When Texas counties choose to bypass legal bidding laws and act by way of an emergency exemption, it can lead to enormous financial and political problems, according to a state expert on the subject.
“State bidding procedures are designed to protect a county and its residents from paying too much and getting too little in quality, and from undermining the trust of the process in regard to how money is being spent,” said Professor Donald Kettl, a government expert and professor at the University of Texas at Austin Lyndon B. Johnson School of Public Affairs.
“There are risks that come along with stepping outside of normal bidding processes in emergencies,” he said. “In terms of the stakes for these kinds of issues, they’re potentially huge.”
Victoria County commissioners voted to exempt themselves from state bidding laws and contract with an out-of-town company to do remediation and work at the Victoria Regional Airport after Hurricane Harvey.
Rather than operate under the standard legal procedures, which state that all projects worth $50,000 or more must go out for bid, the county voted unanimously Sept. 11, 2017, to hire the Virtus Group, a restoration and reconstruction company based in Olathe, Kan., to do the work.
The county acted on a legal exemption, which states that amid a public calamity, counties can be exempt from the bidding process and act immediately to relieve the necessity of the citizens or to preserve the property of the county.
While it can be necessary to move with urgency, acting under the emergency exemption carries risks, Kettl said.
“The bidding processes are complicated and involved, but there are reasons for that,” he said. “Every single regulation and every single requirement is typically based in some time that didn’t go well and ended up creating mismanagement, or types of fraud, or stealing, or conflicts of interest.”
During their monthly meeting in late June, airport commissioners raised concerns about how the county handled the rebuilding process after Harvey.
Among their concerns, airport commissioners asked why the Kansas company was chosen to do both remediation and repairs and why none of the work went through the usual bidding process.
The regulations in place regarding state bidding procedures are a result of cases when “somebody at some time did some thing that made us say, ‘We have to make sure that doesn’t happen again,’” Kettl said.
Yet, when disaster strikes, Kettl said, it’s important to allow counties to find a contractor to do immediate work so they don’t become hamstrung, having to go through a weeks- or months-long bidding process – thus, creating the need for exemptions.
But the choice to contract quickly often becomes complicated, Kettl said. After recent rounds of storms and hurricanes, he said, there have been cases where contractors who were called in for immediate work had relatively little experience and couldn’t deliver on what the government was asking them to do. In some of these cases, it resulted in lower quality work done at a higher cost.
Kettl said it can be a challenge when counties choose quickly to work with out-of-town companies and don’t get a sense of the company’s performance before signing a contract.
County Judge Ben Zeller said previously that the Virtus Group was chosen by the county because of its relationship with the Texas Association of Counties. Cary Roberts, the association’s media relations officer, told the Advocate that the association does not recommend contractors.
Zeller did not respond to a request for comment. The Virtus Group, now called Commercial Restoration Company, or CRC, has not responded to multiple requests for comment.
Kettl said it can become challenging for counties to move out of the emergency exemption period and return to usual bidding procedures.
“In the middle of an emergency you bring somebody in because you want to stabilize the situation and begin some work to get things back, and the situation slowly rolls from one problem to the next, and then it can be hard to get off that road and begin a new relationship with a different contractor,” he said.
“On the other hand, at some point you can step back and say, ‘How long has it been; is it still an emergency?’ At what point should we move into more standard procedures?’” he continued.
Just one week after Victoria County commissioners contracted the Virtus Group to do initial remediation, they voted unanimously again to hire the company to continue to work on repairs.
The company continued working at the airport until March or April of this year, said airport director Lenny Llerena. The work has totaled $2.6 million to date, though there is still a “punch list” of work to be done, Llerena said.
How long counties can remain acting under an emergency exemption is unclear, Kettl said, as the law doesn’t provide a strict time frame.
County Commissioner Gary Burns said previously that the way the county continued to act under the bid exemption after the Virtus Group did initial remediation, rather than bring the rest of the work up for bid, was “abused.” He said that the work the Virtus Group did at the airport for more than one year after the hurricane went beyond what qualifies as an emergency.
“It’s typically the case that the emergency exemption is written fairly broadly,” Kettl said, “as you never know what emergency you’ll face, so public officials usually have fairly broad discretion on how to respond because you don’t want to get tied up with restrictions that are too strict when you need to respond quickly.”
Katherine Howard, an associate general counsel at the Texas Association of Counties, said the law does not spell out a specific time frame. “If an emergency exemption was triggered after a natural disaster, the choice to continue that is up to the court’s discretion,” she said.
Despite the need to act immediately, Kettl stressed the importance of returning to bidding procedures when a county is able.
“Again, there’s all the due diligence that comes along with the normal contracting process that was designed to make sure that you don’t pay too much, that you get good quality, that you have recourse against the contractor, that you can make sure there isn’t somebody somewhere who isn’t trying to pull the strings to line their own pockets,” he said.