New case raises old criticisms of the way Augusta's Procurement Department awards city contracts

As the trade, exhibit and event center begins to take shape on Reynolds Street, add John Bailey's name to the list of business owners fed up with Augusta's methods of awarding contracts.

Bailey, the owner of a North Augusta land surveying company, placed a bid in 2009 to do topographic and utility mapping for the $38 million project. It was rejected by Augusta's Procurement Department over a clerical error.

The bid was deemed noncompliant because the company accidentally wrote the wrong code on a line on an affidavit. The digits in question were his surveying company's E-verify account number, part of a federal Internet program that verifies employees' eligibility to work in the U.S.

That he lost the bid over something he said he could have easily corrected through a telephone call bothers him, but what bugs Bailey most, he says, is that a competitor who did the same thing was treated differently.

Documents filed in a pending federal court case show that the winning bidder, Charlotte, N.C.-based W.K. Dickson, also had an E-verify number wrong on a form for its subcontractor, Augusta Blueprint, a minority-owned company. In that case, though, the department took the initiative to fix the error itself and mail the company a corrected form.

"We have acquired the valid information for this form from your subcontractor," city Procurement Director Geri Sams wrote in January to Dickson branch manager William Wingate. "Please replace the form attached in your files for the Subcontractor Affidavit for Augusta Blueprint."

Bailey said he never gets treated that way when he competes for work in North Augusta, Aiken or Aiken County.

"When you throw in the fact that they're not treating everybody the same, it almost sounds criminal," he said.

Sticky situations

What happened on the TEE center bid effectively represents many of the sticky issues surrounding the Procurement Department, which has been criticized for appearing to have a rigged bidding system and sued over allegations of discriminatory practices.

This latest case has become more ammunition for plaintiff's attorney Robert Mullins, who is seeking punitive damages in Thompson Building Wrecking Co.'s pending contempt action and is piling on examples of inconsistencies in a stack of federal court filings.

The TEE center incident is the most recent example of the department's unequal -- and sometimes inconsistent -- handling of mistakes.

For example, Virginia-based Seabury Aviation Planning won a contract for an air service consulting position in 2009, with the business license requirement waived because the other bidder didn't provide one, either, court documents show.

Arizona-based Head Penn Racquet Sports won a bid to provide tennis balls that same year, and because no other bidder provided license information, the requirement was overlooked.

Though Augusta Blueprint had its incorrect E-verify number corrected by Procurement, the department cited a subcontractor's omission of the number as a reason to reject PM&A Consulting Engineers' 2009 bid for construction management and field engineering services. Likewise, it was a reason to disqualify Avfuel Corp. in a 2008 bid for fuel supply services at Augusta Regional Airport.

Ronlyn Corp. won a concessions contract in 2009 despite having no E-verify number on both contractor and subcontractor affidavits.

Though not commenting specifically on any situation in Augusta, other procurement professionals offered less-stringent ways of handling bid errors than the way the city has handled some.

Fulton County (Ga.) Purchasing and Contract Compliance Director Cecil Moore said most jurisdictions have the right to waive minor errors.

For example, in the case of an incorrect E-verify number -- something required to be submitted by state law -- he would probably let a vendor correct it. He said there is no legal reason why a contractor and a subcontractor would have to be treated differently over that.

"Some jurisdictions have their own idiosyncrasies," Moore said. "I'm not saying what they did was wrong. Like in England, they drive on the left side of the road. You still get where you're going."

Cobb County (Ga.) Interim Purchasing Director Mark Kohntopp also said that a missing or incorrect E-verify number wouldn't be a deal-breaker.

Minority policies

Depositions have begun in the Thompson case, which could have taxpayers on the hook for hundreds of thousands of dollars in fines if Procurement has continued giving preference to minority bidders, ignoring a federal judge's 2007 order to the contrary.

Though the department's disparate handling of the same mistake in the TEE center bid has some crying foul, the city has a ready explanation that involves the complexities of state and local purchasing regulations.

"This issue has come up before," General Counsel Andrew Mackenzie said.

"There's a big difference between a prime contractor and a subcontractor. It may look like apples and apples, but it's really apples and oranges."

Still, city commissioners and the Law Department are hammering out a revision to the procurement code, which they say should keep the city in line with the federal judge's mandate against using race in deciding on whom to hire.

The federal ruling arose out of a 2006 lawsuit by Thompson and three other companies challenging the city's Disadvantaged Business Enterprise program, with Thompson suing first after its bid to demolish the Telfair Street candy factory was rejected over a technicality.

U.S. District Judge B. Avant Edenfield, reasoning that the program was based on old data from a 1994 disparity study, ruled it unconstitutional and forbade Augusta from using any language in bid solicitation materials alluding to race- or gender-based criteria, or from favoring bids on those grounds.

The commission reacted by adopting a "small business opportunity" ordinance, making it the DBE coordinator's job to help small businesses in the procurement process, not minority businesses explicitly. The city hired New York-based NERA Economic Consulting to devise a new disparity study, which again showed that businesses owned by white men are far more likely to submit winning bids in Augusta.

"A good outcome would be that you don't need a race- and gender-conscious program," Mackenzie said.

Thompson alleges, however, that it never really ended. Mullins said the city is looking at more than 200 violations.

Mackenzie concedes questionable language has shown up inadvertently in some bid solicitations but not as many as Mullins claims. The city contends it is in "substantial compliance" with the order.

The city has requested a modification of the 2007 order, believing its mistake was making the language too broad and when the city uses federal funds to pay for a project, there are built-in DBE and minority business enterprise requirements that make their way into bid documents.

The proposed changes to the procurement ordinance will fix that, City Administrator Fred Russell and MacKenzie recently told a commission subcommittee.

As for Thompson's insistence that Procurement uses technical errors to selectively knock out white male bidders, U.S. District Court Judge J. Randal Hall tossed out the businessmen's lawsuit. Legally, a government's action could only be viewed as a possible constitutional violation if the action is a legislative one, not administrative. Procurement is an administrative function.

A change in code

When procurement decisions are appealed, city commissioners uphold them. Commissioner Jerry Brigham said it is because attorneys have advised them that to do otherwise would jeopardize pending litigation.

Members of the panel differ on what should be done about procurement, if anything. Brigham said a code revision, which would require a city charter amendment, is "a step in the right direction."

Commissioner Joe Bowles said he is concerned, but "until we lose lawsuits, I would have to say that the practices of the Procurement Department are standard for the industry."

Commissioner Joe Jackson said he has tried unsuccessfully to get six votes to privatize the department, and he wishes there were six votes to fire Sams.

Like Brigham, Commissioner Bill Lockett said a new procurement code could help iron out some of the city's perceived purchasing inconsistencies.

"I think the intent has always been to do the right thing," Lockett said. "But I think it's obvious that a lot of the lawsuits filed against the department were frivolous."

Mackenzie said the city is trying to reach out to local businesses. "We're doing the best we can to make the process easier, and to educate people," he said.

Sams, who has been purchasing director since 1996, declined an interview request for this article. But at a recent open meeting with business owners in commission chambers, she encouraged more of them to seek city work.

She and her staff went over the basics of how to find out what goods and services are being sought and the importance of deadlines and mandatory guidelines. Sams also pointed out to business owners that the mandatory forms bidders must complete have been reduced from six or more to three.

"We feel your pain," she told one business owner who expressed frustration over paperwork. "There are less hoops now."

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