-3-

Norway Electric Corp. v. Dep’t of Housing

Preservation and Development

OATH Index No. 203/06, mem. dec. (Nov. 28, 2005)

Petitioner, appealing revocation of prequalified vendor status, failed to demonstrate that agency’s actions were arbitrary or capricious, where it was undisputed that petitioner submitted fraudulent building permits.

______

NEW YORK CITY OFFICE OF

ADMINISTRATIVE TRIALS AND HEARINGS

In the Matter of

NORWAY ELECTRIC CORPORATION

Petitioner

- against -

DEPARTMENT OF HOUSING PRESERVATION

AND DEVELOPMENT

Respondent

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MEMORANDUM DECISION

KEVIN F. CASEY, Administrative Law Judge

Petitioner, Norway Electric Corporation, appeals from a determination made by respondent, the Department of Housing Preservation and Development, revoking its pre-qualified vendor status. The appeal is pursuant to section 324(b) of the New York City Charter, section 3-10(m)(5) of the rules of the Policy and Procurement Board (PPB), and section 2-01 of this tribunal’s rules.

The Department revoked petitioner’s pre-qualified vendor status on June 13, 2005. Petitioner filed a timely appeal. After requesting and receiving an extension of time to file, respondent submitted its answer on October 17, 2005.

For the reasons stated below, I find that petitioner has failed to meet its burden of demonstrating that the Department’s actions were arbitrary or capricious. Thus, the revocation is affirmed and the appeal is denied.


ANALYSIS

In 1997, petitioner was pre-qualified to perform emergency electrical repairs for the City of New York (Answer, at ¶ 24). To receive payments from respondent, petitioner submitted invoices and Department of Buildings (DOB) electrical permits for completed work.

On May 10, 2005, respondent suspended petitioner’s pre-qualified status. In a letter sent that date, respondent notified petitioner the suspension was based upon the discovery of irregularities in some of the DOB electrical permits submitted by petitioner (Answer, Ex. F).

On May 18, 2005, petitioner’s president, Joe Middleton, wrote to respondent and admitted that falsified DOB electrical permits had been submitted with invoices. Apologizing for the error, Mr. Middleton asserted that he was unaware of the irregularities and insisted that his office manager had accepted “full responsibility” for submitting the fraudulent permits (Answer, Ex. E).

By letter dated June 13, 2005, respondent notified petitioner that its prequalified status was immediately revoked because it had submitted falsified DOB electrical permits along with its invoices (Answer, Ex. D). Petitioner appealed that determination.

In its petition to reinstate the prequalified status, Mr. Middleton again asserted that his office manager was “solely responsible” for submitting the fraudulent permits; however, he acknowledged that, as president of Norway Electric Corp., he was responsible for all documentation and it was his duty to monitor the company’s business transactions (Petition).

The only issue on appeal is whether the agency’s decision to revoke petitioner’s prequalified status was “arbitrary and capricious.” 9 RCNY § 3-10(m); 48 RCNY § 2-06 (Lexis 2005); Kapadia v. Office of the Comptroller, OATH Index No. 788/04, mem. dec. at 4 (Jan. 5, 2004), Rod Knox Architect v. Dep’t of General Services, OATH Index No. 304/93, mem. dec. (Dec. 10, 1992). Petitioner has the burden of proving that respondent’s decision lacked a rational basis. Sullivan County Harness Racing Assoc., Inc. v. Glasser, 30 N.Y.2d 269, 277-278, 332 N.Y.S.2d 622, 627 (1972). Petitioner has not met that burden.

Under the PPB rules, prequalified vendor status may be revoked where new information “indicates that the supplier does not meet the established criteria for prequalification.” 9 RCNY § 3-10(l)(1). The criteria for prequalification include “business integrity” and compliance with “federal, State, and local laws, rules, licensing requirements, where applicable, and executive orders.” 9 RCNY § 3-10(d)(5)(7).

There is a reasonable basis to conclude that petitioner does not satisfy the established criteria for prequalification. Petitioner admitted that it submitted falsified DOB electrical permits. The company president’s lack of knowledge concerning the office manager’s wrongdoing does not change the analysis. See ABCO Exterminating Corp. v. Dep’t of Housing Preservation & Development, OATH Index No. 1447/99, mem. dec. at 5 (Apr. 30, 1999) (“belated and self-serving shifting of blame to a single employee" and failure to address larger issue of lack of supervision of employee who would routinely forge signatures provided a rational basis for the agency decision); Deluxe Marketing Enterprises, Ltd. v. Dep’t of Housing Preservation & Development, OATH Index No. 1136/00, mem. dec. at 10 (Apr. 18, 2000) (despite vendor’s twelve-year record of performance and relatively small amount of overcharge, it was not arbitrary or capricious to revoke prequalified status).

Based upon the evidence presented, petitioner has failed to meet its burden of proving that respondent’s decision was arbitrary or capricious. Thus, respondent’s revocation action is affirmed and the appeal is denied.

Kevin F. Casey

Administrative Law Judge

November 28, 2005

APPEARANCES:

JOE MIDDLETON

Petitioner, Pro Se

MICHAEL A. CARDOZO, ESQ.

Attorney for Respondent

BY: CESAR PEREIRA, ESQ.