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Detroit cleared…for now

Investigator clears city demolition programme of wrongdoing.

Controversial meetings between city officials and specific contractors to discuss federally-funded demolition work before public bidding didn’t violate written rules, but they weren’t transparent and gave the impression of “preferential treatment,” an independent investigation has ruled.

The findings from an investigation of Detroit’s Office of the Inspector General, which spanned more than three years, are detailed in a 26-page report published Wednesday regarding the programme that remains the focus of a federal criminal investigation.

The city’s programme came under scrutiny in fall 2015 amid concerns over bidding practices and spiralling costs. It’s since been under the scrutiny of state and local probes as well as a federal grand jury.

“Based on our review of documents and interviews conducted for this particular matter, we conclude the large-unit contractor meeting did not violate any existing (Detroit Land Bank Authority) policies pertaining to the use of the Hardest Hit Funds,” the report issued by the office of Detroit Inspector General Ellen Ha reads. “However, engaging in a meeting that was not open to all contractors unnecessarily gave the appearance to the public that an improper activity was taking place behind the closed door.”

The report goes on: “Therefore, while we find no evidence of waste, abuse, fraud or corruption in the demolition procurement process for the large-unit contractors, we find that the large-unit contractor meeting was improperly limited to select contractors, as we have a duty to conduct our business in the most open and transparent manner possible.”

At issue was a 2014 set-price pilot program for bulk demolitions. Three of the four local contractors participating in negotiations — Adamo Group, Homrich and MCM — were the sole bidders after the project was publicly offered. They were awarded the work.

Mayor Mike Duggan has said the move was designed to attract firms able to handle big bundles of demolitions as the city moved with urgency to raze homes and meet a deadline to draw down federal dollars earmarked for the program. The effort was discontinued shortly after.

Demolition officials have said the set-price contract was based on the city’s average pricing of all of its competitive demolition bids and sought contractors with the capacity to raze 800 houses in two months.

The pricing for bulk demolitions — 52 cents per cubic square foot — was crafted to increase production and attract large national contractors.

The inspector general’s office, in its investigation, sought to determine whether the land bank had engaged in waste, fraud, abuse or corruption by holding the large-unit contractor meetings prior to the official release of the request for qualifications.

The investigation found there was no evidence of an “unfair awarding” of the contracts, nor evidence of “kickback,” but all city business should be conducted transparently.

“Based on the evidence gathered, the OIG concludes that the large-unit contractor meeting lacked fairness, openness and transparency. Though the authorities did not violate any of their written policies, this process unnecessarily gave the impression that Adamo, Bierlein, Homrich and MCM were given preferential treatment,” it reads. “Because we (the City of Detroit) have endured a history in which select contractors were being favoured and contracts were issued without a competitive bidding process, it is all the more important now that we, as a public body, have an open and transparent contracting process.”

Read more here.

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