When budget discussions at the Frankfort Plant Board heat up in the coming days, a three-year contract for Dunkin’ Donuts coffee at plant board offices likely won’t raise a lot of eyebrows.
But what the coffee contract will wind up costing may explain why General Manager Jim Smith was fired Feb. 22 after less than two years on the job.
The State Journal has identified a number of contracts worth more than $20,000 each that weren’t publicly bid and appear to violate the state’s Model Procurement Code for purchases of more than $20,000, which the plant board follows.
Other contracts for lesser amounts appear to violate FPB’s internal policy to obtain three price quotes for purchases between $2,500 and $20,000.
The contracts in question, some of which weren’t approved by FPB’s Board of Directors, total more than $140,000, not including an agreement for credit card processing that has no set annual amount but is budgeted at $250,000 per year, according to records obtained by The State Journal through open records requests.
Some are with firms or individuals who worked with Smith on projects during his time as director of College Park Power, a public utility near Atlanta, from 2001 to July 2010, when he was hired at FPB, records show.
Another involves security services from off-duty Franklin County sheriff’s deputies and, for one shift, Constable Floyd Hockensmith.
The plant board could not produce requests for proposals, bids, price quotes or, in some cases, written contracts for the agreements in question.
FPB also could not provide The State Journal written determinations by Smith that competitive bidding wasn’t feasible for some of the contracts that exceed $20,000, which is required in the plant board’s procurement policy when forgoing the public bid process.
Here’s a closer look at some of the questionable contracts during Smith’s time:
nFPB signed a contract that was budgeted for up to $250,000 for credit card processing with Main Source Bank July 27, 2011, after the board approved the contract.
According to an agenda request for the July 15 FPB meeting prepared by former Assistant General Manager Ron Thomas, who signed the contract and was fired alongside Smith, the move would eliminate the $3.95 convenience fee for customers who use credit or debit cards to pay monthly bills.
Main Source would charge 0.86 percent per transaction, meaning a total annual cost wasn’t available, Thomas wrote, but FPB budgeted the $250,000 anyway.
Thomas said in his agenda request that FPB requested proposals from four banks for the service and received responses from three – Main Source, Fifth Third Bank and Farmers Bank.
However, the plant board could not produce any requests for proposals for credit card processing as required in the public bid process. FPB received formal proposals from Main Source and Fifth Third, but Farmers Bank emailed general information on its credit card processing service.
nAt the same July 15 FPB meeting, the board approved a $32,729 proposal from Fifth Third for lock box services as requested by Thomas.
Under the agreement, plant board customers would mail bill payments by check to a new post office box in Frankfort, and the bank would process those checks at a Cincinnati processing center, according to the agenda request. Thomas wrote that the service would provide faster payment processing and save time for FPB staff.
Again, Thomas said in his agenda request that the plant board requested proposals from four banks and received responses from Main Source, Fifth Third and Farmers.
However, FPB could not produce any RFPs in regard to lockbox services. Fifth Third and Main Source submitted formal proposals while Farmers emailed Thomas a copy of its contract for lockbox services.
Thomas signed the contract Jan. 27, records show.
nThe plant board had cost-of-service studies performed for FPB’s electric, water, cable and telecommunications services after Smith was hired as general manager.
John Lansing, a consultant with the Electric Cities of Georgia, performed the study of FPB’s telecommunications and earned $28,000 total – $8,000 more than the threshold for public bid.
Lansing also evaluated the plant board’s cable and Internet costs, though his invoices only list telecommunications as his area of focus, records show.
Lansing is a former consultant with the Municipal Electric Authority of Georgia, working there until 2002, according to his profile on ECG’s website. College Park Power, where Smith served as director before coming to FPB, is one of 49 Georgia public utility companies that receive wholesale electricity through MEAG Power, according to MEAG Power’s website.
FPB could not find any formal contracts, RFPs or proposals for the telecommunications cost-of-service study in response to an open records request from The State Journal.
nThe plant board contracted with SDS Research, a Salt Lake City, Utah, company that specializes in customer service studies.
Thomas signed a contract with SDS Aug. 30. The contract, worth more than $26,000 total, says SDS will charge $14,650 in fiscal year 2012 and $12,100 in fiscal year 2013 for the study.
However, the Model Procurement Code explicitly says public entities cannot split payments between fiscal years in order to stay below the $20,000 threshold for public bids.
Smith is quoted extensively in a 2004 article from the American Public Power Association about the benefits of working with SDS Research and Todd Morris, the firm’s marketing director who made a presentation to the plant board before the survey, during his time at College Park Power.
“… As a new employee who had come to public power from another utility, I had lots of experience conducting market research,” Smith said in the article.
“I understood the value of what customer surveys can do and why it’s important to measure and document what customers want. SDS helped us explain to the council the wisdom of hearing from what we call ‘the silent majority.’”
Morris attended an October board meeting to go over the customer service survey process and commented that he and Smith had worked on similar surveys together when Smith was director of College Park Power.
FPB could not produce RFPs or proposals related to customer service surveys in response to an open records request.
nThe plant board entered a three-year contract with Aramark for Dunkin’ Donuts coffee, Swiss Miss hot chocolate, tea, four coffee brewers and other supplies for each of its offices starting Dec. 8, 2010.
The contract, signed by FPB’s purchasing agent Leigh Ann Phillips, had no set amounts, but records show payments had totaled more than $20,000 as of May 30.
FPB’s Board of Directors discussed the contract during budget talks at its June 14 meeting. While FPB can’t cancel the Aramark contract, Director Patricia Lynch said the plant board could save money by picking a cheaper brand of coffee.
“Apparently what’s being provided now is top-of-the-line price, which was the favorite coffee of the prior general manager,” she said, referencing Smith. She said staff was not surveyed on the matter before the plant board entered the contract.
FPB could not find any RFPs or proposals related to coffee services.
nAfter recent copper thefts on FPB property, a workgroup of plant board employees suggested improving FPB’s security system and asking local law enforcement to increase patrols around FPB property late last year, The State Journal has learned.
Instead, off-duty deputies with the Franklin County Sheriff’s Office, plus Constable Floyd Hockensmith on one shift, were hired for daily eight-hour overnight shifts at $30 per hour plus gas reimbursements.
The arrangement was not formalized in a written contract and cost the plant board more than $13,000 in wages and gas reimbursements from Jan. 6 to Feb. 24, two days after FPB directors fired Smith and Thomas at a late-night meeting, payment records show.
Thomas, through his assistant Kathy Poe, requested that FPB’s finance office create a security ledger for the service, according to a memo obtained by The State Journal through an open records request.
The Jan. 17 memo says security “will be an ongoing service provided by the sheriff’s department to FPB,” but it does not mention an end date.
Had the arrangement continued uninterrupted, wages alone would’ve totaled more than $20,000 by late March. Gas reimbursements paid by FPB averaged $150 per week and ranged from $7.98 to $40.66 per transaction, gas card receipts show.
The plant board could not provide a contract, RFPs, proposals or price quotes for security services.
nSmith actively pushed for a new consolidated FPB headquarters once he arrived at FPB and hired MDG Development Group, a Dallas-based development firm that also has offices in Savannah, Ga., and San Diego, Calif., to perform an evaluation of FPB’s facilities.
The group earned $8,500 for its work, payment records show.
Kent Gregory, owner of MDG Development Group, told the Board of Directors at a December 2010 meeting that FPB’s facilities were crowded and recommended moving to or building a bigger facility.
Gregory made a similar pitch alongside Smith to the College Park City Council for a new power operations facility at a February 2010 meeting, according to a workshop agenda posted on the council’s website.
What’s more, FPB directors later authorized up to $10,000 for Gregory to estimate the costs associated with fitting the RJ Industries building for a consolidated headquarters. Invoices came back from Acertus, a Kansas-based consulting group, totaling $11,500 for the work, records show.
The total price tag for evaluating FPB’s facility needs cost exactly $20,000, records show. FPB has purchased 30 acres of property at the Carpenter Farm from the city but has not committed to building a new headquarters.
While the individual firms did not collect more than $20,000 each and the board authorized the RJ Industries study, the plant board could not produce three price quotes for MDG Development Group’s consulting services as required in its internal procurement policy.
When reached by phone Thursday, Smith declined to comment specifically on the contracts in question.
“As far as I was concerned, we complied with everything,” Smith said. “… At this point it really doesn’t concern me anymore, so there’s not much I can tell you.
“They decided to pursue the contracts at the time, and we got what we felt were in the procurement limits.”
When asked about his familiarity with Lansing, Morris and Gregory, Smith said, “Those are people that we (FPB) had used over time.”
He declined further comment.
Smith and Thomas were fired without cause Feb. 22, but their terminations didn’t take effect until Feb. 29. The former general manager received six months pay of his more than $133,000 salary plus health insurance coverage.
Directors have been mum about Smith’s ouster, but board Chairwoman Sheila Burton said procurement had been the subject of “tense” discussions between the board and management for months.
“There were questions raised about why we were procuring things, what process had been used, and some of those discussions became pretty charged,” she said during an interview in her office Thursday.
“I think that’s indicative that the board was concerned with this area of plant board operations.”
Burton declined to comment when asked specifically whether spending concerns led to Smith’s firing, citing his termination without cause.
She said she doesn’t question the legality of some of the contracts, like the one with Aramark, “as much as I would question whether or not they were done in the spirit of transparency.”
Still, directors weren’t aware of the working history between Smith and some of those contracted by the plant board, Burton said.
“I would not be as concerned that there are so many contracts that obviously the past general manager had some relationship or connection with the contractor if we had followed competitive procurement processes and they prevailed out of that process,” she said.
Burton said Smith told her the SDS Research contract had been publicly bid.
She noted directors blocked an attempt to approve a contract worth about $200,000 for a new phone system that hadn’t been publicly bid in May 2011.
Thomas called the phone system a critical issue and asked that it be declared an emergency in order to expedite the process, according to a previous State Journal story. Smith said he would consider an emergency declaration, but the project was later publicly bid.
Burton said the board has strengthened FPB’s procurement and other policies by adding more accountability to them.
“I think the board has been moving in that direction, and, again, I can’t see the board backing away from expecting accountability for expenditures that we are asked to approve, even if we’re approving them overall in the budget,” she said.