Council: Nothing 'illegal' in Smale construction

Posted at 8:24 PM, Mar 28, 2016

CINCINNATI – The Cincinnati Park Board did nothing "illegal or unethical" in its use of master service agreements to build parts of downtown's Smale Riverfront Park, members of the city's budget and finance committee said on Monday, although the chair of that group wants to cease use of such contracts entirely.

The park board, originally only scheduled to present its budget requests for fiscal year 2017, decided to address publicly for the first time a memo issued March 22 that questioned its use of MSAs in constructing Smale, which debuted its newest features last spring at The Banks. The board has been under increasing scrutiny regarding its spending habits; last year Mayor John Cranley requested an outside audit into how the organization uses its cash.

The memo, released prior to the audit's completion, said the park board may have violated city law, and a lack of competitive bidding raises even more questions about how the park board spends public dollars.

The committee came to a seemingly different conclusion, and if Cincinnati Parks Director Willie Carden's job was ever on the line, it appears safe, for now.

'The System Changed'

Master service agreements, or standing contracts with particular companies usually intended for ongoing maintenance and repair, were "not structured for" new construction or renovation projects like Smale, the city memo said. Instead, the park should have been built using traditional bids or requests for proposals (RFPs). Since some work wasn't procured that way – millions were funneled instead through such pre-existing contracts – the city has no way to know if it received a good price. It also puts the city at risk if construction issues arise, since work like concrete and electrical, may not have been properly bonded.

"A project of such scale and magnitude as (Smale) should always be competitively procured and never done under a contracting mechanism, such as orders issued against MAs (master agreements), that evades the public light," said Patrick Duhaney, the city's chief procurement officer, who issued the memo. "Where it stands now, since this project was not competitively bid, it is not transparent as to how these companies were chosen to provide these services and if the price paid for the work was the most advantageous for taxpayers."

But parks officials said Monday the use of MSAs were "common practice" throughout the city for years. MSAs, despite reports, are initially publicly advertised and competitively bid, Steve Schuckman, parks department planning and design/program services superintendent, said. No work at Smale constructed under an MSA proceeded until first OK'd by the city's finance department.

"No work under the MSA can proceed until finance issues a purchase order. We don't issue the purchase order," Schuckman said.

The parks board was also under pressure to complete Smale's newest features ahead of last year's Major League Baseball All-Star game, Schuckman added, and MSAs were a "routine and effective way" to use vetted contractors.

The city has since changed its procurement rules – limiting the use of MSAs in the future – but the parks board argued it was operating under former rules during construction at Smale, which took place from 2008-2015. The city's most recent procurement manual, for example, is effective Feb. 16.

"All these new procurement policies were changed after the park was completed," Schuckman said.

In all, $40 million in city capital funds were used to build Smale; $25 million of which was publicly bid and another $15 million of which was spent using MSAs. About five to seven contractors operated under those agreements, Schuckman said.

And in terms of bonding, parks officials contend the issue is moot and there's no future risk. All but four MSA bonds for Smale have expired – the bonds were only good for one year – and the four remaining are now fully bonded. Bonds guarantee the contractor will finish the project; contractors are required by city code to cover 100 percent of their work. Some work may have been initially underbonded, Schuckman said, but once informed, contractors increased those amounts.

"Every effort has been made here to advance the mission of the parks… which are, in our judgment, the best in the country," Otto Budig, president of the Board of Park Commissioners, told the committee. "Our objective is to show this body as well as the wider community that the city's parks are in the very best of hands."

But if the parks board was under fire, the committee discussion Monday certainly did not reflect it. Instead, allegations seemed to shift to the city's administration and those who opposed Cranley's failed parks levy last fall – several council members questioned the timing of the memo and its release prior to completion of the audit. No one from city administration was available to comment; the discussion on master service agreements was not listed on the day's agenda.

Councilman Charlie Winburn, budget and finance committee chair, additionally said he had not requested that information. Councilman Wendell Young went so far as to apologize on behalf of the administration, saying there's been no appreciation for what the parks department has accomplished.

"We're all aware administration has made this case in the paper and on TV," Young said. "…It leaves a sour taste in your mouth."

Do Away With MSAs

Winburn additionally called for the city to cease use of MSAs altogether, asking that "everything be competitively bid," or at the very least, the administration freeze the practice and investigate if such contracts are necessary at all. The Metropolitan Sewer District of Greater Cincinnati, he said, also under investigation, has been a big user of MSAs.

"It's a very dangerous thing because it could be used to favor one group over another," he said.

Schuckman said the parks board is being trained on the new procurement procedures, and that City Manager Harry Black is giving "excellent direction" guiding them through those. Councilwoman Yvette Simpson, while saying MSAs may be needed in certain circumstances, called largely for a system that's transparent and easily understood by all department directors.

While Winburn said the park board didn't appear to do anything "illegal, unethical or wrong" at Smale, Carden said the buck ultimately stops with him.

"I will make sure it won't happen again," he said.

See a recap of Liz Engel's live coverage from the meeting in the feed below; follow her on Twitter @_LizEngel