At the same time, the process by which unelected HISD administrators choose the companies with whom the district contracts — to build things, provide services or furnish materials — raises questions and is open to outside influence, outside experts told Texas Watchdog. One former district insider said administrators overrule staff decisions about which companies and suppliers the district should do business with.

The combined effect of the two phenomena: The Houston school district, with an annual $1.6 billion budget that is larger than the budgets of four states, potentially may have overpaid contractors with connections — all while the school district laid off teachers, closed four elementary schools, cut per-student funding and tried to raise $20 million from the private sector.

Still, some district leaders have talked about asking voters to issue more bonds and possibly raise property taxes next year.

Leadership aware of the problem

HISD leaders point to the two external reviews of the district’s procurement procedures they have commissioned — one by a national education nonprofit, the other by an independent auditing firm — as examples of examining and rectifying public concerns with how HISD awards contracts. Both audits launched this fall.

But internal e-mails and other communications show that HISD’s top leadership have been aware of these problems — and have tried to fix them — for months, if not years. And well before the stories broke about HISD’s contracts with Westco Ventures and Dr. Kenneth Wells.

To little avail.

“I am hearing that our facilities staff is offering contracts to companies that did not receive top ‘ranking’ by our procurement folks,” Superintendent Terry Grier wrote in a 2010 email to a group of trustees and top administrators. “I plan to find out if this is happening and why. If it is true, it is going to stop.

“We need to award contracts to the lowest responsible bidder, with an emphasis on responsible, and frankly, board members need to get ‘miles’ away from this process.”

Around the same time, Grier admitted to trustees at a school board meeting that the school system had violated state law in how it handed out certain construction contracts.

Some contractors, Grier told the group, “submitted bids that, under state law, should have been accepted and then, for whatever reason, were not accepted,” according to an audio recording of the meeting.

He also quoted to the trustees the district’s inspector general, Robert Moore, saying Moore had said last year that HISD “had more trouble with this in the last 18 months than all the time that he’s been in the district. And 18 months ago is when this kind of started surfacing.”

Eighteen months prior to Grier’s comments would have been November 2008.

Grier, who has been superintendent since 2009, did not respond to a phone call or an e-mail request for comment for this story. Asked to elaborate on Grier’s comments, Moore referred Texas Watchdog’s questions to HISD spokesman Jason Spencer.

“He remembers talking to Dr. Grier about job-order contracting. And subsequently, the audit committee requested that those contracts be re-bid,” Spencer said, referring to Moore. “That was done last spring.”

Another change Moore informed Spencer the district made is that “a representative from the procurement services department has been assigned to assist with construction and facility services bids on a regular basis.”

Using public records, Texas Watchdog identified seven cases in which HISD school board members appeared to have involved themselves in the district’s contracting decisions or were accused of involving themselves:

“I saw a fellow trustee demand (the contract) get pulled” from a school board agenda, Harvin Moore wrote when it happened in May 2010, “And I believe he said it was because someone was missing from a vendor list. I hope I heard that wrong.”

Harvin Moore did not name the fellow school board member in the e-mail exchange. The only other men on the Houston school board are Marshall, Rodriguez, Greg Meyers and Mike Lunceford. Available public records don’t show which contract was yanked off the agenda.

Harvin Moore, who is not related to district Inspector General Robert Moore, wrote at the time that he was “really upset about this,” and wrote that the last-minute delay in the vote on the contract would have a domino effect that would threaten the then-proposed renovation of Grady Middle School in his district.

Such things are supposed to be “smooth and automatic,” he wrote.

Texas Watchdog reported on Moore’s concerns with the Grady Middle School project in October.

Asked recently by Texas Watchdog to elaborate on his e-mail, Harvin Moore declined to name the trustee who pulled the item from the agenda, but said he was frustrated because he “just didn’t know what was going on.” Harvin Moore also could not remember the identity of the vendor in question.

“I wanted to make sure that nothing like this ever happened again,” he said in a phone interview.

Harvin Moore, a former U.S. Treasury Department official, said he wasn’t sure how things worked now in the district’s contract-awarding process.

“Through the years, board members with influence and contacts have been able to get contracts,” he said. “I hope that’s not still the case, because it sure is important that these things be unbiased and based on the best value for the taxpayers and for the kids.”

Harvin Moore praised efforts by Grier, Chief Operating Officer Leo Bobadilla and Issa Dadoush, HISD’s general manager of facility services, to make things more transparent.

“They’ve been addressing the problem,” Moore said. “They have integrity and ability. It’s just going to take continued work.”

However, records show the contract-awarding process wasn’t smooth and automatic for an HISD school painting contract last year: The trustees got involved in who was hired.

A team of half a dozen HISD procurement and contract administrators worked to narrow down the list of which companies should be included, records show.

Eleven companies wanted in on it, and the HISD team researched and rated each company on its track record, its financial health, how many minority subcontractors it hired, and other criteria over a period of weeks, assigning each factor a numerical score and then ranking each company.

HISD’s procurement staff thought there was only enough work for four companies, so they recommended the top four be hired. In fact, one e-mail shows one procurement staffer had suggested there was only enough work for two or three companies.

The days ticked down. The contract — to be shared among the four recommended companies — was slated to be voted on the May 13, 2010, school board agenda.

But Rodriguez was unhappy about it.

In an e-mail to Dadoush on May 10, 2010, Rodriguez asked why the district hadn’t hired six companies for the contract, as it had in previous years.

Dadoush wrote back that his office “determined that four (contractors) should provide sufficient coverage for the District based on anticipated work load.” The potential hires were evaluated on industry best practices, he wrote. The entire school board was carbon-copied on the exchange.

Rodriguez wrote back that he still wanted six contractors hired — to help out the economy.

“Best Practices have not helped the small minority business in the Houston area, they have been used to deny access to public funds that are being paid to big business, many times not even from the same city or state,” Rodriguez wrote.

“We need to be able to help our community with work, especially in this difficult economic times.”

Rodriguez questioned whether the companies hired for the contract included enough minority-owned companies. Dadoush responded that one contractor, RHJ, itself was a minority-owned company, and the other three contractors had planned to meet goals of using 80 percent, 60 percent and 30 percent minority- and women-owned businesses as subcontractors.

“Thank you for your response, but it is not what I am looking for,” Rodriguez responded. He questioned why more minority companies weren’t hired as contractors, not as subcontractors.

“Small businesses want the opportunity to grow, and make these decisions for themselves and be able to earn the lion’s share of the profit, instead of getting bits and pieces that contractors want to pay,” Rodriguez wrote. “We the district have given the opportunity to the players to help small business grow, but this has not happened. All through the community one can hear of the injustices that the district or it’s contractors have done to the smaller companies. Where does it stop, how does it change?”

On May 12, 2010, the day before the planned school board vote, the school district’s chief financial officer, Melinda Garrett, sent out an e-mail: The painting contract had been removed from the May 13, 2010, agenda so that Dadoush could do a review of the process of evaluating contractors.

The following day, Harris forwarded Garrett’s e-mail without comment to her friend, Nicole West, owner and operator of Westco Ventures, the company that has done more than $1 million in work for HISD.

Westco wasn’t among the bidders on the painting contract, but it has subcontracted in the past on HISD jobs for Fort Bend Mechanical, one of the four recommended companies on the painting contract. Fort Bend Mechanical, an HVAC service and installation company, has done millions of dollars of business with HISD.

‘That’s when favors happen’

In response to Pottinger’s statement, Rodriguez told Texas Watchdog his main concern was that HISD officials weren’t weighting or grading the bidders properly.

E-mails published earlier this year by Texas Watchdog show Harris also was in contact with an official at a local firm, Environmental Consulting and Management Services, before that firm was hired to do environmental testing on school building sites in 2009.

ECMS’ owner, Tyrone P. Dorian, is a business partner of Frank Jones, Harris’ campaign treasurer, state records show.

The e-mail trail shows Harris helped arrange a July 8, 2009, meeting between an ECMS rep and an HISD official. Records made public by the school district last month show that, within two days of that meeting, HISD administrators wanted to hire ECMS for work worth up to $10,000.

Pottinger described a phone call from Harris requesting that he meet with two vendors –one of whom was her close friend and Westco Ventures owner Nicole West — as “a debacle.”

“Harris said, ‘I have two vendors that are upset about a recent contract award, and I need you to meet with these vendors and get it resolved,’” Pottinger said. “It turns out (one of the vendors) was her best friend (West). And, interestingly enough, this woman was absolutely obnoxious. I mean, you would think somebody who was trying to earn — and I can’t stress the word ‘earn’ enough — district business would be a little more friendly or accommodating. But she was demanding. Her attitude was, ‘I deserve this. I have contacts. I know people.’

“That’s when favors happen — ‘I need you to look at this vendor. I need you to visit with this guy,’” Pottinger said.

At the time, Pottinger said he took Harris’ request to “get it resolved” at face value.

“I understood that to mean: Explain why the vendors didn’t win the bid, and allow the vendors to take a look at the vendor process,” Pottinger said.

But in hindsight, particularly, after Harris told Texas Watchdog that she never discussed West with Pottinger — an assertion that Pottinger says is false — Pottinger said, “I wonder if it was (Harris’) intent to sway me toward awarding West a contract. (Harris) was so adamant that she never knew who I was.”

Pottinger wondered, too, why West would call Harris, the school-board president, rather than him when he was the one who oversaw the bid process from beginning to end.

“In retrospect, there are a lot more questions than answers,” Pottinger said.

Two months after Pottinger met with West and a representative of the other company Harris had mentioned, The Woodlands-based Sparks Construction, both companies were added to HISD’s list of minor suppliers, those providing services worth less than $25,000 at a time, for a construction project.

In the time since Harris joined the school board in 2008, the school district has hired West and her companies for what the Houston Chronicle called a “boggling variety” of services, including tutoring elementary-school children, private investigation services, private ambulance rental, painting, security alarm system installation and dry cleaning auditorium drapes.

Texas Watchdog has counted at least three friends of Harris doing business with the district. Aside from West, Harris’ campaign treasurer, Houston lawyer Frank Jones, negotiated Grier’s contract, and his law firm, Greenberg Traurig, is on HISD’s list of approved outside legal counsel. Frank Jones’ wife, Demetra Jones, has also done more than $75,000 in no-bid consulting work for the district.

Who’s changing the recommendations?

Speaking at the May 20, 2010, board meeting, Grier and Garrett told trustees that unnamed district administrators had been changing recommendations for contractors hired to oversee certain types of construction projects.

“In this case, there was a set criteria that was proposed” for the contracts, “and the evaluations were done against that criteria. And then the No. 1 companies were recommended by the committee and, after that is when some of the changes were made,” Garrett told the school board.

Those changes were against state law, she said.

Grier and Garrett’s comments referenced the same type of contract for which Morganti was being eyed for work at Grady Middle School, in a role that would give them broad leeway over directing and managing the entire rebuilding project.

District officials had to redo some questionable contract decisions to make sure they followed the law, Garrett said at the meeting

“When we went back and looked at the recommendations that were made, we have come back and, on the exhibit, the companies that are listed are the ones that came out as the No. 1 ranking of the committee in all cases,” Garrett said.

“And before, they weren’t,” Grier added.

The superintendent said he intended to change things — and there would be consequences for those who did not toe the line:

Harvin Moore, who represents the area including Grady, has called the district staff’s recommendation of Morganti “contract steering” and “corruption.”

As Texas Watchdog reported in October, HISD’s staff ranked Morganti 18th in the “quantitative scoring” category and 15th in the “qualitative results” category. And the district selection committee rated Morganti as having the worst overall reputation among the 28 potential bidders on the Grady project.

“How do you go from that to first?” Harvin Moore asked at the time.

He’s not the only one with questions about the Morganti deal.

“Looking at the figures for the Morganti award, it appears that these figures are skewed,” said Cindy Hallett, the former longtime procurement chief of the Eanes school system outside Austin.

Texas Watchdog asked Hallett to review HISD’s documentation on how the district arrived at the recommendation of Morganti for the Grady Middle project. Hallett and Pottinger don’t know each other and have never met.

“If I were (Satterfield & Pontikes Construction), the vendor that consistently scored No. 1 on the qualitative analysis, I would definitely formally contest the award.”

Dick Lindsay, the school district’s chief business officer at the time and now a vice president with Satterfield & Pontikes — the same company that is rebuilding Grady Middle School – declined to comment or answer any questions when reached by phone by Texas Watchdog.

When HISD kicked Morganti off the Grady project, the district quickly hired Satterfield & Pontikes to take over. Satterfield has since built the school, and it is scheduled to open until after Christmas break in January, Moore said.

Pottinger wasn’t involved in the choosing of the contractor for Grady Middle — construction issues are handled by an entire separate department than the one he ran — but, he, too questioned the initial choice of Morganti.

“Something’s wrong,” he said. “If the quantitative (rating) was worth half of the total score, it’s very difficult statistically for that vendor to become ranked No. 1 overall.”

Pottinger also told of another incident in 2010, one in which he was personally involved.

The school district was considering contracting with a series of companies for a certain service, he recalled.

“We recommended multiple vendors based on their scores in the evaluation process, and gave the recommendations to Dick Lindsay,” Pottinger said.

Lindsay was forced out in February 2010. It’s never been clear why he left.

Pottinger recalled that Lindsay put the item on the school board agenda for a vote – but listed completely different vendors than Pottinger’s team recommended.

Pottinger said he and his colleagues talked to Garrett about the vendor switch.

“This is not what we recommended,” Pottinger said they told her. “There’s a problem here. I remember she got really upset. I don’t know if she got upset at us or at him. But she was upset.”

Pottinger said he followed up with Garrett because “as soon as we gave the data to somebody else and they were able to manipulate that data, this is what happens. This is the result.

“The auditors got involved – super-involved,” Pottinger said. “So, Melinda said, ‘Cancel the contracts with the current vendors and rebid it.’ And all of a sudden, Dick Lindsay disappeared.”

—–

Photo of ‘Money Hand…’ by flickr user stevendepolo, used via a Creative Commons license.

Post originally appeared at Texas Watchdog, was written by Mike Cronin and Jennifer Peebles and is used via Texas Watchdog’s Creative Commons license policy.