This inquiry into the CHA’s management of contracts for securing vacant units has demanded close attention of the reader. The story resides in the details. In order to understand this corruption of the contracting process, one must enter into its molecular structure; the alternative is assertion and counter-assertion in a medium of generality where nothing can be resolved. Also, in view of the gravity of the issues we raise, we have felt obligated to make available our underlying evidence, in the hope that others will scrutinize, correct, and extend our inquiry.
As we emerge from this maze of documents, several questions stand forth in bold relief:
Has VPS fulfilled its scope of work under contract #9351 and its modifications? The CHA presented to the Board contract modifications of $450,000.00 (approved on October 16, 2000) and $300,000.00 (approved on November 20, 2001). In both instances, there is reason to question whether the additional funds covered additional work or cost overruns. HUD initially withheld approval of the $450,000.00 modification “because the scope of the contract was unchanged.” (More than a year after its request for approval of the modification, the CHA returned to HUD with information about specific work covered by the $450,000.00.) In the case of the $300,000.00 modification, the CHA told the Board that the additional funds were necessary to secure some “280 new units needing immediate and near-term security this winter,” and it told HUD that the funds were “for a one-year extension of rental fees for the security screens installed under the basic contract.”
These inconsistencies could be resolved by full disclosure of VPS’s performance in fulfilling its scope of work as of the dates the CHA sought Board approval for the contract modifications. A full assessment of VPS’s performance would address the following questions:
Apart from contract #9351 and its modifications, what contracts has VPS entered into with private management firms hired by the CHA to manage its developments? What role, if any, have CHA staff played in VPS’s pursuit of such contracts? There is evidence that CHA personnel may have advanced the interests of VPS in relation to private management firms while frustrating the interests of Access Denied. It appears that someone at the CHA deleted Access Denied from the list of vendors invited to present at the vendors fair held in December, 2000. And someone at the CHA is reported to have coerced the property manager of the Robert Taylor Homes to withdraw from an agreement with Access Denied. The CHA could clarify matters by disclosing the extent of VPS contracts with private management firms and the role CHA staff played in the process by which VPS acquired those contracts.
Assuming that other independent investigations corroborate The View’s account, what should be done to rectify the situation? Access Denied argues that it has suffered significant loss of business it would have had a reasonable expectation of securing, were it not for contracting improprieties at the CHA. I asked Mr. Bately what he intends to do. “My attorneys are preparing to seek a legal remedy to this situation,” he said. “I haven’t yet decided to proceed, but currently it seems all but inevitable.” I pressed him on what he would regard as an acceptable outcome. “If Access Denied was adequately compensated and a sensible system was put in place,” he replied, “I would be satisfied. All I ask is to be treated fairly.”
Mr. Bately, Ms. Washington, Commissioner Young, and several property managers I spoke with agree on what “a sensible system” would look like: instead of a single, centralized contract for the securing of vacant units, the CHA should make funds available to the property management companies, and they should be free to select the contractor they want in a competitive context free from interference by CHA staff. Over the last few months, in informal conversations, senior CHA officials have indicated that they incline toward such a system. Why, then, in view of the urgency of securing vacant units and the failure of two bid solicitations over the last sixteen months, isn’t such a system in place now? What will it take to establish it?
What are the larger implications of this inquiry into the CHA’s handling of a single contract over time? What does it disclose about the contracting process? What can be learned from it? An essential element of the Plan for Transformation has been the transformation of the CHA itself. It no longer directly manages public housing developments but rather has contracted with private management firms for the purpose. It no longer provides services to residents but has contracted out those functions to various agencies. And now it is entering into agreements with developers to rebuild whole neighborhoods. (For example, at its July meeting, the Board of Commissioners committed $57.7 million to the redevelopment of Stateway Gardens by the Stateway Associates development team.) The CHA has, in effect, become an agency the central function of which is negotiating and managing contracts. Questions about its capacity to solicit, manage, and monitor contracts thus bear on its essential mission. Among the questions that need to be addressed:
What mechanisms of internal monitoring are required in order to provide the Board with the information it needs to perform its oversight function? At the July 10 meeting of the Operations & Facilities Committee of the Board of Commissioners, the first six items on the agenda involved modifications of various contracts. The total of the six modifications came to $5,359,866.40. In each instance, members of the Committee questioned the CHA staff and contractors presenting the proposed contract modification. In each instance, Commissioners voiced their determination to break with the patterns by which funds allocated for providing affordable housing to those in need are siphoned off by contractors. And in each instance the Committee approved the modification. Perhaps each of these modifications was warranted. But what sorts of information does the Board need in order to perform the role it aspires to play in this area? What mechanisms of Board oversight might be created to enable it to identify the sorts of improprieties described in this series of articles?
How might the bid process be reformed in order to avoid deterring quality contractors and inviting improprieties facilitated by the absence of competition? Twice in the last sixteen months the CHA has solicited bids for the securing of vacant units. In both instances, the bid solicitations were unsuccessful. In private conversations, CHA officials have expressed frustration with Access Denied. “How can we give Bately work,” one asked, “if he won’t bid?” It might be fruitful to turn the question around: why would a contractor eager for work make a considered business decision not to bid on contracts offered by the CHA? Do the problems perhaps reside in the substance of the bid requirements and in the manner in which the bid process is conducted?
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The View began its coverage of the problem of unsecured vacant units on June 17, 2001 with a story titled “In Memory of Eric Morse: Part I.” At the time, the CHA was contending with a civil suit brought by the family of Eric Morse, the five-year-old child dropped by two other children from the fourteenth floor window of an unsecured vacant apartment at the Darrow Homes on October 13, 1994. The suit charged that the CHA and a private management firm were liable in Eric’s death due to their failure adequately to secure vacant units. On November 7, 2001, on the eve of jury selection, a settlement was reached under which the CHA and the management firm agreed to pay the Morse family $2.75 million. The settlement came ten days after a deposition from former CHA director Vince Lane in which he said that the housing authority had failed to follow its own policies with respect to the securing of vacant units.
A dead child named Eric Morse has come to symbolize the human costs of not adequately securing vacant units. Those costs take various forms: criminal activity, unauthorized residents, and, in general, exposure of CHA residents to avoidable dangers. In light of the Morse case, I do not doubt that the CHA is acutely sensitive to the potential human and legal consequences of inadequately secured vacant units. It seems clear that its substantial investment in contract #9351 and its decisions to extend that contract, in the face of protests from other contractors and calls for investigations by resident leaders, have been motivated by these concerns. But has corruption of the contracting process defeated its efforts to protect residents from harm and to reduce its liability?
A property manager at a CHA development who has made use of both VPS and Access Denied shared with me a cost comparison he had done of the two companies. Even if Access Denied was not substantially less expensive, he told me, his firm would still use them over VPS because of the frequency with which VPS panels have been breached. “From the standpoint of reducing our liability,” he said, “it’s a much better product.”
In view of the apparent mismanagement of contract #9351, the pattern of VPS panels being breached, and the failure of the CHA to correct the situation once it was brought to the attention of senior staff, what sort of defense will it be able to offer in the next Eric Morse case?