Even an Overseer Needs Oversight

Heeryly Absent

Originally posted on CityStink
June 9, 2013
Augusta, GA
by Lori Tabb Davis
Contributions were made to this article by Al M. Gray, President of Cost Recovery Works, Inc., a provider of Cost Avoidance and Cost Recovery for America’s leading companies, businesses and governments desiring Superior Returns.
The entire hullabaloo over extension of Augusta’s Project Management contract with Heery International involving community liason Butch Gallop, campaign contributions, gifts to county commissioners, and other hysteria, brings one repetitive thought. Where is the oversight over the Heery overseers?
Can I say totally absent? For certain it is stunningly absent.  For now, I brand it Heeryly absent.
When our Augusta Today and Citystink.net team of contributors submitted Georgia Open Records Act requests regarding the Heery contract itself and various contract documents from projects that Heery is and was being paid to manage, control, and supervise for the City of Augusta, we found absurd contradictions with Heery’s role as overseer.
When we looked in the contract and elsewhere for the project procedures manual governing Heery’s performance of the work, we learned that Augusta had none. Our sources told us that an early effort to adopt one was squelched.
  1. Because there was no project procedure manual, perhaps that was the reason that there was no job progress photography protocol to provide us with date-stamped color photos, accompanied by delivery and storage details, of the infamous Tee Center Kitchen Equipment, only black and white pictures of boxes in an unidentified, undisclosed location.
  2. Because there was a lack of coordination of design documents for the Tee Center and already-operating Conference Center, perhaps that is why my open records request for the design of the HVAC for the Tee Center and Conference Center dating back to the days when the Marriott was a Radisson was met with a data disk with blank directories from the city. I fault Augusta for that, but if Heery is Augusta’s Program Manager, shouldn’t they make sure old and new documents are better coordinated?
  3. Because it looks like general contract limits on change orders do not appear to carry through to subcontracts, eye-popping amounts of Augusta’s funds could be in jeopardy.
  4. Heery, if I understand correctly, was paid rates up to and exceeding $200 per hour to provide such services!
  5. The new estimated costs Heery wants to extract from Augusta has been presented at an increase of $1.6 million, including a $149,000 increase/ overrun for the Tee Center, a project that was a total disaster from A to Z.
If Heery is kept, at least $350,000 needs to be cut from that 1.6 million dollar number! I think if all aspects of it were examined, the number that could be cut would be triple that.
How about oversight allowed to Augusta to oversee the overseer Heery by their contract? That was Heeryly absent, too.
  1. The contract cost was put on auto-pilot with 4% annual rate escalation built into the original 2004 Contract. This continued until 2011, when Heery billed slightly lower rates and continued to do so into 2013. The 4% escalation remains, with a consumer Price Index adjustment. With inflation likely to pick up, who knows what the rates will be with compounding like Augusta has seen.
  2. The 2004 contract allows confirmation of the direct cost classification of Heery’s employees without providing what the billing classifications are in terms of employee education, qualifications, certifications, and experience. It sure looks like the program manager Heery has wide latitude to assign people to this contract without Augusta really having the criteria set for their billing rates! (Does Butch Gallop ring a bell? What is a community liason anyhow?)
  3.    The contract does not provide for proof of the direct costs of Dukes, Edward, Dukes or Gallop and Associates, who are not Heery employees, but Heery “sub consultants”.  What are they?
  4.  Access is restricted to “accounting records”, when it is probably the Heery personnel files that would best be used to verify billing classifications.
  5.  There is a statement –  “Owner may only audit accounting records applicable to a cost reimbursable compensation” This sure sounds like the negotiated rates are sacred and cannot be analyzed by Augusta. Such limitations must go. When paying millions of dollars for professional services, shouldn’t Augusta be able to audit anything that touches on what the city is getting?
Our team’s investigative efforts have born amazing results for Augusta and it is a shame to see them stymied by restrictions on audit rights. We saw that the Messerly waste water contract with ESG mandates that Georgia Open Records access be extended to every significant subcontractor. Subcontracts and major supply orders under Heery-managed general contracts need to be brought in line with that standard too. We cannot help if we are stonewalled by contractors and the administration.
After the numerous controversies and fiasco’s involving Augusta projects, Butch Gallop and Associates, the Tee Center, and Tee Center parking decks, it is clear – the overseer needs oversight and the Augusta administrator, starting with George Kolb and continuing under Fred Russell,  has not provided it, he has avoided it. Heery, understandably aiming to please the client, looks like it became a rubber stamp.
If the Augusta Commission extends this contract, citizens should expect better controls, refunds of any miscalculated rate overcharges (if any exist), and lowering of rates to reflect known factors favorable to Augusta. Augusta needs to ditch Butch Gallop now, too.
Our Augusta reformers love old movies and I used to get all into being Lois Lane. Here is a segment that came to mind as I pondered all of this.

“You…you’ve got me, who’s got you?”

Harrisburg in Augusta is in free fall. Deke Copenhaver might be an Ironman, but he is no man of steel. Heery has him, but who has Heery?  Looks to me nothing but hot, stagnant city air.
Somehow I think both would just as soon see me, go splat. Augusta too, if there is a dime involved for them to get.

–    LD

City Stink Exclusive: The TEE Center LLC Trap

TEE Center under construction on Reynolds Street
**City Stink Exclusive!**

Originally posted on CintyStink
Jan. 11, 2012
Augusta, GA
By Lori Davis
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article.
On December 1, 2011, several weeks prior to the Augusta Commission’s vote to engage a forensic auditor to investigate the Tee Center Deck ownership fiasco, I submitted an Open Records request To the Augusta Law Department in an attempt to get to the bottom of  the confusing procession of statements coming from Administrator Fred Russell, Mayor Pro Tem Joe Bowles, and others. I received a response to this request from Staff Attorney Kenneth Bray on December 15, 2011. (See pdfs at bottom.)
Most of the information provided dealt with the Laney Walker Overlay. Most of the rest was missing any dates, including the negotiation term sheet (see pdf at bottom) and a schedule which was labeled as a modification (see pdf). The total packet was about an inch and a half thick. After skimming the documents, I called upon Augusta Today and CityStink.net contributor and cost recovery analyst Al Gray to assist in completing my review.
What we found was stunning new information buried in the document pile. I will get to that later.
The first item requested was information relating to the land under the Tee Center Deck being security for any loans or bonds. Since the bonds were known to be general obligation bonds and were tied to the Laney Walker project funding, this was precautionary, with no documents necessarily expected to come back from the Law department. They provided the bond package for the combined Laney Walker and Tee Center funding.
Emails and any other correspondence relating to the deck between any and all Augusta government parties were requested. None were returned. The Law Department cited pretty wide attorney-client privilege. I was very disappointed by that, given publicized remarks attributed to outside counsel Jim Plunkett about events surrounding the failure to have the various parcels under the parking deck donated by Augusta Riverfront LLC. Much has been said of discussions of air rights. I hoped to get clarification of that. It looks like the forensic auditor might run into immediate stone walling, based upon the response to my inquiry.
Since Mayor Pro Tem Bowles has spoken on The Austin Rhodes Show and elsewhere of  having saved the city $1.5 million due to the ownership and financing, I thought that the request would have at least produced the analysis upon which he was basing his claimed savings. I guessed wrong. Do you suppose the savings are the same place as Augusta taxpayers’ property rights with the deck, which is “up in the air?”
A really obscure document I requested was an insurance certificate from Tee Center and Deck contractor R.W. Allen to Augusta Riverfront LLC, as an additional insured during construction. While this document is not one that Augusta would have in its possession, Augusta’s program manager Heery International probably should have it and it should have been accessible.  Not having this insurance document suggests that R.W. Allen thought it was working on land owned by Augusta government, not owned by Augusta Riverfront LLC. It also suggests that program manager Heery was caught off guard too.
I couldn’t form any conclusions as to whether the land under the decks owned by Augusta Riverfront LLC was to be donated or not because the documents provided conflicted on this point and had no dates to tell me what the final word was. The dating is critical. There was an undated “modification” to the Augusta Riverfront Term Sheet in the package. It might have been created last week, for all the public knows.
The undated, unsigned “Management Agreement Term Sheet” between the City of Augusta and Augusta Riverfront LLC  in paragraph 6 states “LLC will transfer to Augusta that portion of its property needed to develop the Trade Center and parking, adjacent to the Convention Center. This land transfer, which will not include air rights, will be a no cost to Augusta.” This term sheet seems to have been modified to reverse this part of the transaction.  With no dates, it isn’t possible to tell the sequence of events. (see pdf at bottom)
What is clear is that Commissioner Johnny Hatney was told several times by Administrator Fred Russell that the land under the deck owned by the LLC was going to be donated at the December 7, 2009 meeting  at which the Tee Center was approved by the Augusta Richmond County Commission. Russell did not clarify that only limited air rights were donated. I think most of the public thinks his talk of “property that’s going to be donated” means just that, not “air rights.” Besides, there are schedules that were presented to the commission that show the value of the “Donated Property,” $464,353, as being the assessed value, not plus or minus the “air rights.”
Amazingly Parcel 037-3-047-00-0, land under the $38 million Tee Center itself,  remains owned by Augusta Riverfront LLC.  There have been no recordings with the Clerk of Court office documenting any changes in the ownership rights with this piece of land, including air rights. As precise as the legal documentation of land ownership and rights is, isn’t it wild that this could happen?
Augusta built $50 million of buildings, some costing nearly $200 per square foot, on land it only partially owns. The taxpayers might get the ‘air rights’ to a parking deck they paid $12 million for. The LLC’s get guaranteed fees and to keep the property, which gives them dominance over the entire complex forever. 1
“Donation” now means having your cake and getting paid to eat it too.

Fred thinks this was a bargain.
A forensic audit cannot happen soon enough, and trust me, we will be watching every step of the way.

1. According to the detailed term sheet, the public was guaranteed not much more than that the LLC bears losses after the operations loses $250,000 of the public’s money and that figure excludes depreciation and interest. The public would bear those in addition to the losses. According to the modification provided this was changed to the LLC’s getting fees and the public taking the gains and losses from operations.
Augusta Tee Deck Open Record Request Response
Tee Land Acquisition Documents
TEE Center Term Sheet Document
Term Sheet ModificationsUndated Current Tasks Including Deck Info