Contractors Pulled Injunctions After Red Pump Elementary School Was Cancelled

Contractors claiming that the bidding process for Red Pump Elementary School was handled improperly lodged formal protests with Harford County Public Schools over contracts worth almost half the value of the base cost to build the school and planned to object at the December 15, 2008 school board meeting where $23 million in construction contracts were expected to be awarded.

At least two of the contractors also planned to seek an injunction against HCPS, but withdrew their plans after Red Pump was scuttled on December 8th, according to documents obtained by The Dagger under a Maryland Public Information Act request. The documents also raise questions about the school board’s oversight of certain aspects of the bidding and award process.

At least six contractors protested the bidding for Red Pump, four of whom filed formal Bid Protests through legal counsel. Each of the four contractors had been identified by HCPS as the apparent low bidder on contracts for the site work, carpentry, drywall and electrical work, respectively. But they each lost their status when HCPS later decided to waive the Affidavit of Qualification to Bid (AQB) in order to consider lower bids from their competitors. The protests could have been sour grapes over lost contracts. But the contractors’ attorneys presented remarkably similar descriptions of the bid opening and some argued that HCPS was wrongly planning to award contracts to competitors whose bids were deemed non-responsive and whose bid amounts were not disclosed at the bid opening as required by the school system’s Invitation to Bid. The problem with that practice was outlined by one attorney from the Baltimore firm of Goldberg, Pike & Besche, in a letter to HCPS dated November 19th.

The names of the contractors involved have been redacted:

Unfortunately, xxxxx Inc.’s bid was not read at the public opening as required by the Invitation to Bid. The County’s failure to read the xxxxx, Inc. bid at opening was not a minor irregularity or an informality. Indeed, none of the parties present were advised as to any of the particulars of the xxxxx bid. It is inconceivable that the County believes that it can award a contract to an entity whose bid was not read at the public bid opening.

The outcome of the contractors’ protests is unclear because the school was cancelled one week before the contract awards were to be granted. But a letter from an attorney at Coon & Cole, who represented two contractors, makes it clear where his clients’ protests were headed. The letter is dated two days after the school board cancelled Red Pump and it is addressed to School Board Counsel Patrick Spicer:

Based upon your assurances that the project is being withdrawn and will not be an agenda topic this Monday, neither xxxxx nor xxxxx will plan to file for an immediate, temporary injunction nor attend the Board’s December 15th meeting to address this issue.

Perhaps of greater concern is the discrepancy between the way the former School Board President Patrick Hess said the decision to waive the AQB was handled and what the records show school officials actually did at the time, raising questions as to the board’s oversight of the process.

Hess told The Dagger that he had asked for the AQB waivers to be granted after receiving a phone call from a contractor who alerted him to substantial cost savings if HCPS would agree to accept the AQB after the fact from bidders who failed to produce them the day of the bid opening. Hess said the affidavits should be accepted, but out of “fairness” the affected contracts were being done over from scratch, by canceling all bids and re-bidding the work, rather than granting waivers retroactively. But the record shows that HCPS did just the opposite.

On November 17, 2008, letters from HCPS were sent by Assistant Superintendent for Operations Cornell Brown to several contractors who had been previously been notified that they were the apparent low bidder for their respective construction packages. The letters explained that a subsequent decision to waive the AQB meant that HCPS had “ceased considering” their bid. The letters go on to say that the AQB “has been determined by Harford County Public Schools counsel to be a minor irregularity which can be waived.” and make no mention of a cancellation or re-bid. Nor do the HCPS files provided to The Dagger contain any other letters announcing a cancellation and re-bid of the affected contracts. Also on November 17th, a second set of letters went from HCPS to another group of contractors with the happy news that their failure to present the AQB on the day of the bid opening had been waived, meaning they were now deemed the apparent low bidder for their respective contracts.

The existence of the letters raise questions as to why the school board president said the waivers were handled one way, when school officials did another. Was there a problem with communication, oversight, or both?

Pat Hess, who resigned from the school board in July, rightly defended the decision to grant the AQB waivers because doing so saved taxpayer money. Why it took a phone call from an exasperated contractor to tell a board member that the bid process caused HCPS to overpay for construction contracts is a question for another day. But any change made to the process in midstream and enforced retroactively was going to create winners and losers. When combined with the failure to announce the bid amounts for bidders labeled non-responsive at the bid opening, the actions of HCPS bolstered the argument of the losers that the process had been unfair. All of which resulted in legal challenges that could have eaten away at any cost savings on Red Pump, not to mention delaying relief to the overcrowded elementary schools in the area.

Yet another attorney made the following argument against the way HCPS handled entire process:

By “waiving” both the qualification and the public reading of bids, HCPS, in effect, created a parallel bid process that lacks transparency and procedural safeguards. In addition, by accepting an unqualified and unread bid, HCPS had changed the rules of the game after the game was concluded, resulting in a loss to xxxxx, Inc., which reasonably expected HCPS to follow its own bid procedures.

Assistant Superintendent for Operations Joe Licata has said that protests are common on construction projects and that HCPS was confident that they could have withstood any legal challenges over Red Pump. Other professionals in the field of public procurement contacted by The Dagger agreed that, while contractors look for any weakness in the bid process to support their claims, the courts would look to see if a particular glitch gave a material advantage to one contractor over another.

But all of the professionals also said that what has been alleged at Red Pump is not standard practice elsewhere and some said that avoiding even the appearance of impropriety was reason enough to clean up the school system’s procedures. Scott Stegall who is in charge of planning and construction for the 66,000-student Seminole County, FL public school system, said that it was “good professional practice” to announce all bid amounts out loud at a bid opening without any evaluation as to the responsiveness of the bids at that time. Michele Paul, a Purchasing Agent in the Office of Procurement at Montgomery College in Maryland agreed, saying her agency reads all bids out loud and also never writes on bid documents at bid openings. One contractor had told The Dagger that a HCPS official wrote on bid documents at the bid opening for Red Pump and at a bid opening for another HCPS project, in order to tally the bid amounts for some contractors who had neglected to do so. The contractor spoke on the condition of anonymity because he plans to bid on future projects.

Ms. Paul also said it was important to have “best practices” in place, so as not to give even the appearance of mishandling bids. Tina Borger, a director with the National Institute of Governmental Purchasing stressed the need to be consistent in bid openings to avoid the appearance of impropriety, whatever practices are used. None of the professionals said they thought the actions of HCPS were illegal, but some said that they could open the school system up to potential problems.

In other words, why invite trouble if can be avoided?

Second Bid Opening for Red Pump Elementary

Red Pump was cancelled last December, but put back on track this May when it became clear that another school at Campus Hills would not be forward funded by the Harford County Council. The bid opening for the revived project was held on September 1, 2009.

The contractor who had told The Dagger that the first bid opening was “the worst I’ve ever seen”, said that the second time around “[HCPS] did everything right.” He told The Dagger that all bids were opened properly at the second bid opening, all bids were read out loud and without evaluation, and that school officials did not write on any bid documents. The contractor also said that HCPS announced that all of the bids would be reviewed and low bidders would be notified at a later date, which the contractor said was in line with practices in other Maryland counties.

Asked to what he attributed the change in the bid opening process, the contractor said that he thought it was a combination of protests from contractors and the public scrutiny brought about in part through coverage on The Dagger. He said “If everybody clams up, nothing gets done”.

The contractor also said he believed that HCPS had intended to bid the school properly the first time around but said they used “bad practice” that could have allowed for favoritism and a waste of taxpayer money.

Conclusion

Whether or not Red Pump was cancelled expressly to stave off protests and legal action, canceling the school undoubtedly avoided these problems. And even if they were not the reason the school was cancelled the first time, the potential cost and delays arising from the bid protests should have at least been a factor in the school board’s decisions about the future of the school. But the lack of disclosure in the school board’s public and sometimes heated debate with the Harford County Council over the fate of Red Pump raises questions as to what board members knew, what oversight role they played and finally, what has been done to see that the Red Pump experience is not repeated.

As for future projects, whatever bid process HCPS plans to use, be it the one from the first Red Pump bid opening or the second, the most pressing question remains: Will the process used to award millions of dollars in construction contracts be consistent and fair, and will it be designed to ensure that the best, low cost contractors are building Harford County schools?