Judge Cox Orders DWSD to Hire Chief Operating Officer, per Request of Root Cause Committee

Earlier today, at the request of the members of the Root Cause Committee, Judge Sean Cox entered an Order creating the position of Chief Operating Officer (COO) within the Detroit Water and Sewerage Department.

In a joint letter to the Court's Special Master, David Ottenwess, dated last Friday, March 23, 2012, the four members of the Root Cause Committee -- James Fausone, Charles Pugh, Gary Brown, and Mayor Dave Bing -- plus Director Sue McCormick, laid out the need for another position within DWSD, reporting to the Director, and urged Judge Cox to create the position of Chief Operating Officer:

The undersigned are the members of the Root Cause Committee originally appointed by the Hon. Sean F. Cox in his Order of September 9, 2011 with continued authorized responsibilities in his subsequent Order of November 4, 2011.

The Root Cause Committee has met recently to address a number of serious issues facing the DWSD which involve matters of finance and internal structural changes originally mandated by the Court in its November 4 Order. Specifically, we have determined, based on the current level of activity required to implement the November 4th Order by the Board and the Director, it is appropriate and imperative that the DWSD management structure include the position of a Chief Operating Officer (COO) reporting to the Director.

The COO should have significant experience in municipal law, municipal finance, and operations oversight which would include, human resources, procurement, finance and law. These are the four divisions DWSD must stand up to implement the November 4th Order and achieve short and long term compliance with environmental permits.

Judge Cox granted this request. Earlier today, the Court entered an Order directing Mayor Bing (or his designee) to hire a Chief Operating Officer / Compliance Officer at the DWSD. 

2012-03-26.Order by Judge Sean Cox Appointing Chief Operating Officer (COO) for DWSD

Comment: What about the Deputy Director?

Update (3/29): Mayor Bing's office announced yesterday that DWSD has hired Matthew Schenk to serve as the new Chief Operating Officer for the Department.  Mr. Schenk, 40, most recently served as Chief of Staff for Wayne County Executive Robert Ficano. According to the Free Press (here), Mr. Schenk will be paid $194,000 per year, just shy of the $195,000 per year paid to DWSD Director Sue McCormick.

Update (4/16): Matthew Schenk's hiring continues to raise questions. The Detroit News reports today (here) that both Oakland County Water Resources Commissioner, John McCulloch, and Macomb County Public Works Commissioner, Anthony Marracco, were unaware of the decision to hire Schenk.

For more about DWSD Update, click here.

Water Board Finds Insufficient Evidence to Suspend or Debar L. D'Agostini & Sons and DLZ Michigan (UPDATED)

On March 14, 2012, the Board of Water Commissioners received the report and recommendations of the Ad Hoc Hearing Committee, which conducted Responsible Vendor Hearings on March 7th and March 14th for L. D'Agostini & Sons, Inc.  and DLZ Michigan, Inc. The Hearing Committee reported that at the present time it did not have sufficient facts or other evidence to warrant taking any action against the two contractors.

In both cases, on a 5-1 vote, with Commissioner Forte abstaining both times,  the Board of Water Commissioners adopted the findings of the Hearing Committee.

A third contractor, Inland Waters Pollution Control, reportedly reached an agreement with the Water Board which will give it 45 days to negotiate a final settlement agreement or (presumably) participate in a Responsible Vendor Hearing.
 

The lone dissenting vote against adopting the recommendations of the Hearing Committee came from the Chairperson of the Water Board, James Fausone. Prior to casting his NO vote, twice, Chairperson Fausone read a statement outlining his concerns and specific reasons regarding each contractor. Both statements contained a common thread: integrity.

The standard that applies is tied to the City of Detroit purchasing ordinance and the burden is on the vendor to demonstrate it has a "satisfactory record of integrity, judgment or performance." The burden is not on this Board. The debarment policy picks up on this on page one --"The BOWC may determine that a vendor is not a responsible vendor if there is a finding that the vendor has failed to demonstrate a satisfactory record of integrity, judgment or performance."

Additionally I would note Section III, #14 of the Debarment policy provides in terms of causes that "any other conduct or activity by the vendor that has a harmful effect upon the integrity of the bidding, contracting or procurement processes of the DWSD or the public trust or confidence in the operations of DWSD" are grounds for debarment.

So I must ask -- what is integrity? The dictionary definition is simple: adherence to moral and ethical principals; soundness of moral character; honesty.

* * * 

The need for integrity in public construction process is paramount. The burden on a vendor is high.

Chairperson Fausone stated that in both cases he believed the vendor -- based on the criminal indictment against Kwame Kilpatrick, Bobby Ferguson and others, which he said could not have been brought without the federal prosecutor satisfying a probable cause standard -- had failed to meet its burden of proof under the Department's Suspension and Debarment Policy.

Commissioner Williams, a member of the Hearing Committee, also read a statement which indicated that he was confident that the Water Board could revisit these issues at a later time if additional (new) facts come out during any subsequent criminal prosecutions or civil actions.

Update (11/15/12): For anyone who is interested to see how a Responsible Vendor Hearing was conducted, one of the participants, L. D'Agostini & Sons, recently filed a transcript of their March 7, 2012 Hearing in the 15 Mile Sewer Collapse lawsuit pending in U.S. District Court. A copy of the transcript of the March 7, 2012 Responsible Vendor Hearing for L. D'Agostini & Sons can be read here. 

For more about DWSD Update, click here.

WS-682A, Imperial Construction Submits Low Bid on Water Main Repair Project

On March 15, 2012, Imperial Construction submitted the low bid on the project known as DWSD Contract WS-682A, "Repair of Water Main Systems: Various Pipe Sizes at Various Locations Throughout the City of Detroit."

1.  Imperial Construction  . . . . . . . .$4,395,965

2.  Blaze Contracting. . . . . . . . . . . . $4,496,705

3.  Willie McCormick & Assoc . . . . $4,582,008

4.  L. D'Agostini & Sons . . . . . . . . . .  $7,673,214

5.  Ric-Man Construction . . . . . . . $12,518,706

Contract WS-682A is an as-needed repair contract covering a minimum of 500 water main breaks per year. 

For more about DWSD Update, click here.

Wayne State Law School Symposium, Panel to Address Possible Privatization of DWSD

On Friday, March 23, 2012, the Wayne State University Law School, Journal of Law and Society will host a symposium entitled “Michigan In Transition: The Restructuring of Governance Through Privatization and Corporatization."

Of interest to readers of DWSD Update is Panel 2 of the Symposium, which is scheduled to begin at 2:30 p.m., and will discuss privatization of DWSD.

The second panel will address the possible privatization of Detroit's water and sewage system. Environmental consultant and former assistant director at the Detroit Water and Sewerage Department Jim Ridgway will focus on how the current system functions. Oakland County Water Resources Commissioner John McCulloch will present the suburban perspective on privatization. Shar Habibi of In the Public Interest will provide insight on competition, valuation and delivery under privatized systems. Alex Beauchamp of Food and Water Watch will contribute with his grassroots expertise of water privatization in Atlanta and Chicago.

The Symposium will be held at the WSU Law School, Spencer M. Partrich Auditorium, 471 West Palmer, Detroit, MI 48202.  The  event is free, but attendance limited to 200 people.

If you're interested, click here to register online or call WSU at 313-577-8032.

Additional Resources:

• Brown, "Water Privatization Can Help Detroit from Drowning in Debt," Michigan Privatization Report (Mackinac Center for Public Policy, 2001). 
• Wolfram, "Don't Waste Water Treatment Privatization Opportunities," Michigan Privatization Report (Mackinac Center for Public Policy, 2001).
• "The Fiscal Condition of the City of Detroit," Citizens Research Council, April, 2010, p. 60 [discussed here] 
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For more about DWSD Update, click here.

Board of Water Commissioners, Hearing Committee to Conduct Responsible Vendor Hearings

The Board of Water Commissioners has scheduled a Special Meeting on March 7, 2012 at 1:00 p.m. to authorize a Hearing Committee to review the status of three contractors as responsible vendors under the DWSD Suspension and Debarment Policy adopted on January 25, 2012.

According to the Agenda for the Special Meeting published earlier today (here), the following contractors are scheduled to participate in a responsible vendor hearing: 

• Inland Waters Pollution Control, Inc.
• DLZ Laboratories, Inc.
• L. D'Agostini and Sons, Inc. 

Based on statements made at prior Water Board meetings, tomorrow's Responsible Vendor Hearings will be open to the public.

The Hearing Committee will consist of Commissioners Thrower, Kenoyer and Williams.

The Board of Water Commissioners have also scheduled a Special Meeting on March 14, 2012 at 1:00 p.m. to receive, discuss and (presumably) act upon the recommendations of the Hearing Committee.

For more about DWSD Update, click here.