Contract conflict

It’s good to have friends in high places. It’s especially good if that friend is Detroit Mayor Kwame Kilpatrick and you hope to get a contract with the city’s Water and Sewerage Department.

Why “especially good,” you might ask? Because more than 25 years ago, after the city repeatedly failed to comply with sewage treatment laws, the federal government, in the form of U.S. Judge John Feikens, took control of the department through a consent decree. To assure the city played a role in decision-making, Feikens has made Detroit’s mayor the department’s “special administrator.” In that capacity, the mayor is directly answerable only to the court. Aced out of the deal is the Detroit City Council, which ended up losing its authority to approve contracts involving the Water and Sewerage Department (DWSD).

That appears to be a splendid setup for mayoral pal Bobby Ferguson. In the past 14 months, Ferguson Enterprises’ contract to replace a water main under Washington Boulevard in downtown Detroit has more than tripled in price.

Ferguson’s company originally won the right to replace 2,000 feet of water line with a bid of $821,475 in May 2004. Since then, the company has twice sought change orders increasing the amount the city is shelling out for the job, bringing the tab to $2.9 million.

At least that’s what City Council President Maryann Mahaffey says.

Horace Tinsley, a construction manager with Ferguson Enterprises, says the company is only a subcontractor on a larger project totaling $25 million. After hearing that, we checked back with Mahaffey, who insists that, while Ferguson’s company is a subcontractor on some other aspects of the project, this particular piece of the action involves only Ferguson. Subcontracts, Mahaffey says, never come before council (but that, as Auditor General Joe Harris previously pointed out, is a problem unto itself).

“City Council’s got a bug up they ass about Ferguson Enterprises that’s completely unwarranted,” Tinsley says.

He also says the company has gotten less work from the Kilpatrick administration than the Archer administration, and that as a result “we’re almost out of business.”

We almost laughed out loud hearing that, although we saw a similar claim being made in a Sunday story by Detroit News reporter David Josar.

Josar’s piece disclosed that DFT Security, a business group that reportedly includes Ferguson, was awarded a $21.3 million contract to perform security upgrades for DWSD, even though the department’s own records show DFT’s bid was neither the lowest nor the most qualified.

Council members can raise a stink, but are otherwise powerless to stop any DWSD deals it considers questionable — such as the change orders sought to replace a section of water main running under Washington Boulevard.

Why is a $2.1 million increase justified? A DWSD spokeswoman didn’t return phone calls from News Hits seeking an answer to that question, but a June 21 letter from DWSD director Victor Mercado to City Council says that the second increase was “based on the contractor quotation that was further negotiated to obtain a lower final price.”

Huh? If we read Mercado correctly, he’s saying the department is saving money by paying Ferguson more than originally agreed to. News Hits isn’t alone in finding that to be a curious bit of accounting.

It’s common practice, City Council President Maryann Mahaffey says, for a contractor to lowball a bid to get a job, then bump up the payout through change orders. Mahaffey says she’d like to know if that’s what happened in this instance.

Mahaffey and Councilmember Barbara-Rose Collins have both tagged change orders to the contract as questionable.

“We just want to see proof that this was a fair contract, that this wasn’t a sweetheart deal,” Mahaffey says. “Because it looks fishy.”