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Investigator finds impropriety in former Clackamas County sewer director's contract practices [The Oregonian, Portland, Ore. :: ](Oregonian (Portland, OR) Via Acquire Media NewsEdge) April 23--Investigator Darren Goodding found several issues with former Clackamas County sewer department head Mike Kuenzi's contracting practices. Kuenzi was fired after County Administrator Don Krupp received Goodding's investigation Sunday. Krupp also is terminating the remaining contract with a public relations firm at the center of the controversy. The Oregonian reported that it appeared Kuenzi improperly awarded contracts without competitive bidding, split contracts to avoid board oversight and misrepresented the reasons for a contract amendment to the board. The Oregonian based these investigations on independent review of documents, depositions and interviews. Goodding's report backed up many of the The Oregonian's findings. CFM contracts The Oregonian reported that a Nancy Young, who leads fraud investigations and forensic accounting for the private regional accounting firm of Moss Adams, followed an anonymous tip in 2011 during the county's annual audit that led her to conclude that WES Director Mike Kuenzi improperly handed out four contracts to the public relations firm. She found no fault with CFM. From the story: In her December 2011 audit report to county officials, Young pointed out that Kuenzi gave CFM four contracts, totaling $414,000, with no competitive bidding. Furthermore, there was no documentation to justify the exclusive awards, known as sole source contracts. "The contractor does not meet the requirements as a sole-source provider," Young wrote in her audit. When asked for required written justification, Kuenzi responded with a cursory explanation. "The contract was awarded as a sole source contract based on the previously developed trust between CFM and the City's staff and elected officials during the regional partnership discussions." Goodding said in his report that Kuenzi was probably following the rules, but questioned the ethics of awarding the contracts the way he did. From the report: "When looking at public procurement, one must not only consider that the rules allow, but must also consider what is ethical and what is truly in the best interest of the County. Given the findings of the Moss Adams audit, was it really in the best interest of the County to continue to award retainer contracts to CFM without any competition or even checking the marketplace?" "While technically acceptable under the LCRB rules, the type of work being conducted and the long time frame lended itself to having it put out on a Request for Proposal (RFP) instead of continuing to do a yearly retainer contract. This at least ensures that the contracting agency is checking the marketplace and assuring the taxpayers that they are getting the best value for their money." Elsewhere, he wrote: "Given the contracts with CFM has been under scrutiny before, this lack of making sure that the County is getting the most value for the money spent is very troubling." Later, Kuenzi told the county attorney assigned to oversee WES's legal matters to stay out of the contracting process. Storey said in a deposition that Kuenzi's decision made him nervous. From the story: WES county attorney Chris Storey confronted Kuenzi about the multiple sole-source contracts but never reported his unease with the practice to his superiors. As a department head, Kuenzi is authorized to award contracts on his own authority up to $150,000. Sole-source county contracts are legal, but only in special circumstances, typically in an emergency or when only one company provides a necessary service or expertise. Goodding said excluding Storey from the process was a breach of local contract review board rules. From the report: "The decision of Director Kuenzi to run his own procurement process for the CFM contracts and excluding the Assistant County Counsel from the process was a serious breach of protocol," Goodding wrote. "I would argue that the Assistant County Counsel should have monitored the selection process because that is part of following the contracting rules and excluding them from the process would constitute a violation of the LCRB rules." He examined the current CFM contract and found that it was also entered into without proper documentation or an internal checklist created to make sure contracts are properly awarded. From the report: "I was also surprised to not find any other documentation with the most recent CFM retainer contract other than the contract itself and the 1/2 page explanation memo." Goodding then found that WES does not have a mechanism or staff member to determine whether Norm Eder, who works for WES through CFM, is properly billing his time spent on WES projects, or whether the time is producing the desired result. From the report: "Both Liz Garcia and Doug Waugh admitted that there are no formal metrics in place to measure performance and outcomes on the CFM or other retainer contracts," Goodding wrote. HDR contract amendment The Oregonian reported that Kuenzi settled a contract amendment dispute with an engineering design firm over lunch with a friend who worked at the firm. From the story: On Nov. 22, 2011, Kuenzi, the head of Clackamas County's Water Environment Services Department, sent an email under the subject line "Flying" to Randy Goff, then with the Portland design engineering company HDR. Kuenzi had offered to fly Goff's daughter up from Eugene, but the weather wasn't cooperating. Goff responded on Nov. 26, thanking Kuenzi for the offer and raising a contract issue between his company and the county. On Dec. 15, Kuenzi wrote to Goff under the same subject line, inviting the HDR engineer to buy a share in the plane he was planning to buy. The plane partnership never materialized, but Kuenzi and Goff did follow through on the contract issue, resulting in a controversial payment to HDR of $300,000. Goodding said that because Goff was not the person appointed to represent HDR's interests on the matter, Kuenzi appeared to have a conflict. Then, his lack of documentation of the lunch when they hashed out the payment reinforced that appearance. From the report: "Not only was Randy Goff not the HDR contract representative on this project, there are e-mails that were presented during the arbitration which suggest the appearance of a too close relationship between Kuenzi and Goff. In addition, if there were any assumptions or concerns that HDR was considering litigation over this issue and might have played a part in reaching this amount, I did not find any evidence to support that," Goodding wrote. Kuenzi then told his staff to go forward with the settlement over several objections, and claims that Kuenzi was purposely misrepresenting what the $300,000 payment was for when he placed it on the consent agenda for the commissioners to approve. From the story: Project Manager Dewayne Kliewer expressed reservations about the contract amendment and the resolution presented to the board because the county appeared to be paying a second time for work that should have been covered by the original contract. He noted that whole paragraphs included in the original scope of work were repeated in the justification asking for additional money. "I recognize and support the authority of those in position above me to resolve issues as they deem best," Kliewer said in a March 24, 2012, email. "I just want to make sure all are adequately informed of the contributing factors, so that they aren't surprised by anything unexpected coming up at the board level or by auditors that might be difficult to answer." The language submitted to the board made no mention of $150,000 to settle a litigation risk. Goodding didn't decide whether there was a misrepresentation, but said that Kuenzi shouldn't have taken the course of action he did, anway. From the report: "Kuenzi may have had authority as agency director, but he misused that authority by entering into this agreement over the objections of staff," Goodding said in his report. "Given the situation, it would have been appropriate to have disclosed the full details to the Board of Commissioners instead of allowing the approval of this contract amendment to be on the consent agenda." -- Molly Harbarger ___ (c)2014 The Oregonian (Portland, Ore.) Visit The Oregonian (Portland, Ore.) at www.oregonian.com Distributed by MCT Information Services |