(Updated)
The Pima County administration was copied on a letter by US. Department of Transportation informing ADOT of “a DBE Program complaint, dated August 8, 2014, alleging that Select Development and Construction, Inc., has violated the prompt pay requirement of the DBE Program.” In her letter, Karla S. Petty, Division Administrator, advises that the “complaint alleges that the violations occurred on three federal-aid projects being administered by Pima County.”
Petty notes that “both DBE and non-DBE subcontractors have been impacted.”
“The FHWA Office of Civil Rights has asked the Arizona Division Office to conduct a DBE Program investigation into the allegations raised by Jason Orosco, President of Blue Diamond. I have assigned Lisa Neie, Division Civil Rights Specialist, to lead the investigation of the complaint,” the letters reads. “She will be assisted by Sharon Gordon, FHWA Area Engineer for the ADOT’s Tucson District and LPA Coordinator. As part of the investigative process, we will need additional documentation, which will be requested shortly. Lisa and Sharon anticipate conducting an on-site investigation in either September or October 2014. We would very much appreciate having ADOT’s DBE Liaison Officer, Vivien Lattibeaudiere, available for support in the investigative process.
Petty concludes, “Under the Freedom of Information Act, it may be necessary to release this document and related correspondence and records. In the event that we receive such a request, we will seek to protect personal information which, if released, could constitute an unwarranted invasion of privacy.”
Pima County Supervisor Ally Miller, who has gained bi-partisan support as the only watch dog member of the Pima County Board of Supervisors has questioned the use of funds by Pima County since taking her seat in 2012. Miller has attempted to ascertain how the County has spent the millions of dollars it receives each year for road development and repair, while a vast majority of the County’ road are failing.
In retaliation for her investigations, her fellow supervisors voted to sweep transportation funds from her district into theirs.
Supervisor Ally Miller said, “It is very concerning that Pima County is at serious risk to not only lose Federal funds for road projects but also face the possibility of having to reimburse Federal funds that were already paid.” Miller went on to say, “The FHWA audit will certainly help to re-assess the Pima County policies and procedures involved with contractual requirements and allocation of funds -something I have been vocal about on numerous occasions.”
After Miller had raised questions about the situation for some time, finally in a CYA memo dated October 13, Priscillia Cornelio writes Huckelberry to advise the supervisors that the County has “been experiencing various project delivery and compliance issues with Select Development, Inc.” She claims that she has been “proactively and aggressively” questioning Select.
The memo reads:
To date, the most serious issues that both departments have been dealing with consist of the following:
Nonpayment of suppliers and subcontractors, which also includes Disadvantaged Business Enterprise (DBE) qualified firms. This has recently deteriorated to include loss of approved DBE contractors on Magee, which also includes failure to provide replacements in the prescribed timeframe, or suitable justification to request an exemption.
Failure to prosecute the work. The La Canada project is approximately 3 months behind schedule with approximately 63 days in liquidated damages accrued to date. In addition, the Magee project is approximately only 25% complete, yet approximately 75% of the contract time has been expended. Also, completion of final punch list items on the Homer Davis project have been lingering since the August 6, 2014 substantial completion date.
In her memo, Cornelio claims that on Friday October 10 she attended an ADOT Board meeting in Wickenburg and describes the actions that resulted from a meeting with Jennifer Toth, ADOT State Engineer, and Rod Lane, District Engineer:
Following the ADOT Board meeting, the three of us prepared to meet at which time I learned that we were going to be joined by other ADOT representatives, as well as representatives from Federal Highway Administration (FHWA), including Karla Petty, Arizona Division Administrator.
Ms. Petty opened the meeting by stating that FHWA was very concerned about Select because of possible civil rights violations. Apparently, one of Select’s subcontractors (who is a DBE) had contacted FHWA regarding nonpayment, as well as several other payment related issues.
FHWA responded by initiating an investigation into the allegations raised by this DBE. DOT was notified of this investigation and has met with representatives conducting the investigation. As part of this investigation FHWA send a letter to Select last week requesting information. Although Pima County was not copied on this correspondence, I took this opportunity to request that a copy be emailed to us.
As we continued with the meeting, FHWA notified us that they will be taking the following actions:
1. They will be conducting an audit of Select to verify payment to the subcontractors. I explained we had also performed that investigation in which we had asked to see actual checks to show payment. FHWA said they need to see the actual cashed checks, as written checks were being considered insufficient. Select has been given the deadline of October 22nd at which time they must respond to the various inquiries by FHWA.
2. They will be performing an audit of Pima County in order to verify our oversight and management of the projects, especially as it relates to the use of pre qualifications of contractors. Pima County has no independent authority to prequalify contractors. A.R.S. Title 34 is an open competition statute that neither authorizes nor even contemplates prequalification of contractors/bidders. It was not until after September 4, 2014, when ADOT confirmed by letter that prequalification of contractors was required as a condition of the grant, that we had clear authority to do so.
3. FHWA may be reviewing our self-certification.
4. Lastly, Ms. Petty stated that effectively immediately, FHWA, is considering suspending all of the federal funds on these projects. In addition, they may also require Pima County to reimburse all federal funds that were paid to Select for the period of time in which Select did not comply with the DBE requirements. The specific dollar amount will be determined in the audit they are conducting next week.
5. ADOT also took this opportunity to express their concerns with the quality of the workmanship and materials used on these projects.
After months of doing little to address the situation, Cornelio advises Huckelberry “In summary Select’s failures to meet various contractual and federal requirements may cost the Transportation department a significant amount of money, both in terms of lost funding plus reimbursement to the federal government.”