Exclusive: Rick Scott's 'Rookie Mistake' May Have Cost Taxpayers Millions
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CUDJOE KEY (CBSMiami) – Soon after Hurricane Irma slammed into the state, Governor Rick Scott made the decision to ignore the debris removal contracts already in place in the Florida Keys and instead push forward with a plan to issue emergency contracts for the lucrative work of clearing fallen trees, palm fronds, as well as the remnants of destroyed homes and trailers.
One of the companies selected had no previous emergency debris removal experience, while more qualified firms were prevented from even submitting bids. When CBS4 News first reported the story in October, it was apparent the new contracts were going to make the clean up more expensive.
We now know how much more.
The Governor's emergency contracts will end up costing taxpayers an additional $28 to $30 million, according to an analysis by CBS4 News.
And those numbers could grow.
CBS4 News reviewed more than $43 million worth of invoices submitted to the state through February by Munilla Construction Management (MCM) and Community Asphalt, the two firms selected to operate in the Keys under the emergency contract.
If the Governor had instead used one of the companies already under contract with the state, it would have cost taxpayers as little as $13 million to do the exact same work.
"That's a lot of money," said Richard Skinner, referring to the difference between the emergency contract and the pre-existing contracts.
Skinner was the Inspector General for the Department of Homeland Security under Presidents Bush and Obama, as well as the Acting Inspector General over the Federal Emergency Management Agency under President Clinton.
Because President Trump declared Florida a disaster area after the storm, the cost of the cleanup will ultimately be borne by the federal government. Asked if the emergency contract will likely draw scrutiny from the current staff in the Inspector General's office, Skinner replied: "I believe so."
"It is something I would examine if I was the Inspector General today," he said. "We would conduct an audit just to get to the bottom of whether taxpayer money was being properly spent."
Scott Amey, the general counsel for the Project on Government Oversight, a watchdog group based in Washington, said that by ignoring the existing debris removal contracts, the Governor "subjected state and federal taxpayers to millions of dollars of wasteful spending."
"This is a rookie mistake made by a state that shouldn't be making rookie mistakes," Amey added.
Governor Scott may have had the power to do what he did, Skinner noted, but the decision to ignore existing contracts that were competitively bid, in favor of an emergency contract raises some troubling questions.
"Notwithstanding the fact that you have wide discretion following a disaster, you also have to act in a very reasonable, prudent manner," he said. "You just can't ignore good business sense."
He said that is why federal officials encourage states to use pre-existing contracts.
"There is a whole variety of reasons why you would want to have these contracts in place before disaster strikes," Skinner said. "And it makes no sense at all to just ignore those contracts and redo the entire process."
"It just makes no sense at all."
A spokesman for the current Inspector General for FEMA and the Department of Homeland Security told CBS4 News: "While OIG has several ongoing reviews focused on debris removal and prepositioned contracts; currently, we do not have any review specific to debris removal in the Florida Keys planned during Fiscal Year 2018."
A spokesman for FEMA said the storm presented "many unique situations" for communities in Florida, nevertheless the agency would go through its normal review process before deciding whether it reimburses the state for the work done by MCM and Community Asphalt. "Until we receive all documentation, eligibility cannot be determined," the spokesman said. "Before making a decision, FEMA will review the entire situation and all documentation, including contracts and procurement procedures."
A spokeswoman for Governor Scott issued the following statement to CBS4 News: "It is inaccurate to compare pre-disaster contracts with emergency debris removal contracts – it is comparing apples to oranges and must be reflected in your story." (The Governor's full statement can be found at the end of the story.)
The statements issued by the Governor's office, however, contradicts statements Scott made days after the storm, instructing cities and counties to use their pre-storm contracts to avoid "being price gouged by debris removal contractors."
"We will not tolerate any attempt by businesses to take advantage of our communities during their time of need," Scott said during a September 22 press conference, "especially in the wake of a natural disaster like Hurricane Irma."
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The eye of Hurricane Irma made landfall on Cudjoe Key, near Mile Marker 22, at 9 am on September 10. With winds of 130 mph, the Category 4 storm ripped through trailers, uprooted trees, and tore the roofs off homes.
The storm knocked out electricity, phone service, and even disrupted the drinking water in Monroe County. Portions of US1 were wiped out, while the airports in Marathon and Key West were closed until their runways could be inspected for damage. The same was true for the string of bridges that link the Keys together.
Miraculously, no one in the Keys was directly killed by the storm.
Despite the destruction, both Monroe County and the state seemed prepared to handle the aftermath.
Key West, Islamorada and even the resort community of Ocean Reef, all had contracts with a private firm, AshBritt, to clean up storm debris at prices that were negotiated months in advance.
AshBritt, based in Broward County, is one of the largest disaster response firms in the country. They oversaw the cleanup in New Jersey after Hurricane Sandy, in Mississippi following Hurricane Katrina, and in California for the recent wildfires.
Monroe County also had a contract with AshBritt, that had been competitively bid before hurricane season even started.
The Florida Department of Transportation seemed ready, as well. They had six companies on standby, under their own pre-storm contracts, ready to go into the Keys to clear US1. Three of those companies – Ceres Environmental, Bergeron Emergency Services, and AshBritt – had crews pre-positioned on the border between Monroe and Miami-Dade expecting to be called in to help.
Yet all of this planning was ignored.
Rather than using Ceres, Bergeron or AshBritt – state officials quietly sent notices to a handful of companies, inviting them to bid on a new emergency contract. The emails went out late in the afternoon of September 12 and the responses were due by 11 the next morning.
And the new contract would not be limited to removing debris along US1, but it now included everything within the hardest hit areas of the Florida Keys from Mile Marker 16 to Mile Marker 40, just south of the Seven Mile Bridge.
By the afternoon of the September 13, the state decided on two firms: MCM and Community Asphalt.
Both companies, as well as their owners, are politically active and are major campaign contributors to the Republican Party of Florida, as well as Governor Scott. The Munilla family, in particular, has raised hundreds of thousands of dollars for local, state and federal politicians, including Senator Marco Rubio and congressmen Mario Diaz-Balart and Carlos Curbelo, who represents the Florida Keys. (In fairness, it should also be noted that all of the companies in this story are politically active and donate to local, state and federal candidates.)
(MCM is currently under scrutiny for its role in constructing the FIU pedestrian bridge that collapsed in March killing six people.)
The rates for debris removal contained in MCM's emergency contract are believed to be the highest in the state and stand in sharp contrast to the prices Ceres, Bergeron, and AshBritt would have received under their pre-existing debris removal contracts.
For example, MCM charged taxpayers $913 a mile for every curb and gutter they swept.
Ceres would have charged $123 a mile, AshBritt $32, and Bergeron just $12.
To haul rock, sand, soil and sediment MCM charged the state $77.50 a cubic yard.
AshBritt would have charged $11, while Ceres and Bergeron would have charged between $6.50 and $15.95.
So-called "White Goods" is another costly area. To remove a washing machine, a dryer or a stove, MCM charged the state $969 for each and every appliance.
AshBritt would have charged $75 per item, Ceres $48.15 and Bergeron $60.
However it wasn't until MCM and Community Asphalts started submitting bills for their services that the true cost of these emergency contracts could be measured.
CBS4 News reviewed $30.1 million worth of invoices submitted by MCM to the state for work they had done through February.
If that same work had been done by AshBritt it would have cost taxpayers $10.4 million.
Ceres would have done it for $9 million and Bergeron would have only cost taxpayers $8.5 million.
A similar story can be found with Community Asphalt. CBS4 News reviewed $13.5 million in invoices submitted by the firm.
That same work would have been done by AshBritt for $5.5 million.
Ceres would have charged $5.6 million and Bergeron $4.1 million.
In a statement, Community Asphalt defended their work: "Community Asphalt Corp. was invited by FDOT to bid on a competitive emergency contract to remove debris in the Florida Keys. We were one of three contractors selected to perform this work. Our experience and expertise enabled us to successfully complete the project to the satisfaction of the owner."
MCM noted that other companies who bid on the emergency contract actually had higher prices in their bids.
In the past, state officials defended the emergency contracts saying the Governor had to act.
"Because it was absolutely critical to clear roadways in the Florida Keys so families could begin to rebuild their lives, the Governor directed the Florida Department of Transportation to immediately begin debris removal in Monroe County," according to FDOT spokesman Dick Kane.
State officials claimed they acted because of an urgent request on September 12, by the emergency manager for Monroe County, Martin Senterfitt.
"Monroe County asked for additional help to pick up debris following the storm," the governor's office stated last year when asked about the emergency contracts.
State Transportation Secretary Mike Dew testified before the Legislature saying typically FDOT only cleans up roads, but they made an exception in this case because the state "received a request for assistance" from Monroe County.
The Governor's Office repeated that claim in a statement Tuesday to CBS4 News: "We want to be clear: emergency crews were brought in to supplement ongoing work because the local government requested FDOTs assistance to quickly solve this issue so families could return home."
However, in a sworn deposition obtained by CBS4 News, Senterfitt said he never made such a request.
He said on September 12 he spoke to Leo Lachat, the deputy director for the state's Division of Emergency Management, and that it was Lachat who asked him if the state could help the county clear some of the roads.
"He stated he had resources available and asked if we would like those resources to help and I said yes," Senterfitt said in the deposition.
Asked if he expected FDOT to issue emergency contracts, Senterfitt said: "I did not."
Senterfitt said he had no idea the state issued those emergency contracts until well after they were signed. He said he never intended – nor did he want – the state to take over debris removal in the Keys.
By the time he learned of the emergency contracts on September 22nd, he contacted Lachat's boss, Bryan Koon, who at the time was the state's emergency management director.
"I asked him what happened," Senterfitt recalled. "And he said, `Well, DOT was involved with debris collection.' And I asked him why. And he said, `Well, that's what happened.' And that was the conversation. He would not go into detail."
A spokesman for the Division of Emergency Management declined to comment.
Roman Gastesi, the Monroe County Administrator, said he was also surprised by the Governor's emergency DOT contract. He confirmed that by the time county officials realized what was happening, the new emergency state contract was already in place. He said he initially objected to the state takeover because Monroe County had their own pre-existing contracts and county officials wanted to be able to oversee the cleanup themselves.
Nevertheless, he said, state officials refused to rescind the contracts.
"I realized if DOT is going to come in and play the hero, then okay let them come in and play the hero," Gastesi told CBS4 News last year. "Who those trucks belong to and who is driving them, I really don't care."
CBS4 News conducted a review of the rates in the county's pre-existing debris removal contract versus the emergency contracts given to MCM and Community Asphalt. If Monroe County had been allowed to do the work itself, it would have saved taxpayers between $22 million and $26 million.
"There are pre-existing contracts that exist on the local level, the state level and even the United States government has pre-existing debris removal contracts," said Amey, with the Project on Government Oversight. "The state could have used any of those contracting vehicles and they decided not to. A few days after Irma rolled through Florida, they decided to enter a new contract, with limited competition, over a limited time period to accept bids and they got what they paid for."
All of the companies passed over for the work contained in the emergency contract told CBS4 News they were prepared to do the work at the prices in their pre-storm contracts.
"Yeah, I was prepared to honor the contract," said Ron Bergeron, founder of Bergeron Emergency Services. "We honored every contract and honored the pre-existing contract prices."
Ceres Environmental also said they would abided by the rates in their pre-existing rates.
Asked to comment on the how much the state would have saved if they had used Ceres instead of issuing the emergency contracts, a Ceres spokesman replied: "The contracts are in the public record. The prices speak for themselves."
AshBritt founder, Randy Perkins, criticized the emergency contract last year when they became public, calling them "outrageous."
Today his view hasn't changed. "With the benefit of hindsight, and really being able to go through the numbers and dissect them, it might even be worse than I thought it was back then," he told CBS4 News.
The state not only rushed the contracts, he argued, but failed to protect the public. He cited the $913 a mile charged by MCM to sweep curbs and gutters versus AshBritt's rate of $32.
"That one line item should have stood out to people at DOT evaluating these bids and said we are making a huge mistake here," Perkins said.
Officials for AshBritt, Ceres and Bergeron said they were frustrated they were not even allowed to submit a bid for the emergency contract.
"They rebid it and wouldn't let me participate in the new bid," Bergeron said.
"We were not an invited bidder and were precluded from competing for the FDOT September 12 emergency bid for Monroe County," Ceres said in a statement.
The emergency contract created a wave of problems that could be felt across the state. While MCM and Community Asphalt were clearing debris between Mile Markers 16 and 40, AshBritt was cleaning up the rest of the Keys under the pre-storm contracts it had with Key West, Islamorada and Monroe County.
And because MCM and Community Asphalt were being paid much higher rates by the state, crews that had been hired by AshBritt in the Keys walked off the job to go to work instead for MCM and Community Asphalt.
In fact, it became harder for cities and counties outside of the Keys to keep cleanup crews in place, because many of them rushed into the Keys to work for MCM and Community Asphalt.
AshBritt is facing its own problems, the Florida Attorney General is investigating the company to see if they acted improperly in trying to secure higher rates from cities in other parts of the state. AshBritt denies it did anything wrong.
The following is the governor's full statement to CBS4 News:
"It is inaccurate to compare pre-disaster contracts with emergency debris removal contracts – it is comparing apples to oranges and must be reflected in your story."
"It is the State's responsibility to clear U.S. 1 following a storm, like Hurricane Irma because it is a state road. Clearing U.S. 1, which was accomplished in just a matter of days, was absolutely critical for the entire Keys community. Due to the critical need of this roadway, this service was provided at no cost to the local government and at the request of the local government. 90% of this cost is reimbursable through FEMA."
"The initial clearing was accomplished in just a few days, but continued due to the sheer volume of debris on the roadsides and the additional debris people were setting out on U.S. 1."
"Debris companies had a lot of contract disputes and legal battles in Florida and other states following Hurricane Irma and Governor Scott will never let special interests impede recovery in any community."
"We want to be clear: emergency crews were brought in to supplement ongoing work because the local government requested FDOTs assistance to quickly solve this issue so families could return home. FDOT was asked to help and immediately provided assistance because that is what taxpayers deserve."
MCM also released a statement to CBS4 News:
"The Hurricane Irma Disaster Recovery Emergency Contract was hard bid with six responses, and the three lowest bidders were awarded work. MCM's work zone was in the lower keys where the eye of the storm made landfall. It has been well reported that the subcontractor costs were at a premium due to the disaster across the State and in Texas. MCM honored its bid commitments and satisfactorily completed the Work, but was required to pay the market cost. It is not appropriate to compare pre-position contract prices with actual costs in post-emergency times."