Bill Frazer's

Core Municipal Report

An independent investigation is needed for the IAH Terminal Redevelopment Program

In the middle of a missed approach for contractor selections, Mayor Turner decides for a “go-around”.

By now you’ve probably heard about the problems that surfaced during the contractor bidding process for the terminal redevelopment work at IAH. If not, you can read about it here…Morris, M. (2016, February 9) Turner tears up airport contracts, will start bidding over. The Houston Chronicle. (registration/subscription may be required)

The trouble started in November when then City Controller Ron Green “tagged” 5 construction contracts scheduled for City Council approval. Later, on December 22nd, when Green was on his way out the door, he sent a detailed three page memo to Controller-elect Chris Brown outlining evidence of “potential fraud” in the bidding process. A copy of the memo, without the exhibits, can be found here…(December 22nd memo from Green to Brown).

The first sentence of the second paragraph of Green’s memo says: “On, or about, November 21, 2015, this office received notification of potential fraud regarding the ITRP procurement process.”

Exhibit 1 of the memo (a copy of which I do not possess) refers to another memo written by Justina Mann, HAS Chief Procurement Officer, addressed to Mario Diaz, dated November 13th, that “... clearly delineated changes in scores from the first and second rounds of the evaluation process.”

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Controller Brown apparently reviewed the evidence obtained by Green and he, too, expressed serious doubts about the process, citing “lack of transparency” as the main issue.

In light of this, Mayor Turner decided to cancel the process and start all over again.

But shouldn’t we have a full investigation first? If there was fraud in the bidding process, the review process or in the selection of MWBE sub-contractors, shouldn’t we clean that up before we start down the same road again?

If there were any bribes, kickbacks or other acts of corruption shouldn’t there be a criminal investigation and not just a review by the City Controller?

This is a major project by the City of Houston and United Airlines to redevelop parts of Houston’s Intercontinental Airport. The total redevelopment cost is about $750 million and the project is expected to take several years. Major portions of the planning process began in early 2015.

The six projects in question represent the initial work only. Larger projects are scheduled to be bid out later. Chart 1 below summarizes the initial round of bids, totaling approximately $69.5 million. The last item on the list was cancelled when all of the proposed bidders failed to submit MWBE proposals.

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The City’s Acting Chief Procurement Officer, Carolyn Hanahan, gave compelling testimony at the November 19th meeting of the City’s Budget and Fiscal Affairs Committee. You can watch a four minute video of her testimony by clicking here…(Video of Carolyn Hanahan presentation).

As you can see, Hanahan goes to great lengths to convince City Council members as to the thoroughness and fairness of the process. During her presentation she says “What I observed was a really solid process.” And at the end of her presentation she says “If anyone wants to complain about the outcome, they should not complain about the process.”

Her testimony clearly reveals that there were more people involved in the review of the proposals and the resulting recommendations than just a few people in the City’s procurement department.  This includes people from various airline companies (which have a vested interest in leasing quality facilities that meet their independent standards), functional managers from airport operations and members of a variety of highly regarded architectural institutions in the Houston area such as deans from Rice, U of H and PVA&M schools of architecture and representatives from Rice Design Alliance and the Houston chapter of the AIA.The three finalists for the terminal construction project participated in the interviews of the Architecture/Design candidates to give their input.

The companies trying to win the bids and the City employees and other service providers (who charge fees for providing assistance in the process) spent a lot of time, hard work and other resources over the last 6 months of 2015 processing these bids. Having to toss all this hard work is a huge waste.

In stark contrast, two City Controllers have received and/or reviewed evidence that causes them to think there was an element of “potential” fraud involved.  Either that or, in spite of Carolyn Hanahan’s compelling testimony, they felt there was a total lack of transparency in the process.

Mayor Turner is right to start over again to insure greater public confidence in the process. But he should also ask for a thorough and INDEPENDENT investigation into what happened the first time.

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