Mr.

Amritt to deliver. They also acknowledged that the Prime forwarded the monthly MUR to the

OESBD, which reported that the payment was made to the Certified CBE. The President and the

Vice-President stated that after Mr. Amritt informed them that the Owner refused to accept the

check, they asked him to find another CBE that they could use to comply with the Prime’s CBE

goals and that in response, Mr. Amritt recommended Spearhead. They stated that the Prime then

made corrections to the January 2012 MUR and submitted the CBE substitution paperwork to the

OESBD, which approved the substitution of a substantial portion of the Certified CBE’s

participation.

With regard to invoices, the Vice-President reiterated that although the Prime had never received

any invoices from the Certified CBE, he believed that its work was reflected on the invoices the

Prime received from Stanford, so that he crossed out Stanford’s name on them and replaced it with

the name of the Certified CBE. The Vice-President further stated that he later learned that the

Certified CBE had never performed any work on the Project. He also stated that at some point, the

Prime had received invoices from Spearhead. In January 2012, the Prime paid Spearhead the

$369,530.71 originally ascribed to the Certified CBE, a substantial portion of which the Vice-




OIG 11-025

June 20, 2012

Page 11 of 15

President admitted he knew would be passed on to Stanford.7 As with the Certified CBE,

however, the Vice-President stated that the Prime believed that Spearhead was then subcontracting

the job to Stanford, with whom it continued to exclusively communicate. The President and the

Vice-President stated the Prime has never executed written contracts with either Stanford or

Spearhead, and only executed a written contract with the Certified CBE in January 2012.8

The COO stated that he prepares daily reports on the Project, and is familiar with the

subcontractors providing services at the worksite. He stated at the time of the Prime’s original bid

submission, Stanford was listed as a participating CBE, and that Stanford had also subcontracted

roadway work from the Prime on other contracts. After Stanford lost its CBE certification, it

recommended the Certified CBE as a replacement, but represented that the Certified CBE would

subcontract some of its work on the Project to Stanford. The COO further stated that he believed

that CBEs were not prohibited from subcontracting work to non-CBEs.

The COO stated that until sometime in January 2012, only Stanford had performed any work on

the Project. He also stated that he would go through Stanford to schedule work, and that until

recently, he only dealt with Stanford. The COO stated he understood that an issue arose regarding

the Certified CBE’s participation, and that as a result, Spearhead was added as a CBE on the

project. However, he also stated, he still schedules all hauling and related work through Stanford.

3. Interview of Stanford Amritt Jr.

Mr. Amritt stated that at the time of the bid, Stanford was a CBE, but that before the contract was

awarded, its certification expired. Because Stanford’s revenues exceeded the CBE Program

limitations, its certification was ineligible for renewal. Mr. Amritt acknowledged that Stanford

was still performing, and had performed, the majority of hauling services on the Project from the

onset through January 2012, and had been, and continues to be the Project contact for the Prime.

Mr. Amritt admitted that he solicited the Owner to execute an LOI as a substitute for Stanford to

fulfill the Prime’s CBE participation goals. He stated that because the Owner refused to accept the

Prime’s check and acknowledge that the Certified CBE had participated in the Project, the Prime

was forced to identify another CBE to comply with the CBE participation goals. Mr. Amritt

denied attempting to convince the Owner to accept the Prime’s check. He further stated that he

recommended Spearhead to replace the Certified CBE, to which the Prime agreed.

Mr. Amritt characterized Stanford’s participation as being a subcontractor of Spearhead. He stated

that the Prime paid Spearhead approximately $365,000, and that in turn, Spearhead paid Stanford

approximately $350,000. After OIG Special Agents questioned the propriety of the Prime’s

payment to Spearhead shortly after it had been approved as a replacement, Mr. Amritt stated that

the payment “had to be done that way” to meet the Prime’s CBE goal requirements. He further

7 The Vice-President stated that the Prime’s fiscal year ended on November 30, 2011, so that for tax purposes it had to

record the payment prior to that date. 8 They acknowledged, however, that the Prime had entered into a written contract with another CBE at the outset of the

Project.




OIG 11-025

June 20, 2012

Page 12 of 15

stated that Spearhead has been leasing heavy equipment to Stanford, and is now also providing on-

site hauling.9

4. Interview of Donovan Amritt

Mr. Donovan Amritt stated that Spearhead has been a CBE since 2009 or 2010,10

providing

concrete, asphalt, excavation and site development services to various municipalities and the

Florida Department of Transportation on projects in Broward and Miami-Dade Counties. He also

stated that Spearhead has been providing services on the Project since July or August 2011,

although all the work is scheduled by or through his brother. Mr. Donovan Amritt further stated

that Spearhead does not have a contract with the Prime and that he has never communicated with

the President or the Vice-President, but that he has been in contact with the COO.

Mr. Donovan Amritt stated that at Stanford’s direction, Spearhead delivered aggregate and asphalt

to the job as needed. He also stated that he believed Spearhead possessed purchase orders from the

Prime, dating back to July or August of 2011, for services rendered. He further stated that the

Prime paid Spearhead after it received payment from the County, and that Spearhead’s invoices

included costs for materials.11

Mr. Donovan Amritt stated that Spearhead subcontracted to

Stanford to perform work on the Project, but that since Spearhead did not have enough available

cash to float the costs for materials until it was paid by the Prime, the materials went on Stanford’s

account and after the Prime paid Spearhead, Spearhead paid Stanford.

Mr. Donovan Amritt stated that Spearhead leases heavy equipment to Stanford, some of which is

used on the Project, for which Stanford is invoiced, and periodically pays Spearhead. He also

stated that Spearhead leases one dump truck from another of his brothers (not Stanford Amritt),

who also operates the truck while working on the Project. He further stated that he believes that

Stanford owns only one dump truck.

With regard to the check Spearhead received from the Prime dated November 28, 2011, which

Spearhead deposited on January 11, 2012, Mr. Donovan Amritt stated that he did not notice the

date of the check, but he was certain that he would have deposited it soon after receiving it, rather

than holding it for over six weeks. He also stated that he caused Spearhead to promptly issue a

check to Stanford for $364,503, which he stated was for materials that had been charged to

Stanford’s account.

9 As part of the investigation, the OIG requested that Stanford provide invoices, purchase orders, contracts, and other

materials from Spearhead. Although Stanford did not provide any materials in response to our request, at the conclusion of

the investigation, the Prime produced a series of invoices, purportedly prepared by both Spearhead and Stanford which

appear to reflect the work originally designated to be performed by the Certified CBE. The invoices do not bear any dates

of receipt. At any rate, Mr. Amritt has admitted that, in fact, Stanford performed the work. 10

OESBD records reveal that Stanford was actually certified as a CBE on March 11, 2011, at or about the same time

Stanford lost its CBE certification. 11

The OIG requested that Spearhead produce the documents described by Mr. Donovan Amritt, but it did not.




OIG 11-025

June 20, 2012

Page 13 of 15

5. Interview of County Officials

During the investigation, OIG Special Agents interviewed numerous County officials including the

OESBD Small Business Manager and the Deputy County Administrator. The Small Business

Manager stated that he has held numerous leadership positions with the OESBD since 2001, and is

familiar with the Broward County Business Opportunity Act of 2004 (Act of 2004); the SOPs and

the AO; the ordinances referred to as the Broward County Community Disadvantaged Business

Enterprise Act of 2007 (Act of 2007); as well as the Act of 2009. He explained that the Act of

2004 restated previous County ordinances that had established race/gender based criteria for

Minority and Women-owned Business Enterprises (M/WBE) related to set-aside programs for

County projects. The SOP and AO were specifically crafted to accomplish the intent of the Act of

2004, and substantially all the language contained in the SOP and AO was directly restated in the

Act of 2004, and the OESBD operated the program under the provisions of those directives.

The Small Business Manager stated that in 2009, the ordinance was again changed, creating CBEs,

a new race/gender neutral business definition. He further stated that the Act of 2009, like the Act

of 2007, required that the County, within 180 days, enact new standards regarding ownership and

control of CBEs, but no new standards were adopted for inclusion into the AO or SOP.

Additionally, he stated, there was no guidance from senior OESBD management, either in writing

or orally, on how to administer the new CBE program, or how to adopt and enforce the provisions

of the Act of 2004 or AO, other than the specific language of the Act of 2009, which does not

specifically address second-tier subcontracting by CBEs. The Small Business Manager explained

that with no new standards adopted or amendments made to the AO or the SOP, the OESBD staff

continued operating under the past practices of the division as established by the AO, and the

legacy of the M/WBE program, with the exception of applying race/gender criteria. He stated that

since there is no clear line connecting the CBE program with the Act of 2004, the AO and the

SOP, there is a void in governing rules, and by operation, the OESBD staff continues to use the

existing regulatory framework.

The Deputy County Administrator stated that she is currently overseeing the OESBD. She

explained that the Act of 2004 was the basis for the AO. She stated that the Act of 2004 was the

predecessor ordinance to the Act of 2009, which established the race and gender-neutral CBE

program. She further stated that the Act of 2009 affected the M/WBE portion of the Act of 2004,

but the provisions related to SBEs remained as stated in the Act of 2004. She stated her

understanding that the Act of 2009 contains language that references the Act of 2004, and that

language operates to make provisions of the Act of 2004, and the AO, applicable to the Act of

2009.

The Deputy County Administrator acknowledged that although the Act of 2009, as well as the

predecessor Act of 2007, mandated that within 180 days of enacting the ordinances, the County

Administrator was to make changes to the standards for ownership and control of CBEs, such

changes were never implemented. She stated that it was a failure by the previous administration of

OESBD, who have since left employment, to follow through with the mandates.




OIG 11-025

June 20, 2012

Page 14 of 15

The Deputy County Administrator stated that the Prime was not a new contractor in the County, so

that it should have known that CBE participation is required, and that CBEs cannot subcontract to

non-CBEs and expect to receive credit for CBE participation. She also stated that the Prime

should know it cannot claim CBE credit for services provided by non-CBE subcontractors.

The Deputy County Administrator stated that prime contractors are informed of the rules related to

CBEs and CBE participation credit during pre-bid meetings conducted between the Purchasing

Division, OESBD and project managers. In addition, she stated her belief that CBEs are informed

of their limitations and requirements during presentations offered by the County. She also stated

that the intent of the CBE program and common sense should guide prime contractors and CBEs in

claiming CBE credit for the work of non-CBE subcontractors.

RESPONSES TO THE PRELIMINARY REPORT AND OIG COMMENT

In accordance with Section 12.01(D)(2)(a) of the Charter of Broward County, a preliminary version of

this report was provided to Stanford, Spearhead, the Prime, and the Broward County Administrator for

their discretionary written responses. The OIG received responses from an attorney for Stanford and

the County Administrator, which are attached and incorporated herein as Appendix A and Appendix

B, respectively. We appreciate receiving the responses.

1. Response of the Attorney for Stanford

In his response, the Attorney for Stanford stated that “there is no convincing evidence that

Stanford and Sons subverted or attempted to complete a scheme to misrepresent subcontractor

participation in the CBE Program.” The Attorney also stated that interviews by OIG Special

Agents were “not taken properly” because Miranda warnings were not given, and the witnesses

were not represented by counsel. He further stated that the preliminary report was “misleading”

because it inferred that Stanford received over $400,000 in compensation that the Certified CBE

did not, and that “regardless of who was to perform” services on the Project, the “majority of the

funds” expended by the County went to apparently deserving recipients. Finally, the Attorney

challenged the constitutionality of the CBE Program and the County’s other set-aside programs,

and supported his challenge with cites to selected court cases.

As we noted above, CBE Program guidelines and procedures currently fail to provide explicit

guidance that might prevent misapplication in instances where the entities involved are acting in

good faith. In its discretionary response, the County has described steps it is taking to address

deficiencies in the language and application of the CBE ordinance. However, the OIG declines to

engage in a broad-reaching debate concerning the constitutionality of the CBE ordinance. Here,

the facts unequivocally demonstrate—rather than merely infer, as suggested by the Attorney—that

far from acting under a good faith misapprehension of the law, Stanford intentionally sought to

deceive the County in order to enrich itself. Nor will we will be lured into a discussion of the

scope and applicability of the Miranda rule and the right to counsel, since it is beyond dispute that

neither are applicable in a non-custodial, administrative setting. The Attorney’s discretionary

response does not alter the findings reached by the OIG in the preliminary version of this report.




OIG 11-025

June 20, 2012

Page 15 of 15

2. Response of the County Administrator

In her response, the County Administrator stated that the OESBD has been diligently working to

revise governing ordinances and administrative policies in order to address operational issues, not

only in response to OIG Final report 11-012, but also based on the County’s ongoing commitment

to improving its programs and activities for the benefit of community businesses and the taxpayers.

She noted, however, that the OESBD relies upon the honesty and professionalism of contractors,

and that the “intentional scheming” of Stanford, Spearhead and the Prime deprive the County of its

bargained-for contractual expectations.

With regard to deficiencies in the administration of the CBE Program, the County Administrator

cited additional authorities that further provide guidance to CBEs and contractors, but also

acknowledged that “administrative orders or standard operating procedures have not yet been

adopted to explicitly effectuate the purposes” of the CBE program. She stated that the Act of 2009

does not prohibit second-tier subcontracting to a non-CBE, but that not only will such work not

count toward a prime contractor’s CBE goal obligation, those actions “may carry other

consequences that will affect the prime contractor’s contractual relationship with the County.” She

also concurred that the Field Inspector’s daily logs were available for review, so that the County is

working to incorporate them into its CBE Program compliance monitoring activities.

With regard to the actions of Stanford, Spearhead, and the Prime, the County Administrator

observed that each of those entities acted in concert in a manner which would have made detection

of their activities extremely difficult. She also stated that “without excusing or defending

Stanford’s misconduct,” it was entitled to be paid because it actually performed the work on the

Project, but that the Prime cannot claim of receive any credit towards CBE participation

requirements. Finally, the County Administrator stated that the OIG’s investigation necessitates

“immediate action by the County,” which may include legal action by the County Attorney against

Stanford, Spearhead, and the Prime.

CONCLUSIONS AND RECOMMENDATIONS

The OIG investigation revealed that Stanford engaged in misconduct by executing a scheme to misrepresent

CBE participation to the OESBD, through which it obtained $421,548.11 in County funds that were

designated to facilitate participation by a certified CBE in a significant public works project. We previously

noted in OIG 11-012 that, absent administrative vigilance, the County’s set-aside programs are vulnerable to

abuse. The fact that Stanford was easily able to undermine the goals of the CBE program underscores the

need for the County to develop clear, unambiguous rules to ensure its continuing viability.

We are encouraged by the prompt specific remedial steps the County has stated will be undertaken to

improve its administration of the CBE Program—including steps otherwise identified in the body of this

report—in addition to the wholesale revisions which the County is currently undertaking regarding

governance by the OESBD. By way of this report, we specifically recommend that as a part of the legal

action contemplated in conjunction with the County Attorney, the County reassess the fitness of Stanford,

Spearhead, and the Prime to receive future contract awards.

OIG 11-025

EXHIBIT 1

Exhibit 2 Page 1of 2

gn~A!AA[).-.tgUNTY

F L 0 R I D A'

PUBLIC WORKS DEPARTMENT i . ~. One Nmlh Un1verBiy Drive • SuiteA-305 •Plantallon, FlOrida 33324 • 954-357-6410. • FAX 954-357-&40

·. I .

MEMORANDUM · Revised 1-28-11. '• ''

Date: January 28, 2011

To: ~mell Kimbrew, Coostructfon Management Specialist

Purchasing Division ·. , · ·.·

Anthony J. F4~strative Manager II

Public Worics Oepar:tment

From:

Subject CBE Participation Evaluation

·Bid Number. Y0864105C1

UAZ 308, Water and Sewer Improvements

... ,.

The Public Wprks Department evaluated ~e County Busin~ Enterprise (CB.E) parti(:ipation. for Jhe ;.. following bids submitted for this project. Ttlree .lowest of. $!X. bids were. ~viewed, the .results •are. as : . . follows: ·· · :.· ·· · · . ·' · · ~· ;.;.

! . Estabrtshed CBE Overall goal is 15%.

Met the CBE Requirements Sub-Contract Percent · ~ .. Giannetti Contracting Corporation CPrtmel

..f?ltln Diesel, Inc. CBE 5.76% 1\81188 Corp. CBE 8.20% 8 & M Lawn Service & Landscaping CBE 1.04%

Total 15.0%

Contractor's Bid Amount= $6,488,292.00• • Pro~ CBE Sub-Contract Amount:: .$973,243.80 • CBE Participation goal proposed: 15.0%

Man Con. Inc.. CPrimel

Elite Contractor Supply, LL CBE 12.50%

Green Earth Nu~ and SOd, Inc CBE . '1.02%

Southem Transport &Equipment, Inc. CBE 1.50%

Total 15.02%

Contractor's Bid Amount= $6,641,712.00•• Proposed CBE Sub-Contract Amount:= ~997,585.14 ,,. ' • CBE Pai11clpatlon goal 15.02%

Braward

SUI GunzllwVtr •Dale V.C. Hcilnm • Kll8lln D. JaCObo • Clllp Rllllr. Jolin E. RocMcm, Jt•• 8alb8ra Sllaller •lois ~-. '·

·: ~

http:997,585.14http:6,641,712.00http:6,488,292.00

Exhibit2 Page 2 of2

Ric-Man Construction. Inc., (Prime)

B & MLawn Service & Landscaping· CBE.· 1.07%

E & NConstruction, Inc CBE .11.52%

Moore Walters & Associates CBE. 2.42% .

Total 15.01%.

• Contractor's ·Bid Amount= $6,859,'154~00 . • Proposed CBE Sub-Contract Amount= $1,029,559.02 .. CBE participation goal proposed: 15.01%

The three submittals revieWed Were &~em6d compliant with, tile CB~ Program requirements> Giannetti Contracting Co,.Porationand.Man··con,lnc. original .. bid.was·compliarit.·at the time.of submittal,. however.· since that time tWo of the subcontractors. no longer qualify as·.· a. CBE.....Per the County .Business .· Enterprise. Act.· of 2009•. Sec. ··1-81.4(d), ... if the responders' documentation shows. that an·. attempt was ... made to comply with the CBE ·goal; responders have the. opportunity to· cure. any technical issues pertaining to the submission of incomplete information or.doc;umeiltation; within three (3) business days ·. after notification from the County~ .. Staff contacted both Giannetti Contracting Corporation and Man Con, Inc. to request letters of Intent and Schedule of CBE Participation be properly executed and submitted, ·. they both complied with the request. · · · ·· ·· ·· · · · · ·· ·.. ·

Office pfEccinorrilc and Smaii.Business Dev. Datei : ·... ··.··. •' ,•,' ··.··.··. ··, •'',/'

http:1,029,559.02

OIG 11-025

EXHIBIT 2

I I BROWARD COUNTY WATER & WASTEWATER SERVICES BROWARD COUNTY, FLORIDA

DEPARTMENT OF PUBLIC WORKS

I CONSTRUCTION OF

UAZ308I WATER AND SEWER IMPROVEMENTSI

I WWS/WWED Project No. 9061

I BID NO. Y0864105C1

I VOLUME 1- BIDDING REQUIREMENTS, CONTRACT FORMS

AND CONDITIONS OF THE CONTRACT

I Engineer of Record I

I

I CONTRACT DOCUMENTS I VOLUME I BIDDING REQUIREMENTS, CONTRACT FORMS AND CONDITIONS OF THE

CONTRACT

I VOLUME II TECHNICAL SPECIFICATIONS (DIVISION 1-4)

I VOLUME Ill GENERAL DRAWINGS AND STANDARD DETAILS

I APRIL2010

CRAVEN THOMPSON & ASSOCIATES, INC.

I 3563 N.W. 53rd Street

Fort Lauderdale, Florida 33309

I (954) 739-6400

I

I I I I I I I I I I

I I I I I I I I

STANDARD FORM

CONSTRUCTION CONTRACT DOCUMENTS

PROJECT MANUAL FOR THE FOLLOWING PROJECT($):

UAZ 308

WATER AND SEWER IMPROVEMENTS

BROWARD COUNTY

through its

BOARD OF COUNTY COMMISSIONERS

of

BROWARD COUNTY, FLORIDA

BID/CONTRACT NO.: _Y_0_86_4_10_5_C_1_____

CAF#170 (01-07-10)

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I I I I Approv~d by: wfh~f/i&t-~!?11~ lltJ/M cJn J;/u;;:L-/;t?rJf ~s j)j- /)]. I !J p ' 1"0. J) . ., /, ' ~~ /[ 1/t;_,u-t.l;J! ;{;;;ku~.J I I I I I

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NOTICE

The attached Construction Contract Documents have been approved as to legal

form by the Office of the County (\ttomey, and approved by the Risk Management Division

and the Purchasing Division relating to their respective areas of responsibility, prior to the

public notice of the Invitation for Bid.

WATER AND WASTEWATER ENGINEERING DIVISION (Using Division)

(Director)

~ Craven Thorn son & Associates, Inc. ' . ? (CONSULTANT, if applicable)

Assistant County Attorney Purchasing Agent

• ) .··-: ·""> . ' _.:, '7 'I 'r·)

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Date

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Date ON cn"Pcrcz Alexander. c=US, o=Rr:.k Management. ou•Hroward County, ~'""til tlftlaMRAr4er@l!ro 'leill.org Dato: 2010 07.22 09:33:46 -04'00'

Date

CAF#170 (01-07-10) -ii~ I

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10.6. COUNTY shall review each proposed Change Order that, by itself or aggregated with previous Change Order requests, increases the ContractPrice by ten percent (1 0%) of the initial Contract Price or Fifty Thousand Dollars ($50,000.00), whichever is less, for opportunities to include or increase participation of CBE already involved in the Contract. The successful Bidder shall demonstrate that it makes good faith efforts to include CBE participation in Change Order work and shall report such efforts to the SBDD (or designee).

11. On-site reviews to monitor the successful Bidder's progress in achieving and maintaining contractual CBE obligations will be carried out by the ContractAdministrator in conjunction with the SBDD (or designee).

12. The successful Bidder agrees to enter into a formal contract with the CBE contractors which are listed on the Schedule of CBE Participation upon execution of the contract with the COUNTY.

13. The successful Bidder shall be required to submit monthly reports to the ContractAdministrator on a form which may be obtained at the SBDD (or designee) regarding compliance with CBE obligations. In addition, the successful Bidder must inform COUNTY immediately when a CBE Subcontractor is not able to perform. If the successful Bidder is unable to substitute the unavailable CBE with another certified CBE, the actual substitution of a non-CBE subcontractor may not occur until the SBDD (or designee) has verified the good faith efforts of the successful Bidder to substitute the unavailable CBE firm with another certified CBE firm.

14. Nothing herein shall be construed to require a Bidder to award a subcontract to aCBE firm if it is not the lowest responsive, responsible bid.

15. Nothing herein shalf be construed to indicate that a higher level of CBE involvement above the stated goal in a solicitation will give that Bidder the right of award over other Bidders who have met the CBE goal or fully justified that they had made all reasonable efforts to do so.

16. The SBDD of COUNTY maintains a directory of CBE firms which is available for use by Bidders.

17. Any Bidder on this Contract shall be prohibited from entering into any agreement with a CBE firm whereby the CBE firm cannot offer its services to other Bidders on this Project.

18. NOT USED.

19. DEFINITIONS AND CBE QUALIFICATIONS:

Applicable definitions and CBE qualifications shall be as provided by COUNTY ordinance and administrative regulations, as amended from time to time, and shallbe available through the SBDD.

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http:50,000.00

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CONTRACTOR might have under the Contract Documents including but not limited to, Article 24 hereof and any claim regarding latent defects.

26.4. Failure to reject any defective work or material shall not in any way prevent later rejection when such defect is discovered, or obligate COUNTY to final acceptance.

27. Taxes:

CONTRACTOR shall pay all applicable sales, consumer, use and other taxes required by law. CONTRACTOR is responsible for reviewing the pertinent statestatutes involving state taxes and complying with all requirements.

28. Subcontracts:

28. 1. Each subcontractor must possess certificates of competency and licenses required by law. CONTRACTOR shall have a continuing obligation to notifyCOUNTY and CONSULTANT of any change in subcontractors.

28.2. CONTRACTOR shall not employ any subcontractor against whom COUNTYor CONSULTANT may have a reasonable objection. CONTRACTOR shall not be required to employ any subcontractor against whom CONTRACTOR has a reasonable objection.

28.3. CONTRACTOR shall be fully responsible for all acts and omissions of its subcontractors and of persons directly or indirectly employed by itssubcontractors and of persons for whose acts any of them may be liable to the same extent that CONTRACTOR is responsible for the acts and omissions of persons directly employed by it. Nothing in the ContractDocuments shall create any contractual relationship between any subcontractor and COUNTY or any obligation on the part of COUNTY to pay or to see the payment of any monies due any subcontractor. COUNTY or CONSULTANT may furnish to any subcontractor evidence of amounts paid to CONTRACTOR on account of specific work performed.

28.4. CONTRACTOR agrees to bind specifically every subcontractor to theapplicable terms and conditions of the Contract Documents for the benefit of COUNTY.

28.5. CONTRACTOR shall perform the Work with its own organization, amounting to not less than 50 percent of the Contract Price.

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54.2.2 CONTRACTOR has committed to the CBE performance delineated on Exhibit 6, CBE Performance Commitment. CONTRACTOR shall, in performing services for this Project,incorporate by Exhibit 6 the names, addresses, scope of work, and dollar value of CBE participation on the Schedule of CBE Participation into CONTRACTOR's contracts. CONTRACTOR understands that each CBE firm utilized on the Project to meet the participation goals must be certified by the Broward County Small Business Development. CONTRACTOR agrees to enter into contracts with CBE subcontractors which are listed on theSchedule of CBE Participation upon execution of this Agreement and to provide copies of its contracts with such persons to the Contract Administrator and the Broward County Small Business Development Division. CONTRACTOR may not deviate from the CBE's delineated on Exhibit 6, CBE Performance Commitment, without the prior approval of the SBDD (or designee).

54.2.3 CONTRACTOR understands that it is the responsibility of the Contract Administrator and the Broward County Small BusinessDevelopment Division to monitor compliance with the CBE

· requirements. In that regard, CONTRACTOR agrees to furnish monthly reports in the form attached as Fonn 7, CBEParticipation Performance Report, to both the Contract Administrator and the Broward County Small Business Development Division on the progress of CBE participationcommencing with· the first payment application. All reports shall include the name and business address of each CBE firm solicited by CONTRACTOR to work as a subcontractor in thisAgreement and the responses received by CONTRACTOR to such solicitation; the name and business address of each CBE firm actually involved in this Agreement, adescription of the workperformed and/or product or service supplied by the CBE firms; the date and amount of each expenditure; the CBE status of any contractor performing any portion of this Agreement; and anyother information requested by COUNTY which may assist COUNTY in determining the CONTRACTOR's compliance with its contractual obligations, or may assist in the implementation andenforcement of the Act. The submission of the report required by this subparagraph shall be a condition of payment to CONTRACTOR.

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OIG 11-025

EXHIBIT 3

i'liUIIJUC ~J~t&l m!PAm'M~Nf

OM Not!.ll Un~l'!¥Dll\!9 • Sv118MOO •~~~~n. Flomla ~ •91*357~10• FP.X tM·357~

Deoomber 15, 2010

·To: DimeO Kimbrew, Cofwtrudaon M®nagement Spooi~Hst Puuchasing Dlvl~

Anthony J. r:aw:;;:~nisntiv@Manager Bl

Public Works Depart'ment

CSE Participation EwJuat!on

IBid Number: V0004105C1

UAZ 300, Water and Sewer lmprovemoots

The Public Worts Department EM!IuatGd ihe County Business Enterpooe (CBE) patti~ tor the following ·bld8 submitted for this project Tine lowest of efx b~ were I'U\.'iewOO, the results are ss foiiOIMJ: :

EswtiHshOO cae Ovemll goal ts 1~%..

CIBE 5.76%

CBE 8.2%

CBE ..LM

15.0%

• Contmctor'e Elld Amount= $6,448,292.00 • Proposed CBE Sub-Contract Amount= $967,243.80 • CBE Participation goal proposed: 15.0%

Min Con. Inc.. (Primt) Eilt® Contrador Supply, U . Green Emth Ninety and Sod. Bnc StmOOrd & Sons Trucking Corporation

cae CBE cee

12.5% 1.02%

..1a Tcml . 15.02%

Contmctcms Bid Amount= $6,841,712.00 Proposed CBE Sub-Connct Amount= $997,585.14 CBE Parti~paUon goai 15.02%•

D.".l!imlla• Cltp L8MIIlaJ•IIIIII8 ; (JI{!II'A!Ilf

Ei!aGunBIIlJI¥• Dale V.C.I-Iolnass • ~ www.biO\Yald.OJV

www.biO\Yald.OJVhttp:997,585.14http:967,243.80http:6,448,292.00

. BiMkn Comtrug;lfqn. Inc.. lfdmt) B&MLawn Service &Land8cs!ping E& NConstruction, Inc

CSE CBE

1J)7% 11.52%

Moore Walters &Ae•oclatea CBE ~ Total 15.01%

e Contractor's Bid Amount= $6,859,154.00 • Proposed CBE Sub-Contract Amount =$1 ,029;559.02 0 CBE Participation goal proposed: 15.01%

cg Ccmp§!,!lnee Cgmmmts

All submittals W'em deemed mmpllarnt \I!Jith too CBE Program rsquimmems.

http:029;559.02http:6,859,154.00

BP-r:o~/\IAP\0 SCHEDULE OF (CBE) PARTICIPATION a COUNTY (Submit this form with an executed Letter of Intent from each CBE firm listed in this form} ~~~

Bid/RU/RFP #: Y08641 05C1 J Project Location: Dania Beach I Date Form Submitted: November 10, 2010 I IProject Name: UAZ 308 Water & sewer improvements I Project Start Date: To be determined I

Prime Contractor: Giannetti Contracting Corporation \ Address: 6340 Sims Dr Sterling heights, Ml 48313 Contact Person: Ricky L Giannetti I Telephone#: (954) 972-8104 Fax #:_(954) 972-8108

Sub-contract AmountCBE Expiration Type of Work to beAddressCBE Subcontractor Phone (Agreed Price ($) ordate Performed Percentage (%)

954 783-6922 ~. '7 b 00/o1081 NW 12th Terr Excavation, roadway Stanford & Sons 7/30/2011 Pompano Beach, FL 33069 installation & grading

Miguel Lopez Jr. Inc 954 749-7234 Asphalt paving 12/24/2010 7711 NW 74th Ave C0.2..0 /o Miami, FL 33166

954 484-6766 Sod, trees, &B & M Lawn Service &Landscaping 10/17/2013 3230 NW 18th St. l ... OL./ 0 /o landscapingr-ort Lauderdale, FL 33311

Total CBIE Partlci}>ation Total Contract Amount ~ ) lf "8 iSl '29;1.. •fji:)

CBE Subcontractor Participation Percentage (Total amount allocated to CBEs divided by Total Contract Amoun!}

% \S The listing of a CBE shall constitute a representation by the bidder/responder to Broward County that such CBE has been contactad and properly apprised of the upcoming County project. Bidders/Responders are advised that the information contained herein is subject to verification by the Office of Economic and SmaH Business Development {OESBD) and that submission of said information is an assertion of its accuracy, per the requirements of the OESBD Program.

I certifv that the above in Signatur~ Date:

Vice President .\)I(.)L Apr;},_.,....~

NT MUST BE PROVIDED WITH THE SUBMITIAL AND SIGNED BY THE PERSON SIGNING THE SUBMITIA

11/10/2010

OESBD COMPLIANCE FORM 2009-SOP

------------------------------------------

Subscribed and sworn to before me this

LETTER OF INTENT To Utilize a Ccu.aJroty BWJsiJro4ll$!5 Enterprise (CIBE) Su!llccntii'B!Ctor/Subtons&nltant I

From (Name of Proposer/Bidder}: Giannetti Contracting Corporation i l

Firm Address: 6340 Sims Or Sterling Heights, Ml 46313 i I

\ In response to Broward County's RLI/Bid No. Y0864105C1 , ttle I

I

undersigned hereby agree to utilize the CBE firm listed below if awarded the contract. The underslgned further certify that the firm has been contacted .and properly apprised of the projectefl work asaignment(s) upon execution of the contract with Broward County.

Name of CBE Firm: Stanford & Sons

Address of CBE Firm: 2121 WOakland Park Blvd. Suite 7 Oakland Pari~'~""t:::N!!!J"i::>.~lo2~.D:L...t.42:~~~!:!.·...::..,...~-:z,:.·------

I 1

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B~:OWARD ·• COUNTY

Project Description: UAZ 306 Water & Sewer Improvements

(Signature of Owner or Author Rep. Prime}

corred.

Subscribed and swam to before me this tO

[lJ003/00311/l;~/2010 i'lED U: 57 l?.!l.F. 3056r. ~.642 MIGUEL WPll& JR, UJC. :~::j

I

II

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lETTER Of INTENT To Ulti~i:£® l'.lllCOQ.ili111lf f8.ll!ll®lll1loos Euut®rpl'isS (CIBlE) SulbctDntfad©rl$MibJ~@mtn8tamt

From (Name of Proposer/Bidder): Giannetti·-·c_o_nm:_ac_t_in_g_c_arp_o_ra_t_io_n----------

Firm Address: 6340 Sims Dr Starling Heights, Ml48313

Project IJ~crlpiion: UAZ 308 Water Q. Sewer lmprovemsnts

In response to. Broward County's RLI/Bid No. V0864105C1 , the undersigned hereby agree to utilize the .CBE firm listed below, If awarded the contract. The undeiTSigryed furth~r certify that the firm has been. contacted and properfy apprised of the projected work ass1gnm0nt(s) upon.executlon of the contract with Broward County.

Name of CBE Flllm: Miguel Lop~ Jr · ~-----------------------------------------

Address of CBE Firm: 7711 NW 741h Ave Miami, FL 33166

Expiration of CBE Certification: 12124121010 Projected CBE Work Asslgnmernt (description of work

assignment): A~phalt paving

Projected Percentage of Pli e's ContraCt Fees to ba AWarded to CBE:.-:-~.,--'?-_0_~----(Dollar Ami. or Percentage %)

I \-tO-lO

(Date)

Print Nama (owner or authorized Rep. Prime):~\ c._~ L G!-A......., r-:e:t!\

· i () · V FA!Fjfle.Q ·-""'

Subscribed and sworn to before me this ' da~ of ~e.J:\.~~bl[;;·.~igan

·! 1 · A/ ,;~ Countv o1· Macomb •'. ----(/.

.~.--------·r.-=.-.=~.~--

7171·, '-'"'p• 2'llf'-!

OIG 11-025

EXHIBIT 4

B ~RD COUNTY

LETTER OF INTENT To Utilize a County Business Enterprise (CBE) Subcontractor/Subconsultant

From (Name of Proposer/Bidder): ~I 0. v"\ 1"\.J(_ft 7 c~ ·f\ t re-

OIG 11-025

EXHIBIT 5

BF&NV,:nt. to b:.:;i:.:d~ al! !"t~':!sirm!'li. 1r; 1hq. cdg. oo:'::rc-·: 1.~t; (J.\r:":·.~·~~!"lt p3id tc ch~.!e to ~1;bsj

Total CBE Contract Amount $ $ 973,243.80 !Total CBE Paid to Date $ 390,122.55

Original Agreed amount to Sub

$67,490.00

$373,726.00

$532,034.94

Original Agreed Amount

Revised Agreed Amount (C/O's,

Amend.)

Revised Agreed Amount

%of Work Completed to .

Date

%of Work Completed to

Date

Ami. Paid ITotal Amount This Period Paid To Date

$10,871.841 $20,591.84

$369,530.711 $369,530.71

$0.001 $0.00

Ami. Paid This Period

Total Amount Pa\d To Date

Reason for Change

Comments

~

~

~ N .C>

DateApp~d

::;

w CD

i.'' ~

r-r-.f"~ :Z'::J> G':>·=:f -~~!:J

iij~S?·.£8

tnature, I attest that the information submil1ed for this Contract is, in fact, true and correct to the best of State of Florida, County of ":'\ owledge. ackn,pwledged befp{e me this I \!:. . day of )~'kee ~

l.,g \.At'~ (name ofperson acknowledging). (month),

NICHOLAS .J. APOSTOL· . Nota..Y·RabfiC~ of.

OIG 11-025

EXHIBIT 6

- ~ From: 11Chindiesel.com11

Date: Thu, 15 Dec 2011 16:04:07

To:

Subject: Fw: Verification ofPayments from GIANNETTI CONTRACTING CORP 15

Sent from Chino's mobile

From: [email protected]

Date: 15 Dec 2011 11:01:12-0500

To:

Cc:

Subject: Verification ofPayments from GIANNETTI CONTRACTING CORP 15

DATE: 12/14/2011

Certified Finn: CHIN DIESEL INC

Contract: Y0864105Cl- UAZ 308 BP 3

Prime Vendor: GIANNETTI CONTRACTING CORP

..

mailto:[email protected]:[email protected]:[email protected]:[email protected]:detroitdsl(a{aol.com

)ear Sir/Madam:

JIANNETTI CONTRACTING CORP reported to the Broward County Board of County Commissioners that

·our firm was a certified sub vendor for the above agreement or contract.

~he Prime vendor, GIANNETTI CONTRACTING CORP,reported that your finn was paid a

otal amount of$369,530.71 for the services rendered as of the report date of 12/14/2011.

tis your responsibility to verify that the information provided is accurate. To do so, you first need to activate

rour vendor registration in the Vendor Self Serve application. Instructions for activation can be found here:

1ttp://www.broward.org/Purchasing/Pages/Registration.aspx Once your Vendor Self Serve account is active,

?lease log into your Vendor Self Serve account and access the iContractsCentrallin1c ·

Within iContractsCentral you will be shown the payment information which needs to be verified.

Click the GREEN CHECK mark in the CORRECT column to confirm that the information

provided by the prime vendor is accurate.Click the RED X in the NOT CORRECT

column and provide corrected information to what was provided by the prime vendor.

Under Florida law, most e-mail messages to or from Bioward County efllployees or officials are public records, available to any person upon request, absent an exemption. Therefore, any e-mail message to or from the County, inclusive of e-mail addresses contained therein, may be subject to public disclosure.

http:of$369,530.71

OIG 11-025

EXHIBIT 7

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By s1gna:ure, I arfust!t\at lha jnforiJlaifon su!/'rili(te!i loi,this Contrac! .is, ,in.lact, Irue and CClrr...ect to tha 'best'p.f1· ··S.ta.. i~ 0 lo(.id: ~·.·C··.0.•. fl. , .· ·.· . ··...··• .·• ···.··.·.,··.~. ·. ·. .. . ..·. l ......'. ·.·.· ... · ..··.·..'.. f: .. U ...t.'y····.o·'··.··.•• ·.···..•...•. ···•·•. ·. '.·"·. ·

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t·. w:. ...· •. .. ·.··'·.le··.d ..··o ~" ~?, .(mon··· th).,my lmowredge. • ...;··.T···,·.h.·!_··J·..o•. .. go·i·n··.9.· •..' •..•.·.l·e·,·ff.· a.·.·.··s ..a,....c.k.,,"·.o·····w·.· ... '.ge···!.l··· be····...:re me thi~.·, .. '$ - . da.y.of· 0_,;:J~.~~c (Y;n ·~· )st.k.;~_!~11-r~·· .(oame orperson acmowtedgin~J.~···· .·· · , -:·_ -~ .·.Fr:esi~nt: '1131201?,..-:-; l~tt·kr o:~.,:reu-, ~-\ ~ t\) l- \ v - t Title ·o,.teJ \ Namw=- .,, '~-~. ·~-- .. v\~-PJ~J)· \ .;f-3.::-_) No~*~~~

i C.. J '--------···----·--.....1 ij I .. $i{Jf!afU~'tfNotal· . . ·•,:eou~ofMatomb.< , ·... · . · ....•.. · .. ~ . ""';~%~·~!.!·Or ro-e&~';flllt!Mbi'--~IJ!I',2ol8·

(Name otNolary, 'P'int~!t~r,typed) rdenllfiCall

OIG 11-025

EXHIBIT 8

LETTER OF INTENT To UtiHZ\1. a County Business Enterprise (CS~} Subcqntractqr!Subconsl!ltant

·'·-,-----------·--

Firm. ·A'frl'e·s·" 6340 Sims Dr., Stedihg H-.:!.~hts. M! 483~3 !•'··.·· ~v~·"'· .::J. . ~·------~--------......._.._,;....;,__. __·•.

"C"r.; ~ 1 ~'•5,.... iIn response to Bro"vard (;oqiJry·s RL.IfBid No.. I ''-'"" ..... ·~ ·----· thiil undersigned hef'eby agree to JJ\ill:::e th.e CBE hrm listed .below, if awarded the contract. The undersigned further c~nifY tho\ ~be firm h,as been co~,tactE~q and propt:rly apprised of the projeCted work assignl'nerH(s) t.!p

~~ ;- "'.

Zt-z.~ l ''1...

PUBLIC WORKS DEPARTMENT 115 S. Andrews Avenue • Suite A-550 • Fort Lauderdale, Florida 33301 • 954-357-6410 • FAX 954-357-6340

February 2, 2012

Giannetti Contracting Corporation 2660 N.W. 15th Court Suite 108 Pompano Beach, Fl. 33069

Subject: Project Number: 9061 UAZ 308 Water and Sewer Improvements

Nick Apostol,

Thank you for your letter requesting reduction of the work assigned to Chin Diesel, Inc. and reassigning it to Spearhead Development Group, Inc.

The Public Works Department evaluated the revised County Business Enterprise (CBE) participation for the above project that you submitted for approval.

Established CBE Overall goal is 15%.

Giannetti Contracting Corporation (Prime) Status Sub-Contract Percent Original Revised

Chin Diesel, Inc. CBE 5.76% 1.08% Kailas·corp. CBE 8.20% 8.20% B & M Lawn Service & Landscaping CBE 1.04% 1.04% Spearhead Development Group, Inc CBE 4.68%

Total 15.00% 15.00%

The above revised CBE adjustment does not change the original commitment of 15% and the realignment adds Spearhead Development Group, Inc. as a new CBE firm. The above is approved as submitted and should be reflected on your next Monthly Utilization Report submission.

If you have any questions please feel free to contact me at 954-357-6475.

/ .t.'l. . i// / 1 ·- --- •/j_,-;~~·~c_.l;t,t~}( ..•ze/r Anthoof:f. Fattizzi Administrative Manager II

cc: Freddy Castillo, OESBD

Broward County Board of County Commissioners · Sue Gunzburger ·Dale V.C. Holness • Kristin Jacobs· Chip LaMarca • Ilene Lieberman • Stacy Ritter • John E. Rcdstrom. Jr. ·Barbara Shariei • Lois Wexler

www.broward.org

http:www.broward.org

OIG 11-025

EXHIBIT 9

*ti+"*''IWe•ew4§$i:I.J:Jilli1i!i.fdt§S1Bii·libj!.jlii·ifj!fjj;hl.gi:!·*311J?!·!!iiljtt.jt1•!A#·IitrfJ·'·U·Nl!:tt•re

GIANNETTI CONTRACTING CORPORATION 6340 SIMS DRIVE

STEALING HEIGHTS. Ml ~6313 PH: (586) 268·2090

.FAX: (586) 268·7099

TCF NATlONAL BANK STERLING HEIGHTS, Mt 48313

74-7154f272•

1'fliitE 1 *S..,QiiMhRAMN ORO I~

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iZ3935190?

Date: March 13, 2012 Branch Banking and Trust Page 2 of2

Reference: 10000306152040:10000306153040:10000305175043

Date 20120111 Account Number Amount 36953071 CR-DR Serial Number 0000043286 Transaction Link 011425230885808411

OIG 11-025

EXHIBIT 10

ORDER OF ---,---------------------------' L ' • l I Three hundred sixty four thousand five hundred thirty & 711100 •••••••••••••

DOLLARS ___________________________________________________

ID ;:.::BRANCH BANKINQ AND TRUST COMPANY

1-800-BANK BBT BBT.eom

UAZ 308 FOR-------- .......~ ...

SPEARHEAD DEVELOPMENT GROUP INC 1152 1484-4 SW 54TH ST

MIRAMAR, FL 33027 January 13. ~ .,.,,_.,.,20

PAY To THE Stanford and Sons Trucking Corp. $ '3645307·1~

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3d953ZS

Date: March 13, 2012 Branch Banking and Trust Page 2 of4

Reference: 10000306152029:10000306153029:10000305175034

20120120 Account Number Date Amount 36453071 CR-DR Serial Number 0000001152 Transaction Link 010836230515366720

OIG 11-025

EXHIBIT 11

Ae:count Number

. 9865826038l\T TCF

·+·. 1 ~A1IONALB4NK

43524

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OIG 11-025

EXHIBIT 12

SPEARHEAD DEVELOPMENT GROUP INC 1203 14844 SW 54TH ST MIRAMAR, FL 3:1027 OHI3~c2631--Lt¥~/0;;...__20./2..__

f.OO().BANK BBT BBT.oom

FOR~~ .. ~.4ldJL u•OO L 20 ju•

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OIG 11-025

APPENDIX A

I LAW OFFICES • ' "'!. . .. ! ..... . . ~ ·~,-. ·_. .. .

rfORRE & SoBEL, P.A. 8211 \\ E~T BHMHD Rot LE\ \IW 1 StiTE 2.30 1 Pl.'~T\TIO\, FL :rn2 ~ BHm\ \ IW% 1.781.1 u 1 1 ~-'' \ 9.3 1. 16.3.2590 1 To1.r. FH EE soo. 7:n.1:wo

REPLY TO BROWARO OmCEDAVID S. TUPLER Dn iPI£1\@SIEGffilfOI.AW.COM

June 14, 20 12 Via Hand Delivery

Mr. John W. Scott, Inspector General Broward Office of the Inspector General One North Un iversity Drive, Suite Ill Plantation, FL 33324

Re: Stanford and Sons Truck ing, Inc. OIG Preliminary Report, Reference No. OIG I 1-025

Dear Mr. Scott:

Enclosed is Stanford and Sons Trucking, Inc. Response to the OIG Preliminary Report Reference No. OIG 11 -025. Please direct a ll future communications to the undersigned on behalf of Stanford and Sons Trucking, Inc.

Sincerely,

SIEGFRIED, RIVERA, LERN ER, DE LA TORRE & SOBEL, P.A.

UJS~ David S. Tupler

DST/tp

cc: Stanford & Sons Trucking

J

mailto:iPI�1\@SIEGffilfOI.AW.COM

LAW OFFICES SoBEL, P.A. I 821 1 \\ E~T BHO\\ \HD Bm LE\ \H D 1 sun: 250 1 Pu \T \TIO\ . FL :n:~2 1 BHm\ \IW 9.> 1.78 1 . 11 :~ 1 1 F\\ 95 1.165.2590 1 TOLL FHEE soo.1:n.1:wo

RESPONSE BY STANFORD AND SONS TRUCKING, INC.

TO THE OIG PRELIMINARY REPORT REF. NO. OIG 11-025

INTRODUCTION

The Office of the Inspector General claims that Stanford and Sons Trucking, Inc. (hereinafter referred to as ··stanford and Sons'·) attempted a scheme to misrepresent subcontractor partic ipation in the CBE Program. There is no convincing evidence that Stanford and Sons subverted or attempted to complete a scheme to misrepresent subcontractor participation in the CBE Program. Additionally, the Ordinance in question is not pursuant to law and unenforceable. The law in question is Broward County Ordinance Number 2009-40, which states in its preamble that this is known as the County Business Enterprise Act of 2009. .. establishing cumulative goal for County business enterprise partic ipation and County contracting opportunities; ...and provid ing that community disadvantage enterprise goals in pending contracts be met. Add itionally it is stated that the County is attempting to insure participation by small , Broward based firms in County contracting opportunities which benefits the health, safety, and welfare of County residents and ... insures a more level playing field in pursuit