County pays triple
State probes two firms championed by Shamsie; he says it's sour grapes; county engineer says he could've done job
By Jaime Powell Caller-TimesJune 19, 2005
From an engineer's perspective, Nueces County's $58 million road rehabilitation project is a simple job. Yet, the county is paying three times the customary rate for engineering and inspection services, according to engineers in government and private practice.
Instead of assigning the county's staff engineer to handle the project, Nueces County Judge Terry Shamsie negotiated $7.6 million for engineering with Omega Contracting Inc. and $7.95 million for inspection with DOS Logistics, as the county revamps 280 miles of mostly flat, straight, narrow, non-shouldered rural roadway.
The engineering and inspection fees amount to 34 percent of the $47 million construction portion of the project. Engineering professionals say those fees normally would be in the 10 percent range - or less for a job such as this one because it is not an engineering challenge.
Shamsie was able to negotiate contract proposals with the two out-of-town firms, and then submit the proposals to the Commissioners Court for approval, rather than submit the contracts to competitive bidding, because they are contracts for professional services. Local governments can select a professional services contractor to their liking after receiving statements of qualifications from those interested in the job.
Shamsie says County Engineer Glenn Sullivan was too busy to take on the project - an assertion Sullivan denies.
Shamsie also said the two companies are worth what they're being paid. He says he expected the project to be costly because he wanted it completed quickly. He did not want it to drag on for years, he said, as have some of the state and municipal road projects under way in this area. He successfully sought to fund the project with certificates of obligation, a way to bypass voter approval, which he said would have taken valuable time.
"That's a negotiated contract," Shamsie said. "They (Omega and DOS Logistics) wanted a lot more than that. Everybody thinks it's a 'gimme.' Are they paid well? Yes. Are they going to do the job? Yeah. Are a lot of other people jealous? Yeah."
The Texas Board of Professional Engineers is now investigating whether either of the firms was licensed to provide engineering services when they signed their contracts, Texas Board of Professional Engineers spokesman Paul Cook said.
The county's request for qualifications for the engineering portion of the project states that Nueces County was seeking an engineering firm, registered to practice in the State of Texas, with experience in roadway rehabilitation, bridge design and large-scale road and bridge projects.
For the inspection portion of the project, the request for qualifications solicited inspection for capital construction projects and other special services such as presentations to the Commissioners Court on progress.
Fees viewed as high
The engineering and inspection fees aren't the only ones in the contracts that have been described by engineers in government and private practice as exorbitant. A review of proposed rate schedules from six other companies that sought the contract shows that the winners are receiving significant markups for the following:
-- DOS Logistics' $95-an-hour fee for senior inspectors. The local average is $70 an hour, according to the local companies' rate schedules.
-- Omega's $161-an-hour fee for a program manager, totaling $593,889 during the 18-month contract period. The local average is $110 an hour, according to the rate schedules and interviews with officials from some local companies. Kurt Diedrich, Omega's program manager, is not a state-licensed engineer, according to the Texas Board of Professional Engineers - unusual, engineers say, for a firm offering engineering services. Attempts to reach Diedrich were unsuccessful.
-- Omega's $82 an hour for each of two administrative assistants, or $494,582. The local average is $50 an hour, according to the rate schedules.
-- DOS Logistics' $120 an hour or $374,400 for public relations coordinator Celina Garza. The six other companies' rate schedules do not include public relations as a service, but typically they would charge three times the labor cost for a contract employee to account for overhead, profit and office expenses - meaning private industry would bill $45 to $96 an hour for a spokesperson.
The Texas Department of Transportation pays its beginning public information officers $14.95 an hour. The agency's top spokespeople make $31.83 an hour and handle sensitive and complex issues, serving as a liaison to the print and broadcast media, the agency's public information office in Austin and the public, said Texas Department of Transportation planning and development director Paula Sales Evans.
Garza's job is to handle inquiries from the public and the media. Garza did not return phone calls or e-mails, and declined to answer questions when contacted in person by a Caller-Times reporter.
Garza's experience and qualifications were unavailable. On a previous occasion before declining to answer questions for this article, she disclosed that her most recent previous employment was as a secretary to Hidalgo County Commissioner Sylvia Handy.
Shamsie said DOS Logistics and Omega Contracting are qualified and complaints are coming from local companies that submitted their qualifications and wanted the job.
Critics of the contracts include engineering professionals who would not have been in a position to bid on the job. Among those saying the county is overpaying are Steve Stagner, the Austin-based president of the Texas Council of Engineering Companies, and engineering professionals in government jobs with the City of Corpus Christi, the Port of Corpus Christi and the Texas Department of Transportation.
"It's a considerably higher percentage of fees than you would expect to see for those services as a part of the overall project," Stagner said.
By comparison, engineering and inspection for 10 miles of high-traffic city streets included in the City of Corpus Christi's 2004 bond project is averaging 8.3 percent for engineering/design and 3.5 percent for inspection. And the project is much more challenging, said City Engineer Angel Escobar.
"We have waterline work, waste-line work, drainage, road construction, curb and gutter, sidewalks and traffic signals to deal with. And it's in built-up areas, not in the middle of nowhere," he said. "It's quite a difference, isn't it? The other big difference is we are dealing with a complex system in the city, versus caliche and asphalt."
And then there is the question of qualifications.
County Attorney Laura Garza Jimenez has appealed a Caller-Times public information request for documents including the qualifications submitted by the two companies. Jimenez's appeal to Attorney General Greg Abbott, which is pending, claims the documents including the two companies' qualifications contain confidential information, some of which is proprietary.
Shamsie said he could not recall projects either company had worked on, and he could not cite either company's qualifications. DOS Logistics and Omega Contracting officials did not respond to phone or email inquiries.
Once the contracts were awarded, Stagner filed a complaint alleging that Omega Contracting violated state law by not having an engineer on staff when the contract was awarded.
The complaint alleges that when Omega responded to Nueces County's June 2004 request for qualifications, and when the county awarded the contract in October 2004, Omega was not registered as an engineering firm in Texas. The complaint also alleges the company did not have a licensed engineer on staff.
According to Texas Board of Professional Engineers licensing records, Omega was licensed as an engineering firm 21 days after Nueces County awarded the company the engineering contract on Oct. 25.
Omega declined to comment, referring questions to Garza of DOS Logistics, who also would not answer questions.
In DOS Logistics' contract there also is nearly $1 million in charges to the county for a resident engineer and an assistant resident engineer. The company is not licensed to offer those services, according to records from the Texas Board of Professional Engineers.
Looking into project
"We are going to look into everything and anything that has anything to do with engineering on this project," said Cook, the board's spokesman.
Garza, the spokeswoman for DOS Logistics, declined to answer whether the company employs an engineer and said written questions from the Caller-Times about the project had been turned over to an attorney. She declined to identify the attorney and the Caller-Times has not received a written response to the questions.
In October, Omega hired Dallas-based Parsons Brinckerhoff Construction Services to do the actual engineering on the project after the Nueces County Commissioners Court voted unanimously to act on Shamsie's recommendation that the contracts be awarded to the two companies.
Gary Hodges, an engineer with Parsons Brinckerhoff, said the company has supplied a registered engineer to the project and that the company, which has an international reputation, will make between $1.5 million and $2 million for engineering on the project.
Parsons Brinckerhoff is not supplying an engineer to DOS Logistics, Hodges said.
That leaves Omega to do oversight on the project and DOS Logistics to conduct the inspections.
County Commissioner Betty Jean Longoria said Shamsie was "the driving force" behind the two contracts. Shamsie recommended the two firms to the commissioners, she said.
She said she was anxious to get the project moving because a majority of the roads in need of work are in her precinct and at the time she did not notice that she was never shown any qualifications for either firm, she said.
Once the contracts were awarded, she immediately started hearing complaints from local engineers who told her that Omega was not an engineering company, and questions about the ownership of DOS Logistics.
"I didn't know they didn't have an engineer. I heard all of that after the fact," Longoria said.
Carl Crull, president of the local Council of Engineering Companies and an engineer at HDR Engineering, one of the firms originally vying for the job said, "We were disappointed that more of the work was not being done by local firms."
Maverick Engineering, Naismith Engineering, RVE Engineering, Goldston Engineering, HDR Engineering and the Anderson Group are the local companies that submitted qualifications for the engineering and inspection work.
Texas Secretary of State records indicate that Omega Contracting is based in Dallas and belongs to Luis Spinola. Spinola also owns Azteca Enterprises. Both firms are described on their Web site as contractors that seek government contracts set aside for minorities. Spinola did not return phone calls. His secretary referred inquiries to Garza, the Dos Logistics public relations specialist, who has refused comment.
DOS Logistics' registered agent is Eric Chin and the company is based in Weslaco, according to records from the Texas Secretary of State. Corpus Christi businessman George Finley said he started the company in 1999 to pursue minority contracts and that he no longer owns it.
DeLay did legal work
Randy DeLay, a Houston lawyer and lobbyist, whose brother is U.S. House Majority Leader Tom DeLay, was the company's registered agent when it was incorporated in 1999. Finley said Randy DeLay's only role with DOS Logistics was handling the legal work of incorporating the company for Finley.
Last year, Shamsie and County Commissioner Oscar Ortiz unsuccessfully sought to award DeLay a $1.2 million contract to lobby on behalf of local military installations.
Chin, the stepson of Gumecindo "Gume" Ybarraa business associate of Finley's, has since taken over operations, Finley said.
"I have known Gume for 10 or 15 years," he said. "I have businesses in the Valley."
There also are questions about why County Engineer Glenn Sullivan didn't handle the project. Normally Sullivan would have been responsible for a project such as this, Shamsie, Longoria, Ortiz and Commissioner Chuck Cazalas said.
Sullivan said he had nothing to do with hiring the two companies, which would normally have been a part of his duties, he said.
Shamsie and Ortizsaid Sullivan was stretched too thin, taking care of his regular duties and did not have time to oversee the rehabilitation project.
Unsure of reason
Sullivan denied that assertion, saying he is qualified for such a project and that he was not too busy.
Typically he and Cora Goding, the county purchasing agent, would have played a key role. This time they didn't. He said he does not know why.
Cazalas and Longoria said they do not know why Sullivan was bypassed and agreed that he should have played a big part in the project.
Shamsie and Ortiz said it's a big, aggressive project being turned around quickly - 18 months - and that they both wanted professionals doing the job.
"People pay taxes, and they want the job done," Shamsie said.
Sullivan joined the county five years ago after a 27-year career with the Texas Department of Transportation, part of which was spent as Assistant District Engineer, the No. 2 man, over a 10-county area that includes Nueces County. Evans, the TxDOT planning and development director, describes Sullivan as a highly qualified professional with the experience and skills to have handled the project.
Ortiz said the county's roads have been in disrepair for a long time and they needed to be rehabilitated quickly.
Asked about the price tag for the services Omega Contracting and DOS Logistics are providing and the staffing costs associated with those contracts, Ortiz answered: "I really don't know what to say about it."
Contact Jaime Powell at 996-3716 or email@example.com