On January 15, 2002, at the monthly meeting of the CHA Board of Commissioners, Francine Washington, president of the Stateway Gardens resident council, asked the Board to investigate the CHA’s handling of contracts for securing vacant units. There is reason to believe, she told the Commissioners, that for the last several years one vendor—Vacant Property Security (VPS)—has enjoyed a monopoly, while another offering a competitive product at a significantly lower price—Access Denied—has been shut out of the bid process. Board Chair Sharon Gist Gilliam told Ms. Washington that the Board would look into the matter. At the March 19 board meeting, Ms. Washington inquired about the results of the investigation. The Board did not respond to her question. Duwain Bailey, chief of operations at the CHA, told me in a private conversation that within two weeks a new contract would be put out to bid that would be neutral in its terms and would not give advantage to any one vendor. At the April 16 board meeting, Montel Gayles, chief of staff to CHA CEO Terry Peterson, told Ms. Washington in a private conversation that the new contract would come out within a few days. To date, the new contract has not been advertised. And the CHA has not responded to Ms. Washington’s request, first made more than three months ago, for an investigation of the contracting process.
The problem of unsecured vacant units is arguably the critical management issue for the CHA. For a number of years, the CHA has been emptying the high-rise developments in anticipation of their eventual demolition. Now under “The Plan For Transformation” this process is accelerating. Putting aside questions about the wisdom of this approach, it necessarily results in partially occupied buildings with increasing numbers of vacant units.
In the absence of an effective strategy for securing those units, conditions predictably develop that threaten the health and safety of residents.(See “In Memory of Eric Morse—Part I and Part II.”) Vacant apartments become sites of criminal activity. They are used for hiding drugs and guns. They serve as places for consuming drugs. Garbage accumulates in them, providing habitat for rats, roaches, molds, etc., and creating an increased danger of fire. As we reported in “Off The Lease: Unauthorized Residents in Public Housing,” nonleaseholders seeking shelter move in. Taken together, these conditions—all arising from unsecured vacant units—make CHA buildings all but impossible to manage and deny residents minimally safe, decent living conditions.
At The View From The Ground, we have firsthand experience of these patterns. Our office is located in a first floor apartment in 3542-44 South State Street—one of the buildings at Stateway Gardens undergoing relocation. Currently 55 apartments out of 126 are occupied by leaseholders. Until several weeks ago when the building was secured by Access Denied, we daily witnessed the human consequences of open vacant units.
In January, there was a massive flood in our office. Water poured down from above. Three staff members had to work intensely for an hour to bail out the office in order to protect files, computers, etc. The cause of the flood? Scavengers had gone into unsecured vacant units on the upper floors and torn out plumbing fixtures and pipes. This happened repeatedly in the building, causing substantial damage and diverting janitorial staff from other needs.
A robust drug trade operates day and night in the corridor outside our office. Some of those engaged in this activity lived in vacant units. One man charged other “squatters” $50 a month to stay in vacant apartments he controlled.
A significant number of unauthorized residents in the building were simply homeless: families in search of shelter, living in exposed, dangerous conditions.
Over the Christmas holiday, a woman was found dead in the vacant unit she had been occupying. She had been dead for three days before anyone called the police. It appears that she was murdered.
The realization that the securing of vacant units may prove a matter of life or death is not a new idea. The single incident in recent years that most powerfully dramatized the conditions under which CHA residents live was the case of Eric Morse—the five-year-old child dropped to his death by two boys, ages 10 and 11, from a window in an unsecured vacant unit at the Darrow Homes. In November of last year, the CHA, together with the property management company involved, settled the civil suit brought by the Morse family for $2.75 million. (In June the private security firm involved had agreed to settle for $800,000.) The CHA was moved to settle the case after former director Vince Lane stated in a deposition that the authority had failed to follow its own policies with respect to the securing of vacant units.
At the March 19 board meeting, Mr. Bailey told me that he had come to believe that adequately securing vacant units was the single most critical operations issue in implementing the current phase of the Plan for Transformation. And Commander Ernest Brown, until recently the commander of the public housing division of the Chicago Police, told me that he had justsent a letter to CHA chief Terry Peterson on the urgent need to secure vacant units in order to combat crime.
Against this background, the CHA’s handling of contracts for the securing of vacant units gives rise to troubling questions.
Traditional board-up methods—attaching plywood to door and windows frames by means of concrete nails—have time and again proved inadequate. The boards can easily be removed and often are. The CHA and the private companies it hires to manage its developments have thus long been interested in finding effective alternative strategies.
Both VPS and Access Denied offer such strategies. Each has developed its own distinctive method of sealing off door and window openings by means of metal panels attached to a frame. Both methods are far more secure than conventional board-up.
VPS and Access Denied both originated in Europe. Chicago is the only United States market in which they compete directly with each other.
Peter Bately, the founder and principal owner of Access Denied, is a British entrepreneur who, among other ventures, was centrally involved in the construction and operation of oil rigs in the North Sea off the coast of England. Access Denied is a family business which he has developed with his two sons. According to Mr. Bately, never in the course of his long, varied career has he encountered business practices by a public entity such as those of the CHA. He gives the following account.
In December of 1998, Mr. Bately was invited to Chicago by Joseph Shuldiner, the director of the CHA during the period of HUD receivership, and his chief lieutenant Edward Moses, in order to explore the possibility of providing his product to the CHA. He was referred to David Anderson of the operations division.
Access Denied and VPS both made presentations to Mr. Anderson and his colleagues. The CHA put out to bid a contract worth roughly $100,000. At the time, VPS was less expensive than Access Denied. They got the contract. Once they had secured this initial contract, VPS’s prices went up sharply.
Thereafter, whenever Mr. Bately inquired about possible work for the CHA, he was told by Mr. Anderson that nothing was going on, that no contracts were being given out.
In 1999, VPS received a contract from the CHA worth more than $1 million. When Mr. Bately inquired, he was told it was it was a “sole source” contract. Sole source is a procedure under which a contract is granted without going out to bid, because there is only one source for the service or product being sought. But how could the CHA issue a sole source contract, when it knew about Access Denied?
Among the documents Mr. Bately showed me was an e-mail from Mr. Anderson, dated December 1, 1998 and addressed to several colleagues in the operations division, that shows the CHA was aware from the outset that this was not a sole source situation: “I am planning to schedule a presentation of a security door and window product called Access Denied, which appears to be conceptually similar to the product marketed by Vacant Property Security…”
How much business has VPS received from the CHA? According to Mr. Bately, if you consider both the work the CHA has contracted for directly (including “add-ons”) and the contracts it has urged on private managers, it could be as much as $4 million over the last few years. Presumably, this is a question to which an investigation by the CHA could provide a precise answer.
In December of 2000, a vendors fair was held by the CHA for the purpose of bringing property managers together with companies offering services. Prior to the fair, Mr. Bately received a phone call from someone in the CHA purchasing department he had come to know who informed him that Access Denied had been deleted from the list of vendors and urged him to attend. He did so.
At the vendors fair, Access Denied engaged the interest of several property management companies—notably McCormack Baron, the company that manages the Ida B. Wells and Madden Park developments, which soon thereafter contracted with Access Denied to secure vacant units at Wells and Madden Park.
At the fair, Mr. Bately also met Duwain Bailey, who expressed interest in his product. (I recall having a conversation with Mr. Bailey soon after the fair in which he spoke enthusiastically about an alternative to VPS called Access Denied.) Since then, Mr. Bately has called Mr. Bailey repeatedly but has received no response.
In June of 2001, the CHA released a bid package for a contract worth roughly $2 million. Mr. Bately attended a prebid meeting conducted by Mr. Anderson. One of the ways in which an apparently open bid process can be skewed toward a particular vendor is by tailoring the specifications set out in the contract to that vendor’s product, so that only they can satisfy the terms of the contract. In this instance, the contract not only contained VPS’s specifications, they were presented in the bid document on VPS letterhead. Under these circumstances, Mr. Bately declined to bid on the contract.
According to Mr. Bailey, the CHA decided not to award the contract last year, because it was not satisfied with the bids from VPS and the one other vendor who responded. Instead, it extended its existing contract with VPS on a month-to-month basis. The upshot is that almost a year has passed during which no new bid package has been issued, and VPS has continued to enjoy its exclusive relationship with the CHA.
Several weeks ago, Mr. Anderson left the CHA and took a job with the City Department of Housing. At the end of last week, resident leaders and property managers informed The View that the VPS contract had been extended for another six months. We do not have independent confirmation of this from the CHA. If it is true, then VPS appears to be well on its way to securing via “add-ons” the substance of the contract that the CHA put out to bid and then withdrew last year. What has been the total dollar value of the VPS contract extensions during this period? This is among the questions that a proper investigation would answer.
Shut out by the CHA, Access Denied has been working at several developments under contracts with private management companies. Its most substantial contract has been at Wells. Both the resident leadership and the management company are enthusiastic about the quality of service they have received.
Sandra Young, the president of the Wells resident council and a CHA Commissioner, told me, “Access Denied is excellent. Their panels are attractive. They complement the buildings. They don’t stand out. We haven’t had a single instance of someone breaking in. And it’s much less costly than VPS. Also, they let you move the panels without charge.”
I spoke with three property managers who are now using Access Denied after using VPS. Each echoed the points made by Ms. Young. The Access Denied panels are more secure—VPS panels have repeatedly been breached, while Access Denied panels have not. They are aesthetically pleasing. And Access Denied is committed to hiring residents. “We’ve got several residents employed,” said Ms. Young. “We never placed a single resident with VPS. We forwarded names to them, but we never got a resident hired.”
Above all, Access Denied is far less expensive than VPS. As of the first of the year, the rental fees for an Access Denied door and window panel adequate in combination to secure a CHA unit were $45/month ($540/year). The least expensive VPS panels were priced at $126/month ($1,512/year). In other words, Access Denied prices are 71% less than VPS prices.
The price differential becomes still more pronounced when one considers that Access Denied allows clients to move panels from one location to another without charging a fee, while VPS does not. (For example, as one building is closed, panels can be moved to another building on the site without charge—a dramatic savings for developments undergoing relocation, demolition, and redevelopment.) Also, VPS installation techniques do damage to the door frame and threshold, necessitating repairs in those instances in which the unit secured is to be rehabbed. Access Denied installation techniques do not.
Property managers and resident leaders at two developments now working with Access Denied report that they have been approached by VPS representatives who have said they can match Access Denied prices. An illustration of how competition regulates prices, this also suggests the extent of VPS profits and waste of CHA resources under monopoly conditions. According to Mr. Bately, he makes “a nice profit” at prices 71% lower than those of VPS.
The point of this comparison is not to promote Access Denied. It is to raise as sharply as possible this question: In view of the urgent need to secure vacant units at CHA developments across the city, and in view of the CHA’s responsibility to make prudent use of limited resources in order to improve the quality of life for residents, how is it that a vendor offering a competitive, if not superior, product for securing vacant units at a significantly lower price has been consistently put at a disadvantage by the CHA while another vendor has been favored? Why has this situation been allowed to persist? How will it be corrected?
This account is based largely on information provided by Mr. Bately. It is one man’s perspective on a sequence of events on which there are no doubt other perspectives. The current CHA administration inherited the problem of unsecured vacant units and the arrangement with VPS. I know from conversations with Mr. Gayles, Mr. Bailey and other senior CHA staff that they are concerned about the VPS monopoly. They have indicated that they intend to correct the situation by issuing a new contract. But if similar patterns are to be avoided in the future and confidence in the integrity of the contracting process is to be restored, something more is required: a public accounting by the CHA in response to Ms. Washington’s request for an investigation.