Manatee school attorney charges there was bid tampering in 2009 construction projects

BRADENTON -- Under the Whistleblower Protection Act, Manatee County School District Staff Attorney Mitchell Teitelbaum will forward to the Florida Attorney General's Office claims of bid tampering related to an investigation of a 2009 sales tax bond.

"I am under a fiduciary and legal duty to represent this district," Teitelbaum said Wednesday during an Audit Committee meeting in which he detailed his findings and his plan to forward the matter to the attorney general's office.

The announcement follows an investigation into expenditures from a 2009A COP bond. Three projects were approved through bond funding, which allows the district to borrow the money and pay it back with sales tax revenues.

Audits revealed money spent on an additional project at Myakka City Elementary School wasn't properly documented, and there were other unauthorized expenditures. An amendment filed last month to fix the issue and add the Myakka City project to the bond also may not have properly addressed the scope of money transferred improperly.

Bid tampering

While investigating the misspent money, Teitelbaum was called upon by internal district auditors to offer legal advice. Teitelbaum, who reports to Superintendent Rick Mills, researched bids for a $10 million construction contract at Braden River Elementary School and a $13 million contract at Myakka City Elementary School.

Teitelbaum said he found evidence of bid tampering and official misconduct in the bid processes.

In 2008, the district began to look for a construction manager and architect for the projects. The district's original intent was to use one selection process for both projects, Teitelbaum said.

On Sept. 22, 2008, all bids were evaluated. Balfour Beatty, based in Sarasota, was ranked No. 1, followed by NDC Construction of Bradenton, Beck, Ad Morgan and Creative Contractors. Another company, W.G. Mills, ranked No. 8 out of 13 in the process, according to Teitelbaum.

A week later, then-Chief Financial Officer Tim McGonegal emailed members of the selection committee on behalf of then-Superintendent Roger Dearing, asking the committee to rescore the bids to have a more "profound" local selection. At the time, this was contrary to Florida statutes and Manatee County School Board policy, Teitelbaum reported.

The architect designs were not thrown out. The construction manager results were thrown out, Teitelbaum said. The reranking pushed W.G. Mills to the top of the bids. NDC stayed in second place and Balfour Beatty ended up in third.

During a committee meeting Dec. 9, 2008, Bob Gause, a member of the committee and a school board member, made a motion to award the Myakka City Elementary school work to W.G. Mills and award the Braden River Elementary work to NDC. The motion was approved by the committee and by the school board Jan. 12, 2009.

Gause said Wednesday he didn't do anything unethical or improper. He also questioned Teitelbaum's decision to report his findings to the attorney general.

"I was hopeful we were moving past all the silliness," he said.

Gause, now chairman of the school board, said he was out of town and did not attend the Audit Committee meeting. He said he would probably have to call a special meeting with the board. The next regularly scheduled board meeting is April 12.

Teitelbaum said he was alarmed by the bid evaluation process and it raised a number of questions. NDC, originally the No. 2 company, did not rise to the top with the new scoring criteria.

Teitelbaum also questioned the decision to throw out the results and start over, saying the committee could have just rescored the original bids, adding the new local preference criteria.

"A rescoring of the original bids would not have allowed W.G. Mills to reach No. 1 from No. 8," Teitelbaum said.

Teitelbaum offers a couple of explanations as to why W.G. Mills rose to the top. The company had previously done heating, ventilation and air conditioning work for the district in 2007. The company also performed "addition analysis" on Myakka for the district in 2007.

Teitelbaum said he came forward with his concerns because of the need to maintain transparency and regain public trust in the district.

"There is a 2017 sales tax that needs to pass to continue to fund this district," Teitelbaum said. "Without public trust, in my opinion, this district will face certain serious financial challenges."

Teitelbaum's report did not address the misspending of the sales tax bond proceeds.

Sales tax bond

Teitelbaum's action stems from audit reports on the 2009A sales tax bond. An updated report, presented to the audit committee on Wednesday, is considered a draft until it is accepted by the school board.

The investigation done by Oscher Consulting of Tampa at the request of internal district auditor Shinn & Co. of Bradenton and finds a general lack of controls.

"It is apparent that there was a breakdown in the control system that managed and oversaw the disbursement of the Series 2009A COPS proceeds," the report states. Oscher representatives attended the meeting to answer Audit Committee member questions.

In 2009, three projects were approved for bond funding using the sales tax revenues:

A Palmetto High School addition.

Work at Rogers Garden Elementary School.

Modernizing the transportation and maintenance facility at the Matzke complex.

About $45.2 million was available for the three projects, but not all the money was spent. Often construction estimates are on the high side to assure the district doesn't run out of money.

Bond money was used to fund work on the Caruso Road campus of Manatee Technical College and cover debt service, both improper uses, the audit found.

The biggest misuse of $3.5 million went to a construction project at Myakka City Elementary School, including payments to W.G. Mills.

If the district had wanted to use leftover funds from the bond to pay for work on Myakka Elementary, an amendment should have been made with the bond trustee before funds were spent. The draft report says funds were first used for Myakka Elementary in 2010 and an amendment was started in 2011 but never fully executed.

In October, the board approved a $2.4 million amendment, which doesn't fully capture the total spent. The amendment wasn't signed until February. Oscher said he wasn't sure why the amendment was wrong.

The conclusion of Oscher's report points toward a pattern in the district, as the district also had to file an amendment to the 2007 bond for similar reasons.

"It raises questions about what was done in the past," Oscher said. "It's obvious funds were being shifted for whatever reasons that I cannot tell you."

Meghin Delaney, education reporter, can be reached at 941-745-7081. Follow her on Twitter @MeghinDelaney.

This story was originally published March 19, 2015 at 12:00 AM with the headline "Manatee school attorney charges there was bid tampering in 2009 construction projects ."