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DWSD pays tab for wine, steaks, airfare, while cutting workforce

Judge Cox’s regional board pushed lucrative deal in no bid contract

By T. Kelly
The Michigan Citizen

DETROIT — Detroit Water and Sewerage Department (DWSD) board has employed a consulting company to reduce its workforce by 80 percent. While workers face massive cuts, the DWSD board is covering the costs of the consultants’ meals, wine, malt liquor, steak dinners, airfare in and out of the city, and hotel accommodations, according to documents obtained by this newspaper.

Since federal Judge Sean Cox took control of DWSD in 2011, he has moved toward regionalizing the board (see side bar on page 4), allowed them to spend up to $2 million on any given contract without city approval and encouraged privatization as a means, he says, to curtail costs.

The new DWSD board — working with a new director, former Ann Arbor public services administrator Sue F. McCormick, and under Cox’s guidelines — secured no-bid contracts totaling $2.2 million for a Minnesota -based consulting firm.

McCormick and the newly appointed DWSD board selected EMA Inc. without a bidding process. In February 2012, the board failed to secure City Council support for a five-year, $48 million contract for the consulting company. So the board, according to public relations officer Mary Alphonso, used its power to approve contracts up to $2 million without Council approval.

Using that power, the board approved a $205,008 contract with EMA for two months of work from April 16, 2012 through July 16, 2012. The board then approved a second six-month contract for $1.99 million for work from Dec. 1, 2012 through June 2013.

“They (the DWSD board) are skirting the City Council by piece-mealing out the contract,” said Catherine Phillips, staff representative of AFSCME Local 25.

EMA Inc., a national consulting company headquartered in St. Paul, Minn., according to its Web site, offers its customers “solutions” to asset management, operational optimization, people/workforce, information management, customer service and support and organizational leadership.

In Detroit, EMA will change the way jobs are classified and shrink the number of water and sewer employees from 1,978 to 374 and then hire 361 private contract workers. According to published reports, McCormick promises that will save $149 million annually.

DWSD paid EMA $133,289  for the first month of work. Included in the charges were $119,840 in labor costs for consultants whose hourly pay ranges from $75 to $330.

For example, EMA Vice President Brian Hurding, a Toronto, Ontario resident, earns $330 an hour. For an eight-hour day, DWSD pays Hurding $2,640.

EMA charged $63,310 for 312 staff hours interviewing water and sewer department employees to assess what each worker did in order to streamline and reorganize the department.

“They were talking to us about what we actually do,” said water department employee Mike Mullholland. “While people tried to explain you could see in their eyes they’d heard it all before. What they see as redundancy has to go. Even necessary redundancy, like when you want back-up for people with special skills.”

However, DWSD is paying for more than labor. Water/sewer funds are picking up the tab for the consultants’ expenses  — eating, drinking, sleeping and transportation.

Seven EMA employees rang up $13,449 in expenses during their first month in Detroit. That included $327.52 for two EMA workers who live in and near Toronto to rent a car to come to work in Detroit on just one of several trips; and nearly $600 for meals eaten over a two-day period in Ontario.

Airline tickets from Toronto to Detroit; Philadelphia to Detroit; Minneapolis to Detroit; Tampa to Detroit — all paid for by DWSD. Nyquil, coffee, valet parking, tolls and potato chips — Detroit pays.

DWSD paid over $70 for one employee to park his car at the Minneapolis airport, while working in Detroit.

One EMA employee, Jack Geisenhoff, flew from Minneapolis to Toronto on May 30, 2012, then two days later from Toronto to Chicago and then back to Minneapolis — all at DWSD’s expense.

Wine costs at dinner are picked up by Detroiters and sometimes not. A $145.24 meal at London Chop House in Detroit was reimbursed at $131 because the $35 bottle of B Leyda Pinot was deducted.

Other times, DWSD paid for the drinks. On Dec. 18, seven EMA employees ate a $522.14 meal at 24 Grille in the Book Cadillac that included two bottles of Newton Red and one bottle of Black Farm Pinot Grigio for a cost to Detroit of $75 after the restaurant’s half-off promotion. Taxpayers also picked up the $100 tip added to the $522 meal.

On another occasion, DWSD paid for glasses of sauvignon blanc, merlot and chardonnay during a $234 meal at Wah-Hoo on Shelby. EMA employees do not appear to stick to wine or cheap whiskey, either. A $406 meal at 24 Grille on Dec. 11 included charges for a porterhouse, beef ribs, a glass of 18-year-old Glenlivit at $15 a glass and a $10 shot of MacCallan 12, along with three bottles of wine at $17 each after the house discount — and a glass not of Detroit water, but sparkling water for $7.

A $168 tab Dec. 10 at Big City on Washington Blvd., included more than half in liquor charges — or $89. Earlier the same day the EMA crew ran up a $349.80 bill at the Subway on Gratiot.

When asked about spending items, board member Fred Barnes, the Macomb County representative, referred this paper to DWSD public relations officer Mary Alphonso. “As a policy board, I don’t get into that level of detail,” Barnes said.

McCormick did not respond to two requests for comment, nor did Board President James Falsone return a call from this paper by press time. EMA Inc. had not replied to an e-mail request for comments by press time.

New DWSD Board

By order of federal Judge Sean Cox, February 2011, the Board of Water Commissioners is made up of seven members who oversee DWSD operations, management and major contracts, and set rates for water and sewer services. The Board includes four members from the city of Detroit, and one each nominated by the Wayne County Executive, the Oakland County Water Resources Commissioner and the Macomb Public Works Commissioner with confirmation by the Mayor of Detroit. All members must have at least seven years of experience in a regulated industry. Commissioners receive $10,000 in compensation and an additional $250 per meeting, not to exceed $20,000 per year in total.

In November 2011, Judge Cox ordered James Fausone, Esq., to be chair. He represents Wayne County, is a partner in Fausone Bohn LLP, of Northville, and a resident of Canton Township.

James F. Thrower, vice chair, Detroit, is president and CEO of Jamjomar Inc., and the owner of seven McDonald’s restaurants in Detroit and the surrounding metropolitan area.

Fred Barnes, P.E., Macomb County, is a registered professional engineer from Sterling Heights. He owns and operates Fred W. Barnes Associates Inc., a consulting engineering firm.

Mary E. Blackmon, Detroit, is a retiree of Ameritech and served for 10 years as a member of the Detroit Board of Education.

Linda Forte, Detroit, is a senior vice president at Comerica Inc, with more than 30 years of business, finance, and commercial banking expertise to the board.

Bradley Kenoyer, Detroit, brings more than a decade of cross-functional problem-solving experience in delivering customer-driven results to technical and service quality issues for Ford Motor.

J. Bryan Williams, Oakland County, is an attorney with the Dickinson Wright law firm. Mr. Williams, a resident of Birmingham, practices in the areas of corporate and municipal law.

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