Internal documents question conflicts of interest between KCPS employees and winning vendors

KANSAS CITY, Mo. - Kansas City Public Schools is reviewing its policies following criticism some contracts were awarded to companies that have personal ties to a District department head.

Internal audits obtained by 41 Action News recommend KCPS adopts a policy that addresses conflicts of interest between employees and potential vendors.

The internal audits, which reviewed two different contract selection processes in 2011, both mention personal relationships between vendors and Director of Facilities Larry Englebrick.

41 Action News learned the contracts were under scrutiny when several sources within the District sent tips after a February investigation about a controversial $32 million project . That investigation revealed an unpaid adviser for the District was later allowed to form a company named HMM Construction Services and win the lucrative bid.

The contract was later terminated by the District. KCPS Superintendent Dr. Stephen Green announced the decision during an April interview with 41 Action News.

Security camera bids criticized

In early 2011, the District solicited bids for a security camera installation at Southwest Early College Campus.

However, in the midst of the bid process, the school experienced several highly-publicized safety incidents, including fires, fights and building lockdowns.

In response, former Superintendent John Covington asked for security cameras to be installed as soon as possible. He signed an emergency justification memo, which allowed staff to expedite the purchase instead of going through the typical competitive-bidding process.

Board documents indicate the emergency memo was signed on Feb. 23, just one day before bid responses from interested companies were due.

When asked why the District did not wait an extra day to receive and review all competitive bids, a written response from KCPS said the process would have delayed purchasing the cameras for up to 60 days.

"Given the seriousness of the situation, cameras needed to be installed immediately," the statement said.

District officials solicited a quote from DH Pace System Integration and another from ACS Electronic Systems (ACS). Contrary to normal process, the quote of $117,000 from ACS was sent directly to Englebrick instead of the District's procurement department.

A District spokesperson said communication during a bid process should be between a vendor and purchasing employees. However, the statement said Englebrick was acting on the emergency directive.

The $117,000 contract was signed by the superintendent and ACS vice president Tom Garrison on Feb. 23.

Did relationship influence bid selection?

Following the installation of security cameras at Southwest, KCPS also wanted to add systems to several other schools.

During a pre-bid meeting and tours of those schools, representatives of several companies told 41 Action News the selection of ACS seemed like a foregone conclusion.

Competing companies and sources within the District told 41 Action News that Englebrick is friends with ACS executive, Garrison.

"We all knew ACS was going to win and that scared quite a few bidders off," said one vendor who requested anonymity because he did not have permission from his company to speak with 41 Action News. "Whether you win or lose a bid, the process should be fair."

In May, the District awarded the project to ACS for $840,610 . Two other companies submitted lower bids. The lowest bid from All Systems was $624,979, according to board documents.

However, All Systems and two other companies were disqualified from the bid because the District said it determined they were not certified installers of the equipment.

The internal audit said the certification was never made clear to vendors and the decision to disqualify them was not "appropriately vetted."

READ: ACS Electronic System, Inc. Selection and Contract Assessment - http://tinyurl.com/ccuuad6

The audit also said vendors were not informed about the disqualification and criticized the lack of communication.

"It would have given the vendors the opportunity to respond to the disqualification, potentially providing the documentation the District had not even requested that would prove certification," the audit said.

The internal document also noted the "personal relationship" between Englebrick and Garrison.

"We do not have any information that any person acted fraudulently or intentionally impacted the selection process in favor of any particular supplier," the audit concluded. "However, we do feel the issues surrounding the disqualification of bidders are significant and should consider reevaluating the award."

KCPS: Relationship was disclosed, process transparent

A review of board documents indicated KCPS awarded ACS roughly $1.6 million in contracts in 2011. Some of those contracts included emergency HVAC repairs and fire alarm monitoring.

A separate contract for a $419,400 emergency boiler replacement again had a quote sent from ACS directly to Englebrick.

"I

do know that [Englebrick's] friendship is influential to ACS receiving so many bids," said a District employee, who requested anonymity for fear of losing his job.

KCPS declined all interviews for this story, including a 41 Action News request to speak with Englebrick. Instead, the District provided written responses to emailed questions .

In its statement, KCPS said Englebrick had previously disclosed the relationship and the purchases were handled in a transparent manner.

"Dr. Englebrick does not have a substantial personal relationship with Mr. Garrison," the statement said. "The majority of their personal contact was ultimately business-related. Dr. Englebrick, Mr. Garrison, and another KCPS team member have purchased lunch in a rotation system. That type of relationship in not unusual in business circles."

ACS president Robert Harper said he was not aware of how any of the other bidders were disqualified, but did agree with the audit's recommendation for better communication.

However, he dismissed any discussion about the relationship between Englebrick and Garrison influencing the process.

"The only relationship that exists is strictly customer to vendor," Harper said.

Separate audit mentions relationship with family member

The District also initiated an internal audit of a $150,000 contract for an IT assessment of the technology department.

READ: Alexander Open Systems Selection and Contract Assesment - http://tinyurl.com/cf4d7vv

As allowed by the District's purchasing policies, the work by Alexander Open Systems (AOS) was considered "professional services," and there was no bid process.

Englebrick's brother works at AOS. However, the audit said the relationship did not affect the decision, which was made by Englebrick's former boss.

"Dr. Englebrick voluntarily disclosed his brother's employment at AOS prior to the District making contact with the firm and has voluntarily removed himself from that relationship, when possible," the District's statement said.

As part of its review and improvement of purchasing procedures, the District told 41 Action News it plans to spell out its stance on personal relationships between vendors and employees. There is already a similar policy addressing conflicts of interest between board members and vendors.

Meantime, a follow-up report of KCPS by the Missouri State Auditor is expected to be released in August.

Ryan Kath can be reached at ryan.kath@kshb.com. You can follow him on Twitter or connect on Facebook .

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