Bidder cries foul after Metro takes back flood cleanup contract

Sunday, May 16, 2010 at 10:45pm

In the first days after Middle Tennessee’s great flood of 2010, a dramatic controversy involving public health and millions in public money played out in Nashville with little public notice. Its consequences may yet cost the city plenty.

But the reasons why this dispute arose are as murky as the waters that covered communities across Nashville and beyond.

We know these facts: Metro procurement officials, worried about the possibility of dangerous bacterial and mold growth in the flood debris that citizens have piled along curbsides across the county, set out to hire help that could begin to get rid of the piles as soon as possible. They offered a contract to Bamaco Inc., a disaster-recovery firm based in Bunnell, Fla., that was the low bidder in Metro’s request for proposals. And they took that offer away from Bamaco the same day they made it, claiming the company had failed to meet performance-bond requirements.

Metro instead gave the work to Storm Reconstruction Services Inc. and the DRC Group, the next two bidders in line. “Contracting with the next lowest bidders will be approximately $4 million more expensive for Metro than if Bamaco performed the work,” the company alleged in a lawsuit filed against the city on Monday, May 10.

That morning, Davidson County Chancellor Carol L. McCoy denied Bamaco’s request for a temporary injunction that would have allowed it to take back the work from SRS and DRC. Bamaco’s lawsuit now appears to be mainly focused on extracting damages from the city.

Its lawyers have also suggested that bidding irregularities could lead the federal government to strip Metro Nashville of the aid from Washington that it is counting on as flood recovery efforts continue.

We don’t know why Metro Purchasing Agent Jeff L. Gossage and Bamaco personnel recount such different versions of their May 6 conversation over when Bamaco was supposed to furnish its bond, or why Gossage allegedly said he “never had any faith in Bamaco in the first place” as he pulled its contract.

While we do know Gossage was concerned by the fact that Bamaco’s bid was far lower than most of the others he had received, he said he had no knowledge of that company’s recent history of legal tangles with municipalities where it had been involved in disaster recovery.

Hours of drama

Metro issued an “emergency invitation to bid” on May 4, the day President Obama declared Davidson County a disaster area and thus made it eligible for federal aid. Drawing on contract language suggested by the Federal Emergency Management Agency, the request for bids presumed contractors would have to haul away some 15 million cubic yards of flood debris.

That’s the amount of debris an F4-strength tornado would be expected to generate, and FEMA suggests that projection as a proxy for other forms of damage. Whether the flood generated less than that amount (since it did not destroy lots of homes as a big tornado would) or more than that amount (perhaps because it affected a much broader area than a twister could) remains to be seen.

Notes taken by a Bamaco official on the morning of May 6, as bids were being opened, list 18 bid amounts ranging from Bamaco’s $6.6 million to a high tender of $28.1 million. Fifteen of the bids were above $12 million. Bidders priced their work in increments so that the final cost could be higher or lower depending on what the total volume of debris turns out to be. The notes were filed as an exhibit in the lawsuit.

Payments for this work, much of which is to be funded by federal disaster aid, will represent only part of the total cost of clearing all those roadside piles. For instance, the contractor is supposed to set aside any household hazardous waste found and leave it for Metro Public Works to clean up. Batteries, fluorescent light bulbs, television sets and computers, among other common household items, are considered hazardous in the waste stream.

The hectic pace of the emergency bidding process is evident from filings by both sides in the legal case. Developments included:

• 4:35 p.m., Thursday, May 6. Five hours after the bid opening, Gossage has a telephone conversation with Robert M. “Mike” Mitchell, president of Bamaco. Gossage claims in an affidavit that he told Mitchell the bond had to be provided by 10 a.m. the next morning, and that Bamaco agreed.

“My client’s position is: That conversation simply did not occur,” said John B. Enkema of Kay, Griffin, Enkema & Brothers PLLC, representing Bamaco. “There was no conversation whatsoever about any deadline. The conversation was simply that the performance bond would be faxed to Metro on Friday and would be overnighted to arrive at Gossage’s home address for Saturday delivery.”

Enkema says in the May 10 court session, McCoy ordered that procurement official Terry Griffith appear for a deposition, which Enkema conducted on May 12. Griffith was on the line when the disputed telephone call took place. According to Enkema, she testified that she did not remember any discussion of a 10 a.m. deadline.

• 7 a.m., Friday, May 7. Don Bramlage, Bamaco’s bonding agent, phones Griffith “in an attempt to obtain information regarding the bonding requirements of Metro.” Griffith does not answer. Bramlage and Griffith miss each other’s calls three more times before they make contact shortly after noon.

• 2:36 p.m. Friday. Gossage sends an email to all concerned. “Folks, we need the bonding and COI [certificate of insurance] now!” he writes. “Cleanup must start, and if we don’t have the documents, I must go to the next bidder. We must be on the street with debris removal with a contracted
supplier tomorrow.”

• 2:40 p.m. Friday. Gossage phones Bramlage at his office.

According to Bamaco, Bramlage says something to the effect that “it would be nice to have until Monday to get the bond done.” Bamaco says Gossage then made his remark about having no faith in the company and announced he would move on to other bidders.

According to Metro: “Bramlage stated that he had a meeting to attend and could not issue the bond. He stated that he could not see what another day or two would matter. He was informed that the work needed to start Saturday and could not start without the bond. He sighed and went silent,”
at which point Gossage terminated the deal.

A flurry of contacts ensue over the next few hours, including a warning from a Birmingham attorney for Bamaco to Metro that the company would be “forced to seek any and all legal remedies available to it” if Metro reneged on its commitment. Metro officials respond several times that the matter is settled. Late in the day, Bamaco furnishes the procurement department with the signed bond for $6.6 million.

By then, Metro had already entered into contracts with SRS and DRC, which each furnished performance bonds within a couple of hours of being contracted.

• Sunday, May 9. In a letter sent to Metro officials, attorney James D. Kay Jr. of the Kay Griffin firm warns that going forward with those contracts “would be an egregious waste of taxpayer dollars — and raises serious questions of what motivated Metro’s decision.” Kay notes ominously that “conducting business in this manner likely violates FEMA regulations and may put Metro at risk of losing its FEMA funding.”

Bamaco’s claim that the chosen contractors will cost $4 million extra is based on the bids submitted by SRS ($9.8 million) and DRC ($7.5 million) to do the entire job. The two firms are now splitting the work.

“I will not deny the fact that Bamaco was substantially lower,” Gossage said in an interview Thursday. But he added:

“We had questions about their capacity to actually do the work in the time period we’re talking about, that they could get rolling as fast as we needed them to roll. And the only thing that gave us any confidence in that was the presence of a performance bond. They said they could do that immediately, and then they said they could do it the next morning — we had excuses throughout the day from their bonding company as to why they had not done it yet.”

A litigious history

Bamaco’s trip to the Metro Courthouse on May 10 resembled journeys it had been on before.

In August 2008, after floods ravaged Cedar Rapids, Iowa, Bamaco came in with the low bid to demolish houses that had been damaged beyond repair. Believing a verbal commitment from a consultant to the city was binding, the company mobilized to bring personnel and equipment to town. When the local council decided to re-bid the project because its scope had expanded, Bamaco sued for an injunction halting the re-bid. A judge denied that request.

In January 2008, Bamaco filed suit against the city of Tulsa, Okla. It sought an injunction to halt disaster remediation work that competitor SRS had just begun, clearing out a massive amount of tree debris left by an ice storm. Bamaco claimed the city had not followed proper procedures in awarding the work to SRS. A judge turned aside that injunction request as well.

Bamaco attorney Enkema emphasized that his client would not have wanted Chancellor McCoy to do anything that might “delay or hinder the cleanup” if she had granted the injunction request.

“We recognize that filing a lawsuit in the context of an enormous disaster, when the city is in a recovery mode, is something where we’ve got to tread very lightly,” Enkema said. “But gosh, we also feel like these are the times when it is most important that the government follow fair procedures.”

Filed under: 2010 Flood

4 Comments on this post:

By: govskeptic on 5/17/10 at 6:16

We will never know the truth from either side of this dispute!

By: budlight on 5/17/10 at 7:48

Well, now all the complaining will begin! But of course, we must consider Bamaco's litigous past:

In August 2008, after floods ravaged Cedar Rapids, Iowa, Bamaco came in with the low bid to demolish houses that had been damaged beyond repair. Believing a verbal commitment from a consultant to the city was binding, the company mobilized to bring personnel and equipment to town. When the local council decided to re-bid the project because its scope had expanded, Bamaco sued for an injunction halting the re-bid. A judge denied that request.

By: localboy on 5/17/10 at 8:36

lowest bidder....you get what you pay for...

By: dogmrb on 5/17/10 at 10:53

Google Bamaco and read about it and Robin Bay Realty. Not sure exactly what these folks do or where.