Inland Waters Settle Claims and Pending Litigation with Detroit, Cleared to Bid New Work (UPDATED)

Late Wednesday [11/28], the Detroit Water and Sewerage Department announced in a press release (here), that it had agreed to settle all pending claims and litigation against Inland Waters Pollution Control, Inland Management, Inc., and Inland Pipe Rehabilitation, LLC for $4.5 million. 

Inland, in a separate statement released on November 27th, reported that the $4.5 settlement with the Department resolved claims that were in excess of $380 million. 

Inland Waters, Inland Management, and Inland Pipe Rehabilitation were among 13 contractors originally suspended by the Board of Water Commissioners on December 21, 2011. The Board reversed itself three weeks later on January 11, 2012, and lifted the suspension on 5 of the 13 contractors, including Inland Waters Pollution Control, Inc. 

Inland Waters is still one of over three dozen Defendants in a federal lawsuit filed on July 18, 2011 by the Macomb Interceptor Drain Drainage District that remains pending. The allegations in that lawsuit focus on the cost of repairing a sewer line that collapsed in 2004.   However, several recent decisions in that case have gone against Macomb, and its questionable now whether the Drainage District will be able to continue its lawsuit against Inland Waters and the other 40 contractors in that case.  

Comment: I'm not familiar with all of the claims made by the City of Detroit in the federal litigation against Inland Waters, but if the City's claims were on the order of $380 million (a number that seems very high, but probably includes alleged treble (3x) damages), Inland's $4.5 million settlement was a pretty good deal. Maybe even a great deal. The settlement amount was less than  $0.02 on the dollar! And, even better, Inland has been declared to be a Responsible Vendor, cleared just in time to bid on two new sewer repair contracts the Department is planning to advertise for bids in December, Contracts DWS-886, and DWS-887. 

What do you think about the terms of Inland's settlement? Was this a good deal for DWSD?

Update (1/7/13): The Department is now planning to advertise four (4) new sewer repair contracts during Q1 of 2013 -- DWS-886, DWS-887, DWS-889, and DWS-890. 

Update (2/25/13): The Inland Waters settlement is featured in Crain's Detroit Business (here) as one of the biggest legal settlements of 2012. 

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.

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. 

Detroit Water Board Adopts Suspension and Debarment Policy, Clarifies Earlier Actions (UPDATED)

The Detroit Board of Water Commissioners today approved a resolution rescinding ab initio the suspension resolution it adopted on December 21, 2011 and amended its January 11, 2012 resolution, which lifted suspensions as to 5 contractors, to cover all contractors originally suspended on December 21, 2011. The Board then took up and adopted a formal Suspension and Debarment Policy.

DWSD's new Suspension and Debarment Policy starts by declaring that the Department will only do business with responsible vendors (contractors). The policy then spells out the criteria for determining who is a responsible contractor and establishes notice and hearing procedures (due process) for the Water Board to follow before it suspends or debars a contractor.

The new Suspension and Debarment Policy(*) addresses criticism of the Board's earlier actions, which suspended contractors without prior notice and without providing the affected contractors with an opportunity to review and respond to charges against them. (Comment: These are due process requirements that should have been followed in the first instance. The Board took the right steps today by stopping, backing up, and putting things in the right order.)  

With the new policy in hand, Chairperson James Fausone announced: (1) that the Board would conduct "Responsible Bidder Hearings" for (some of) the previously suspended contractors (I'll update this post when I confirm the exact list of names), (2) that the Ad Hoc Hearing Committee would consist of Commissioners Thrower, Kenoyer and Williams), and (3) that "Responsible Bidder Hearings" would be conducted on the following dates: 

• Friday, February 10, 2012 (p.m.)
• Wednesday, February 15, 2012 (a.m.)

Hearings will be subject to the Open Meetings Act.

Then, there will be a Special Water Board Meeting on February 15, 2012 at 2:00 p.m. to consider the Hearing Committee's findings and recommendations. Some of the same contractors named in the previous resolutions could find themselves suspended again.

Due perhaps to the planned consideration and adoption of the Suspension and Debarment Policy(**), the Chairperson announced at the start of today's Board Meeting that resolutions to approve 3 design-build and construction contracts were being pulled from the Agenda -- PC-787 (Belt Filter Presses), PC-783 (Underground Electrical Ductbank Repair), and DWS-862A (Department-Wide Security Upgrades).  

The Board did approve a contract with Metco Services for CS-1498 (Aeration System Improvements) and a one-year contract with Onyx Enterprises, Inc. (Tarolyn Buckles) to provide technical advisory services to the Water Board. Ms. Buckles replaces Jim Ridgway, who apparently could not come to terms with the Board on a contract.

* Copies of the new DWSD Suspension and Debarment Policy have been posted here. were not immediately available, pending the addition of a small change requested by one of the Commissioners, but it should be posted on the Department's home page within a few days.

** There was no reason given publicly for pulling these contracts from the Agenda, and only 1 of the 3 contractors, Lakeshore Engineering Services, is caught up in the on-again, off-again suspension saga. The Chairperson gave some indication at the end of today's meeting, however, that these 3 contracts would return to the Agenda at the Regular Water Board Meeting on February 22, 2012. 

For more information about DWSD Update, click here.

Water Board Lifts Contractor Suspensions, then Authorizes Lawsuit Against Most of the Contractors (UPDATED)

At a Special Board Meeting on January 11, 2012, the Detroit Board of Water Commissioners voted to lift the suspension resolution it passed just three weeks ago on 5 of the 13 cited contractors. The following contractors are no longer suspended, but the resolution included the caveat -- "pending further action of the Board": 

• Lakeshore Engineering Services, Inc.
• Inland Waters Pollution Control, Inc.
• DLZ Laboratories, Inc., 
• D'Agostini & Sons, Inc.,  and 
• Walbridge Aldinger Company, Inc. 

The Water Board then (a) approved an extension of its attorney's legal services contract, and (b) authorized Miller Canfield to intervene in the federal lawsuit initiated by the Macomb Interceptor Drain Drainage District in July, 2011 (the "15 Mile Sewer Repair" case)  and  file a lawsuit against approximately 17 Defendants, including 4 of the 5 contractors whose suspensions were just lifted (D'Agostini & Sons, Inc. is excluded).  

The Board also directed its Legal Committee to work with Miller Canfield to draft a (new) suspension policy for presentation to the Board at its next regular meeting on January 25, 2012.

Then the Board voted to accept (for consideration) a bid protest filed by Walbridge Aldinger, on Contract PC-786, which the Board had approved for award to Walsh Construction on December 21, 2011. The Board voted to conduct a public hearing to determine whether Walbridge Aldinger is a "responsible bidder."  

(Does this mean the Board might rescind its award to Walsh if it finds Walbridge to be a responsible bidder? And what about the policy of not contracting with persons you're suing? Why conduct such a hearing if you've already directed your legal counsel to sue Walbridge and the other contractors for racketeering and civil conspiracy?) 

(Confused? You're not alone!)

Additional Resources:

• Detroit water department seeks $60 million in suit tied to 'Kilpatrick enterprise' contractors, Crain's Detroit Business, January 11, 2012.

For more about DWSD Update, click here. 

 

Suspended Contractor Files Lawsuit Challenging Detroit Water Board's Suspension Policy (UPDATED)

Earlier today, L. D'Agostini & Sons, one of the 13 contractors suspended for 3 years by the Detroit Water Board on December 21, 2011, filed a federal lawsuit contesting the Board's decision. 

The lawsuit alleges that the Water Board's actions violated the contractor's due process rights and violated its rights under 42 USC 1983, a federal civil rights statute.  

In addition, L. D'Agostini & Sons (LDS) has also filed a Motion for a Temporary Restraining Order (TRO) and Preliminary Injunction. The contractor requests that the Court (1) enjoin the City of Detroit from enforcing the debarment order; and (2) order that the debarment as to LDS be expunged. No hearing date has been set on this motion.*

2012-01-05.L D'Agostini v City of Detroit - Complaint

Additional Related Articles:

• Water Board to Review Suspensions, Crain's Detroit Business, January 1, 2012
• Macomb contractor sues Detroit over bidding ban, Detroit News, January 5, 2012
• Construction firm sues over ban, Detroit Free Press, January 5, 2012
• D'Agostini & Sons opts for "Damned if you do. . .", Crain's Detroit Business, January 6, 2012
• Contractor's Decry Suspensions by Detroit Water and Sewerage Dept., Engineering News-Record (ENR), January 16, 2012  

For more about DWSD Update, click here. 

*Update (1/9) (1/10) (1/19): The Hearing on L. D'Agostini & Son's Motion for Temporary Restraining Order and Preliminary Injunction has been re-scheduled scheduled for Wednesday, January 11, 2012 at 2:45 p.m. January 18, 2012 at 2:00 p.m. February 2, 2012 at 1:45 p.m. before the Hon. John Corbett O'Meara.   

CORRECTION to List of Suspended Contractors

DWSD Update confirmed earlier this morning that one of the contractors we originally included in the list of contractors affected by the Water Board's December 21, 2011  suspension resolution -- D'Alessandro Contracting Group -- was NOT included in the final resolution that was voted upon by the Water Board.  D'Alessandro Contracting Group is NOT suspended  and NOT barred from being awarded contracts with the Detroit Water and Sewerage Department. Crain's Detroit Business has also noted this correction (here).

Detroit Water Board Declares 13 Bidders Non-Responsible, Suspends them from Bidding DWSD Work for 3 Years (UPDATED)

Earlier this afternoon, the City of Detroit, Board of Water Commissioners conducted a Special Meeting  and adopted a resolution declaring 14 13* contractors to be non-responsible bidders and suspended them from bidding DWSD work for a period of 3 years. 

The contractors suspended from bidding on DWSD contracts until December 31, 2014 are among the contractors cited in the federal indictments unsealed last December against disgraced-former Mayor Kwame Kilpatrick, his father, Bernard Kilpatrick, contractor Bobby Ferguson, and former DWSD Director Victor Mercado.  

The contractors affected by the Water Board's action today include the following: 

• A&F Environmental
• A&H Contracting, Inc.
• D'Agostini & Sons, Inc. 
• *
• DLZ Laboratories, Inc.
• E&T Trucking
• Ferguson Enterprises, Inc.
• Inland Waters Pollution Control, Inc.
• Inland Management and Inland Rehabilitation Pipe Co.
• Johnson Construction Services a/k/a Johnson Consulting Services
• Lakeshore Engineering Services, Inc.
• Maestro Associates, LLC
• Walbridge Aldinger Company, Inc.
• Xcel Construction Services, Inc.

The Water Board included the following administrative appeal procedures as part of its resolution:

The Board shall reconsider the parties and suspension period upon receiving additional information from the U.S. Attorney's office. A company may appeal the application of this policy to an ad hoc committee of the BOWC, appointed by the Chair, which shall receive evidence and information and report to the entire Board. The suspension can only be modified by motion of the Board. 

Following adoption of the suspension resolution, the Board proceeded to approve a $13,117,000 contract for the Rouge River Outfall No. (RRO-2), Contract PC-786, with the third bidder, Walsh Construction, bypassing Walbridge Aldinger, who was second in line for the contract after the low bidder, Lakeshore Engineering, retracted their low bid.

Comment: The Water Board's actions today have enormous implications for the affected companies, many of which perform federal contracts, and a huge impact on the local contracting community.  The Board's actions, which the Chair reported were supported by Oakland, Macomb and Wayne Counties, will be felt well beyond DWSD. Two of the named contractors are among teams who proposed on the bio-solids contract (PC-781). If their suspensions are upheld, it would surely jeopardize their proposals.

Update (12/22): Crain's Detroit Business has an article (here), which quotes several of the Water Board Commissioners and adds further insight into the reasons for yesterday's suspension resolution.  

Update (12/23): DWSD Update confirmed earlier this morning that D'Alessandro Contracting Group was NOT among the contractors included in the final suspension resolution adopted by the Board of Water Commissioners on Wednesday. They were included in the proposed resolution, outlined in the Board Agenda, but NOT included in the actual resolution, as read into the record by Commissioner Fred Barnes, and NOT included in the final vote. To be clear: D'Alessandro Contracting Group has NOT been suspended nor barred from receiving DWSD contracts.  

For more about DWSD Update, click here.

PC-786, Lakeshore Engineering Submits Low Bid on Rouge River Outfall (RRO-2) Project

Lakeshore Engineering submitted the low bid earlier this afternoon on the project known as DWSD Contract PC-786, Rouge River Outfall No. 2 (RRO-2) Segment 1, WWTP Modifications:

1.   Lakeshore Engineering - - - $11,855,749*

2.  Walbridge Aldinger - - - - - $12,970,000**

3.  Walsh Construction - - - - - $13,117,000

4.  Weiss Construction - - - - - $13,391,000

5.  Detroit Contracting - - - - - $14,021,000

6.  L. D'Agostini & Sons - - - - $14,702,250

7.  O'Laughlin Construction - $15,232,600

This project was previewed at a June 22, 2011 public hearing and reported here.

For more about DWSD Update, click here. 

* Update (11/22): DWSD Update has learned that Lakeshore Engineering asked the City of Detroit to retract its bid on this project in a letter dated November 17, 2011.   

** Update (12/21): Earlier this afternoon, at a Special Meeting, the Board of Water Commissioners approved a contract with Walsh Construction for $13,117,000. This followed adoption by the Water Board of a resolution suspending Walbridge Aldinger, and 13 other contractors,  for a period of 3 years.