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| "I am an artist! We do not just 'arrest'. We watch them slowly eat themselves alive. This is history. Go get the cocktails & popcorn." |
But, hey, what do I know?
I know Donna Shalala might be going to Congress.
I know Donna Shalala created the Detroit Land Bank Authority with Perkins Coie for Bill Clinton.
And, I know Perkins Coie Sucks.
#perkinscoiesucks
Detroit Land Bank cancels millions in demo awards after bid blunder
The Detroit Land Bank Authority was forced to cancel more than $2.4 million in demolition awards earlier this month after it was discovered there was only one eligible bidder among a pool of firms — a violation of regulations that govern the program.
Agency officials admit errors were made during the bidding process, but dispute that their actions resulted in improper bids actually being awarded. Instead, the land bank claims, incomplete and "misleading" information was disseminated but quickly rescinded — after a Free Press investigation raised questions about the bidding.
The newspaper's inquiry also raises questions about whether a key change in the demolition bidding process — originally intended to broaden competition for the lucrative demolition contracts — has actually limited opportunities instead.
In its examination of demolition bids from earlier this summer, the Free Press found that the second largest contractor within the program — Homrich — was deemed the only qualified bidder among half the eight bid groups that were released on June 26. The federally funded program is required to have at least two qualified bidders in order to award contracts.
Homrich has performed more than $40 million in federal- and city-funded demolition work since 2014.
"When we started, we had a robust pool of candidates but as you score, people fall off, they no longer have capacity and the number of the eligible pool of candidates is reduced," said land bank Demolition Director Tammy Daniels in an interview last week. "So, unfortunately in this case, by the time we got to these groups at issue, there was only one eligible bidder."
According to bid tabulation sheets reviewed by the Free Press, Homrich was set to win 55 percent of the homes across the eight groups, or 126 of the 227 homes available for demolition. The company also was the highest bidder in almost every case, including an instance where the company's bid was a staggering $108,224 higher than the lowest bid received.
Homrich's average bid per structure in the packages was $19,518 — 37 percent higher than the average cost of $14,297 to tear down homes in the program.
"That’s the whole reason we did not award the four groups in question because we needed some competition," Daniels said. "There was no one else to compare his costs to."
Homrich did not immediately respond to requests for comment.
The bid tabulation sheets were signed by three DBA employees on Aug 2, as well as Detroit Building Authority Director Tyrone Clifton.
Despite Clifton's signature on the sheets approving Homrich as the bid winner, award information being posted on the agency website and emailed to contractors earlier this month, Daniels characterized the notifications as an error and said that the contracts were never officially awarded to the company, Homrich.
The bids in question were removed from the Detroit Land Bank's website last week shortly after the Free Press inquired about them.
"It’s not a notice of award, but we recognize that there could be you or anyone else who would look at that and mistakenly believe something that was not true," Daniels said.
In a series of emails between Daniels, DBA employee Tim Palazzolo and other officials on Aug. 16, provided to the Free Press by the land bank, Daniels ordered that the four groups be re-bid. Her email followed an initial one sent by Palazzolo the same day, asking for guidance on how to move forward with the bids.
"We had always intended to rebid them," Daniels said. "When we saw that this may have misled people, that it was not clear what our plan was, we immediately removed the information that may have been misconstrued and we have now posted information that we believe clearly indicates what our plan is."
But an Aug. 17 email obtained by the Free Press, sent to contractors by Planning and Procurement Manager Lorna MacFarlane, indicated the contracts in question were actually awarded.
Daniels contends the email was "misleading," but the language used in the email mirrors what has been consistently sent to contractors announcing bid awards in the past.
"The (email) title is wrong, the content is slightly misleading because we did not award work to all of those contractors," Daniels said about the email. "We only awarded work to four of those groups. If you look at that email between Tim Palazzolo and myself on the 16th, he had been formally notified that he was to pull and rebid those the day before. I can appreciate you read that ... and thought something that wasn’t the case."
The properties will be rebid in early September.
The bid mishap also calls into question whether a recent policy designed to increase competition within the program may be having the opposite effect.
The other companies were deemed ineligible for the June 26 bids under a new policy enacted by the land bank in April that calculates how much work a contractor gets based upon 50 percent of a company's bonding limit. The program's policy has changed multiple times within the past year.
After bidding on the four groups in question, Homrich had a remaining capacity of more than $20 million to bid on the work. The capacity of the other companies ranged from as low as $54,612 to $269,010.
In total, 12 companies are currently pre-qualified to bid in the program.
The limit essentially sets the amount of credit a surety company will provide to a contractor. Critics previously told the Free Press some contractors believe the new policy makes it harder for smaller companies to grow or compete with larger firms, which have much higher bonding limits.
For instance, Adamo Group, the largest company in the program has more than $105 million in total bonding capacity.
Daniels told the Free Press earlier this year that the land bank has "very large players in our program" and that if the policy were based on a company's full bonding amount, a company like Adamo "could low-bid every contract and win every contract."
Daniels said at the time she believed the new policy promoted diversity and inclusion and "was done to create a competitive bidding environment where one contractor could not monopolize all of the work.”
And last week, Daniels doubled down on it being the best policy in place.
"If we didn’t have that policy the numbers would be twice as large," Daniels said. "Homrich's would be $50 million, Adamo’s capacity would be $120 million. The other smaller contractors — if you doubled their maximum capacity — they would still be dwarfed by the bigger contractor."
After new requests for proposals, a handful of new group winners, totaling hundreds of homes, are expected to be announced soon.
When asked whether any other contractors, aside from Homrich, currently have the capacity to bid, Daniels said: "The reality is that none of our contractors' capacity is at zero. Everyone has some dollar amount of capacity."
"Once they get the houses down and it’s invoiced, their capacity is going to jump," Daniels said.
Contractors are currently being allowed to submit updated bonding letters to the land bank for consideration to increase their capacity, Daniels said.
While contractors have reached out to the Free Press about the policy, Daniels said she hasn't heard any complaints.
"They've asked why do you cut it in half and once I explain it to them, they get it," Daniels said. "The capacity policy is totally based on their ability. It's not based on their performance in (the federal Hardest Hit Funding program.) It’s their financial ability to get the houses down. We think it’s a fair gauge of their actual capacity to do the work."
Despite capacity concerns, Daniels said demolition work isn't slowing down in the city.
"Never in the history of the program have we released consistent demo packages every two weeks," she said. "We’ve released between 200 and 225 properties every two weeks since April 3 and we continue to do that. We have millions of dollars under contract with our contractors. I would say it has sped up precipitously."
The program, which is funded by HHF dollars, is required to use up the remainder of the funds by the end of 2020. Including contracts that have been awarded but have yet to be paid out, Daniels said there's about $55 million left.
Daniels said land bank officials "are very confident" that they'll use the remainder of the funds and aim to have the remainder of the dollars under contract by the first quarter of 2019.
"There's a sunset on the HHF program," Daniels said. "... But the administration is clear of the need to remove the blighted homes, so they're working feverishly to identify other dollars so we can continue these efforts. We feel like they are absolutely bearing fruit and that we are making a difference in the neighborhoods and we don’t want to leave our job undone."
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