Detroit City Council questions consultant payments

Christine Ferretti
The Detroit News

Detroit — The head of Detroit’s City Council wants a list of all consultants, their salaries and funding sources from the chief financial officer’s office after becoming aware of several contracts costing the city hundreds of thousands of dollars.

The newest consultant is earning $118 an hour — and up to $951 per day — under an agreement CFO John Hill arranged last fall. Dexter Lockamy, a Baltimore-based financial turnaround expert, joined the city in late June under the $495,000 deal.

“As we continue to establish financial stability in our city, it is critical that we maintain transparency and accountability for managing the finances of the people,” City Council President Brenda Jones said.

Contracts like Lockamy’s have come under fire from Jones and others on the City Council who are pressing the city’s administration for specifics on the pay and role of its contractors and consultants who were hired without the council’s input as the city recovers from bankruptcy.

The Detroit News obtained a list of more than 70 personal services contractors approved or extended by Hill between February 2015 and February 2016 under authority granted by former Emergency Manager Kevyn Orr. Prior to his 2014 exit, Orr put a series of orders in place, including one that gave Hill sweeping authority to bypass the council and make hiring decisions to support the city’s finance and budgeting operations.

It includes a mix of full- and part-time posts and contractors in CFO areas, including grants management, procurement, finance and treasury.

Some positions are temporary, while others have concluded, such as Detroit’s former chief assessor Gary Evanko, whose agreement ran from October 2015 to June 30, 2016. He earned $162 per hour as part of a $194,400 contract.

The list also includes Deputy Mayor Carol O’Cleireacain, appointed by Orr in 2014. A former budget director for New York, she is compensated at $108.17 per hour with total pay of $225,000 under the existing one-year agreement that expires Friday.

Hill voluntarily surrendered powers to bypass the City Council on contracts in December but not before he signed off on Lockamy’s contract and extended a separate agreement with another Washington, D.C.-based restructuring consultant, Larry A. King, who has earned more than $626,000.

Jones, who is awaiting a list of consultants with salaries exceeding $100,000, said she wasn’t informed about King’s or Lockamy’s contracts before they went into place.

“I don’t think it’s money being spent very wisely,” Jones said after learning of King’s contract.

Lockamy’s post, meanwhile, was designed to be a full-time assignment over two years and had been slated to begin in December 2015. But the start date was ultimately delayed six months. Lockamy began with Detroit on June 27 and has served the city only part time so far, Hill said.

The approximate annual amount of Lockamy’s contract is $247,499, assuming he works full time. But this year, he’ll earn less since he started in June rather than December. The contract runs through Dec. 19, 2017.

Hill said he’s been transparent all along with Detroit’s council, providing monthly reports on actions he’s taken.

Lockamy, he noted, brings decades of experience in finance and management and is being compensated at a rate below others of his caliber.

“If you look at Dexter’s resume, you see someone who has really sat in a lot of positions ... and is, therefore, able to really help bring that experience from other cities here,” said Hill, noting funding for the contracts is covered in his department’s budget.

Lockamy’s resume touts a list of leadership roles and 28 years of experience in municipal, private and international institutions, including consulting experience in Afghanistan, Kenya and Nigeria.

In the mid-1990s, he worked under Hill as chief financial officer and senior financial manager of the Washington, D.C., Financial Control Board. Hill served as the control board’s executive director. King also worked for the board.

Phasing down reliance

Council President Pro Tem George Cushingberry Jr. this week said he heard about Lockamy but hadn’t viewed his agreement. It’s part of the reason he formally requested Hill provide a list of all personal services contractors, namely those outstanding from the tenure of the city’s ex-emergency manager. He said he intends to take up each individually.

“Can we get by without them and how soon can we get rid of them? That’s my issue,” said Cushingberry, who chairs the council’s budget, finance and audit subcommittee.

Asked about consultant pay data, Mayor Mike Duggan said the emergency manager order doesn’t shut him out and council members will get everything they are asking for soon.

The city, he added, is “steadily phasing down the reliance on consultants.”

“We’re eventually going to eliminate it entirely, and City Council is certainly entitled to those records,” Duggan said.

Hill confirmed the city is reducing its use of consultants and said a goal of the restructuring is to get more permanent people into government and reduce Detroit’s reliance on temporary workers.

Hill noted he did not extend Detroit’s contract with the operational restructuring firm Conway MacKenzie when it expired June 30.

Consultants from the company were brought on before fall 2013 to aid Detroit during bankruptcy and post restructuring. The firm was among nearly a dozen working on Detroit’s restructuring that drew scrutiny over fees during bankruptcy.

Overall, the firm was paid about $27 million with several individuals earning $400 per hour — or $832,000 annually on a full-time basis, Hill said.

Expert says value in expertise

As the senior adviser to Hill, Lockamy was hired to lead and execute special projects within the office of the CFO, according to the contract. The city declined to arrange an interview with Lockamy, saying that he is a contractor, not a city employee. He did not respond to a message left at a Baltimore number listed in public records.

Detroit will reimburse Lockamy for all travel-related expenses including transportation, lodging and other expenses approved by Hill, the contract says. As of Aug. 31, he’d received about $1,000 for expenses and worked about 75 hours.

Lockamy’s contract details come after some council members raised concerns over King’s agreement and earnings in August.

Bloomfield Hills-based turnaround expert Patrick O’Keefe said Detroit’s getting good deals on King and Lockamy, considering the level of expertise they bring.

“These people have specialized knowledge and experience and they command more than what you might pay to an average employee,” said O’Keefe, CEO of O’Keefe & Associates.

City records show King’s contract was first authorized by Orr in spring 2014.

He is the architect behind much of the restructuring in the Office of the Chief Financial Officer, Hill said.

He’s also working on restructuring other areas, including the innovation and technology, development, and housing departments.

Between April 15, 2015, and July 7, 2016, King was paid $626,675. During that time, he also got $65,723.57 in expenses for round trip airfare, hotel stays, transportation services and food, according to records obtained under the Freedom of Information Act.

King is compensated $175 per hour and his initial contract under Orr was for $115,000. Hill amended it twice, with the current deal expiring Dec. 31.

Staff Writer Jonathan Oosting contributed.