Fabyanske Firm Sues to Protect Integrity of Minneapolis Procurements
Category | Announcements
By Dean B. Thomson and Zach E. Coppola
Dean and Zach are members of the firm’s Construction Law Department. Dean can be reached at 612.359.7624 or DThomson@fwhtlaw.com. Zach can be reached at 612.359.7667 or ZCoppola@fwhtlaw.com.
It has been a long-standing practice of the Fabyanske, Westra, Hart & Thomson firm to protect the integrity of public procurements. Recently, the firm became aware of significant problems with the City of Minneapolis’ procurement and administration of its alternative violence prevention programs and decided to challenge the program in a pro bono lawsuit to stop what it considered violations of public procurement law. Although these programs do not directly affect construction, the principle involved do have direct application to public construction procurement where a request for proposal (“RFP”) is utilized, so the outcome of the lawsuit is relevant to the firm’s typical clientele.
The City has awarded approximately $73 million in contracts over the past several years to reduce violence through alternative means to traditional law enforcement. The alternative violence prevention programs may have had laudable ends, but regrettably the City chose illegal means to achieve them. Since 2021, a large portion of the City’s violence prevention contracts have been funded with federal grant funds. In awarding contracts with federal funds, the City is required to follow certain provisions of the Code of Federal Regulations (“CFR”). These provisions mandate certain practices are put in place to ensure a fair, competitive procurement process resulting in contracts awarded to responsible contractors who have submitted proposals responsive to the RFP. The City plainly ignored these CFR requirements:
- One group of RFP reviewers can be more conservative or liberal in their scoring than another group, which is why it is important to have the same group of reviewers evaluate all proposals to get consistent results. The City allowed different groups of RFP reviewers score proposals which resulted in inconsistent scoring of proposals.
- The City did not enforce its scoring instructions and allowed scores to exceed stated scoring limits. For example, one RFP reviewer awarded a score of 27 when the scoring limit for that category was 20.
- Rather than use the six scoring categories announced in the Request for Proposal, the City’s reviewers only used four in violation of the City’s stated procurement process.
- Reviewers were instructed only to score proposals based on the content of the proposals and not based on personal knowledge of the proposers. Nevertheless, the RFP reviewers often disregarded these instructions as their notes indicated their scores were influenced by their past personal interactions with the proposers.
- The RFP reviewers gave high scores to proposers even though the proposers didn’t provide an answer to the question posed. For example, one question asked, “What tools do you have in place to ensure fiscal responsibility on a project like this?” The proposer answered “NA” but nevertheless received a score of 8 out 10 in the “Fiscal Responsibility” category and was awarded a contract under the RFP.
- The City dropped the scores from certain RFP reviewers because they did not attend a non-mandatory session at which scores could be discussed. For example, several very high scores for the Greater Minneapolis Council of Churches were discarded for this reason, which resulted in Church Council’s proposal not receiving an award.
Improper and illegal procurements were not the only problem with the City’s Alternative Violence Prevention program. The CFR also requires contractors seeking payment from federally funded programs to comply with generally accepted accounting principles (“GAAP”) when supporting their requests for payment. As an example, the City can only make payments to a contractor for personnel wages if the contractor is able to support those claimed wage payments with records providing reasonable assurance that the expense was incurred. The City did not do this and for years continued to pay millions and millions of dollars to the contractors without receiving any backup for their invoices. Just like the Feeding Our Future scandal, this situation was ripe for abuse.
Faced with the evidence of its failings – and also faced with a motion for summary judgment – the City agreed to settle. The settlement the City agreed to contained every demand made in the firm’s lawsuit, covering both the procurement and administrative issues:
- The City will now require that all proposers must possess the ability to comply with GAAP accounting standards. As a condition of contract execution, the proposer must provide evidence that it is able to provide cancelled checks for personnel expenses and receipts for non-personnel expenses.
- The City must state all grading and evaluation factors, along with their respective weights, in its RFPs and award to the highest scored proposal.
- The City will not award a contract unless the RFP was considered by the same reviewers and at least three reviewers will be used.
- The City will require proposers to state in writing what services the vendor will provide in sufficient detail to enable the City to determine how, when, and where services will be provided. As a non-exclusive example, a statement that the vendor intends to “interrupt violence” will be insufficient and render the proposer not eligible for award.
- The City Auditor will commence an audit of past invoices for Violence Prevention Contracts, which will be conducted in the next 180 days.
- The City will require billing descriptions for services provided during each calendar month. The billing description must describe how the services rendered or expenses incurred were within the contract’s scope of work provided by the individual or entity who is receiving payment from contract funds.
- Pursuant to GAAP, the City will require payroll information and receipts or cancelled checks of payments actually made for personnel wages either before or after approving for payment of that part of an invoice for personnel wage reimbursement. If after, and the vendor cannot provide evidence it has made payment of personnel wages to the extent claimed in its invoice, the City will demand that the vendor return that portion of the payment received. The same process will apply to charges claimed for non-personnel expenses.
All of these settlement terms make intuitive good sense, especially the audit of the millions of dollars in past payment. Unfortunately, it took a lawsuit to extract them from the City, but our firm thought the effort was worthwhile. The same problems with the City’s Alternative Violence Prevention program can occur in other public construction procurements, and sometimes legal action is necessary to protect the integrity of the public procurement process.
Announcements
Dean Thomson was selected by Finance and Commerce and Minnesota Lawyer as a 2024 Legal Icon honoree for his contributions to the community and the profession. For more information click here.
Fabyanske, Westra, Hart & Thomson, P.A. is pleased to announce the following thirteen attorneys have been selected as Best Lawyers by their peers in the recent Best Lawyers© publication, one of the oldest and most respected peer-review publications in the legal profession: Scott Anderson, Mark Becker, Hugh Brown, Matt Collins, Julia Douglass, Rory Duggan, Gary Eidson, Kyle Hart, Jeffrey Jones, Jesse Orman, Robert Smith, Dean Thomson, and Katie Welsch. Dean Thomson was also selected by Best Lawyers as 2025 Attorney of the Year in Construction Law. For more information click here.
Congratulations to the seven attorneys from Fabyanske, Westra, Hart & Thomson, P.A. who have been named 2024 “Minnesota Super Lawyers”. The polling, researching, and selecting of “Super Lawyers” is designed to identify Minnesota lawyers who have attained a high degree of peer recognition and professional achievement. Only five percent of Minnesota attorneys receive this honor. FWHT’s 2024 “Minnesota Super Lawyers” include Mark Becker, Matt Collins, Julia Douglass, Gary Eidson, Kyle Hart, Jesse Orman, and Dean Thomson. Dean Thomson was also selected as a Top 100 “Super Lawyer”. For more information click here.