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By Colbert I. King
Saturday, June 9, 2007
The story of EdBuild, a Washington nonprofit start-up organization that was awarded a $57.6 million sole-source contract by the soon-to-be-out-of-business D.C. Board of Education, continues this week.
To recap: EdBuild was put together 20 months ago by a group of well-wired civic leaders and was funded generously with venture capital, for the purpose of forming a partnership with the superintendent to transform District public schools.
The speed with which EdBuild got off the ground and lined up at the D.C. treasury's door is breathtaking.
Three months after the school board approved a partnership with EdBuild on Dec. 16, 2006 -- and before school Superintendent Clifford Janey finalized contract negotiations with EdBuild last month -- the $57.6 million EdBuild-D.C. Public Schools relationship was included in Mayor Adrian Fenty's proposed 2008 Budget Support Act, which was transmitted to the D.C. Council in March.
The eagle-eyed council chairman, Vincent Gray, spotted the section authorizing a multimillion-dollar contract with a relatively new organization, and he deleted it.
But how did the EdBuild provision get in the act in the first place?
Deputy Mayor for Education Victor Reinoso advised me in an e-mail this week that the provision "was submitted by DCPS [D.C. Public Schools] and was included as a courtesy to DCPS, as is the practice with all independent agencies or entities that must be included in the mayor's budget submission." So there.
While Gray was blocking the apparent attempt to fast-track approval of the EdBuild-school partnership, Janey and his staff had their hands full pushing back against the aggressive EdBuild.
Among EdBuild's contractual desires, according to Janey:
· Contract funds were to be segregated in a separate escrow account with a third party (not the school system or D.C. government) managing the account, and EdBuild would be able to draw from the account as needed.
· A construction management fee of 9 percent, although the industry standard is 3 to 5 percent.
· A clause stipulating no indemnification of the D.C. government for liability. EdBuild also opposed a requirement to provide a performance bond.
· A minimal role for the school system contracting officer's technical representative, who usually oversees such work.
· EdBuild's architect should retain ownership of design documents.
· A management fee for maintenance services. EdBuild also wanted to serve as the final arbiter of disputes that might arise between the school system and a future space-sharing partner regarding use of school facilities.
To his credit, Janey put his foot down and declared those EdBuild requests nonstarters.
Janey knocked down EdBuild's proposed 9 percent construction management fee to less than 3 percent. He also required EdBuild to submit payment requests to the school system's chief financial officer, who will make payment only after an independent construction inspector certifies to school officials that the amount is proportional to the work completed. What's more, the final contract requires EdBuild to purchase liability insurance at agreed upon coverage limits as necessary, and all contractors EdBuild retains must have performance bonds.
Janey not only ensured that the school system would own the design plans but also that the system would have the authority to reuse the plans.
He put the kibosh on EdBuild's desire to serve as the final arbiter of disputes between the school system and space-sharing partners in school facilities. That task, Janey declared, would be left to a designated, neutral third party.
So EdBuild failed to get the whole store. But it still got the $57.6 million sole-source contract -- without approval of the school system's chief procurement officer, Kevin Green.
Which gets us to the D.C. Council.
Gray told me in an e-mail last week that the council is concerned about the award of sole-source contracts as well as about the school system's piecemeal approach to modernization. City lawmakers, he said, wanted to ensure that the recently authorized $2 billion to $3 billion school modernization program is handled properly. That's why, he explained, the council approved creation of a new agency with its own operating budget to manage and oversee the construction and renovation program. Gray asked, in his e-mail, "Why enter into a contract with EdBuild at this point when we are embarking on an entirely new approach to school construction where such responsibilities will be assumed by an agency designated to manage such projects?" A good question.
EdBuild feels its approach could be a model for future public-private relationships, a point echoed by Reinoso in an e-mail to me yesterday.
Gray also observed that with the approval of the mayor's school takeover plan, the school system may cease to have authority even to transmit contracts, since it will no longer be an independent agency.
Meanwhile, EdBuild has a date with the D.C. Council.
Gray said that he intends to introduce a resolution of disapproval of the EdBuild contract when it arrives at the council. That action will extend the council's period of consideration from 10 days to 45 days. He also has reserved June 18 for public hearings on the EdBuild contract.
Mark your calendar.
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