Gov't

City Services Contract Option Forfeited Prematurely

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By Dave Freneaux

    Last week by a 3 to 2 vote the Central City Council passed a resolution urging Mayor Watts to give formal notice of non-renewal to CH2M Hill.  The contract under which Central's "City Services" are provided ends on June 30, 2011, and the City had the right to renew the contract.  The contract also gave the City of Central until March 2, 2011 to make that decision.  In deference to the City Council's request, Mayor Watts sent a certified letter to CH2M Hill forfeiting Central's right to renew the contract.  Mayor Watts explained that the action was taken "in a spirit of cooperation with the Council."  Council Members LoBue, Messina and Washington approved the resolution which was then acted on by the Mayor.  Council Members DeJohn and Moak voted against giving up the renewal option.

    The argument against the premature forfeiture of the option is that a number of circumstances ranging from storms to national or local economic events, or even a lack of qualified interested bidders could make a renewal option financially beneficial to Central.  Absent any such circumstance, the City had an additional four months to make this decision with no penalty.  With the sending of this letter, Central has lost that option.  The only argument made in favor of the forfeiture was a desire not to miss the 120 day notice requirement.  The amended contract states: "The initial term of this Agreement shall begin March 3, 2008 and end on June 30, 2011."  and "The Agreement shall have an automatic renewal … unless either Party furnishes the other Party written notice of its intent not to renew this Agreement not less than 120 calendar days prior to the renewal term of this Agreement."

    A committee of 21 respected and qualified citizens has been assembled in a committee co-chaired by the Mayor and former Baton Rouge DPW Director Fred Raiford to determine how to proceed in the matter of contracting out Central's City Services on July 1, 2011.  This committee, referred to by Council Member Washington as the "Dream Team", began meeting just a few weeks ago and has months of work yet to do.  In the meantime, the City of Central, without the input of this committee, has given away its right to renew the current City Services contract four months earlier than was required.

10 Comments

  1. Lewis Bagot

    November 4, 2010 at 2:11 pm

    City Services Contract Option Forfeited Prematurely……does this mean we will no longer have city services until a new contract can be bid and signed ? I have always tried to pay ahead instead of waiting until the last minute……….seems right to me !

    • dave

      November 4, 2010 at 8:04 pm

      It means that ch2m hill will provide services until 6/30/11 then contract will be awarded to a qualified bidder

  2. Captain Obvious

    November 4, 2010 at 8:25 pm

    So why is this a bad thing. CH2 will have a chance to win the contract again. This gives more companies an opportunity to provide the services. I see this as a win win for the city of Central.

    • dave

      November 5, 2010 at 7:37 am

      Captain Obvious,

      If all goes well, and qualified bidders submit bids, and the economic stability of the State and Country remain reasonable, and there is no catastrophic event in south Louisiana, this is not a bad thing. Question you need to ask is, what did this move GAIN for Central. It LOST an option we could have exercised for the next four months if it was in our financial best interests. It gained NOTHING. I have been promoting bidding out this contract for the past six months, and I believe doing so will save Central even more money, but that has nothing to do with this forfeiture of our renewal option.

      A good analagy would be football. Fourth quarter, up by 28 points with eight minutes to play. We have all three timeouts remaining. Should we call all three timeouts, back to back, with eight minutes remaining? Why would we do that? Well, it is EXTREMELY unlikely that the other team will score 28 points in eight minutes and cause us to possibly need these timeouts to engineer a game-winning drive with little time left on the clock. So why not burn the timeouts now? Wrong question. Question is, what does it benefit us to use up our timeouts now? Answer is – NOTHING. Same situation for Central. Any benefit for giving away our renewal option four months early? NOPE. Any potential benefit for holding that option until we actually must decide whether to use it? YEP. Think about it.

  3. Mike Mannino

    November 4, 2010 at 10:54 pm

    As a member of this committee, let me give you my official, unauthorized opinion on the concerns voiced in this article.

    1- This committee is a highly experienced group of individuals which includes Tara Landry from the EBR permit office and Fred Raiford who ran EBR Public Works for years.

    2- CH2 is obligated to provide services until 6-3-2011. The only danger here is that CH2 will continue to let a backlog of work orders build and not complete them as obligated under the terms of their agreement. That is a management issue on our officials part and they should hold payments back at the end to assure we are left with a clean backlog.

    3- I fully believe that at the time this contract was signed, it was our best option. However, without out all the pressure we had then and with 3 years of data, it is quite obvious we can save the City a substantial amount by revisiting this agreement.

    4- There are several bidders that have voiced their interest in this contract. With the economy in the shape it is is, we could not have picked a better time to bid all or parts or this contract with an almost guaranteed savings the result.

    5- I will absolutely guarantee that we will come out of this with savings for the City and a business partner that will be agreeable to complying with requests for records that our current contractor has not.

    6- Anyone with any clue about simple economics will understand that it makes no sense to pay a company in another state, with no equipment to come to Central and sub-contract grass cutting, weed control, drainage, pothole repairs, etc., and charge us a minimum of 30% “handling fee”. It also is ridiculous to pay 90% of all permit fees to an out of state company.

    In closing, to any citizen that may be alarmed by this article, rest easy. We do not have a problem because of a so called “premature” notice to not renew ! It was the right thing to do given the history of this company.

    • dave

      November 5, 2010 at 6:48 am

      Mike,

      Your comment claims to give your unauthorized opinion on the “concerns voiced in this article”, yet NONE of the six numbered opinions you gave has ANYTHING to do with the article. Simply stated, the article explains that the option to renew was given away for no value and for no apparent reason. Please do not muddy the water by presenting arguments and opinions that have some validity then impying that these unrelated arguments discredit the facts presented in the article. I can present numerous scenarios in which retaining the City’s options as long as we are legally able may greatly benefit Central. I challenge you or anyone to name a single benefit, financial gain, or advantage to the City of Central as a result of this early forfeiture of our renewal option. Saying it is because it was done because of concerns that the City would miss the 120 day notice date is like staying up all night because you are afraid your alarm clock will not go off in the morning and you will be late for work. Buy another alarm clock or ask an expert whether your clocks will work properly, but going to work exhausted is not the answer.

      I mostly agree with the six points you made, but again, they have NOTHIG to do with the article, but here are some concerns: Item 2 – what happens if 30 work orders are called in by citizens on June 30th at 4:59 PM? Is that work for the exiting contractor or for the new contractor? Item 5 – I also am hopeful that Central will save a great deal of money, but I will have to stop short of “absolutely guaranteeing” that savings because I don’t have the money to back up that guarantee. As to “complying with requests for records that our current contractor has not”, please tell me what records the City of Central has requested and not received. I do not believe there are any. I assume you are referring to requests made by a private for-profit company, and not by the City. Yes, I know the Council passed, by a three-to-two vote, a resolution (which is a non-binding opinion) to ask the contractor to give the private company what they asked for, but our legal system, to which we are subject, has already told the world that their records are private. Fianlly, Item 6 – If I were a member of this committee, tasked with taking a fresh look at the needs of the City of Central, I would not want to be seen as having gone into the process with a predisposition to discount or disqualify potential bidders based on where their home office is located, or to be on record saying “It was the right thing to do given the history of this company.” That might cast an interesting light on the decisions I supported as a member of the committee.

      Just my opinions,
      Dave

  4. Mike Mannino

    November 5, 2010 at 11:35 am

    Quite simply Dave, nothing gained but nothing lost either. Call it Insurance because frankly, I dont trust CH2. Is that biased ? Nope, its a logical conclusion using data from all over the country and here. Call it profiling if you like as some do about racial profiling. But I prefer to say I came to a decision based on available data.

    As far as me having the ability to influence the final decision, there are 21 members on this committee for a reason. To assure that no one person has the ability or authority to make a decision on their own, only offer their perspective.

    CH2 in the end, I will assume will be given the ability to bid on all or parts of the new contract just like any other qualified bidder. One big difference; it will be on our terms with the experience they helped us gain guiding us to put provisions in the contract to address things we were not satisfied with in the way they run things today.

    • dave

      November 5, 2010 at 10:38 pm

      Does not change the fact that Central gave away an option we had no need to forfeit, and got nothing in return. Less options, less leverage, weaker position, just basic business sense. I really wish someone could explain how this benefitted Central. My current theory is that mo such rational explanation exists.

  5. Mike Mannino

    November 6, 2010 at 12:09 pm

    Here is my perspective. Sure I agree no gain. But nothing lost either. I’m very sure, in fact I know since the Mayor had already informed them of our intentions, that CH2 was very aware we have a committee looking at bidding this contract. A notice was just a formality. Any natural disaster until 6-30-11, they still have the obligation to handle. I am sure they will bid on any package put forward with the knowledge they will have to come in lower than the current structure realizing they will have competition. All bidders will also know that WE will define public records clearly in the scope of work. As far as the timing, with the Holidays coming up, the potential for different intreptation of the date needed to give notice without penalty, lets just say an early notice is playing it safe. If they play games because of the early notice, just a reason to exclude them from bidding. Just my opinion.

    • dave

      November 7, 2010 at 6:49 pm

      Mike,

      I know there are those that don’t like the way the law reads, but we cannot define what constitutes “public records”. We absolutely CAN write a contract that requires PRIVATE records to be open for inspection, but that would be a contractual agreement, not the enforcement of the Louisiana Public Records Law.

      I HOPE there is no financial damage as a result of the premature forfeiture of our city’s option, and it would take exceptional circumstances to cause that. However, I prefer to have my options still alive if that circumstance comes. Kind of like buying life insurance when I was 25. No reason to believe my children would need for me to be insured, cause I was not likely to die at 25. This, however, is like canceling an insurance policy after the premium was paid in full. No benefit, potential loss.

      Like I said, I hope Central is not put in a position to regret the action, but to maintain that it was warranted is simply not logical.

      Just my opinion.

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