Denial of Access to Access Denied: Part III

Collage of young child and sections of CHA contract for securing vacant units.

On October 16, 2000, the Board of Commissioners approved a modification of the CHA’s contract with VPS (contract #9351) in the amount of $450,000.00, bringing the total value of the contract to $1,814,300.00 The presentation to the Board by the CHA provides the following justification for the modification of the original contract

Because of several factors, including underestimating CHA’s needs under the original procurement, higher relocation rates than anticipated for the remaining family high rise buildings, the recently enacted City ordinance that requires improved security levels for vacant properties and concerns related to the heating of partially vacated properties over the coming heating season, it is recommended that the contract amount with VPS be increased by $450,000.

The presentation to the Board does not say anything about VPS’s performance under contract #9351. Was VPS fulfilling the terms of its scope of work in a cost-effective manner? The Board presentation says of the $450,000.00:

This amount should provide CHA with an adequate reserve to secure those units needing immediate and near-term security and to pay for second year rental costs associated with the use of the VPS product.

Does this $450,000.00 “reserve” represent additional work or does it represent cost overruns? If both, in what proportions? There is no way to tell from the CHA’s presentation to its Board.

Precisely for this reason, HUD did not initially approve the contract modification. A letter dated December 7, 2001 from Terry Peterson, the CEO of the CHA, to Linford Coleman of HUD, seeking approval of yet another contract modification for VPS, contains the following passage:

The CHA originally wrote HUD in October 2000 requesting approval to increase the above referenced contract by $450,000. This correspondence was apparently lost and CHA did not find record of a response to it. On August 3, 2001, the CHA forwarded a facsimile submission of this October 2000 letter to your office again requesting approval of a contract modification. Your response correspondence dated August 16, 2001 indicated that you could not approve this contract modification, as prepared, because the scope of the contract was unchanged. [emphasis added]

Mr. Peterson went on to explain that the scope of the contract had in fact changed:

Perhaps our original request was deficient in explaining that, in fact, the scope did change. The CHA originally bid out requirements for 1,100 units and was proposing the modification to secure 400 additional units, the rental cost of which totals approximately $450,000.

The letter then itemizes the door panels and window screens of various sorts covered by the original contract and the modification. It does not indicate whether the terms of the original contract were fulfilled. We do not know what the CHA got for its money.

In a letter to Terry Peterson dated March 22, 2002 Mr. Coleman ultimately approved the contract modification for $450,000.00.

* * *

From his base of operations in California, Mr. Bately repeatedly called Mr. Anderson to inquire about CHA work. Mr. Andersen would tell him that “nothing was going on.” Mr. Bately recalls him saying, “Any further work is up to upper management.” In early December of 2000, Mr. Bately called from California and spoke with Deborah O’Donnell of the purchasing department. She told him that there was lots of work available—with private firms that had taken over the management of CHA developments. There was, she informed him, a vendors fair to be held within a few days at the South Shore Cultural Center. “You were supposed to be on the vendors list, but a lot of names I put on the list have been deleted,” he recalls her as saying. “You must get here right away.”

Mr. Bately left immediately for Chicago to attend the vendor’s fair. At the fair and in the days following, he made direct contact with several property management firms which expressed interest in contracting with Access Denied. This led, among other things, to a substantial contract with McCormack Baron, the firm managing the Ida B. Wells and Madden Park developments.

Among the property management firms that expressed interest in the services of Access Denied was William Moorehead & Associates, the firm managing the Robert Taylor Homes. Access Denied entered into a verbal agreement with Moorehead & Associates to provide its services at Robert Taylor. Its bid for the specific scope of work would have resulted in a savings of $7,732.00 a month relative to VPS’s bid. Within a matter of a few days, Moorehead & Associates was told by someone at the CHA that they were not to do business with Access Denied. They were, in effect, forced to continue using VPS.

* * *

On April 11, 2001, the CHA issued an invitation to bid on a contract worth roughly $2,000,000.00 to provide steel door and window board-up. Access Denied sent a letter to Duwain Bailey, the CHA’s director of operations, protesting the fact that the bid package contained VPS’s specifications—on VPS letterhead. Mr. Bailey replied that Access Denied could respond to the bid using its own specifications. The CHA did not, however, correct the process for other bidders.

The bid opening was on June 1, 2001. There were three responses: two bids and one protest—from Access Denied.

The bid opening was set for 10:00 am. According to Mr. Bately, he and his son Nathan arrived at 10:02. Another contractor, having delivered his bid, was leaving the room as they entered it. Thomas Serafini of the purchasing department told them, “You’re late. We can’t accept your bid.” He refused to take the envelope proffered by Nathan. Nathan then opened the envelope. “Now you have to take it,” he said and handed Mr. Serafini what proved to be not a bid but a letter of protest. “I have to take it,” replied Mr. Serafini, “but I don’t have to read it.”

VPS, it turned out, had bid on only part of the contract. The CHA determined that its bid was “non-responsive” because it had added “additional terms and conditions.” The other bidder was determined to be “non-responsible for being incapable of performing the volume of services in the time required.”

* * *

On November 20, 2001, the Board of Commissioners approved another modification of contract #9351 in the amount of $300,000.00, bringing the total value of the contract to $2,114,300.00. The presentation to the Board referred to the unsuccessful bid solicitation in June:

Until a new procurement can yield responsive and responsible bidders, the CHA must still be able to secure vacant properties from trespass and inclement weather in order to prevent further damage to the properties and to prevent the creation of dangerous and hazardous conditions to the residents.

I know from conversations with CHA executives during this period that they fully appreciated the urgency of securing vacant units and that they were uneasy about the VPS “monopoly.” Because of the CHA’s inability to put out a successful bid, however, VPS nevertheless emerged with more work on an exclusive basis.

The presentation to the Board also stated:

While VPS performs the additional services pursuant to the latest amendment to the existing contract, the CHA will proceed with a competitive procurement in the form of a Request For Proposal (RFP) to encourage more competitions for this service and encourage more vendors to submit proposals.

In the December 7, 2001 letter from Mr. Peterson to Mr. Coleman, the CHA says of the RFP: “The timeframe for issuance is early January 2002.” In fact, the bid solicitation would not be issued until mid-June.

The Board presentation describes the scope of work under the modification:

The $300,000.00 amendment would provide CHA with an adequate reserve to secure approximately 280 new units needing immediate and near-term security this winter, consisting of approximately 280 security doors, 300 large screens and 250 small screens.

A March 22, 2002 letter from Mr. Coleman to Mr. Peterson makes reference to a letter sent by Mr. Peterson on February 22, 2002—this letter was not among the materials released to Access Denied—and includes the statement that the $300,000 contract modification “is for a one-year extension of rental fees for the security screens installed under the basic contract.” So it appears that the $300,000 was not used to secure new units as had been represented to the Board but to pay rental fees on security screens already in place.

Again, the presentation to the Board of Commissioners did not include any assessment of VPS’s performance under the original contract or the $450,000.00 modification.

No change in the term of the contract was requested by the CHA in the draft resolution presented to the Board—the contract was to end on March 30, 2002—but in subsequent communications with HUD the CHA requested and received an extension of the contract until March 30, 2003. It is not clear from the documents secured thus far under the Freedom of Information Act whether the Board was aware of the contract extension.

* * *

On January 15, 2002 at the monthly meeting of the 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. Board Chair Sharon Gist Gilliam told Ms. Washington that the Board would look into the matter. Two months later, at the March 19 Board meeting, Ms. Washington inquired about the results of the investigation. The Commissioners did not respond to her question. Ms. Washington is, she says, “still waiting for a response from the Board.”

On April 22, The View published an article titled “Denial of Access to Access Denied.” The article elicited no response from the CHA, but it brought a swift response from VPS. The View received an e-mail from Frank Cureau, president of VPS, protesting the article and characterizing it as “entirely deflamatory [sic] and without substance.”

Mr. Bately received a letter from VPS’s attorney accusing him of “making false statements about my client in an effort to interfere with Vacant Property Security, Inc.’s business relationship with the Chicago Housing Authority.” The attorney wrote:

Please be advised that if the conduct of you and your company results in any loss of business, existing or prospective, to my client, then I will advise my client of its litigation options against you and your company. These false accusations must cease immediately.

I asked Peter Bately about the legal threat from VPS. “My issues are with the CHA,” he told me, “not with VPS. As far as I’m concerned, VPS saw a business opportunity and pursued it. I can’t fault them for that.”

VPS also appears to have responded to the article in other ways. I had quoted Sandra Young, president of the Ida B. Wells resident council and a CHA commissioner, on VPS’s record in hiring residents, “We never placed a single resident with VPS. We forwarded names to them but never got a resident hired.” Within 24 hours of the posting of the article, VPS had hired three residents at Stateway Gardens.

There were also reports from Madden Park that VPS was retrofitting panels it had installed there, although demolition was to begin within a matter of days. Were they trying belatedly to conform to the specifications in the contract for the work at Madden Park?

* * *

The long-promised “request for proposals” (RFP) that the CHA told HUD would be issued in “early January 2002” was finally issued on June 14, 2002. It was sent to Access Denied via regular mail. Postmarked June 19, it was delivered on Saturday, June 22. They opened it on Monday, June 24 and found that the pre-bid meeting was scheduled to be held that day. The deadline for responding to the RFP was July 9.

Access Denied, which has entered into rental contracts with a number of housing authorities across the country, found the RFP unacceptable. “They ask for trade secrets,” said Nathan Bately. “For a proprietary product, it’s unheard of.” Specifically, the RFP asked for a breakdown of all costs and profits, for shop drawings showing details of design and installation, and for the right to commercially exploit any copyright or patent developed in the performance of the contract. It also explicitly exempted the CHA from being required to pay in a timely manner: “The CHA’s obligation under the contract is contingent upon the availability of appropriated funds from which payment for contract purposes can be made.” In effect, the contract commits the vendor to provide its product and services, but does not commit the CHA to pay for those products and services in a timely manner.

The CHA received no responses to the RFP. Thus, over the last 16 months, it has made two unsuccessful solicitations for bids. The result has been more business for VPS: operating under the extension of contract #9351 to March, 2003, the CHA continues to give VPS work on an exclusive basis.