State investigators say Hampton Roads Transit's former leaders flouted federal and state contracting laws, steering millions of dollars of publicly funded consulting work to "preferred individuals" over about four years.
HRT manipulated some contracts to prevent them from coming before the agency's governing board and failed to seek competition in nearly 70 percent of procurements reviewed by the Virginia Department of Transportation Inspector General's office, that office says.
Additionally, consultant work at times was "improperly" arranged without the knowledge of HRT's procurement office or was secured under expired contracts, says the inspector general's "special review," which was released last week.
"HRT did not comply with applicable procurement laws," the report concludes.
"As far as I'm concerned, it's the same thing as stealing money," said Jim Wood, a Virginia Beach city councilman and past chairman of the HRT board. "If anybody who worked for HRT or works for HRT knowingly violated procurement laws, they should be prosecuted. Period."
The report states that HRT: improperly hired consultants without seeking competition in 16 of 24 contracts; failed to establish an "impartial and comprehensive evaluation" in eight of nine contracts competitively bid; produced no documents to show price was considered in five of seven competitive bids; awarded five consulting jobs under expired contracts; and twice hired consultants as temporary employees to avoid seeking competition.
The report cited examples including,
n When a recruiter was hired to fill an executive position, there was no documentation that the job was competitively bid or that the procurement department knew of the hiring. E-mails among senior staff admit that the hiring violated federal law and indicate Townes instructed staff not to use federal money to pay the contractor because rules were not followed.
n HRT policy stated that contracts over $50,000 must be approved by the HRT board. However, the board had no knowledge of payments of $485,000 over 2-1/2 years to one light-rail consultant. The consultant was hired as a temporary employee in five-month periods, for less than $50,000 each period, "in order to keep it within the President/CEO's signatory authority."
"HRT staff took deliberate steps to avoid obtaining Board approval of these services." And by contracting as a temporary employee, HRT avoided the need to seek competitive bids.
n HRT awarded a $9.5 million contract to Williams Mullen for legal services. Although pricing was listed as part of the selection criteria, the law firm was chosen before HRT's evaluation panel even considered the fee schedule.
Additionally, bias was introduced in the process when HRT's technical evaluation included the statements that Williams Mullen "has unequalled knowledge of HRT, its history and its needs" and "has demonstrated excellence in representing HRT... for many years."
n When HRT was selecting a firm to conduct a study for extending light rail into Virginia Beach, Townes, who was not part of the evaluation panel, attended a meeting to tell panel members that HRT might sue one of the proposers for other work it had done for the agency and therefore the firm's hiring could harm HRT's case. Prior to that, the firm received scores that were equal to or higher than the company that was eventually selected.
n A consultant's contract for light-rail construction and management was altered several times when costs started exceeding the contract limits. Early on, the contract with PBS&J Inc. was doubled to nearly $17 million by Townes, without approval from the board, which had authorized a $10 million limit for the work. Townes did not have authority to approve such a large change, so the contract increase was rescinded and replaced with one that brought the contract to the $10 million limit.
About six months later, the company wrote HRT indicating that it still needed the extra money, plus more, for a total increase of $10 million. About six months later, the HRT board authorized $2.8 million.
Then several months later, HRT staff had the board approve an additional $8.1 million. Meanwhile, during the lag, the consultant performed $2.4 million worth of work "without approved funding."
Donors profit from Myrtle Beach sales tax (South Carolina, USA)
(As a background note, this article suggests that the Myrtle Beach Chamber of Commerce was given public funds to promote the area's tourism industry. On Guam, the Guam Visitors Bureau is an autonomous government agency, part of the Executive Branch, and its affairs are expressly covered by the government Procurement Act.)"Any time you're spending taxpayers' money, there should be some checks and balances," said state Sen. Ray Cleary, R-Murrells Inlet.
Although public money makes up 70 percent of the chamber's revenue - a projected $18.7 million for 2011 - state law does not require the chamber to solicit competitive bids or follow any other procurement rules for projects that are paid with taxpayer dollars.
The chamber is required to submit regular reports to governing bodies and the public showing how much tourism grant, accommodations tax and sales tax money it spends and where it spends it, but those reports have no impact on the vendors chosen to do that work.
Some businesses that made campaign donations to politicians who approved a sales tax increase for the Myrtle Beach Area Chamber of Commerce now are among the biggest beneficiaries of that tax increase.
The chamber has paid those businesses and others that donate to a political action committee supporting those politicians at least $5.9 million in public money - including sales tax revenue - during the first nine months of this year for marketing work without any competitive bidding and little public oversight.
Most of the sales tax money - charged on retail sales within the Myrtle Beach city limits - goes to the chamber of commerce for advertising to out-of-state residents. The city gets about 20 percent of the funds for property tax breaks and tourism infrastructure projects.
The tax is expected to generate up to $18 million per year over the 10-year life of the legislation.
Myrtle Beach, which passes the sales tax money along to the chamber, does not require the chamber to follow any procurement rules, according to city spokesman Mark Kruea.
"The chamber is interested in getting the biggest bang for its buck, so I'm sure they are being responsible with that money," Kruea said.
Myrtle Beach Mayor John Rhodes said the chamber's quarterly reports and regular updates to council provide enough accountability.
"It's all there - what they are spending and what they are spending it for," Rhodes said. "There are always going to be questions with anything that has to do with public money, but I think it's fine the way it is."
John Crangle, director of Columbia-based Common Cause of South Carolina, said giving public money to the chamber without oversight "is an open invitation to abuse."
Read more: http://www.thesunnews.com/2010/12/19/1877146/donors-profit-from-sales-tax.html#ixzz18aDv1w00
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