November 30, 2007

DO YOU TRUST YOUR ELECTED REPRESENTATIVE TO HAVE YOUR BEST INTERESTS AT HEART WHEN THEY MEET BEHIND CLOSED DOORS?

There is a lot of discussion in the media about changing the open meeting rules and criteria. In the face of all the indictments and corruption that has happened, it is hard to justify the desire for changes put forth by Ulysses Jones and the confirmation of this change by the Shelby County Commission in an 11-0 vote.

I understand the desire to be able to talk one on one in private and if every politician was an honest public servant who had the interests of the taxpayer at heart, there would be no problem. However history, both past and present, indicates that politicians generally have their own interest front and center ahead of the publics’ interests. You only need to look at the recent Knoxville debacle to see what happens when high paying public jobs come open and the public servants decide to split up the pie. The most revealing indication of political inclination is the fact that the Tennessee legislature refuses to apply the same open records laws that they dictate for every local politician to themselves. This is analogous to the United States Congress and Senate that dictates that everyone but them selves have social security but they refuse to participate themselves and instead have a plush and generous retirement plan of their own.

There is a fall back position that could keep the public informed but give the local politicians some slack. If two or more politicians want to exchange ideas away from the public meeting, they could exchange emails with a copy to the media and another copy posted on the public website of the city or county. This would force the politicians to put their thoughts on electronic paper, organize their thinking and research and still ask the recipient of the email to consider his ideas and answer his questions. Another possibility is to require any such meetings to be reported on the political website in a meeting report with the date, time and subject matter noted on the posted report.

Let face it. The public does not trust politicians to act in their best interests when they meet in private and the record indicates that the public is correct.

A PYRAMID SCHEME DISCOVERED AT CITY HALL

November 14, 2007

I have been trying through an open records request since April 2007 to get information on the huge City of Memphis’s purchases done under the cover of the year 2000 SCT/ACS (Affiliated Computer Services) information technology (IT) contract. SCT (Systems’ and Computer Technology Corporation) was the original winner of the 2000 IT outsource bid largely in part due to its commitment to minority vendors here in Memphis as indicated in a Memphis Flyer article at the time by Mayor Herenton himself. ACS later purchased the governmental division of SCT, adding Memphis as a client to ACS’s fold. The interesting part of the bid process is that the original participants of the proposal outlined their commitment to minority diversity in the City with the promise of including certain local minority firms in facilitating the contract. Otherwise, all had commitments to minority vendors. ACS included a list of certified minority venders in their proposal that apparently was obtained from the (MMBC) MidSouth Minority Business Council, which included names like Associated Softworks), Thomas, Mitchell, LeSure and others. The MMBC is the minority certification arm of the City government, another private entity providing a governmental function. Even though ACS did not win, somehow these vendors ended up on the SCT contract either through purchase of SCT by ACS or by the City asking that these vendors specifically be used. For some time, I have been particularly interested in four companies, Mitchell Technology Group, Thomas Consultants Inc, Integrate Technologies and Lesure Computer Services.

From July 2002 through March 2006 these four companies have racked up $7.39 million in business with the City. This does not include another $1.15 million from July 2006 to February 2007. This information comes from the ACS summary monthly reports of Minority/Women Enterprise participation. All that is reported on these monthly reports (see attached sample of a typical monthly report) is a lump sum monthly figure paid by ACS to each particular minority firm. The above four firms were named in the original contract as approved subcontractors. In other words, they were assured of virtually no bid business. Nice work if you can get it.

As a taxpayer I wanted to find out what the taxpayers were paying for the goods and services under this ACS contract with the City of Memphis. In an open records request I asked for details for four months (one month for each of the above four companies). I did not want to be swamped by hundreds of documents. I received fairly complete information about Mitchell Technology and Thomas Consultants for the particular months that I designated. I did note that one contract for Mitchell was for $49,500 (just under $50,000) designating Mitchell as a sole provider for maintenance and technical support for CA Inc. products.

What was also interesting was a purchase of three Dell computers in December 2006, Model GX620MT, Type 1 for $1033.55 each. Shelby County government used to give all their computer business to Thomas Consultants until recently when they started buying from the Dell State contract. Now the County computer department is buying most of their computers off this direct contract as well as buying directly from Gateway and Motorola. I asked them what they would pay for these three Dell computers and they responded that they would cost $705.00 each, a savings of 31.7%. The City of Memphis and the MLGW could also buy off the Dell state contract but they have chosen to give the business to Thomas and Mitchell.

The City’s response concerning Integrate Technology (Reginald French) and Lesure is more interesting. Elbert Jefferson (the City Attorney) stated that the two firms were analogous to subcontractors to a main building contractor which was ACS. He provided a letter from Charles G. Elliott, the local ACS account manager. Mr. Elliott stated in his letter (see attached Jefferson and Elliott letters) to Mr. Jefferson that Integrate and Lesure serve as part of their Full Time Equivalent Count and that they do not provide salary information on their employees. Therein lays the problem that taxpayers all over the country are having with governments who want to avoid the sunshine of open records. They take a government function such as Information Technology, state run child care services, or fiber optic networking and give the government function to a private firm. The private firm then claims that the public is not entitled to know how the taxpayer’s money is being spent and the government claims that they don’t have the requested information and refuse to audit the service. A thick wall of secrecy, difficult to pierce, is constructed. The only way to get at that information is to see how these companies are spending taxpayer dollars as a quasi-government division. How much are Mitchell and Thomas paying for the computers they resell to the City? How much do French and Lesure pay its resources to provide work to the City? Or for all practical purposes, are they even providing a commercially useful function to the City since the City could easily buy the same computers and labor direct? Remember, the minority code clearly states that the services must be commercially useful.

Now you see the problem that I have in trying to get this information. I have filed suit in Chancery Court, hired a lawyer at my own expense and am now faced with Alan Wade’s firm who is being paid by my tax money. What could be more unjust? But fortunately for us and thanks to some honest folks in government there is some light shining from under the locked door at City Hall to shed light on the deals that are being pulled on taxpayers.

To give an example, here is what is going on with the ACS/Integrate Technologies contract. The City of Memphis requests that ACS provide some programmers for their operations and their Oracle software for a temporary assignment to interface the payroll system with the accounts payable system or to write custom reports. The City puts in a work order to ACS who then puts in a work order to Integrate (Reginald French) to do the work without open bid. Reginald French turns to another private vendor named Mr. Bala Karri with Shrichakra Consultancy Services, LLC in Dallas, Texas who then turns to two consultants who aren’t even employees of any of the above firms to perform the actual work on site at the City. Essentially, we have a tier scheme going from Memphis to ACS to French to Karri to the two contractors (Ravinder Malga or Min Zhan) who do the actual work and who all, except for the city and maybe ACS, get a piece of the pie. The pie is large as ACS in their reply to Elbert Jefferson stated that they were paying Integrate at twice the standard rate and Lesure at four times the standard rate. Plenty of pie to go around. However, there is a fly in the ointment that has brought this matter to light. I have recently come into possession of emails (see attachment) which have been sent to all Memphis City Council members claiming that Mr. French is not paying Mr. Balli to the tune of $79,440 from back in 2006. Mr. Balli has even gone so far as to discount Mr. French’s invoice by 20% to prompt payment. THAT MAKES ONE WONDER HOW MUCH ABOVE THE LOWEST POSSIBLE COST THESE SERVICES ARE ACTUALLY COSTING THE CITY. Also the emails reveal that Mr. Elliott (ACS) indirectly asked Mr. Balli not to spread the word about this non payment which of course is very convenient for Reginald French. It is also interesting that the City Council has not broken this news. I hope now you understand why I feel open records and more importantly open bidding is essential to honest government. All this information needs to be put on the internet.

There are many questions to be answered in this whole affair. 1) How much is this ACS contract really costing the taxpayers over and above what the real cost of the goods and services could be purchased for in an open market with competitive open bids – my bet is at least 20%-50% more or a waste of $5MM to the extreme. The contract and common sense states “Vendor shall protect City’s interests, including verifying that Components (Goods and Services) are purchased in accordance with City’s requirements (e.g., at the lowest price available, considering market price, City’s leveraged price, and the lowest price obtainable by Vendor). Since the City nor ACS want to audit its good friends and contractors, it leaves us tax payers to dig through thousands of documents to find the truth or worse yet file suit in court – a bet the City is willing to take that the average taxpayer can’t afford or have the time to do.

In addition, there is the question of subcontracting as Integrate (Reginald French) is doing. The contract states that prior to entering into a subcontract with a third party, Vendor shall give City reasonable prior written notice specifying the components and services affected, the scope of the proposed subcontract, and the identity and qualifications of the proposed subcontractor. There is also the question of an individual or firm attempting to benefit from or participating in an M/WBE program, through fronting activities, false representation of a commercially useful function, or other fraudulent or unlawful activities. Remember the fax to Lilly Halford (see attachment) at the MMBC from Carlee McCullough (contract compliance officer of the City of Memphis) asking to rush Reginald French’s minority application to assure his inclusion on this ACS contract? Help that the mayor told the Commercial Appeal never happened. Who at the MMBC or the City verified that French’s firm was actually doing the work?

It is apparent that there needs to be a thorough investigation by the City Council or by other organizations to find out what is really going on in the ACS/City of Memphis contract and how much could be saved by operating as the Shelby County government is now doing and by operating is a transparent and open manner rather than hiding behind the cloak of the ACS contract.

Click here to see a sample of the ACS monthly minority reports

Click here to see the Elbert Jefferson (city attorney) letters in answer to the open records request

Click here to see the emails and communications between Balli Kari and Charles Elliott of ACS concerning the non payment by Reginald French

Click here to see how Carlee McCullough rushed through the approval of Reginald French for minority certification so he could participate in the ACS feast

November 13, 2007

A GAS RATE INCREASE AT THE MLGW. GIVE ME A BREAK!!!

The MLGW is planning a rate increase in the gas division but do they need a rate increase? I have been studying the monthly financial reports for January 2007 through May 2007. It shows that the current assets less current liabilities in the gas division have increased by $29 million dollars. They claim that they need a rate increase because they have lost money for the last two out of three years (2004, 2005 and 2006). They did lose money in 2004 and 2006 but not in 2005.

With their rate structure, it is hard to see how they can lose money. The residential rate structure is as follows.

• There is a monthly customer charge of $7.00 per month that you pay regardless of the amount of gas that you use.
• There is a margin block, 17.28 cents per ccf, for the amount of gas that you use. This along with the $7.00 per month charge is to cover administrative and overhead costs.
• Then there is a base gas cost of 54.64 cents per ccf which is an arbitrary figure for gas purchase cost.
• Then finally there is a purchased gas adjustment (PGA) charge to be added to the above base gas cost to cover what the gas actually costs the MLGW.

It is difficult to see how this monopoly can lose money but they managed to do that the last two years out of three. The problem is in management and the lack of real world experience in management. They need outside professional help and a President who has real world utility experience. However they have chosen to continue on as before and pass through their mistakes to their customers.

Look at the figures. They do not need a rate increase. The three MLGW divisions are sitting on an excess of current assets over current liabilities that amounted to $306 million dollars as of December 32, 2006 and which has increased to date. They are supposed to operate as a non profit operation with minimum cash on hand. Instead they are a honeypot of money which politicians love to tap.

As an example of a place to cut costs, look at the attached file showing the Corporate Communications Department jobs and salary schedule. The annual salary cost for these 33 people is $1.82 million with another $820,000 in overhead costs. Leading this group is Gale Jones Carson at a salary of $126,000 per year. Remember her. She used to work for the Mayor but decided to take the cushy job at the MLGW to increase her pension prospects.

The heating season is just starting so be prepared for an assault on your wallet when your MLGW bill arrives.

Click here to see what you brochures and communications from the MLGW are costing you

November 7, 2007

HURRY UP AND PUSH THESE THINGS THROUGH, THERE IS A NEW CITY COUNCIL COMING TO TOWN!!!

We are seeing the last gasp of the current long running city council which will be replaced on January 1, 2008 with mostly new members. The recently reelected Mayor is doing his best to get things the way he wants before the new kids arrive. Look at what he has done so far with the approval and concurrence of the present city council.

1) A new President (Jerry Collins) of the MLGW without a national search for one with extensive utility experience. Obviously the Mayor wants to keep control of the money honey pot.

2) Herenton also suggested he'll consider shifting the city's sewer operations from Public Works, where Collins has presided, to MLGW. Watch your sewer fees go up.

3) Also he created a “Blight Division” with the approval of the City Council charged with tackling blight around town. Naturally, this creates two new high priced jobs (Director and Deputy Director) at $115,706 and $100,898 for two more Herenton cronies.

Look out folks, the tax increases are just around the corner.