Procurement Review Panel Delays Ruling on Shop Road Extension Protest
By RON AIKEN
Rather than cop to a $3 million mistake, Richland County doubled down on it, in the process taking more than a million dollars out of the hands of the small, local businesses it wrote an ordinance to protect and jeopardizing the future of penny-tax procurement
Over the course of nine-plus hours of testimony at Richardson Construction’s protest hearing of the Shop Road Extension project before the Richland County Procurement Review Panel, County attorney Liz Crum defended winning bidder McClam & Associate’s tactic of counting dollars allocated to meet Disadvantaged Business Enterprise (DBE) requirements to also satisfy separate Small and Local Business Enterprise (SLBE) requirements, thus pulling the rug out from under the SLBE program it created in 2014 to ensure small and local businesses got their piece of the penny-tax pie and giving tacit approval for future contractors to do the same.
Crum and the County’s bizarre position — arguing in favor of an out-of-county, highest-bid vendor that bent the rules to send as few dollars as possible to Richland County businesses against an in-county, lowest-bid vendor that followed the rules and gave the most money to local businesses — meant that rather than resolve a troubled procurement process already riddled with collusion, deceit and hypocrisy, the County opened the door for other companies to twist the rules for years to come unless and until governing ordinances are rewritten.
The County’s procurement review panel consists of Willa Martin Bailey, Dale Boozer and Allen Brown — two shy of the required five but enough, the County argued, to constitute a quorum. Each member represents a certain segment of the procurement universe — Bailey from the professional service industry, Boozer from the construction industry and Brown from the service industry. While Boozer has been on the panel since 1994, Martin and Brown joined recently, in 2014 and 2015, respectively. The panel currently is without representation from someone in the public procurement sector (preferably at a management level with state or local government) and someone representing the consumer industry.
Though hired by the County to advise the panel and not a member himself, attorney Hank Wall took the lead throughout the day and did most of the talking and decision-making, including asking attorneys from both sides at the end of the day to draft closing arguments and legal conclusions for the panel to consider by July 12. After that the panel has 10 days to issue a judgment in writing to either dismiss the complaint, award the contract to Richardson and/or declare McClam’s bid non-responsive.
GUTTING THE SLBE
Besides arguing that it should have been allowed to correct its bid to cure a typographical error — more on that later — Richardson Construction also contends that McClam & Associates’ bid should be declared non-responsive since it did not meet the minority participation requirements of allocating 4.37 percent of the total award to SLBEs and 7 percent going to DBEs. Instead, because McClam used a subcontractor who qualified as both an SLBE and a DBE, McClam counted the same dollars spent to satisfy the larger DBE requirement as satisfying the smaller SLBE requirement.
According to Richland County Code Section 2.639, the SLBE program’s purpose is to “provide a race- and gender-neutral procurement tool for the County to use in its efforts to ensure that all segments of its local business community have a reasonable and significant opportunity to participate in County contracts for construction, architectural & engineering services, professional services, non-professional services, and commodities,” it reads.
“This policy is, in part, intended to further the County’s compelling interest in ensuring that it is neither an active nor passive participant in private sector marketplace discrimination, and in promoting equal opportunity for all segments of the contracting community to participate in County contracts. Moreover, the SLBE Program provides additional avenues for the development of new capacity and new sources of competition for County contracts from the growing pool of small and locally based businesses.”
The County’s definition of a DBE, which the State office of Small and Minority Business Assistance certifies, is outlined in Richland County Code Section 2.633: “‘Minority business’ means any business, whether individually owned, a partnership, a joint venture, or a corporation which is certified to be wholly or at least fifty-one (51) percent owned or controlled by members of a minority group and is a resident business in the state,” it reads. “Minority individuals or groups” include but are not limited to Black Americans, Hispanic Americans, American Indians, American Asians, and women.”
While Richland County Attorney Larry Smith and Assistant County Attorney Liz Mclean sat and watched, Crum argued that McClam’s double-counting, or ‘stacking,’ of dollars was legal because no language in the ordinances specifically prevented it. This assertion by the County’s representative meant that, like it or not, penny tax contractors are free to ignore the program’s SLBE requirements at will provided they can find a subcontractor that qualifies as both an SLBE and a DBE.
In short, because County Administrator Gerald Seals sold County Council on supporting McClam’s bid without informing it of its financial problems — more on that later — the County chose to double-down on its mistake despite the obvious harm that would cause the two special-interest groups in question.
“How in the world would you serve those two communities if you allowed (McClam) to double count?,” Richardson attorney Richard Detwiler asked the panel. “Let’s just say for a second that the SLBE was satisfied at 4.37 percent. Then all you have to do is get the differential to fulfill your DBE commitment.
“Who gets hurt? The DBE community gets hurt. And that’s what they’re doing here.”
Said fellow Richardson attorney Kathleen McDaniel, “This decision (by the County) is basically gutting the SLBE program.”
In sworn testimony, Richardson Construction co-owner Bobby Richardson called Crum and the County’s logic “ludicrous” and “absurd.”
“My understanding of the requirement was it had to be 4.37 percent subcontracted to SLBE contractors in the County and an additional 7 percent, minimum, contracted to DBEs,” Richardson said. “They are two very different programs.”
When Detwiler asked Richardson’s opinion of McClam’s use of Taylor Brothers to satisfy both percentages, Richardson, who had been reserved all morning, was emphatic with his words.
“I think it’s absurd and the bid should have been thrown out immediately based on that. If there is a requirement that you subcontract the total, 11.37 percent to SLBE and DBE subcontractors and you attempt to get away with doing barely 7 percent, that should have been thrown out immediately.
“I consider it cheating.”
In her cross-examination of Richardson, Crum asked him to read along from the project specifications where it mentioned the two percentages as being requirements.
“Anywhere in there does it say it has to be cumulative, that you have to add the two together?,” Crum asked Richardson.
“No, it does not on this page,” he said.
“Well can you show me anywhere else in these pages where it says that?,” she asked.
“No, I don’t think it says that anywhere. I think the SLBE program and the DBE programs speak for themselves.”
“And the ordinances speak for themselves,” she said.
In her cross-examination of company co-owner Joseph Richardson — Bobby’s son — Crum repeated her position that meeting the category requirements separately was not specified anywhere in County code.
“Anywhere there it says they have to be submitted separately?,” Crum asked.
“No, but I’d like to explain that,” Richardson said. “These are two programs defined in two different places in the Richland County Ordinances.”
“On the one hand we have a specifically race-neutral requirement that was enacted 25 years after the race-specific or race-dependent requirement. There’s no universe where I would ever think that the 7 percent and the 4.37 percent were not intended to be, in the aggregate, 11.37 percent for the two very different, but sometimes overlapping, communities of DBE and SLBE.”
Crum pressed Richardson to provide the same answer his father gave, that County ordinance language leaves the door open to legally double-count.
“Your interpretation of the (request for proposal) … is based on your understanding, your impression, of the minority requirements in Division 6 and the SLBE procurement requirements in Division 7 of the County ordinance, right?,” Crum asked.
“No,” Richardson said. “It’s based on simple addition of 7.0 plus 4.37.
“We live in a universe where the law exists and is a factor. So I live in a world where section six and seven I just read to you are the law of Richland County and are two separate things. So when two separate goals are listed I added them up together. I don’t think there was a lot of interpretation required.”
WHOSE INTERESTS DID THE COUNTY SERVE?
Currently, only one business — Taylor Brothers Construction — meets the definition of both an SLBE and a DBE and is capable of doing the work on the scale of the Shop Road Project, and the reason Seals approved the highest bidder was that McClam used Taylor Brothers to satisfy both categories despite $3 million more than Richardson’s bid while allocating approximately $1 million less to local businesses.
Crum and the County’s position — which County attorney Larry Smith shook his head vigorously in favor of while seated behind her — directly contradicts previous statements of then-interim director of the County’s Office of Small Business Opportunity Brenda Parnell in a Sept. 12 email from Parnell to Collier Taylor (vice president of Taylor Brothers) and PDT assistant procurement manager Janet Jones written two days before the bids for the Shop Road Extension project were opened.
“Mr. Collier Taylor called me today about verification of the SLBE and DBE participation,” Parnell wrote. “Can subcontractors be included on both SLBE and DBE Participation Forms and be credited toward both percentages?
“The answer is ‘NO.’ The participation is going to be either/or, not both.”
When Collier wrote back that two days before the bids were to be opened was too late to inform the bidders of the change and said that instead, “We’ll have to handle post-bid with the successful contractor,” Parnell objected.
“(The time concern) is understandable,” Parnell wrote, “but contractors need to know SLBE/DBE is either or, not both.”
Collier agreed to Parnell’s terms the morning before the bids were opened.
“Yes ma’am,” Collier wrote Parnell. “We’ll make clarifications.”
None were made by Collier then or in the months that followed leading up to the awarding of the project to McClam for $25 million.
“If it’s OK to cheat the requirements, which is what the County is saying, why would anyone not use a business that qualifies as both?,” Richardson Construction co-owner Joseph Richardson said. “By saying it’s OK for Taylor Brothers to be counted towards both, that makes Taylor Brothers almost the most powerful subcontractor in Richland County because a contractor who secures them can low-bid anyone else who is trying to satisfy both requirements.
“Because they’re trying to defend a position they screwed up and got themselves into, rather than admitting they were wrong they’re going to just OK a practice that makes absolutely no sense and actually hurts the small local businesses they were trying to help.”
The specifics of Richardson’s protest was that its error of listing the incorrect firm as its SLBE vendor — the numbers were correct, the name and address were not — should have been considered a clerical error that Richardson ought to have been allowed to fix as the lowest responsive and responsible bidder.
However, despite immediately meeting with Richardson representatives who provided proof of the harmless nature of the error, the County quickly ruled Richardson non-responsive then attempted to award the contract to C.R. Jackson, a firm whose bid was materially non-responsive in that it met none of the SLBE or DBE requirements.
In fact, trying to secure the award for C.R. Jackson is where the county ran into ethical hot water and represented a dishonest opinion to County Council. First, County staff colluded with Taylor Brothers Construction to secure their involvement with C.R. Jackson then misrepresented a key opinion from the SCDOT’s DBE office about Jackson’s bid.
Despite all that, the bid only was ruled non-responsive when it was discovered, just hours before County Council was poised to approve it at a regular meeting, that Jackson had fraudulently listed one of Richardson’s contractors as being part of Jackson’s bid.
That was October.
Two months later, rather than publishing McClam’s bid as part of the public documents included with County Council’s agenda, Seals wrote a letter to Council recommending they award the bid to McClam and declared McClam, whose bid was $3 million higher than Richardson’s, as the only responsive and responsible bidder. This was done despite knowing McClam — since it had secured the Taylor Brothers’ complete participation — had used the tactic of double-counting SLBE and DBE money, a fact that, because the bid was not made public as C.R. Jackson’s had been, was only discovered through a Freedom of Information Act request that the County delayed honoring until the last 15 minutes of the 15th day (the last day it legally could withhold it).
“The question in my mind, is why the County spent so much time trying to help C.R. Jackson solve a bigger problem than a typo but didn’t want to talk about due process,” said Procurement Review Panel member Dale Boozer.
However, each time McDaniel attempted to bring up C.R. Jackson’s bid to show a pattern of inconsistency in the application of standards, Crum and Nicholson objected quickly, calling the Jackson award process “irrelevant” to the circumstances of this protest.
One of the final witnesses of the day, former Richland County Procurement Director Cheryl Patrick, seemed to have the most sway over the panel as she was able to get away from the legal minutia about ordinance language and deadlines and cut directly to the chase.
While being cross-examined by Nicholson, he asked Patrick about types of mistakes on bids that would be considered material or not material to the bid’s responsiveness in an effort to lead Patrick to calling the SLBE program a “minor informality.”
“I’m not saying that at all,” Patrick said. “What I’m saying is that in this case, based on what has been stated, the prime contractor (Richardson), in error, wrote down the name of a sub and they were questioned about it and they had documentation to show that they in fact used the numbers from the subcontractor they intended to use.”
“The bottom line is you do what is best for your entity, whether it be DOT, whether it be Richland County or the City of Simpsonville. If it’s in the best interests of the taxpayers to waive an informality, you waive the informality.”
When asked under re-direct by McDaniel whether Patrick thought, in her expert opinion, that a county should waive a correctable typographical error if it meant doing so could save it $3 million, as is the case with Richardson’s bid, Patrick was deliberate in her answer.
“If the lowest responsive and responsible bidder shows that they can cure that defect, the best interest of the county is to allow them to cure it.”