IN COLUMBIA, QUESTIONS ABOUT ETHICS, FAVORITISM; QUASI-GOVERNMENT USES UNORTHODOX BIDDING PROCEDURES; 'THEIR OWN LITTLE WORLD'; CA OFFICIALS SAY THEY HAVE DONE NOTHING IMPROPER

THE BALTIMORE SUN

As a veteran roofer, Rocky Mills knows the only foolproof way to avoid rejection is to not bid on a job in the first place.

Or so he thought until recently, when he learned that bids he says he never made had been turned down by the Columbia Association (CA).

Records at the huge homeowners association -- a private corporation that functions as a quasi-government for the Howard County planned community -- list Mills as a bidder by phone for two jobs. "That's crazy," says Mills, who swears he didn't bid on the projects.

Mills' purported bids are among 16 losing ones in CA records from contractors who say they never made the bids. Those discrepancies highlight the unorthodox ways that the CA -- the second-largest homeowners association in the nation -- goes about spending Columbia residents' money.

As a private entity with public responsibilities, the CA operates without the checks and balances of government agencies while essentially serving as one for the unincorporated community of 85,000 residents.

The CA gets much of its money from annual homeowner payments similar to property taxes. It spends $49 million a year and has accrued about $90 million in debt for the wide range of recreational facilities and services that are Columbia's hallmark.

Like many businesses and governments, the nonprofit group takes bids for its larger purchases, with the goal of obtaining the best work at the lowest price. But a Sun investigation of CA spending in the fiscal year that ended in May 1996 -- the first independent look at CA's finances -- found dozens of cases in which the CA staff:

* Apparently falsified phone bids. A Sun reporter who called 44 losing bidders on a sampling of 22 CA projects -- for which three bids each were purportedly taken by phone -- found 16 who said they hadn't bid on the projects and four who said they were almost certain they hadn't bid. Mills, a Woodbine resident, is listed as a bidder for jobs at the Columbia Swim Center in 1995. "I don't even know where the swim center is," he says.

* Accepted late bids. CA officials acknowledge they allow bidders to submit proposals after deadlines met by other bidders. In one case last year, the CA awarded a contract by phone to a late bidder -- a business owned by a former CA manager -- four days before it received the bid by fax.

* Altered bids after they were received. Those contracts include $99,300 in tennis court renovations awarded to a Baltimore company after the CA staff lowered that company's bid and raised its competitor's, which had been lower -- while discussing the changes only with the winning bidder.

* Awarded no-bid contracts without contacting other readily available bidders. The Sun found seven such cases in which other potential vendors were readily available, including two contracts, totaling $58,591, for concrete repairs awarded to a neighbor of the CA's longtime president.

At the least, those practices violate accepted standards for government and business and, in many cases, violate the CA's own purchasing policies, which call for competitive bidding for larger purchases.

At worst, national experts say, they cost residents money, drive away good vendors, raise questions about favoritism and pose ethical problems.

"First of all, I think it's costing them a ton of money," says Mark Crowder of Chattanooga, Tenn., who supervises tens of millions of dollars in purchases for the Olan Mills chain of photography studios and serves on the ethics committee of the National Association of Purchasing Managers.

Harold Fearon, founder of the Center for Advanced Purchasing Studies at Arizona State University, says that following such practices "opens it up to all sorts of fishy occurrences."

In response to The Sun investigation, the CA's board voted Thursday night to include an analysis of the association's purchasing practices in its annual audit, which begins at the end of this month.

CA officials say they have tried to adhere to their own policies and have done nothing improper. They say their flexible purchasing practices are efficient and that stricter controls would probably drive up costs.

"Are the people of Columbia getting a good deal?" says Padraic M. Kennedy, who has been CA president for 25 years. "Are they getting their money's worth on the jobs and the quality and the prices and the timeliness and whatever it may be? I am absolutely confident they are."

Kennedy says he doubts that favoritism is a CA problem.

"I've never gotten a call saying this is going on and someone is complaining that they were given a bad deal," he says. "And I would think this is the kind of community where people would not hesitate to call and say that."

Kennedy says he is happy with what the CA gets for its money. "I think the quality of the work is good," he says. "I think the price is normally under budget."

'It's like shopping'

Pam Mack, CA vice president in charge of community relations, adds, "We believe we are getting the best prices and quality through our bidding procedures. It's like shopping. I'm a great shopper. And I check prices before buying."

Mack offers little explanation for CA records of bids that bidders say they never made. "The only thing I can say is, they should have been called," Mack says. "I just know that our staff put down that those people were called."

The extent of the problems with CA purchasing practices cannot be determined. Its bid records -- kept at association headquarters overlooking man-made Lake Kittamaqundi in the heart of Columbia -- are incomplete. They variously lack dates, signatures, and copies of bid solicitations and vendor proposals.

Impartial bid competitions are the standard for government and much of the business world as a means of getting the lowest prices and ensuring a level playing field for vendors.

But as a private entity, the CA is not under the same strict legal burdens most government agencies are -- although the association has its own competitive bidding rules that stress fairness and cost savings for larger purchases or projects.

The impact of the CA's questionable practices can be as immediate as when 12-year-old Chrissy Gregg tried to use a handicapped-accessible playground that was built last year in Columbia's Stevens Forest neighborhood. Her wheelchair became mired in the playground's wood-chip surface.

"It seemed like she worked for five minutes to go five feet," says her mother, Susan Gregg, who works with the Howard County Commission on Disability Issues. "It's like having a building with an accessible bathroom but having no [way] to get to it."

Two bidders for the playground contract met the bid deadline, and one of them offered, for the same price, to put in rubber surfaces in key areas -- instead of wood chips -- so that children in wheelchairs wouldn't have trouble moving around on their own.

The CA chose the third bidder for the job, one who met the deadline with a higher bid but then came back 90 days later with a lower, final bid, according to association and the bidder's records.

In the end, the late bidder's final price -- $60,000 -- was the same as those of the other two bidders, but its bid did not include rubber surfaces, CA records show.

The CA now plans to spend an additional $22,465 to make the playground more accessible to the handicapped, including $13,200 to install 1,200 square feet of rubber surfaces and most of the remainder for additional equipment tailored for the disabled.

Reworked bid

When first asked about the contract about five weeks ago, Fred Pryor, CA vice president in charge of parklands, could not explain why he selected as the builder of the playground a contractor whose final bid was 90 days late.

Two weeks ago, Mack provided CA records indicating that the builder, Great Outdoors Sales and Service of Elkridge, offered the "best play equipment/site amenity combination for the available funds."

Last week, Mack said Great Outdoors' original bid had come to the CA by the deadline but that, because Great Outdoors' bid was too high and needed reworking, the association gave the company more time to "resubmit" its bid -- an opportunity that CA did not offer the other two bidders.

Great Outdoors' owner, Ray Miller, says he didn't know the details of the other two, competing bids submitted earlier than his final bid. He says he omitted rubber surfaces so that he could provide more playground equipment. "From my experience," he says, "CA is a very clean operation."

The Stevens Forest playground wasn't the first late bid to earn Great Outdoors a CA contract. Six days before he bid on the playground contract in August 1995, Miller was the third contractor to submit a bid, for $44,000, to install wooden boardwalks, CA records show. His bid was 6 1/2 hours late; the other two bids were on time. Miller underbid the next-lowest bidder by $700.

One of the losing bidders for the playground, Joe Fasanella, president of Mid-Atlantic Products of Annapolis, whose bid included the rubber surfaces, says CA officials "are in their own little world. If you're buddies with them, you get the job."

The CA's domain is hardly little: It manages more than 3,000 acres of parks, 77 miles of walkways, three man-made lakes, 23 outdoor swimming pools, two golf courses, two health clubs, 22 day care programs and everything from a horseback-riding center to sister-city programs with cities in France and Spain.

The CA's board, the volunteer Columbia Council, is technically in charge of all that and more, but over the years it has offered little oversight. The council comprises 10 residents elected in sparsely attended annual elections, held this year April 18 and 19. Members serve part-time, receiving annual recreational facility memberships worth more than $400.

'Not overly alarmed'

Told of The Sun's findings, Michael Rethman, chairman of the council for the past year but just voted off the board, said, "I'm not overly alarmed."

Kennedy, who was named CA president in 1972 by Columbia's developer, the Rouse Co., is a power in his own right, the closest thing the community has to a mayor. Kennedy has continued to run the association, even after Rouse made it independent and the responsibility of Columbia's residents in 1982.

In the summer of 1995, Kennedy approved two no-bid contracts for $58,591 worth of spray-on concrete repairs by Salgado Eastern Corp. at two of Columbia's many walkway underpasses.

The Columbia company is owned by Bill Voss, who has lived four doors from Kennedy on Columbia's Waterfowl Terrace for 25 years, according to Howard County property records.

Before awarding Voss the two contracts, a CA manager, Chick Rhodehamel, unsuccessfully tried to find other contractors interested in the jobs, according to a note in CA bid records. But the records show no details of that search.

This spring, a Sun reporter, using a widely available directory of Maryland contractors, found seven other contractors who do such concrete work.

Six of the seven say they are sure the CA did not contact them. "I would have liked to have been the only one bidding on that," says Jill Glassgold of Masonry Resurfacing and Construction Co. in Baltimore, one of the six.

Jerry Sheetz, owner of the seventh contractor, P.D.I. Sheetz of Linthicum, is fairly sure the CA hadn't been in touch. "That doesn't ring a bell," Sheetz says.

At Salgado Eastern, Bill Voss says he offered his company's services, in part, to help the CA.

CA records show that its staff was so pleased by the price Voss offered for the first job -- less than half the cost they had estimated -- that he was hired to rebuild another pedestrian tunnel a month later, again without a competing bid. "The price was terrific," says Pryor, Rhodehamel's boss.

Kennedy approved the two contracts, CA records show, as he is required to do with all large CA projects. But those approvals, both he and Voss say, were the extent of his involvement.

That Voss is his neighbor had nothing to do with the contracts, Kennedy says.

"I didn't even discuss it with Pat," says Voss.

Such practices are improper, says Crowder, the Tennessee purchasing expert: No-bid contracts -- particularly any awarded to acquaintances -- beg for detailed documentation that no other bidders are available, he says.

"For a mom-and-pop shop, that would be unacceptable," Crowder says, "let alone for an organization that size."

Thirty years ago, when Columbia was being carved out of 14,000 acres of farmland by the Rouse Co., the CA may have been a mom-and-pop shop. But no more.

With 185 full-time and 685 part-time employees, the CA is larger than many local government agencies. Its proposed $49 million budget for the fiscal year that begins next month -- $36 million for operating expenses and $13 million for capital projects -- is more than twice as big as the county parks department's.

The CA gets its operating revenue mostly from annual liens paid by property owners and from fees it charges Columbia residents and nonresidents for using its recreation facilities.

The CA lien for the owner of a $203,000 single-family Columbia house -- the average price in Howard County -- will total $741 this year, in addition to Howard property taxes of $2,103.

Despite its size, the CA has never conducted a thorough study of whether it should use stricter purchasing procedures or whether it should set up a central purchasing department. At least two dozen CA staff members -- throughout the organization -- manage bidding at various times.

By contrast, the only homeowners association larger than the CA -- that of Leisure World, a retirement community outside San Diego -- has a five-person central purchasing division. Officials there say it saves money.

The Columbia Council technically controls CA spending, but the council seldom reviews bid records.

By contrast, when the staff of the county schools awards a contract for more than $15,000, it is required by law to submit bid records to the school board.

Norma Rose of Columbia's Wilde Lake village, a CA board member who has questioned certain projects, says she is "astonished" by the problems found by The Sun.

"It's very troubling not to have processes regularly followed," she says. "It's all done quite informally, and it's not professional. No matter what explanations they give, it's sloppy.

"You don't proceed that way if you think you're going to be held accountable. What does that say about the organization and credibility?"

The question of the CA's credibility has been raised before, mainly by small groups of Columbians, including one that recently sought to turn the unincorporated community into a full-fledged city. The critics have typically drawn little public support, and they have often been dismissed by CA officials as ill-informed.

Political apathy

And even as Columbia's population has doubled in the past 20 years, residents have continued to be apathetic about their community's politics. Fewer than one of 10 eligible voters turns out for Columbia's annual elections -- typically held in village shopping centers -- for seats on the Columbia Council and 10 village boards.

Many of the council members say it's not their job to micro-manage the association. The council's twice-a-month meetings are poorly attended, and it seldom conducts in-depth discussion of particular purchases or contracts.

Kennedy and other CA officials say there is little need for big changes in the association's practices. But national experts say that, at the least, the CA staff needs to conduct much less of its business by phone and much more in writing.

"It's just a really simple policy in purchasing that you get things in writing," says Walter F. Laske of Tampa, Fla., a business purchasing expert who teaches seminars on the subject and audits private purchasing departments. "You eliminate all of this with a fax that costs 20 cents."

'Unnecessary paper'

Mack says CA staff members will start writing down the names of those who provide phone bids on behalf of businesses. But she says she's not certain that replacing phone bids with faxes would be efficient. "That would be an awful lot of paper," she says, "an awful lot of unnecessary paper."

CA staff members acknowledge that they don't document everything, even when they start out taking bids in writing.

In the spring of 1995, for example, CA construction director Dennis Mattey asked three contractors to submit bids for tennis court renovations. Two Baltimore-area contractors bid.

Mattey changed both bids -- lowering one, raising the other and thereby changing the low bidder. CA bid records don't explain why.

Mack says that is because neither of the two bidders followed the CA's project description in submitting bids. One proposed too much work, the other not enough, she says.

Mattey cut one bid from $102,400 to $99,300 and raised the other from $95,705 to $100,205, giving the job to the new low bidder.

Mattey called the winning bidder, Lamborn Associates, to derive its new, lower price, Mack says. But he didn't call the loser, All Pro Court, to discuss raising its price.

"That's not right," says Raymond Campbell, All Pro Court's president, who knew he had lost that job but did not know why until he was called this spring by a Sun reporter.

According to his records of the tennis court project, his price shouldn't have been raised so much because of the change in scope. He says he should at least have been called so that he could have come up with his own revised bid.

"The way it went down," he says, "it seems like they wanted Lamborn from the get-go. It didn't matter what my price was."

Pub Date: 4/27/97

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