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Detroit Land Bank outsources bidding process for demolition work

Nicquel Terry Ellis
The Detroit News

The Detroit Land Bank Authority has hired a third-party company to assist with the bidding process for demolition contractors amid a federal criminal probe into the program's practices.

PriceWaterhouseCoopers has been awarded a one-year contract not to exceed $710,000 that began July 1, land bank officials confirmed Friday. 

Under the agreement, PwC will review requests for proposals and make recommendations to the land bank for contracts for demolitions being done with funding from the federal Hardest Hit Fund program. The land bank is still responsible for awarding the contracts for demolition.

Land bank officials said the move, which comes in the wake of concerns over a lack of diversity in the program, was made to improve transparency and encourage more contractors to participate.

"Effective July 1, 2018, with a goal of providing a greater level of stability, transparency, and to encourage the participation of a diverse group of contractors; the DLBA transitioned all of its HHF procurement services from the DBA to PriceWaterhouseCoopers, Public Sector, LLP (“PWC”)," Land bank Executive Director Saskia Thompson and Tammy Daniels, the authority's director of demolition, said in a prepared statement.

Detroit City Council grilled the administration and the land bank earlier in July over whether enough was being done to ensure minority and city-based companies were getting fair access to the federal demolition work.

The federal program has awarded about $173 million since spring 2014. So far, about 28 percent of the contract dollars — or $48 million — has gone to women-owned or minority-owned businesses, the land bank said.

PwC was one of three companies that responded to the authority's Request for Proposals, Thompson and Daniels said. Experis submitted a bid for $172,000 and RGP submitted a bid for $99,000.

"PWC was selected based on their response to the RFP, and they bring a wealth of knowledge, experience, and a stellar reputation to the DLBA and the Hardest Hit Fund Demolition Program," the land bank statement added. 

The authority decided earlier this year that it needed to outsource the work after a spike in soliciting requests for proposals for demolition work as well as increased management roles tied to health department protocols for the program, officials said.

This left minimal time, officials said, for the authority's project manager to focus on field operations. 

The land bank said the contract requires PwC to provide recommendations for about 10 requests for proposals per month. 

Other responsibilities include project management, tabulating bids and administering the annual request for qualifications process.

Overall, $258 million has been earmarked for Detroit under the federal effort that has about $108 million left to use by Dec. 31, 2020.

The city's demolition program has been the subject of federal, state and local reviews since it came under scrutiny in the fall of 2015 in the wake of bidding concerns and soaring costs. 

A 2016 state audit, first made public this spring through the Freedom of Information Act, suspected "bid rigging" and "collusion" between the city's building authority, the Detroit Land Bank and program contractors. 

Demolition officials, according to the audit, admitted to contract price manipulation that included hiding some demolition overages by spreading them over other properties so it appeared none of the work exceeded cost limits set by the state.

Mayor Mike Duggan's office has noted that some of the concerns initially raised by the auditor were not substantiated after a full investigation of land bank and building authority computers and documents.

The administration maintains Detroit has been completely transparent and fully cooperated with all state and federal inquiries.

Duggan first revealed in February 2017 that the state's review of the demolition program's billing practices had turned up a total of $7.3 million in what the Michigan State Housing Development Authority argued were "inappropriate" or "inaccurate" costs.

Early last year, the land bank repaid $1.37 million to address improper expenses identified by auditors for the state.

Last June, the city's land bank also reached a settlement with state housing officials to pay $5 million to resolve a dispute over invoices the state said were improperly submitted for repayment in the demolition program. At the same time, the state agreed to make another $5 million available to the city for tearing down houses.