A forensic audit

The "And the questions continue" story below resulted in the council voting to do an audit.  Village Attorney John Quick was directed to facilitate the audit.  The audit report was received by the Village November 19, 2023.

Click here to read the audit.  Click here to read our opinion of the audit, understanding that the auditors are the expert.  But as taxpayers we had hoped for a more comprehensive review, not of the contractor, but of the Village and the process that resulted in questionable results.

And the questions continue.  

In April of 2023, as described below, the Council was asked to approve almost $4 million in wastewater expenditures to one contractor who had a continuing service contract with the Village.  Most of the projects involved had already been completed and paid for without competitive bidding of the specific projects and without council authorization. An audit was requested by council. Results of the audit have not yet been reported.

The Village puts out “Requests for Qualifications,” (RFQ) for formal proposals from service providers who wish to provide services the Village may need.  Applicants considered “qualified” by a staff selection committee are placed in a Village “library” of qualified service providers. Typically, the Village uses an RFQ process to qualify multiple service providers for the library. Then the Village usually signs Continuing Service Agreements (CSA) with multiple qualified applicants.

Three contractors had been qualified to do wastewater work back in 2018 and signed 5-year CSAs. Only one ever did any work for the village in the last 5 years. The other two never heard from the Village. No projects were ever put out for competitive bid though well over $4 million in wastewater projects were done during that 5-year period. 

Several months ago, the Village put out a new RFQ as the 5-year CSAs expired. Only one contractor submitted a proposal. The council approved a new 5-year contract.  When state and federal grants require competitive bidding for projects that qualify for reimbursement, does the selection of a contractor as the only response to an RFQ meet the requirements?  

The question, does qualifying service providers via an RFQ eliminate the need to put specific projects out for competitive bid? We don’t think so. We believe the purchasing ordinance requires that projects exceeding the Village and state thresholds as to cost must be competitively bid - not just assigned to a qualified provider. How else are we assured the taxpayers are receiving the “best deal?”

The Village suggests that qualifying a service provider through an RFQ process satisfies the requirement that a project must be competitively bid.

From Section 2-327 of the Village Code:

Competitive bidding. Competitive bidding shall apply in the following situations:

1. As required by state statutes.

2. As required by federal law.

3. As required by the terms and conditions of a federal, state or county grant.

4. Purchase of or contracts for materials, supplies, equipment, improvements or services where the anticipated cost is estimated to exceed $25,000.00.

At the October 10 meeting there were several resolutions in the consent agenda approving “work authorizations” for “qualified” providers. We question whether they can do work via a work authorization approved by council that exceeds the competitive bid threshold? The total work authorizations approved without competitively bidding via an RFP (request for proposal) in the consent agenda Oct 10 exceeded $1 million.

The Village Finance Director, Maria Bassett, suggested putting all projects done to maintain and repair the wastewater system would take too much time.  Perhaps a single RFP to hire a contractor for the regular maintenance and emergency repairs?  And individual RFPs for the major projects and capital improvements. Like when the Village replaced 3000 vacuum pit manhole cover concrete rings.  

We’d like to make sure we understand the process! And that the Village does too.

Below is an explanation of prior issue from April 2023

At a Village Council meeting on April 13, 2023, the Village Finance Director, Maria Bassett, presented three resolutions.  She recommended that the council approve:

1. Expenditures made in fiscal year ending September 30, 2022,

2. Expenditures for fiscal year ending September 2023 and

3. The extension of a Continuing Service Contract through September 30, 2023 with a particular plumbing contractor

With little discussion, all three resolutions were passed.

The concerns:

• The approval was for approximately $4 million. 
• There was no competitive bidding for the projects
• The Council was asked to approve the work after the fact. 
• A majority of the work was already done and the invoices paid. 
• The expenditures require budget amendments as the work was not anticipated in the annual budget. 

The staff continually claimed there was competitive bidding.  In fact the Village did an RFQ – Request for Qualifications – in 2018.  Four plumbing contractors were qualified.  Three of the four agreed to Continuing Service Agreements, though the Village staff continually insisted that only one agreement was ever signed.  However, we located all three - signed and notified and in the public record.

The Continuing Service Agreement specifically explained that the agreement did not approve any projects.  

When the Village had wastewater projects, they only contacted one of the three contractors and gave him all of the $4 million in work without competitive bidding for the projects and without requesting a proposal from the other two qualified contractors.

1. Almost $4 million of work was done, billed and paid for without adequately demonstrating the need for the work.

a.   30 concrete rings around vacuum pit manholes were determined to be in need of replacement, yet approximately 3,000 were replaced with no competitive bidding, no apparent emergency, no documented need. Almost 2,300 of those were replaced before council approval was requested on April 13, 2023.

b. For the Low Pressure Force Main (LPFM) system with grinder pumps, a 100 unit sampling was done, demonstrating a need to replace all check valves in the system – approximately 500 more than the initial 100 approved. The Village bought the extra 500 check valves to save money. Yet only 300 of the 500 were replaced over the following year and a half. While the need was classified as critical  due to potential Village liability, the work was not done immediately and not all of the critical work has been completed – nearly 2 years later… based on the invoices that were approved April 13, 2023.  The majority were invoiced in 2021-2022.  There is no plan in place to finish installing the remaining valves based on the information in the agenda April 13.  It has been suggested that the Village does not have these extra 200 check valves (cost, approximately $290 each) in their inventory of spare parts.  Where are they?

 c.    Both projects (check valves but most particularly concrete rings) were extensive repairs/replacement in a central sewer project that was completed just five years before the projects in question were done. How could 3000 concrete rings installed 5 or 6 years earlier be in need of replacement? How many concrete rings are there total?

d. Why is a significant component like check valves in need of 100% replacement so soon after they were installed?

e.    Though the invoice and the agenda item refers to the concrete ring around vacuum pit manhole covers (at $1000/ring), are the small squares of concrete where the check valves are located in the LPFM system separately charged and invoiced as concrete rings at $1000 each or were they included in the $900 charged to replace the check valves?

2. Work costing nearly $4 million and spread over a two-year period should have been competitively bid to assure a quality and cost-effective result. The timeline demonstrates the projects were not clearly of an emergency nature and should have been competitively bid and approved by council prior to the work being done.  The work done and invoiced should have been verified.

3.The staff stated that the contractor hired was the sole contractor available. This is not true. The Village approved continuing service contracts with two other contractors. The signed and notarized contracts were available on the Village website. And does it really take a wastewater contractor to pour concrete rings around a manhole cover?

4. Inconsistencies in the invoices were significant.

a. Many concrete rings were invoiced in LPFM areas that do not have vacuum pits and therefore have no concrete rings around vacuum pits.

b. Vacuum pits can accommodate between 1 – 5 homes yet based on the addresses in the invoices, some streets seemed to average a vacuum pit concrete ring replacement for every 1 to 2 homes.

c.There are addresses in the invoices that do not exist and are not even near homes that do exist.

d. The continuing service agreement included the costs that the contract would charge for repairs.  Neither replacement of check valves or replacing concrete rings on vacuum pit manhole covers was on the list.

5. Lack of bonding was blamed on the prior Village Attorney. Yet the continuing service agreement with the unbonded contractor was extended on April 13, 2023, well after Weiss Serota took over legal responsibilities, acknowledging they were aware of the bonding issue and it has been addressed by them.

6. Federal grant requirements were not adequately addressed. A more thorough explanation is needed – a single audit was to be done. How did auditors ignore the lack of competitive bidding for two major projects, “after the fact” approval of the projects, no documented need for the projects, and apparent inadequate oversight.