Errata for DC Council member Cheh's Report

December 10, 2018

 

   AS DC Council member Charles Allen, chairman of the Committee on Judiciary and Public Safety, ushered through passage of his omnibus campaign finance reform bill, his mantra was ending pay-to-play “perception and reality.” To support his cause, he cited allegations against Fort Myer Construction Corporation made in a questionable 2017 report. That document was prepared by Ward 3’s Mary Cheh on the contracting process for the Buzzard Point soccer stadium and the St Elizabeths sports and entertainment arena.

 

Recently released findings and recommendations from the DC Office of the Inspector General (OIG) challenge the claim that Fort Myer had engaged in any so-called pay-to-play scheme. Rather, staffers at the Department of General Services (DGS) appear responsible for the mess that ensued, including violations of DC contracting and procurement laws. Instead of being advantaged by DGS’ actions, Fort Myer was greatly disadvantaged—not once, but twice.

 

Among other things, revealed in the OIG Oct. 2018 report: DGS contract files were incomplete and lacked explanations for important decisions and actions; [technical evaluation panel] documentation was incomplete and unsigned; and the rationale for several change orders and price modifications was not provided. Further, staffers manipulated the scoring system; the IG recommended Mayor Muriel Bowser introduce legislation to clarify that the total score should be 100 with 12 preference points being available to DC certified business enterprises. City Administrator Rashad Young said in the report such legislation isn’t needed, as the problem has been corrected.

 

The OIG’s document reads like errata for Cheh’s report.

 

“I don’t think there is the clarity I was hoping for,” Cheh told TBR when asked about her reaction to the OIG report.

 

As chair of the Committee on Transportation and the Environment, she has oversight of the DGS. She said she hopes she can work with the new DGS director to implement reform ideas she has begun developing for the agency.

 

However, Cheh regurgitated during her conversation with TBR some of the same false allegations that appeared in her report, despite information from the OIG that refuted many of those claims. “I think there is blame on both sides.”

 

Does that last bit sound familiar? Two-way-finger-pointing is becoming the modus operandi of politicians, who either can’t admit they were wrong or are unwilling to acknowledge folks they like and admire may have made mistakes.

 

Instead of being a “favored” contractor of the Bowser administration, as was portrayed by Cheh, the OIG has made the case that on multiple occasions Fort Myer was mishandled. In fact, it appears that DGS staffers were determined to deny the corporation either contract. The OIG didn’t assert there was contract steering away from Fort Myer, but after reading the report, it’s difficult not to reach that conclusion.

 

Unsurprisingly, the OIG’s report hasn’t been covered by the media. That’s probably because it’s not as sexy as perpetuating the myth of a significant pay-to-play culture in the District government that can only be reined in by campaign finance reform, a key platform of political progressives and their allies. While the city’s laws may very well need some tweaking, a decision to take such action shouldn’t require creation of false narratives or the deliberate attempt to taint a corporation’s reputation.

 

Allen did not reply to TBR’s request for a comment on the OIG’s report, particularly within the context of his committee throwing shade on Fort Myer.

 

"We appreciate the city's thorough investigation and welcome the report's recommendations to increase fairness, transparency, and consistency in the procurement process, " said a spokesperson for Fort Myer about the OIG’s report.

 

Ward 4 Council member Brandon Todd, chair of the Government Operations Committee, which oversees the Office of the Mayor, said that he appreciates the OIG’s recommendations to improve transparency and fairness in the contracting process, and looks forward to working with the executive to implement [them].” Todd was one the council members who voted against the release of Cheh’s report.

 

What’s troubling about all of this isn’t just the deliberate efforts to discredit one of the city’s oldest companies, but also the fact that the two people involved in violating local contracting laws received more than a half-million to settle claims that they were wrongfully terminated. The pay-outs were made before the OIG issued its report. Equally disturbing is that District taxpayers ended up paying millions above the bids that DGS accepted, underscoring the waste of public money that frequently occurs in the government.

 

          TBR’s readers may recall the dustup about the contracting spilled over into the public, following the resignation of then-DGS director Admiral Christopher Weaver; he claimed his departure was directly related to his refusal to fire Yinka Alao, director of contracting and procurement, and Carlos Sandoval, the agency’s general counsel. CA Young had demanded their terminations upon learning that the two had violated local law by changing the contracting scoring system, pushing it from 100 to 200, which diluted the power of the preference points given to DC-based certified business enterprises.

 

Cheh, apparently a Weaver fan, came to his defense. She made the charge that Bowser and her administration were pushing Fort Myer because the company was a large contributor to her campaign.

 

Simultaneously, a nonprofit organization advocating for campaign finance reform, released a report revealing that Fort Myer had made thousands of dollars in donations to the mayor’s campaigns, as if it had been a secret; the public can see the list of donors for any political candidate through the Office of Campaign Finance’s website. Moreover, like many local companies, Fort Myer has made numerous contributions to multiple elected officials. Further, it has made grants to a variety of nonprofit organizations, including my own group, which serves fatherless girls and women.

 

While Cheh was lambasting the administration and sullying Fort Myer, she seemed to ignore the voices of several business groups, including the DC Chamber of Commerce and the Metro DC Hispanic Contractors Association, that expressed grave concerns about the adverse consequences of DGS’ changing the scoring system.

 

Alao and Sandoval effectively shifted focus from them and onto Young and Bowser. Alao and Sandoval’s strategy, along with a threat of a lawsuit, won them cash settlements from the government. The former was paid $250,000 and the later received $350,000.)

 

Cheh held a series of closed-door hearings with representatives from DGS and others.  At the end of the probe, however, most of the members of her committee refused to sign-off on the release of a so-called investigative report. Ignoring their objections, Cheh publicly distributed the document, including to the press, under her name only--a distinction without a difference. TBR published an article about that action and her report, calling it a compilation of opinions, innuendos, circumstantial evidence, wild accusations and contradictory conclusions.

 

          The OIG’s report has provided much needed transparency and clarity. Truth be told, it also has provided an example of the fine art of steering a contract away from a legitimate winning bid.

Consider that the DGS determined Fort Myer was not a responsible company for the Buzzard Point project, although an evaluation panel had chosen it over W.M Schlosser Co., Inc, --the other bidder.  DGS staffers, Alao and Sandoval, “deemed Fort Myer nonresponsible” for Buzzard Point while almost simultaneously deeming it responsible for the St. Elizabeths, the OIG wrote. The information Fort Myer provided for both projects was “not materially different.”

 

In an April 11, 2016, memorandum the evaluation panel determined that Fort Myer was a responsible contractor; its proposal price was fair and reasonable, and it “should be awarded the Buzzard Point contract.” That memorandum was “invalidated” and “overturned” for reasons not documented in the contract file,” according to the OIG.

 

Interestingly, throughout the process Office of the Attorney General challenged how the DGS procurement staff and its general counsel were using various techniques to justify its decision not to award the Buzzard Point contract to Fort Myer. The OAG questioned the DGS’ use of a calculation methodology “not widely used in other solicitations,” to declare Fort Myer a moderate to high risk.

DGS used so called legal matters and litigation to strengthen its false case. According to the OIG, the OAG indicated Fort Myer had 19 pending legal matters, and a Dun & Bradstreet report identified 23 lawsuits.”  Actually, as the Office of Contracting and Procurement’s general counsel noted in testimony before Cheh’s committee, some of the 19 pending legal matters “were not actual lawsuits, but simply contracts over $1 million that required approval from the D.C. Council.” Moreover “one of the legal matters cited by DGS was resolved at least three years earlier.

 

“DGS’s D&F lacked the persuasiveness and clarity for a reasonable outside observer to support a non-responsible determination,” wrote the OIG.

 

Translation, Fort Myer was cheated out of the contract for Buzzard Point.

 

Having effectively stolen the Buzzard Point contract from Fort Myer, the DGS didn’t stop there. It ignored the technical panel’s decision in the St. Elizabeth’s Project and chose Gilbane Building Company (Gilbane), asserting its proposal of $6,630,003 to be more “advantageous” to the District.  Fort Myer had submitted a bid that was valued at $16,574,280; it filed a protest with the Contract Appeals Board (CAB) challenging the accuracy of Gilbane’s numbers. The CAB ruled, however, that DGS properly awarded the contract to Gilbane and dismissed Fort Myer’s protest.

 

          The case against that conclusion can be found in the numbers. Consider that Gilbane won the St. Elizabeth’s project because it provided the lowest bid at $6.6 million.

However, according to the OIG, in July 2016, the DGS “entered into an early release package (ERP) for a not to exceed (NTE) price of $10 million, “an amount higher than Gilbane’s original proposal.”

 

The OIG explained that the ERP partially paid the contract and anticipated “the negotiation of a definitized contract and [Guaranteed Maximum Price] . . . pursuant to which the Design-Builder will be authorized to proceed with certain preconstruction and construction services...” 

 

DGS’s Guaranteed Maximum Price Amendment was issued as a $37 million modification to the contract; that set the NTE amount at $48,000,000 and set a target GMP of $59,502,843, which was approved by the D.C. Council. 

 

Then, in July 2018, DGS sought approval to execute a proposed Modification No. 7. According to the OIG, that change “would establish a final GMP of $83,409,667--an increase of $23,906,824 to the target GMP. “A new competitive procurement might have better served the District than these large modifications,” wrote the OIG in its report.

 

When TBR asked Cheh why she voted to approve Modification No. 7, she replied well “You know how it is around here. They tell you these things must be approved, or the project will be delayed…Hurry, hurry.”

 

Cheh could have, however, as a matter of principal voted no. She didn’t. So maybe she is right: There is blame on both sides—on the executive side and the legislative side.

 

 

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