Councilman takes a closer look at city contracts, agreements

May 7, 2010

By Tim Pfarr

Councilman Rich Crispo, who was sworn into office Jan. 5, spent the first few months of his term examining all of the city’s contracts and interlocal agreements. He said he did so as part of his effort to understand everything going on in the city.

“I’ve done a lot of work with contracts, so I know what to look for,” said Crispo, a retired executive from The Boeing Co. He managed contracts with Boeing and he said the most important things to be noted in contracts are payments, deliverables and schedules.

The city has about 80 contracts for things such as the Coal Creek Parkway project, building plan reviews and street sweeping. It also has interlocal agreements for things such as police and fire services.

Crispo began sifting through contracts and agreements about two weeks after being sworn into office, and he spent three to four days a week for about a month at a vacant desk in City Hall reading the documents.

“I just started going through the cabinet,” he said.

He concluded his reading Feb. 18, and he summarized every contract and agreement in documents. He said some contracts, including contracts for the Coal Creek Parkway and Transit Center projects, were inches thick, and police and fire agreements were lengthy as well.

Cripso said he made some interesting finds going through the city’s contracts and agreements.

He said the city’s contracts with C.A. Carey, which did construction work on the Coal Creek Parkway project, and Marshbank, which did construction work on the Coal Creek Parkway and Transit Center projects, functioned very well. He said he was impressed with the overall clarity of the contracts, and how the companies presented the work they performed.

However, Crispo said the city’s fire protection contract with Bellevue is not favorable to the city, because the city cannot control its costs. This year, the city will pay the Bellevue Fire Department more than $1.6 million for its services, which is 11 percent more than last year.

The city’s fire agreement accounts for 28 percent of this year’s operating budget.

The Bellevue Fire Department provides fire protection services for other cities as well, and it calculates how much it charges its contracting cities using population statistics. Therefore, Crispo cited that the city must pay for things it does not necessarily need, such as new extension ladders that service high-rise buildings.

Crispo also said the city’s contract with CH2M Hill for design and management of the Transit Center project was not favorable to the city nor managed correctly by the city. The value of the contract stands $1.2 million, and it was amended six times to expand the scope of work.

The overhead rate in the base contract with CH2M Hill was more than 170 percent of the hourly labor cost, and Crispo said this rate was unusually high.

The contract also stated that CH2M Hill did not guarantee the performance of Marshbank, which performed the construction work for the Transit Center project.

The contract instead stated that CH2M Hill personnel would “provide the city a greater degree of confidence that the completed construction work will conform generally to the construction documents.”

Crispo said he would never have accepted a contract written in such a way.

Interim City Manager Rob Wyman said he has found Crispo’s contract and agreement summaries helpful, and he said he uses the documents as quick reference sheets.

“It’s just another tool,” Wyman said. “It’s great.”

Director of Finance Christine Olson also said she finds Crispo’s sheets helpful.

“I know the contracts pretty well, but some of them are old and I haven’t looked at them, so it’s a good reference,” she said.

Crispo said he would next look into the tax revenue issue the city is facing. By law, businesses should report sales tax in the city in which they provided a service rather than by reporting it in the city in which the business is based.

Businesses often report sales tax in the wrong city, and Crispo estimated the city could bring in an additional $250,000 of tax revenue if taxes were accurately reported. He said examining the issue is important, because residents should not be asked to pay more in property tax until all revenue sources are exhausted.

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