CLEARWATER — The city has paid more than $16 million over the past decade to consultants who should have been hired through a competitive process but were instead handpicked by city staff.
State law says architects and engineers can be hired by governments without competing only if total construction costs of the project are less than $2 million. But city officials have been misinterpreting this law for more than 20 years, thinking as long as the design contracts met another requirement in the statute — that the agreement is for specific work and has an end date — design companies could be chosen outright, even for construction projects over $2 million, said Director of Engineering Michael Quillen.
"We weren't trying to do anything wrong," Quillen said. "It's confusing language in the Florida statute."
The realization came to light in May when purchasing manager Alyce Benge attended a state conference and heard a speaker talk about a 2013 Attorney General opinion that clarified the law.
The opinion was prompted by a question from the Osceola County school system after a state auditor raised concerns about its practices during a routine review of the books.
Every four years, firms can apply to become architects or engineers of record and be added to a short list of consultants governments can select to perform work on a "continuing contract," one that does not have to be put out for a competitive bid.
Attorney General Pam Bondi acknowledged the confusion in the law, stating "an apparent ambiguity exists" for when governments can use a firm on a continuing contract because of one word: "or."
The law states a government can hand a contract to a company when construction costs are under $2 million; if the design fees are less than $200,000; or for specific work that has an end date.
Bondi said the word "or" usually implies a choice. On this issue, however, Bondi said the law may have been misinterpreted by some governments "allowing them to circumvent the competitive selection process," and that the $2 million limit must apply to all cases.
Many read the confusing clause as a legal window to avoid a lengthy procurement process, said Usher Brown, attorney for Osceola County schools.
"I had cities call me, their attorneys basically said 'why did you ask for this opinion, it's the most appalling decision,' " Brown said. "What prompted us to ask this was not that we were being altruistic. We were going along like anybody else because I never understood those three requirements to include the $2 million threshold. It's important in all cases to protect public money, but in this case, it wasn't clear what was required."
Benge, Clearwater's purchasing manager, first alerted her colleagues to the epiphany when she rejected a work order on May 31 for architectural work by Long & Associates on the city's gas facility based on the $13.5 million construction costs.
"In a nutshell, the project construction value of estimated $13.5 million exceeds the (law's) $2 million limit," Benge wrote in an email.
Chuck Warrington, executive officer of Clearwater Gas System, and others responded that adhering to the $2 million construction threshold would significantly delay the city's upcoming projects, like the Morningside Recreation Center, and utility and stormwater projects.
"This is very bad news," Warrington said in an email to Assistant City Manager Jill Silverboard. "This will throw at least a four-month delay in our project and means that virtually every major project that the city has done for at least the last 20 years was done wrong since competitive (request for quotations) should have been done on them … Help!"
City Manager Bill Horne said all engineering and purchasing staff have been briefed on the changes and that design work on projects more than $2 million going forward will be bid out.
He would not characterize the two-decade error as illegal or even a misinterpretation because city staff was acting as they thought was appropriate. Because there was never a court challenge on the issue, there was never a legal precedent in the state, he said.
And although he said attorney general opinions are not binding, the city has changed procedures to follow its guidance.
"There are examples where laws have been passed that have been ambiguous and cities use their best understanding of what the law means and found out later through a lawsuit or (attorney general) opinion their interpretation was not what it should have been so cities alter their processes," Horne said. "This is one of those instances."
Contact Tracey McManus at [email protected] or (727) 445-4151. Follow @TroMcManus.