Category: City Auditor’s Report

Fight for Army Base Jobs Linked to Audit Issues

By J. Douglas Allen-Taylor

One of the key issues in Oakland City Auditor Courtney Ruby’s recent Non-Interference in Administrative Affairs Performance Audit involves a contract to demolish a structure known as Building 6 at the Oakland Army Base.

The contract was originally awarded by staff to Turner Construction of Oakland in 2009 following a competitive bid.

Courtney Ruby

Courtney Ruby

But according to The Oakland Post, the Turner contract was thrown out after intervention by Oakland developer Phil Tagami, who was negotiating to become the Master Developer of the Oakland Army Base project.“(We) must insist that the bid solicitation be rejected and the process significantly revised with our direct involvement before being re-started,” wrote Tagami in an email dated Oct. 15, 2009 to Walter Cohen, then director of Oakland’s Community and Economic Development Agency.

Following Tagami’s selection as Master Developer for the project, the Building 6 demolition contract was awarded to Top Grade Construction company of Livermore by city staff on a no-bid basis. Top Grade was reportedly Tagami’s choice for the job.

City staff has said that the dropping of the Turner contract and the reopening of the Building 6 demolition contract was required because the “scope” of the demolition changed following the contract award.

But asked by then-Councilmember Jane Brunner at a Council Community and Economic Development Committee meeting in mid-October of 2011 why the revised contract went out on a no-bid basis, Redevelopment Agency staff member Al Auletta admitted that “We were working on that on the spirit of working together with the Master Developer. We’ve been told and we now understand that this was an incorrect way to handle it.”

The no-bid Top Grade Building 6 demolition contract went to Council Rules Committee in the summer of 2011 to be scheduled for discussion at the CED Committee—the first step for possible full Council approval—but after a meeting between Reid and staff members of the city’s Community and Economic Development Agency (CEDA), the Top Grade contract was dropped by staff and never revived.

Instead, at that October 2011 CED meeting, Brooks and Reid introduced an ordinance to reopen the Building 6 contract to open bid, but with new rules that would mandate that only Oakland-based firms with an existing workforce that was 33 percent Oakland residents could bid, with the further stipulation that the winning firm would have to employ 50 percent Oakland residents to work on the actual Building 6 demolition.

That Oakland-firm/Oakland-hire Building 6 demolition contract ordinance was eventually passed by the full City Council in the fall of 2011 by unanimous vote. The contract went out to bid and three Oakland companies qualified—Turner Construction, JH Fitzmaurice, and Downrite Corporation—with staff eventually picking Downrite and the full Council approving.

The Non-Interference audit lists only two instances alleging that Councilmembers Reid and Brooks improperly interfered with city staff in the Building 6 demolition contract negotiations.

Phil Tagami

Phil Tagami

The first allegation is listed at an unspecified date or dates in the month of June, 2011, during the time the Council Rules Committee was putting off discussion of the Top Grade contract.

The audit alleges that Reid and Brooks told staff that the Top Grade contract would not clear Rules, and that Brooks said she was “negotiating a portion of the contract with Turner Construction.”

The second allegation is listed as taking place between July and September of 2011, after the Top Grade contract died, when Reid and Brooks are said to have directed city staff to work with Turner Construction “to establish a bid proposal for the project.”The audit produces no documents to support the allegations, stating only that they occurred “according to” the Redevelopment Agency staff handling the contract.

No improper interference in favor of Turner Construction by Brooks or Reid in the Building 6 contract was alleged in the audit after mid-September, when the two Councilmembers first introduced the proposed new Oakland-firm/Oakland-hire procedures for the Building 6 demolition project.

Instead, when the full Council first considered the proposed new procedures in November of 2011, Brooks introduced an amendment that would reopen the contract bidding to non-Oakland firms if no more than two Oakland firms qualified in the first round of bidding, thus making it more likely rather than less likely that Turner Construction would have sufficient competition in the bidding.

Courtesy of the Oakland Post, April 5, 2013 (www.postnewsgoup.com)

Community Challenges Ruby’s Audit

By Ken A. Epstein

Community members and local leaders showed up to speak out this week at the first City Council meeting since Auditor Courtney Ruby released a report targeting Councilmembers Desley Brooks and Larry for interfering with city staff.

Tom Chasm

Tom Chasm

While the main issues on the agenda concerned the city’s new budget, over 91 speakers had signed up for the Open Forum part of the meeting. Many of those who spoke challenged the methods and conclusions reached by Ruby in her March 21 audit.

“The auditor’s report as far as we are concerned was false. (There weren’t) any facts in that report,” said Len Turner, president of Turner Group Construction.

The audit charged that Reid and Brooks in 2011 interfered with city staff attempting to steer a contract worth at least $2 million to the Turner Group, a local minority-owned construction company.

“The auditor never gave us an opportunity to speak to those false accusations,” Turner said. The report talks about favoritism, he said, but “Turner Group… has only received two contracts from the city in the last five years, each equally less than $50,000.”

At the time the contract was being negotiated, he said, “We met with about everyone on the council about the Army Base project,” including Councilmember Pat Kernighan, who is currently council president.

“Hopefully, you have received our rebuttal from our attorney,” he said.

“I think we are getting the message about your feelings about the auditor’s report, said Kernighan, responding to Turner.

Derek Barrett

Derek Barrett

Derek Barrett, president of the National Association of Minority Contactors, Northern California chapter, said the audit was unfair.

“I’m awfully discouraged with that rush to judgment concerning one of our local minority contactors,” said Barrett, who is a painting contractor in Oakland.

“Turner Group Construction has been a solid contractor. We feel that there has been unfair treatment due to the fact that you didn’t even get their side of the story.”

“Councilmember Reid and Councilmember Brooks, we thank you for caring that there is fair participation with the local (small businesses),” he said.

City labor leader Dwight McElroy, who attended the council meeting with hundreds of members to demand raises, also defended the two council members.

Speaking of “Brother Reid and Sister Brooks, there’s a smell that’s emanating from the accusations that (are being made), and the smell is not coming from either one of them,” said McElroy, a city public works employee and Oakland chapter president of SEIU 1021.

“The city’s auditors report falls fall short of the truth,” said Tom chasm, Urban Recycling Solutions, alleging that issues of interference originated from Phil Tagami, master developer of the Army Base development project.

According to Chasm, his company was working to bring recycled dirt for Army Base cleanup at no cost to the city, and the staff was encouraging him.

“We were told in August (2012) that things changed,” he said, “that the developer had other plans to import to import fill, barging 2,800,00 tons of soil at a cost of $40 to $50 million.”

“You ought to investigate why the developer is not creating jobs and saving this town $50 million,” said Chasm.

Heather Ehmke challenged Kernighan for statements in the press that the City Council should develop a process for censuring

Heather Emhke

Heather Ehmke

council members.

“The audit report was reckless and unsupported by evidence if there was a crime, council members should know before this is released to the media. No evidence was quoted or cited in the report.

“There was no crime for anyone to be censured (about),” said Ehmke.

Courtesy of the Oakland Post, April 5, 2013 (www.postnewsgroup.com)

 

Fight for Army Base Jobs Linked to Audit Issues

By J. Douglas Allen-Taylor

One of the key issues in Oakland City Auditor Courtney Ruby’s recent Non-Interference in Administrative Affairs Performance Audit involves a contract to demolish a structure known as Building 6 at the Oakland Army Base.

The contract was originally awarded by staff to Turner Construction of Oakland in 2009 following a competitive bid.

Courtney Ruby

Courtney Ruby

But according to The Oakland Post, the Turner contract was thrown out after intervention by Oakland developer Phil Tagami, who was negotiating to become the Master Developer of the Oakland Army Base project.

“(We) must insist that the bid soliciation be rejected and the process significantly revised with our direct involvement before being re-started,” wrote Tagami in an email dated Oct. 15, 2009 to Walter Cohen, then director of Oakland’s Community and Economic Development Agency.

Following Tagami’s selection as Master Developer for the project, the Building 6 demolition contract was awarded to Top Grade Construction company of Livermore by city staff on a no-bid basis. Top Grade was reportedly Tagami’s choice for the job.

City staff has said that the dropping of the Turner contract and the reopening of the Building 6 demolition contract was required because the “scope” of the demolition changed following the contract award.

But asked by then-Councilmember Jane Brunner at a Council Community and Economic Development Committee meeting in mid-October of 2011 why the revised contract went out on a no-bid basis, Redevelopment Agency staff member Al Auletta admitted that “We were working on that on the spirit of working together with the Master Developer. We’ve been told and we now understand that this was an incorrect way to handle it.”

The no-bid Top Grade Building 6 demolition contract went to Council Rules Committee in the summer of 2011 to be scheduled for discussion at the CED Committee—the first step for possible full Council approval—but after a meeting between Reid and staff members of the city’s Community and Economic Development Agency (CEDA), the Top Grade contract was dropped by staff and never revived.

Instead, at that October 2011 CED meeting, Brooks and Reid introduced an ordinance to reopen the Building 6 contract to open bid, but with new rules that would mandate that only Oakland-based firms with an existing workforce that was 33 percent Oakland residents could bid, with the further stipulation that the winning firm would have to employ 50 percent Oakland residents to work on the actual Building 6 demolition.

That Oakland-firm/Oakland-hire Building 6 demolition contract ordinance was eventually passed by the full City Council in the fall of 2011 by unanimous vote. The contract went out to bid and three Oakland companies qualified—Turner Construction, JH Fitzmaurice, and Downrite Corporation—with staff eventually picking Downrite and the full Council approving.

Phil Tagami

Phil Tagami

The Non-Interference audit lists only two instances alleging that Councilmembers Reid and Brooks improperly interfered with city staff in the Building 6 demolition contract negotiations.

The first allegation is listed at an unspecified date or dates in the month of June, 2011, during the time the Council Rules Committee was putting off discussion of the Top Grade contract.

The audit alleges that Reid and Brooks told staff that the Top Grade contract would not clear Rules, and that Brooks said she was “negotiating a portion of the contract with Turner Construction.”

The second allegation is listed as taking place between July and September of 2011, after the Top Grade contract died, when Reid and Brooks are said to have directed city staff to work with Turner Construction “to establish a bid proposal for the project.”

The audit produces no documents to support the allegations, stating only that they occurred “according to” the Redevelopment Agency staff handling the contract.

No improper interference in favor of Turner Construction by Brooks or Reid in the Building 6 contract was alleged in the audit after mid-September, when the two Councilmembers first introduced the proposed new Oakland-firm/Oakland-hire procedures for the Building 6 demolition project.

Instead, when the full Council first considered the proposed new procedures in November of 2011,

Brooks introduced an amendment that would reopen the contract bidding to non-Oakland firms if no more than two Oakland firms qualified in the first round of bidding, thus making it more likely rather than less likely that Turner Construction would have sufficient competition in the bidding.

Courtesy of the Oakland Post, April 5, 2013 (www.postnewsgroup.com)

Ruby’s Flawed Audit Fails to Make Case

By Ken A. Epstein

If you read the city auditor’s new report like it’s the gospel truth, then Courtney Ruby’s 64-page “performance review “ cites damning evidence against two members of the Oakland City Council who are accused of interfering with city staff in awarding a multi-million dollar contract for part of the city’s Oakland Army Base development project.

But to a critical reader who expects an audit to back up its claims with evidence, the allegations against City Councilmembers Desley Brooks and Larry Reid quickly begin to fall apart.

According to Ruby, Reid and Brooks in 2011 interfered with city staff, attempting to steer a contact worth at least $2 million to Turner Construction, a local minority-owned construction company.

But the facts do not line up with Ruby’s account. The contract ultimately went out to bid, and the City Council, including Brooks and Reid, voted 7-0 (with Jane Brunner abstaining), June 19, 2012 to give the contract to the lowest bidder, Downrite Construction.

Strange behavior for public officials who were allegedly directing business to Turner Construction. Their vote does not square with Ruby’s statement: “Both the councilmembers involvement and interference in the contracting process appears to inappropriately favor Turner.”

Ruby’s Army Base allegations are a key part of her “Non-Interference in Administrative Affairs Performance Audit” for 2009 through mid-2012, released March 21, and widely reported uncritically in the media.

The audit never claims the two councilmembers stood to gain financially from the alleged behavior or tries to explain the reasons

Desley Brooks

Desley Brooks

for the councilmembers’ actions.

If one looks to the audit for reasons, they will not be found. Ruby did not ask Brooks and Reid for interviews until after the audit was completed. Nor did the auditor’s office talk to a representative of Turner Construction, which has earned a record in the city as a responsible builder that seeks to hire and train the formerly incarcerated.

Unlike most audit reports, Ruby’s findings lack evidence. Of course, she cannot identify whistleblowers, but she does not quote or paraphrase any of those she interviewed.

Her report says she reviewed telephone records and “all the councilmembers’ and all council aides´ email accounts for evidence of interference, including “tens of thousands of emails.”

None of this evidence was quoted or cited in the report.

The report said “27 hotline tips were received” and the auditors’ staff talked to  “more than 40 individuals, which included interviewing specific employees in areas likely to have instances of interference.”

This sounds like a lot, but these numbers are connected to multiple allegations spread over three years. .  How many tips did the auditor receive, and how many people did she talk to specifically about the Army Base contract?  She does not say.

Just as important as the councilmembers’ unexplained vote to the lowest bidder and lack of documented evidence, the auditor fails to go back to the beginning of the council discussion in 2009.

It’s hard to understand a story when you come in at the middle.

Ruby starts her timeline on May 20, 2011 and concludes it with the City Council vote on June 19, 2012.

But she leaves out the most important part of what happened, which goes back to August 2009 when city staff conducted open bidding to award the Oakland Army Base demolition and remediation (Building 6) project, which was worth at least $2 million but could go as high as $6 million.

After the bidding, John Monetta, real estate manager for the city, wrote in an Oct. 9, 2009 email, “The preliminary staff recommendation is to select PARC Services for the job,” PARC Services was a consortium of contractors that included Turner Construction and other local contractors.

When pressure was exerted to derail the process, it did not come from councilmembers but from Phil Tagami, who was negotiating to become master developer of the Army Base project, in an email dated Oct. 15, 2009. This was before he was awarded an Exclusive Negotiating Agreement on Jan. 22, 2010.

“(We) must insist that the bid solicitation be rejected and the process significantly revised with our direct involvement before being re-started,” Tagami said in the email to Walter Cohen, then director of Oakland’s Community and Economic Development Agency.

“In the spirit of working as a team we want to be supportive and timely in our responses to agency requests and hope our constant communication and meeting throughout the week was deemed responsive and helpful in identifying issues and pitfalls that justify an alternative course of action.”

Tagami said he wanted the contact to go to part of his team, Top Grade Construction, consistent with the philosophy: “One vision, one team, one project.”

City staff withdrew its recommendation and decided two years later to give the job to Top Grade, which is not a local company, without sending the contract out to public bid.

Ruby recognizes staff’s failures to publically bid the contract but called the actions a  “misinterpretation” of whether they could issue a sole source contact for the demolition work.

“Under the standard contracting process for construction contracts exceeding $50,000 the administration should have conducted a competitive bid process,” the audit said. “This occurred because, according to redevelopment, in an effort to speed up the remediated work on the Army Base, redevelopment attempted to contract with Top Grade Construction who was a contractor of the master developer of the project,” Phil Tagami.

It was at his point that the two councilmembers, according to the audit,  “directed staff to work with Turner to establish a bid proposal.”

The staff in June 2011 was attempting to give Top Grade two no-bid contracts, one for $2,676,750 and another for $2 million, which was opened-ended and could rise to as high as $4 million.

According to Brooks and Reid, they never pushed for Turner to receive the bid. Instead, they rejected the sole source agreement,

Larry Reid

Larry Reid

and in public meetings demanded the city stand by its open bidding rules, which include opportunities for local small businesses, they said.

In fact, they argue, Turner Construction has rarely done business with the City of Oakland.

The councilmembers say the attack by the auditor is not about them personally but against elected officials who are willing to back the community’s demands for local jobs on city-funded projects.

“We stood up for local hiring, and a ton of bricks dropped on us,” Reid said.

Courtesy of the Oakland Post, March 31, 2013 (www.postnewsgroup.com)

Ruby Responds to Post Questions

By Post Staff

In response to questions from the Post , City Auditor Courtney Ruby disputed criticisms raised by a Post reporter and community leaders on the quality of her “Performance Audit”  that targets interference with city staff by Councilmembers Desley Brooks and Larry Reid.

Ruby, speaking in a phone interview,  said that the two council members vote for the lowest bidder,  Downrite Construction, in

Courtney Rub

Courtney Ruby

June 2012 did not undermine the auditor’s finding that they were trying to steer business to Turner Group Construction.

“To interfere and coerce staff, a councilmember does have to be successful,” she said. “It is the act of coercing or interfering.”

She disagreed that the audit’s finding were undermined by the  failure to include evidence of wrongdoing.  None of the witnesses were quoted, and none of the 10,000 emails and many phone records reviewed were specifically cited.

“We go through government standards,” Ruby said. “Everything that is in the audit report has been independently reviewed and substantiated ” by an outside and independent reviewer.

She was asked why she did not go back to 2009 to examine Phil Tagami’s involvement in derailing an open bidding process and attempt to  give a sole source contract to Top Grade Construction , which was affiliated with Tagami’s team.

At that time, pressure on staff did not come from councilmembers but from Tagami, who was negotiating to become master developer of the Army Base project, in an email dated Oct. 15, 2009.

“(We) must insist that the bid solicitation be rejected and the process significantly revised with our direct involvement before being re-started,” Tagami said in the email to Walter Cohen, then director of Oakland’s Community and Economic Development Agency.

But Ruby’s focus was on interference by two council members – not what was happening or why.

“The object of the report was to look at interference,” she said. “Where we have documented findings is  related to interference.  It is not about the (Army Base) contract. This is not an audit of the (open bidding) process.”

According to the two council members, what  they were doing at the time was saying in public meetings that they would not vote for the  a no bid contract and were insistent on following the city’s open bidding policy.

“The instances identified in the audit are clear interference,” she said. “Whatever their  motivations and reasonings are, these are clearly instances  of interference.”

Courtesy of the Oakland Post, March 31, 2013 (www.postnewsgroup.com)