China Jushi USA plant president explains what the new manufacturer will make
When Richland County Council voted Dec. 6 to take the unusual step of awarding the Phase I portion of the Shop Road Extension Project to the highest bidder, top county personnel had known for three months McClam & Associates’ $24.5 million bid did not meet mandatory minority participation requirements.
That shortcoming, shown in emails and documents obtained through Freedom of Information Act requests, was the same flaw that had disqualified two previous bidders. But county employees did not share what they knew with the public or County Council, which voted to award the bid.
The project, to extend Shop Road 1 mile from Pineview Road to Longwood Road, is key to the $300 million China Jushi plans to invest in a fiberglass manufacturing plant in the county’s fledgling Pineview Industrial Park. The Shop Road project was already two months behind schedule by Dec. 6. That’s because staff members’ previous recommendation of C.R. Jackson, the second-highest bidder, was yanked from the agenda at the last minute in October when the lowest bidder noticed a fatal misrepresentation in C.R. Jackson’s paperwork that scuttled the award.
Time got even tighter for the project when the county had to defend a temporary restraining order over the construction contract from the lowest bidder, Richardson Construction, just before Christmas, which it did in part by raising the specter that further delays could jeopardize the entire China Jushi investment.
“Any such failure to execute a contract for construction and be able to complete this portion of the Shop Road Extension could be catastrophic to the relationship between the county and Jushi,” attorney Ben Nicholson of the McNair law firm wrote in the county’s Dec. 20 memorandum of opposition to the temporary injunction.
“Indeed, Jushi could choose to forego the project,” Nicholson wrote, at an estimated loss of economic benefits, the county projected, of $785 million.
But further delays are precisely what has happened due to a lack of a procurement director or procurement review panel, and the steady trickle of revelations that procurement rules were bent, broken and ignored over the course of this solicitation.
That includes, last week, the release of documentation proving top county officials knew the highest bidder used a tactic called “stacking” to meet participation requirements that the county ruled was expressly forbidden days before the bids were opened.
Nearly two months after the McClam award was approved and four months after County Council’s scuttled vote in October, the only dirt that has been turned at a site critical to the infrastructure of the China Jushi plant was done by golden shovels at the high-profile groundbreaking ceremony Dec. 8. And no start date has been released for a project the county promised Jushi would be completed by Dec. 31, 2017.
When reached by phone, a man to whom the McClam & Associates transferred a reporter for questions was asked when he expected to start work.
“You’ll have to ask Richland County that,” he said, and hung up.
Bids for Richland County penny tax projects contain mandatory percentages of participation by Small and Local Business Enterprises (SLBEs) and Disadvantaged Business Enterprises (DBEs), which are minority- and woman-owned businesses.
For Phase I of the Shop Road Extension Project, the percentage of the total project required to go to businesses qualifying as DBEs was 7 percent, and SLBEs, 4.3 percent.
A complete inspection of all three bids was not possible until the county released the information packets to a reporter only last week, 13 days after the vote was taken and the day after the protest period to contest the award ended.
That timing is important, because when council voted 9-2 to approve McClam’s bid (only Seth Rose and Bill Malinowski voted against it) for $3 million more than the lowest bidder, neither the council nor the public were informedthat the bid did not meet the SLBE and DBE requirements for the project.
That was not the case on Oct. 17, 2016, when the published agenda for the Oct. 18 County Council meeting recommending C. R. Jackson for the contract included C.R. Jackson’s bid form, an engineer’s estimate comparison, bid tabulation, license and mandatory pre-bid sign-in sheet – enough information for Richardson to notice that C.R. Jackson had significantly misrepresented one of the businesses it said it had contracted, have its attorney call the manager of the Penny Tax Program Development Team the next day and have the recommendation for the award removed from consideration hours before council was to vote on it.
When the vote came around again, on Dec. 6, what county administrator Gerald Seals gave council on McClam’s bid was thin.
The only documentation included for the $24.5 million award was a three-page letter from Seals that recommended McClam entirely on the strength of its one virtue: It had yet to be disqualified.
“Since the Richardson and C.R. Jackson bids are non-responsive, only one bid, that of McClam & Associates, was responsive” said Seals, despite proof, both in the bid document itself and in communications available to Seals for months between senior staff at the county and the Program Development Team, that it was not.
DEALING FROM A STACKED DECK
Seals knew, or should have known, there were issues with McClam’s bid.
“Stacking” is a technique in which a prime contractor uses a firm that qualifies as both a DBE and an SLBE – in this case, Taylor Brothers Construction – to satisfy the participation requirements of both categories. In other words, a company can pay a subcontractor once and count the money twice.
In its official bid, McClam agreed to pay Taylor Brothers $1.8 million, with that percentage (7.3) used to satisfy the higher DBE requirement and the lower SLBE requirement of 4.3 percent. Thus, instead of 11.37 percent of the project going to DBE/SLBE firms as intended, only 7.3 percent does, with that going only to a single firm.
This practice was in McClam’s bid in direct opposition to county policy, one explained in writing in a Sept. 12 email from Brenda Parnell, interim director of the county’s Office of Small Business Opportunity, to PDT procurement manager Dale Collier and PDT assistant procurement manager Janet Jones two days before the bids were opened.
“Mr. Collier Taylor (vice president of Taylor Brothers) called me today about verification of the SLBE and DBE participation,” Parnell wrote. “Can subcontractors be included on both SLBE and DBE Participation Forms and be credited toward both percentages?
“The answer is ‘NO.’ The participation is going to be either/or, not both.”
When Collier, the PDT procurement manager, protested that it was too late to inform the three contractors in writing and wrote that, “We’ll have to handle post-bid with the successful contractor,” Parnell took issue.
“(The time concern) is understandable,” Parnell wrote, “but contractors need to know SLBE/DBE is either or, not both.”
Collier agreed to Parnell’s terms at 9:59 the morning before bids were opened.
“Yes ma’am,” Collier wrote Parnell. “We’ll make clarifications.”
The release of Parnell’s Sept. 12 email immediately led Richardson Construction attorney Kathleen McDaniel of Callison Tighe to file a second supplement to the firm’s existing protest of the awarding of the Shop Road Extension Phase I contract.
“Ms. Parnell’s statement that a single contractor could not satisfy a bidder’s SLBE and DBE goal is consistent with (Richardson Construction’s) reading of the Richland County procurement code,” McDaniel wrote. “This means that McClam’s bid was non-responsive at the time of the bid opening.” “Non-responsive” means it was disqualified.
A message to Seals that included a copy of Parnell’s email asking about the ruling and when he learned of it was answered instead by county spokeswoman Beverly Harris.
“The document is unfamiliar,” Harris wrote, adding that she disagreed with any interpretation that Parnell’s email proved county staff knew stacking wasn’t allowed prior to the bid opening. “Therefore, no commentary is being offered.”
DUE PROCESS, DELAYED
Like the Shop Road Extension Project itself, due process for Richardson Construction also has been delayed.
Richland County is without a director of procurement and has failed to maintain a properly staffed procurement review panel as required by its own ordinances. The review panel hears protests.
Richland County has not had a procurement director since Cheryl Patrick resigned in May 2016. It has not had a fully staffed review panel since at least 2012, according to a Freedom of Information Act Request for outstanding review panel requests; it is currently short two members.
Richardson filed its first protest Oct. 19 after the county recommended awarding the contract to C. R. Jackson, added one supplement to that protest on Dec. 5 regarding the McClam award and another on Jan. 26 to include the information revealed in Parnell’s emails obtained through the Freedom of Information Act.
With no procurement director, no decision can be made. With no procurement review panel, no review can be heard (the 2012 protest made by Pay Tel Communications over the awarding of the Alvin S. Glenn Detention Center’s inmate telephone system has yet to be heard).
As the clock continues to tick on the county’s promise to China Jushi with no movement at the site, the outcome seems less settled than ever, the impact more alarming.
In his remarks to the court in December, Nicholson summed up both the county’s position and its fear.
Arguing that “a project with a tight timeline and of great economic importance to the citizens of Richland County” could create “permanent harm as the manufacturer for which this construction time frame has been created could determine that this sort of delay is not what it bargained for when it came to Richland County,” Nicholson wrote, “(China Jushi) may have second thoughts about locating here.”
Messages left with China Jushi were not returned.
No further comment was offered by Harris, the county spokeswoman, despite numerous requests for comment from her, Collier, Parnell and Seals.
Aiken is a Columbia journalist whose website, quorumcolumbia.org, publishes local investigative stories.
WHAT IS THE PENNY TAX?
The $1 billion, 22-year sales tax program was approved in 2012 by a 52 percent to 48 percent vote of Richland County residents. Collections began in 2013.
Most of the revenue from the penny-on-the-dollar sales tax, 71 percent, goes to roads. Twenty-five percent goes to the Midlands’ bus system, with 4 percent set aside for pedestrian improvements.