| Work Detail |
The bidding process for Detroit’s demolition program — the subject of an ongoing federal probe — has been outsourced to a third-party vendor via a lucrative contract that transfers the significant role of helping decide awards of future blight remediation work to an outside party.
The one-year contract, which maxes out at $710,000, was awarded to PriceWaterhouseCoopers in late June and went into effect July 1, marking a major change within the federally funded program, administered by the Detroit Land Bank Authority and Detroit Building Authority.
In total, three companies — PwC, RGB and Experis — submitted bids. PwCs bid amount was considerably higher than the other two: Experis submitted a $172,000 bid and RGBs was $99,000.
The Land Bank did not provide a requested copy of PwCs contract but Land Bank Community Affairs Director Rod Liggons said the company was selected because it provided the "most responsive proposal" and that the other two proposals were "deficient."
"This is not an apples to apples comparison," Liggons said. "...The PwC pricing may appear high, but their proposal was the most complete and comprehensive, addressing all aspects of the work being contracted. ... RGP and Experis are both firms operating at a smaller size/scope."
More: Detroits demolition program under fire for lack of diversity
More: Land Bank may ask state for help to increase diversity in contracts
Liggons said the bid was advertised on the Land Banks site and in the Legal News.
The outsourcing reduces the building authoritys oversight of the program. The authority, which serves as the Land Bank’s program manager and has largely overseen the bidding process until now, will shift its focus to supervising field operations, which includes inspecting demolition sites.
Under the contract, PwC will review at least 10 requests for proposals per month, which will include bids to tear down hundreds of homes across the city.
The company is also responsible for tabulating and ranking the best bids, as well as providing project management and administering the Land Banks annual qualifications process, which allows new companies to bid within the program.
The company will make recommendations on who should win the bids but the Land Bank will make the final decision.
Both the Land Bank and the building authority have been under immense scrutiny for more than two years after concerns were raised about soaring demolition costs and questionable bidding practices.
The Free Press reported in March that the FBI has reviewed a report that suggests bid-rigging and collusion among Detroit demolition officials and contractors. The documents were originally compiled by investigators hired by the state.
Contractors’ bids to tear down Detroit’s blighted homes were manipulated, according to the documents, but the mayors office downplayed the documents significance, indicating the concerns raised have been resolved with the state.
The FBI also was given information about several other red flags, including a $1.3-million demolition contract that an investigator believed was "greased" for Adamo Group to win. Adamo is the largest contractor within the program.
The program was suspended for two months in 2016 by the U.S. Department of the Treasury during a review that led to new procedures being put in place to evaluate bids and pay contractors.
SIGTARP, a federal watchdog agency, and the FBI have been reportedly conducting a criminal investigation into Detroit’s aggressive demolition program related to costs and payment to contractors for some time. No one has been charged.
When asked whether the federal probe or contractor complaints factored into the decision to outsource the bidding process, Land Bank Demolition Director Tammy Daniels said: “This change was made to establish the best operational structure to get blight down as quickly as possible for Detroiters while adhering to every rule and to allow the DBA to focus on the supervision of field operations.”
Overall, more than $258 million in federal Hardest Hit funds have been earmarked for the city since the Land Bank began its targeted blight remediation effort in 2014, when Mayor Mike Duggan came into office. It is one of the largest pools of federal dollars disbursed to Detroit in recent memory. The city only has until 2020 to spend the funds.
Although the outsourcing is a major shift for the program, Daniels said no additional approval was needed by the Detroit City Council.
Council also doesnt approve any of the federally funded demolition contracts.
“The DLBA as the grant recipient of HHF funds has the power to award contracts related to the administration of HHF,” Daniels said in an email, adding that council was notified of the change earlier this month.
As a result of the program change, two contracted DBA employees, Planning and Procurement Manager Lorna MacFarlane, who regularly deals with contractors, and Travis Albright, Planning & Procurement Specialist, will not have their contracts renewed at the end of August, Daniels confirmed.
MacFarlane was paid $85,000 a year and Albright was paid $16 an hour for 60 hours weekly, Daniels said.
The Free Press previously reported that contractors have complained to various city officials that it has been hard for smaller or new companies to win bids and compete with established firms within the program.
A June Free Press investigation revealed that only 26 percent of the program’s demolition work has gone to minority-owned companies and of that total just 16 percent has gone to black-owned firms, raising concerns in a city whose population is overwhelmingly black.
The program has been dominated by two large companies, Adamo Group and Homrich, which have received the bulk of the dollars thus far, earning more than $72 million combined.
Contractors were first notified of the pending change toward the end of June, according to emails obtained by the Free Press.
The move, Daniels said, was also made “with a goal of providing a greater level of stability, transparency, and to encourage the participation of a diverse group of contractors."
“PwC (brings) ... a wealth of knowledge, experience, and a stellar reputation to the DLBA and the Hardest Hit Fund Demolition Program,” she said.
Daniels said the process began in April in an effort to also "stabilize demolition costs."
Earlier this year, the Land Bank started to increase the volume of homes it put out for bid, anywhere from between 400 to 500 at a time, and Daniels said the entity decided an outside company could handle the workload better.
Daniels also attributed the switch to a March 6 decision from the Detroit Health Department, which imposed new protocols on the program to prevent lead poisoning.
The city announced in March that a preliminary report released by the health department said there could be a potential link between demolitions and elevated blood lead levels in children. In 2017, the Michigan Department of Health and Human Services released preliminary data that showed Detroit’s percentage of children with elevated blood lead levels increased from 7.5% in 2015 to 8.8% in 2016.
The health department at the time said it was seeking an external evaluation to further explore the potential public health impacts of demolitions in Detroit.
The potential link led the city to suspend demolitions, aside from emergency demolitions, in five Detroit ZIP codes through the end of September.
Some of the new protocols include requiring site supervisors and permit holders to be certified as Lead Safe through an EPA program, hiring at least three additional field supervisors in 2018 and requiring a field supervisor to be present at the time of a demolition.
Daniels said outsourcing the bidding process will allow the DBA to focus on supervising demolitions.
The Land Bank argues the move also will help increase transparency and streamline the program, but the shift is a pricey move to make.
Daniels said the switch was ultimately necessary to account for the "changing landscape of the program."
Katrease Stafford is the Detroit government watchdog reporter for the Free Press, covering city issues and the community. Contact Katrease Stafford: kstafford@freepress.com or 313-223-4759.
|
