Controller slows controversial recycling contract citing transparency concerns

HOUSTON (KTRK) -- A 15-year, $37 million recycling contract is on hold - again - after city Controller Chris Brown said he couldn't certify the contract, citing transparency concerns among other issues.

The contract first appeared in front of the Houston City Council in July and was placed on hold then after concerns over how city staff members selected FCC Environmental. The contract went back for another round of bids then. The same company won the second round of bids, but not without another round of intense questioning from council members on Nov. 28, when the contract came back for review.

"I feel every policy and procedure was followed," Chief Procurement OfficerJerry Adams said at the November meeting. He said he fully supported the proposal and had no issues with it, despite admitting his staff finished putting the information together just "minutes" before the meeting and didn't give council members any documents or lead time to study the contract or bid.

"It seems to me someone, somewhere was determined that FCC was going to win this contract, and that disgusts me," Councilmember Mike Knox said. "It appears they are purchasing a contract for $23 million."

Council member Dave Martin walked out of that meeting, complaining that the scoring matrix didn't make sense then and didn't make sense now.

"The winning company came in last in three of the nine categories," Martin said of the July bid. "They won in one category: price. But on operations? Dead last."

Martin wanted to know how FCC scored 50 percent higher than the nearest competitor when he said the difference in pricing was separated by a small margin.

RELATED: Recycling plan meets controversy with city leaders again

City council members were slated to take up the contract Wednesday.

Brown outlined a number of issues he had with the contract in a memo to the mayor and city council members Monday.

"As part of the Controller's Office review, I would like to highlight concerns pertaining to the transparency of the procurement process and the... sub-contractor's status as the defendant in several federal lawsuits," Brown wrote.

Records show that sub-contractor is Tayor Smith Consulting, a staffing firm. The complaints stem from overtime pay, records show.

Brown's office was told only hard copies existed of the original paperwork and those copies were destroyed when the basement of city hall flooded during Hurricane Harvey. Brown wanted to review scoring sheets and original proposals, but he couldn't, he was told, because none of the paperwork survived the storm, the memo said.

In addition, rules put in place for Brown's reviews have been "unusual," he wrote. For both the first and second round of proposals, his staff had to review documents in a secret room and only after a non-disclosure agreement was signed, Brown said.

"No legal reasoning has been provided for this assessment," Brown wrote.

Brown said he also had concerns about a sub-contractor, who is a named defendant in four recent federal lawsuits. Three of those four cases are for violations of the Fair Labor Standard Act.

The review of the contract is ongoing, Brown said.

"Our position is that the subcontractor is involved in pending litigation that has not been found to have merit, as many other companies tend to have. In the event the company is found guilty of any wrong doing FCC will no longer to continue to do business with them and will replace them with another MWBE vendor," FCC CEO Inigo Sanz said in an e-mailed response. "FCC takes compliance with all local labor laws very seriously."

"Additionally, Waste Management currently uses our proposed subcontractor as their staffing provider under their current recycling contract with the city of Houston."

Calls to the mayor's office and Taylor Smith Consulting have not yet been returned.

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