Wayne County Response To Jail Audit

Wayne County Memorandum
To:
From:
Subject:
Date:
Wayne County Legislative Auditor General

Offices of the Wayne County Executive
Response to Audit Report
September 4, 2013
The following is in response to the Office of the Legislative Auditor Generals (OAG)
"Wayne County Consolidated Jail Facility Construction Cost" report. Wayne County's
Response (County) is limited to the "Working Draft" that was provided on August 27,
2013 and labeled August 16, 2013. The Parties agree that certain findings were referred
to the Wayne County Prosecutors Office for review. .
EXECUTIVE SUMMARY/REPORT DETAIL
This section reviews, scope, methodology, background and review. Many of the
statements are misleading or factually incorrect. Therefore, the County would take
exception to such statements. The OAG has stated that documentation regarding support
for such statements allegations will not be provided. To date, no supporting
documentation has been provided. The County has limited its responses to the draft
statements, and where appropriate we have provided documentation. We ask the
courtesy to respond more thoroughly to the OAG Report once supporting documentation
has been provided.
OAG Response:
The Office of the Legislative Auditor General (OAG) responses are written in red:
The respondent began by stating that many of the findings in the report are misleading or
factually incorrect. We began by stating that the purpose of the closing conference is to
correct any factually incorrect statements as it relates to condition and\or cause as
stated in each finding. However, if the respondent is challenging conclusions reached
based our examination of the conditions and or cause, we are required by auditing
standards to make those corrections.
In general, the respondent questioned many of our conclusions and\or opinions as
opposed to being able to demonstrate a need to change the conditions\or cause as stated
in the report. Based on our overall review of the responses provided, a large percentage
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of the objections appear to be related to the conclusions and opinions reached by the
OAG.
In addition, the respondent mentioned that no supporting documentation was provided. It
is customary in the industry to not provide supporting documentation for
findings\recommendations included in our report. However, at the closing conference
working papers and other documentation to support conclusions reached are discussed in
detail as it relates to each finding\recommendation being challenged. The administration
elected to provide written responses as opposed to allowing the OAG the opportunity to
discuss the support and documentation for each of the findings. The opportunity for the
respondent to discuss each finding and our support is still open and available if they wish
to exercise that option.
Our preliminary response regarding this matter will be addressed in each of the
Findings or Recommendations provided by the OAG. We will address statements in
which we take issue and where we believe such statements are misleading. We have also
provided you with a response on each of your recommendations. Again, this can only be
a preliminary response since the OAG has indicated that he will not allow us to view
documents on which he has drawn his conclusions.
OAG Response:
The detail of our report layout states work performed and the results of work
performed. This format is conducive to assisting the respondent in understanding what
work was actually performed and the conclusions reached based on that work performed.
Our underlying working papers are designed to support the work actually performed.
The auditing standards require the OAG to prepare and maintain working papers to
support conclusions reached. In essence, the report itself identifies work performed,
results of that work and conclusions reached.
We would also question the OAG on their statements at the end of each finding titled
Views From Responsible Officials We are assuming such headings are added as a
matter of convenience. It is the County, through the Department of Management and
Budget and for the benefit of the Wayne County Building Authority, who sought and
requested that the OAG perform an audit on the Consolidated Jail Project. Both parties
must acknowledge that since the initial draft report was issued on August 13, 2013, three
other revisions were then issued. The County has been modifying its responses as each
new version is submitted. This Closing Conference will be the first opportunity for the
County to effectively address these findings. Again, such responses must be limited since
the OAG has indicated that he will not provide documentation. We are assuming that
you will either include our Views or make a statement under each section that such
views are listed in the appendix. We would ask for written clarification regarding your
format.
OAG Response:
Views from Responsible Official is a term that is suggested by GAGAS under which
this engagement is being performed.
We agree the Wayne County Building Authority (WCBA) requested the OAG to perform
this engagement as an Agreed Upon Procedure Engagement and we complied with that
request. We have held several meetings with the auditees during the course of this
engagement and they have been granted the opportunity on numerous occasions to
provide responses to findings\recommendations as they were being developed by the
OAG.
It is customary to have several drafts of a document and the latest being dated August 16,
2013, resulted from additional significant information that developed based on
information submitted by the administration to the Wayne County Committee of the
Whole on August 14, 2013. This additional information was considered significant by
the OAG; therefore, the auditing standards required us to expand the scope of the
engagement for all significant activity pertaining to this subject matter up to the date of
our report, which in this case is August 16, 2013.
Yes your assumption is correct - the OAG will attach the respondents comments in an
Appendix B to our report.
AGREED UPON PROCEDURES PERFORMED

EVALUATE INTERNAL CONTROLS
Control Environment
Philosophy and Style- pg 32
Results of Work Performed pg 33
Points of Clarification
Ethics Policy- The WCBA did formally acknowledge that they are bound by the
Countys Ethics Ordinance. However, we believe that it is important to note that all of
the Countys Boards are bound by the Ethics Ordinance. A formal resolution does not
need to be passed.
OAG Response:
Although the approval action was in fact taken by the WCBA, we were informed by
WCBA Special Counsel that it was not necessary.
Compensation- Compensation for Board members is not an eligible cost under a bond
financing. If there is a desire to compensate board members then it would need to come
as an allocation of general fund dollars. The Commission would need to provide a yearly
allocation not only to the WCBA, but to other boards.
OAG Response:
The OAG was able to identify $213,000 in the general operating fund of the WCBA
audited financial statements as of September 30, 2012. Management & Budget (M&B)
stated there will be an annual loan processing fee of more than $14,500 annually that
will be received by the WCBA in future periods that can be used to offset administrative
cost.
Therefore, their funding would not have to be paid from the Wayne County general fund
as incorrectly stated by the respondent. A more detailed discussion can be found in our
report under the caption VII Adoption and Approval of Budgets - General Operating
Fund.
Fiduciary Duties- We believe staff and board members have a fiduciary responsibility to
the County. The choice to have a Project Manager report to the County, the obligor of all
issues on the Project, should not be considered a flaw.
OAG Response:
The OAG is concerned that the Project Manager with all of the qualifications, experience
and skill sets are reporting to someone other than the WCBA board of directors. This
could result in decisions being made by someone other than those persons without the
skill set and knowledge to meet the goals and objectives of the WCBA board. Any
differences that may exist between the WCBA board and the administration should be
resolved at that level not at the expense of decisions being made by those without the
necessary qualifications and experience.
Administration of Leadership
Strategic Direction
Results of Work Performed- 37
Results of Work Performed-pg 34. You have acknowledged that the former DCEO and
Chief Development Officer oversaw the Project in its early stages. However, in
paragraph 1, you have not added that when the ad-hoc or Oversight Committee was
formed this committee included the Director of Buildings and a member the Office of the
Sheriff. It is important that these individuals are also named as part of the committee in
other sections. We would ask that you remain consistent your presentation of facts in
order for the County to remain consistent in the responses it provides. Additionally, it
should be noted that this committee was not limited to the staff members you have
indicated. At several meetings, members from the Countys IT Department and the Chief
Operating Officer were also in attendance. Furthermore, this committee was not a
decision making committee nor did it engage in such actions. Instead it was a meeting
held where the Program Manager could inform the County on the progress of the Project.
OAG Response:
An email received from the Chief Administrative Officer (CAO) on July 18, 2013,
identified four core members that made up the Oversight Committee.
We understand there may have been other participants; but, we were concerned about the
key administrative team members. Therefore, no change is being considered.
We are unclear as to the function of the committee if they were not a decision body then
who made the day-to-day decisions for the period June 2012 October 2012, when there
was no designated owners representative? Since we were informed that there were no
minutes and\or notes taken at those meeting, we are unable to understand the role and
function of the committee.
Generate Savings- On page 37 you have indicated that you do not have documents based
on how savings would be generated from the consolidation. Please note that these
documents are a matter of public record and were provided to the Wayne County
Commission during the different presentations provided by AECOM. AECOM
represented, and it was accepted, that a consolidation of services would create a reduction
of staff and a reduction in the duplication of services. Within other areas of your report
you have indicated that you appropriately sought and received documents from AECOM.
You have indicated that you have interviewed AECOM representatives on several
occasions. We are uncertain why you either did not ask, or are not acknowledging the
documents that were created by AECOM on the operational savings. Attached are
documents demonstrating what was previously provided. Based on this information we
believe this section should be re-written. See Exhibit A., Presentations and Best Practices
OAG Response:
We did request this information from Wayne County Sheriff Office (WCSO) personnel
and they informed us they did not have a comprehensive listing to support annual savings
projected at $20 - 30 million.
Although the information you have been provided is helpful, our preliminary review has
determined that it still does not provide a comprehensive listing of savings by specific
categories. If and when we are provided with a comprehensive listing with dollar
amounts to support the $20 $30 million in annual savings, we will re-state the
paragraph pertaining to annual savings.
We requested and received a schedule of proposed cost savings from AECOM officials
on September 12, 2013; therefore, we will amend our statement on page 37 of this report.
Organizational Structure
The proposed flow chart indicates a recommendation of a super-committee of three
board members. A committee structure is useful. However, creating a super committee
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would not be advised. One should attempt to create committees so that they can make
recommendations, not decisions that would usurp the authority of the WCBA.
OAG Response:
If a super committee exists for the COBO Hall Regional Convention Authority which is
a $279 million project and very successful - with a five member board and 3 members on
the capital improvement sub-committee - then why the same concept cant be used for the
WCBA. This issue is being raised several times by the respondent, but no viable
alternatives are offered. More importantly, the oversight model the WCBA is currently
using has failed to meet their goals and objectives.
Based on the narratives that you have provided a point of clarity needs to be
acknowledged. The WCBA has responsibilities beyond the creation of the new
Consolidated Jail Facility. It was prudent to create a position of a Chief Administrative
Officer within their organizational structure. This CAO will always report directly to the
WCBA. Therefore, any suggested change in how a specific project may be created
cannot change the fact that the CAO will be reporting directly to the WCBA, not to a
committee.
OAG Response:
In the newly proposed organizational chart on page 39 of our report, we support the
CAO reporting directly to the board; but, if a Capital Improvement Sub-committee is
formed then we believe the CAO should report to that committee as it relates to that
activity.
More importantly, the CAO is key to handling the administrative and financial affairs of
the WCBA; however, rarely, if ever, do these individuals possess the skill sets or time to
manage daily on-site construction management and we believe those tasks should be left
to those who have the qualification, experience, and time, like in this case the Project
Manager.
Criteria- pg 40
Amendment of Bylaws- Special Counsel apologizes if former explanations left the OAG
with the idea that an amendment of the bylaws is all that is required for a committee
structure. An amendment of the Articles, with approval by the Commission is necessary
and prudent for the creation of Committee structures on any board. Bylaws would then
identify each of the differing committees that the WCBA may form.
OAG Response:
We recognize and appreciate the action that must be taken by Wayne County
Commission; however, we have also been informed that initial action is required to be
taken by the WCBA board in order for changes to be made to the articles of incorporation
and by-laws.
Recommendation 2013-01
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Consider amending the bylaws- after receiving permission from the primary
government unit to provide for compensation on a per diem basis and
reimbursement for parking expenses
View of Responsible Officials
Although the administration does not disagree with this finding in theory there are other
items that must be taken into consideration. The Wayne County Building Authority has
no funding source to which they can be compensated. There currently is fund balance
that exists due to one-time revenue as a result of the sale of the parking lot, but according
to best practices (GFOA), one-time revenues should be used only for one-time expenses
not for ongoing operations, particularly if there is a history of unsustainable use. Refer to
the attached excerpt from Recommended Budget Practices: A Framework for Improved
State and Local Budgeting
OAG Response:
The Administration incorrectly states that board compensation would have to come
from general fund dollars when in fact the OAG identified that $213,000 currently
exists in the WCBA general operating fund at September 30, 2012 , as well as another
$14,805 and $14,675 projected for years 2013 and 2014 from loan processing fees, and
a similar amount thereafter. Therefore, the WCBA would not have to receive funds from
Wayne County general fund as concluded by the administration.
Adopt a Resolution to amend the by-laws to allow for sub-committees with one being the
capital improvement sub-committee with board members preferable with real estate
development experience.
We agree that the committee structure can be useful. However, this would require an
amendment of the Articles of Incorporation and approval of the Wayne County
Commission. If there is a board of five members, one cannot create a sub-committee of
three. That would create a super-majority and would place the power in the committee
instead of the board. Instead, we believe a Committee structure that includes the
Commission is useful. This is an ad-hoc committee that would send recommendations to
the full board. This is logical since the County is the sole funding source for the WCBA.
A committee that allows for Commission representation would ensure that there are no
disagreements regarding what information was made available to the Wayne County
Commission on Capital Projects.
OAG Response:
See the same response at stated above in a previous paragraph.
Governance and Board Independence

We believe there is merit and justification for this concern. Meetings were canceled, or
rescheduled, without written authorization from the Chair.
In light of the fact the WCBA by-laws require one regular meeting to be held during the
first week of each month we recommend the WCBA consider revising its bylaws to
restrict anyone other than the board chair or a board approved designee, in their absence,
to establish and/or cancel meetings. This would provide full transparency for its
deliberations as a public body that is independent of the Wayne County Administration
and avoid any appearance of lacking independency.
Views From Responsible Officials
The Administration agrees that a policy regarding cancellation of regular or special
meetings should be developed. We agree with a provision revising the bylaws limiting
the power of scheduling meetings. However, both should be developed according to the
provisions stated in the Open Meetings Act. We disagree with the statement made
regarding transparency. There are no documents that you have presented that would
support a recommendation that the WCBA Board has not operated in a transparent
manner.
OAG Response:
The OAG believes that because the board meetings were canceled by the Administration
and not the WCBA, this reduced oversight and transparency of the board.
According to communication from the CAO, the Oversight Committee generally met on
Wednesday of each week, it stands to reason, that this Committee met on a regular basis
even during the same period that the WCBA board meetings were canceled.
Risk Management
Subject matter entitled Allegations of Fraud and Material Misrepresentation has been
removed for this report . This section is not addressed due to the request for an
investigation
OAG Response:
Yes portions of this finding\recommendations has been forwarded as required by the
Wayne County Fraud Investigative Policy to the Wayne County Prosecuting Attorney
Office for further review.
Control Activities
Before addressing Recommendation 2013-04, it is important to address numerous
inconsistencies, facts and conclusions drawn by the Auditor General (AG) pertaining to
the request for proposal (RFP) for the construction manager at-risk (CMAR).
Results of Work Performed
The Auditor General (AG) alleges on page 46:
We had difficulty understanding the criteria used by the selection committee in the
evaluation of the proposals.
This is an erroneous conclusion since both the request for proposals (RFP) and the
evaluation forms listed that the criteria used to evaluate the proposals:
1. General Information & Qualifications
2. Technical & Specifications
In addition, the AG clearly articulates the evaluation criteria later in its report on page 49.
Thus, it is unclear as to why it is difficult to understand what criterion was used to
evaluate the proposals.
OAG Response:
Since the criterion was merely based on qualification and experience and excluded price
we did find it difficult how committee members were able to objectively base their
selection merely on qualification and experience. This is our opinion and we find no
justification for the exclusion of price from the evaluation process. Especially, when it
had not been determined that it was even feasible to build a 2,000 bed facility for $220
million. We see no evidence that will change our opinion as it relates to this matter.
Price Eliminated as a Factor:
On page 46, the AG misplaces the context of the Purchasing Directors quote regarding
as to what factors are utilized in evaluating RFPs:
An RFP is done when the County is requesting the vendor to propose a solution and
there are other factors, other than price, to determine which vendor is the most
responsive and responsible. He further stated: The other factors include experience and
qualifications, solution, work plan and price . Emphasis added.
The AG utilizes this quote to intimate that price will always be a factor in RFP
evaluations. However, this is incorrect since this quote was in response to the AGs
question:
What primarily is the difference between a RFP and a RFQ?
The Purchasing Director responded by illustrating the difference between an invitation
for bid (IFB), RFP, and request for qualifications (RFQ). In contrasting, IFB (where price
is the only factor) with RFP, the Purchasing Director provided a list of criteria that can be
used to evaluate RFPs. This list was not comprehensive and was provided only as an
example. Thus, the Purchasing Directors quote should not be utilized to conclude that
price will always be a factor included in every RFP.
Before addressing the issue of Price not being a factor, it is necessary to discuss
the role of Purchasing in acquisition planning, prior to the issuance of a competitive
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solicitation, to properly understand why price was not a factor. According to the
American Bar Associations textbook on State and Local Government Procurement1
acquisition planning is defined as:
Process by which the efforts of all personnel for an acquisition are coordinated and
integrated thorough a comprehensive plan for fulfilling an agency need in a timely
manner and at a reasonable cost.2 Emphasis added.
In preparing for issuing a solicitation, purchasing officials should consult with agency
experts when developing procurement plans and preparing statements of work... to ensure
incorporation of relevant requirements in procurement planning documents and purchase
requests.3
Accordingly, Wayne County Building Authority employed the assistance of
construction experts, which consisted of AECOM/GHAFARI (program manager), Kotz
Sangster (law firm), and Tony Parlovecchio (Owners Representative) to effectively plan
for the solicitation of the construction manager for the new jail. In addition,
representative from EDGE, Purchasing and Corporation Counsel were also involved.
The decision for price not being considered a factor in the RFP was recommended by
the construction experts based upon funding and bid documentation that was available
at that time. Thus, it was determined that guarantee maximum price (GMP) RFP was the
best process to procure the construction manager at-risk.
OAG Response:
We consulted with the most recently hired Project Manager and he too found it highly
unusual to exclude price from a large public capital improvement project. In fact, in an
email dated July 28, 2013 he states: It is my understanding of the process for this project
was that all bidders were advised that the cost to be bid was $220 million based upon
documents provided. This is an unusual method of bidding - usually contractors are
simply provided a set of bidding documents and are requested to submit their proposal
accordingly. With emphasis placed on this is an unusual method of bidding.
It is important to note that GMP contracts are an industry standard in construction related
contracts. For instance, an article in a New York Law Journal4 titled Design-Bid-Build
v. Guaranteed Maximum Price Contracting: The Basics for Owner's Counsel sets-forth a
persuasive analysis for the use of GMP contracts and bid documents. As it relates to the
inclusion of price in the bid documents, the article states:
Danielle Conway, State and Local Government Procurement (Chicago, ABA Section of Local Government
Law, 2012).
Id.at 62.
Id. at 63.
: See: http://www.hancocklaw.com/JEH_Article.pdf
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Because each project is essentially a prototype, the cost to complete the overall project
generally cannot be known with great precision. Many reputable cost estimating service
providers will not assure the accuracy of their estimates below a range of plus or minus
10 percent. For this reason, it is difficult to know how competitive a given price is when
procuring construction services through other-than properly-administered competitive
bidding. The variation in construction pricing can be significant when considering a
project costing tens of millions of dollars. Even with competitive bids, the range in prices
offered by the various bidders can reveal the inherent variability in construction
pricing Emphasis added.
Accordingly, it would have been very difficult to obtain comparable pricing due to the
limited bid documents available. The vendors would have assumed a lot of different
information in order to provide a comparable price for the project. In addition, it would
have been very difficult to do an evaluation since each of the proposers was assuming
different information in determining price. Thus, price was not considered a factor.
In addition, the Auditor quotes the recently hired Project Manager on page 46 to conclude
that this is an unusual method of bidding. This statement is taken out of context since
the Project Manager was clear in its responses that it was unusual but NOT incorrect
due to the bidding documents available at the time. The Project Manager was clear that
price could be a factor if sufficient bidding documents were available at the time.
OAG Response:
See response as stated above with the full context of this conversation.
Lastly, the Auditor alleges on page 47 that since proposers could be disqualified that the
process could be manipulated:
Further, we believe it is unusual when a RFP disqualifies a respondent for
including price in their proposal. We believe this is counterproductive to the
purpose of a competitive bid process and exposes the Authority to the risk of the
process being manipulated by key decision makers. Emphasis added.
While it is true that the RFP stated that the proposers could be disqualified for including
price in their proposals, the FACT is none of the proposers were disqualified. Each of the
proposers was given an opportunity for an interview and their proposals were reviewed
and evaluated. Thus, the Auditors claim that the process was manipulated by key
decision makers is unwarranted since each and every proposal was evaluated and given
an equal opportunity.
OAG Response:
In an email dated July 28, 2013, the Countys Project Manager stated: I understand that
some that were invited to bid declined to bid as they did not believe the construction cost
number provided was adequate.
It is important to note that procurement standards allow vendors to be deemed nonresponsive for failing to follow the requirement of solicitation.5 There is no legal
5
State and Local Government at 100.
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precedent that prevents the WCBA or Wayne County from disqualifying a proposer.
Therefore, the allegation that disqualifying a vendor is considered manipulated is
untrue and negates established procurement principles.
OAG Response:
In our opinion, to disqualify a bidder for submitting a price does not appear it was the
intent of this RFP to make it fair and competitive.
Beginning on page 47, the AG has lengthy analysis to conclude that Wayne County did
not allow for a for a fair and competitive bid process. Before responding to this
allegation, it is important to note the duty of an Auditor, pursuant to American Institute of
Certified Public Accountants, is to base their report on sufficient evidence to provide a
reasonable basis for the conclusion that is expressed in the report.6 This is critical since
the evidence relied on by the Auditor for this section is extremely questionable and
presumptuous.
OAG Response:
We felt that this lengthy analysis was necessary to support the conclusion reached by the
OAG that the process was not fair and competitive.
Furthermore Federal Courts in interpreting Federal Acquisition Rules provide guidance
regarding unfair competition:
A significant potential conflict is one which provides the bidding party a substantial and
unfair competitive advantage during the procurement process on information or data not
necessarily available to other bidders therefore requires mitigation of significant
potential conflicts, but does not require mitigation of other types of conflicts, such as
apparent or potential non-significant conflicts. The contracting officer does have
considerable discretion in determining whether a conflict is significant. Moreover, the
FAR provides a contracting officer with considerable discretion to conduct fact-specific
inquiries of acquisition proposals to identify potential conflicts and to develop a
mitigation plan in the event that a significant potential conflict exists In sum, the FAR
requires that [e]ach individual contracting situation should be examined on the basis of
its particular facts and the nature of the proposed contract7. Emphasis added.
The Federal Courts have also stated it will not conclude a contract was awarded
unfairly on the basis of a possibility and appearance of impropriety.8" A protesting
bidder must identify "hard facts," not a mere inference based on "suspicion or
innuendo".9
6
AICPA Professional Standards (June 1, 2012) 101.51
Command Management Services Inc. v. United States, 111 Fed.Cl. 279 (2013)
Id.
Id.
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Consequently, the Auditor has failed to provide direct evidence to demonstrate

that process was unfair and provided an advantage to Walbridge/DCK. Thus, the AGs
conclusions are based upon inferences.
The Auditor claims that Wayne County did not allow for a fair and competitive bid
process. This is factually inaccurate since it fails to take into account following facts:
1. There were 8 addendums issued after the initial RFP that took into account all of the
potential proposers questions and concerns. Some of the addendum resulted in changes
to the RFP to address the proposers concerns. If the RFP was written to favor
Walbridge/DCK then the concerns of the other proposers would have been irrelevant
and the RFP requirements would not have changed.
2. 6 proposers responded to the RFP, including Walbridge/DCK. If the RFP was not fair
and competitive it is highly unlikely that 6 proposers would have spent the time, energy,
and funds (required bid bond) to sufficiently respond to the RFP.10
3. No bid protest was filed after the award to Walbridge/DCK. By law, all proposers
responding to a competitive solicitation have the authority and discretion to file a bid
protest. Each of the proposers could have obtained copies of all relevant documentation
through the Freedom of Information Act.
Instead of reviewing the totality of circumstances, the Auditor bases its broad conclusion
of the process was designed to provide an unfair advantage on inferences from four (4)
facts on page 47(which are summarize below):
1. M&B should have selected the Evaluation Committee and not EDGE since WCBA
falls under the authority of M&B.
2. Evaluation Committee should have included an engineer or architect as a scoring
evaluator. However, the Auditor does state that given the nature of the project, we
question whether any county employee had the necessary experience.
3. Price was not a factor in the RFP.
4. A RFP from another reputable company could have met the budget of $220 Million by
reducing the square footage by 100,000 sq. ft.
4. The former CDO may have unduly influenced her Deputy, who was a scoring
evaluator on the committee since she supervised the Deputy. In addition, another voting
member was a confidant and friend of the CDO.
None of the aforementioned statements directly demonstrate how the evaluation was
designed to provide an unfair advantage. These are inferences and innuendos.
First, the AG claims that the County should have taken into account the proposal
submitted by a reputable company to reduce the square footage in the new jail in order
10
As a note, all of the proposers were nationally known companies that have an expertise
in capital construction projects and would have objected to non-competitive RFP.
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to meet the $220 Million budget. The evaluation committee did review this proposal to
determine if it was feasible. If the County would have accepted this proposal, it would
have required the County to reduce the number of jail beds (i.e. 2,192) to accommodate
the reduction of the square footage. The reduction of the beds would negate the AGs
recommendation on page 8 that the new jail should have at least 2,512 jail beds.
OAG Response:
At the time of the bid, obviously some of those invited to bid questioned if a 2,000 bed
facility could be built for the price of $220 million; in retrospect, it appears those
concerns remain legitimate two years later.
Nevertheless, the reference to this fact by AG does not clearly demonstrate how the
RFP did not allow for a fair and competitive bid process. How is the process unfair
by not accepting a vendors proposal to change the scope of work? Procurement
standards allow municipalities to reject proposals that do not comport to the requirements
of a solicitation.
Secondly, the Auditor did NOT interview the former CDOs Deputy to determine
whether he was unduly influenced by the former CDO or not. Thus, its questionable
whether the Deputy was unduly influenced or not.
OAG Response:
We saw no benefit in interviewing the Deputy Chief Development Officer - merely the
appearance of a lack of independency was enough to create questionable doubt.
Furthermore, the Auditor fails to take into account that ALL of the scoring evaluators
overwhelmingly scored Walbridge/DCK proposal higher than other proposals. Besides
taking issue with the Deputy of EDGE for allegedly being unduly influenced and
questioning the friendship of one of the other voting members with the former CDO,
the Auditor does not raise issues with the remaining evaluators. The Auditor has not
argued that the other evaluators were unduly influenced or controlled by the former CDO.
Therefore, its highly incredulous to broadly assert that the process was not fair and
competitive and not provide evidence of the improper conduct.
Lastly, AG insinuates that the former CDO had the sole authority to select and approve
the evaluation committee for the construction manager RFP. This is false since the
Purchasing Director gives each and every department, which issues an RFP, the courtesy
of recommending the members of the evaluation committee. The Purchasing Director
reviews the list, and ultimately, has the final authority to approve or reject the list. Thus,
the process utilized is in compliance with section 120-35(i) since the Purchasing Director
has the sole authority to select the members of the evaluation committee.
OAG Response:
In reality we questioned the role the Purchasing Director may have exercised in the
selecting the evaluators on the committee. We were informed that they were proposed by
the Chief Development Officer and none were rejected by the Purchasing Director.
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OBSERVATIONS:
The AG correctly quotes the Purchasing Director on the bottom of page 48 regarding the
process so select evaluation committees for RFPs. However, the AG intimates that
somehow the process violates the spirit of section 120-35(i). As previously stated above,
all departments initially make recommendations to the Purchasing Director of potential
evaluators for review. Ultimately, its the Purchasing Director, who reviews and selects
the evaluations committee for each and every RFP. Its a courtesy given to each and
every department since departments know their employees that are qualified to evaluate
proposal.
It is important to note that the process for selecting evaluation committees is the
same process utilized by Purchasing to select the external auditors on behalf of the
Auditor General. In the past, the AG initially recommended the evaluation committee,
but the final decision is made by the Purchasing Director. Thus, the process has not
violated the spirit of section 120-35(i) in the past.
CRITERIA:
Since 2011, Purchasing has adopted all of the six (6) best practices pertaining to public
procurements listed by the AG on page 50. In addition, the Ethics Ordinance and
Procurement Ordinance were revised in 2012 and require all County employees to
disclose all conflict of interests, financial interests and familial interests. Thus,
Purchasing is following best practices.
Moreover, the Auditor misquotes section 120-43(b) regarding exceptions to providing
cost pricing data. The Auditor claims that the Purchasing Director is required to
provide a written waiver. However, the section provides numerous exceptions:
1. The contract price is based on adequate price competition;
2. Contract price is based on established catalogue prices or market prices.
3. The contract price is set by law or regulation; or
4 The purchasing director determines that the requirements of subsection 12043(a)may be waived and states the reasons in writing. The Purchasing Director shall
provide a copy of each such written waiver to the county commission. Emphasis added
Hence, a written waiver is only required if the other three (3) exceptions are unavailable.
In this case, section 120-(b) (2) applied since AECOM/Ghafari established the cost of
$220 Million by taking into account market prices and industry standard to complete a
2100 bed Jail Facility.
OAG Response:
The OAG requested the research to establish the market price to complete a 2,100 bed
Jail Facility but were not able to obtain. In addition, we believe any support for
15
establishing the cost of $220 million should be maintained within the Purchasing
Division as support for the RFP.
a. This is the current process and was the process utilized in 2011. All of the Countys
evaluation committees do include individuals that have the necessary expertise to make
an informed decision. The Countys process mirrors the federal procurement law, which
makes clear that an evaluation team is to be tailored for [each] particular acquisition,
by including persons with appropriate contracting, legal, logistics, technical, and other
expertise to ensure a comprehensive evaluation of offers.11
b. Purchasing is confused by the reference to an ad-hoc evaluation committee and its
relationship in evaluating RFPs. The current Procurement Ordinance currently allows
external consultants to serve as advisors. The construction manager at-risk RFP did
include the program manager and owners representative as advisors as stated on
page 48 of the AGs report.
c. The Ethics Ordinance and Procurement Ordinance were revised in 2012 to incorporate
this recommendation.
d. Purchasing does NOT concur with this recommendation since every Procurement is
unique and to have a general rule that all RFPs require a price component would not
be feasible These are a couple examples as to why every RFP does not include price as a
factor:
1. Many RFPs issued pursuant to grant agreements do not include price as a factor.
Usually, the RFP sets the price what the vendor will be paid since this is the amount
listed in the grant agreement/budget. Failure of the County to utilize the entire proceeds
of the grant for services would require the County to return the funds to the granting
agency.
2. In addition, price is not a factor in many of the Countys revenue contracts since
vendors are generating revenue for the County and there are no costs associated to the
County.
WCBA Procurement Policy-pg 51
Results of Work Performed- pg 51
The statement that the AECOM Contract was not competitively bid is inaccurate.
AECOM was competitively bid and under contract when the County asked them to
consider reducing their scope from a Regional Justice Center (RJC) to a Consolidated
Jail. In the absence of an approved Procurement Policy, all boards, including the WCBA
have a responsibility to follow the Countys Procurement Ordinance, with few
11
FAR 15.303(b)(1).
16
exceptions. The County disclosed to the Commission that AECOM would continue
working on the Project in 2010 during Commission meetings. Your statements are
factually incorrect and damaging to the County. Such statements are not supported by
any documentation and should be removed.
OAG Response:
The OAG feels that the administration still has not submitted convincing evidence that
pricing should not be a factor in large public capital improvement projects. Again,
another reputable contractor stated they could not build a 2,000 bed jail for the price of
$220 million; however, the key decision makers failed to take this into consideration. It
is our opinion, that price should always be a factor in all large public capital improvement
projects.
Recommendation xx- pg 52
We recommend that the WCBA include a section within their Procurement Policy that
requires purchases to be initiated by a purchase order for all goods, services and or
construction related costs over a certain dollar amount or the WCBA may be able to use a
voucher system for purchasing of goods and service of $100 or less
Typically WCBA has very few purchases of goods and services that would necessitate a
full purchase order system. This is the primary reason why the overall procurement
policy did not specify the use of purchase orders. In regards to the jail project, WCBA did
evaluate the feasibility of using purchase orders and concluded that since WCBA did not
have the financial system or the staff to administer the purchase order process, it would
be more cost effective to use a voucher process in conjunction with the contracts. Since
the purchase order is a document equivalent to a contract that serves as a legal agreement
between the buyer and seller, WCBA used contracts in lieu of a purchase order.
OAG Response:
The OAG believes that because there are numerous contracts issued by the WCBA, the
use of a purchase order could prevent the processor from exceeding the contract amount.
This limitation does not exist with the use of a voucher system as being recommended by
the administration.
BEST PRACTICES- PG 53
The Administration strongly disagrees with the statements that were made regarding the
exclusion of the Sheriff in the design and programming of the jail. Attached for your
review is the Program Design Document, that was reviewed and approved by the Sheriff.
This occurred in May of 2011. It is in direct contradiction to your statement that the
Sheriff was not involved. As noted in the OAGs report, the Sheriff was part of the adhoc and Oversight Committee as of October of 2011. Additionally, AECOM and the
Director of the Buildings Division met with AECOM on a regular basis to review designs
17
of the facility. Also included in this Exhibit are certain meeting minutes showing that
Sheriffs Representatives were not only meeting with AECOM on a regular basis,. This
misstatement of fact misleads the reader and your supports your conclusions that the
Sheriff had no responsibility in the design or programming of the facility. See Exhibit B,
Sheriff Program Approval, Meeting Minutes.
OAG Response:
In our report on page 54, it states: We questioned how involved the WCBA and \or its
Owner Representative was involved in design, cost evaluation, construction phase and
whether they possessed the expertise. We did not find any statement in this report that
implied or stated that the Sheriff was not involved in the design and programming of the
jail. However, we have documentation from Sheriff Officials that they were concerned
that the CEO was meeting with AECOM on the jail design and construction without
participation from the Sheriffs Office.
In fact, we acknowledge several times throughout our report the WCSOs involvement
and participation in the construction of the jail. Unless the respondent can specifically
point to instances where we state the WCSO was not involved in the design and planning
stages of this project, we respectfully decline to make a change to the report.
A.
B.
C.
The WCBA prior to beginning a major construction project, stakeholders

understand and use recognized best practices in the construction industry
including delivery method, type of contract, realistic budget and property
oversight.
Leadership place greater reliance on organizations that understand the needs,
problems and individual requirements of local correction agencies such as the
National Institute of Corrections.
The WCBA considers developing a website similar to the one being used by
the Detroit Regional Convention Facility Authority (DRCFA)
Views from Responsible Officials

A.
Prior to the request for a Resolution of Intent the County engaged AECOM to
meet with all of the stakeholders. This included not only the Sheriff, but the
Prosecutor, Jail Medical and Public Defenders. Concerns and requests
regarding programming and population management were all incorporated in
AECOMs final program. See Exhibit B.
The County relied on the Program Manager and the Architect regarding the
delivery method and the budget. These terms are incorporated within their
contract. When the County proceeds with the Project, it will again rely on its
Program Manager and Architect to recommend a budget and delivery method.
18
B.
AECOM did employ Best Practice, and demonstrated the use of nationally
recognized organizations in its Programming. Mistakes were made, but the
record reflects that AECOM presented, and the County relied upon its
expertise
The County utilized MITEN as a website for the construction of the Jail. This
C.
Michigan bid system provides a way for local government agencies in Michigan to more
effectively notify vendors of RFP and bid opportunities, while using shared resources to
increase efficiency and reduce costs. The procurement solution delivers suppliers
centralized online location to view and receive Michigan RFPs and bid opportunities
from over 100 Michigan local government agencies. This is a national recognized
website utilized by vendors wishing to bid on contracts. Additionally, the County has
developed a website for the Building Authority. www.waynecounty.com We believe the
use of MITEN and the development of the website clearly addresses the issue listed in
recommendation C.
Jail Design-Bed Capacity pg 60
We recommend the WCBA take into consideration the possibility of expanding the
number of jail population beds to 2,512 when reaching a decision regarding the future of
this Project.
We believe this is a decision of the Commission, Executive, and Sheriff. It is not the
decision of the WCBA. The capacity of the consolidated jail project of 2,000 beds was
based on conversations with the Wayne County Sheriff. The Wayne County Sheriff
attended Commission meetings regarding this capacity and did not object. Additionally,
prior to determining the capacity of the proposed facility, AECOM presented the Sheriff,
the Commission and County Staff with projections on population and cost. This
information led to the decision of 2,000 bed capacity. See Exhibit C, AECOM
Projections.
As the County proceeds with the new project, the same conversations will occur with the
Wayne County Sheriff, Commission and other stakeholders. If it is determined that a
2,500 bed facility is optimal, that will be the decision of the Wayne County Commission.
Information and Communication
Recommendation 2013-04- pg 63
The WCBA and the administration should explore the legal possibility of requiring
dispute resolute clause to allow the owner the right to arbitration at their sole discretion
19
when there is a disagreement/dispute and not have it predicated on work actually

performed and a claim filed.

Disagree. The Dispute Resolution Clause within the CMAR Contract is based on
standard construction terms. The County could consider mediation or other type of
resolution; however, it is doubtful that a contractor will assume the type of risk during
construction. The OAGs suggestion would mean a contractor would need to delay
construction until the dispute is resolved. Additionally, delays that are caused or
requested by the Owner would then be costs that would be assumed by the County.
OAG Response:
It is our understanding that a unique approach was being used in construction of the jail
we suggest why not take a unique approach to revising construction contract language to
benefit the county in situations when disputes may occur during the construction process.
In regards to the Countys decision to hire an outside firm to assess the overall state of
the project, the County disagrees with this assessment. The Hubbel Roth Report gave the
County insight that was needed. It was not limited to looking only at the CMAR as
suggested in this recommendation. We believe that the OAG has not viewed the facts
correctly.
OAG Response:
We contend that other means possibly could have been explored before $73,000 was
spent and we still have not resolved the disputed differences. The OAG maintains that the
Administrations decision to hire a professional engineering and architectural firm to
perform an independent review of the claims for additional costs related to the jail was an
example of a waste of county funds. Pursuant to the construction management at risk
(CMAR) contract under Article 10, it allows the owner at its own discretion to elect to go
to arbitration over claims, disputes, or other matters in question.
Wayne County Building Authority Board of Commissioners pg 64

We understand the assumption regarding the lack of authorization from the WCBA. It
was the responsibility of County Staff to ask for a recommendation or resolution. Neither
was provided to the WCBA. We believe that is an unfair to profess that the WCBA is
responsible for this matter. The WCBA trusted County staff to direct AECOM to
complete these reports. The lack of written reports should not be attributed to the
WCBA. This is a material weakness of the County Staff, not the WCBA. We would ask
that you revise this section.
20
OAG Response:
A recommendation was proposed by Special Counsel for the WCBA to allow a monthly
progress report to forward to the Commission on specifically what percentage of
subcontracts are to Wayne County businesses, how far the project is in spending and how
close in construction. There is no documented evidence that written reports were
prepared.
We believe that the WCBA as the oversight body should have requested and received
written reports on the status of the project as a matter of public record and failure to do so
may have impaired their ability to carry out their fiduciary responsibilities. Therefore,
we see need to revise this section as requested by you.
We recommend the WCBA prepare monthly written status reports as a matter of public
record to assist board members in carrying out their oversight responsibilities. Also, we
suggest a presentation be made, and a status report filed, with the Wayne County
Commission on a semi-annual basis since Wayne County is the guarantor on the bonds.
In addition we suggest that the WCBA develop informational material for public
distribution and consult with the Department of Technology to develop a website similar
o the one being used by The Cobo Hall Regional Authority.
Monthly Reports. We agree written monthly reports should be provided. We would
suggest on large capital projects presentations should be made on a quarterly basis, not
semi-annually. As noted above, the County has and will continue to utilize MITEN.
Additionally, the County has developed a website for the Building Authority.
www.waynecounty.com
OAG Response:
The OAG acknowledges managements concurrence with the recommendation.
Monitoring pg 66
Throughout this section of the OAG report there appears to be a general
misunderstanding regarding the responsibilities of the Countys Oversight Committee.
Please note the following:
Building Authorities are only financing tools for the construction of public buildings.
Under the Contract of Lease it indicates that the operation , maintenance and use of the
facility will be for the incorporating unit, the County. It is the County under the Contract
of Lease that determines how the facility will be designed and used.
21
At the onset of this Project, the County issued an RFP to find a Program
Manager/Architect that would operate as the Countys Owners Representative on an
RJC. When the scope of this project was reduced, it was logical that the County initially
intended that the AECOM would operate as the Owners Representative. After
Parlovecchio Building was selected as the Owners Representative , weekly meetings
were held with the DCEO, the Director of EDGE, the Owners Representative and
AECOM
These weekly meetings were appropriate to keep the County informed regarding the
progress on the Project. Issues and contracts were then taken to the WCBA for approval
and informational presentations were given at each meeting.
In October of 2011, meetings were then scheduled with a committee of AECOM, the
Owners Representative, the CFO, the COS, Sheriffs Representative, the Buildings
Director and Special Counsel. These meetings went on to include representatives from
IT and the Countys Chief Operating Officer. These Committee meetings often had as
many as 6-10 County employees in attendance regarding the progress on the Project.
As the ultimate owner and user of the facility a venue needed to be created where
AECOM and the Owners Representative could bring updates, issues and progress
reports to the County. Ultimately, this committee became known as the Oversight
Committee. AECOM NEVER REPORTED TO THE OVERSIGHT COMMITTEE. IT
GAVE REPORTS AND UPDATES TO THE OVERSIGHT COMMITTEE.
The County needed to monitor the progress on this Project. We would assume that if the
County had not established such a committee that the OAG would have established a
finding that the County was not monitoring the Project.
As cited earlier in your report, staff indicated to the WCBA that they wanted a structure
where decisions were made by the WCBA, not the Owners Representative. The OAG
indicated in several areas an agreement that more decisions should have been made by
the WCBA.
The creation of the Oversight Committee as a venue to ensure that information was given
to the County on a weekly basis was a prudent decision. The County acknowledged and
expected AECOM to operate as the Countys Owners Representative. We believe this
report, and specifically this section should not be written in a manner that would provide
AECOM with justification for not fulfilling certain contractual duties.
We are asking that the OAG reconsider the facts regarding this Project. We do not
believe providing narratives and conclusions that contractual duties that rested with the
Countys vendors should be shifted and presented as the County is responsible for these
issues.
22
We recommend that monitoring of the consolidated Jail Facility Project be entrusted to

an Owners Representative or its equivalent, who should be an independent third party
that represents, and reports directly to the WCBA.
Hiring of Owners Representative. The OAG suggests that an Owners Representative
should be a direct hire of the WCBA. We do not agree that this is a material weakness.
An Owners Representative or Project Manager (such as Mr. Newton) who is a direct hire
of the County protects the Countys interests. The WCBA should not have interests that
differ from the County.
OAG Response:
The WCBA is the owner of the Consolidated Jail Facility Project and as the owner there
are associated monitoring responsibilities. Moreover, while the Oversight Committee
clearly serves an important function, it is not providing the day-to-day Project interface to
address the myriad of issues that may arise during a project of this complexity. Also, the
Oversight Committee does not possess the qualifications, experience and/or the skill set
needed to meet the goals and objectives of this project.
We see no difference between the interest of the WCBA and the county in simple terms
one is the lessor and the other is the lessee. Their combined goals and objectives are the
same - which is to build a 2,000 bed jail facility within a given period of time.
The CMAR contract in numerous instances makes reference to an Owners
Representative and that failure to provide a reputable one has consequences.
COMPLIANCE WITH THE CONSTRUCTION CONTRACT, THE DAVIS

BACON ACT, ARRA COMPLIANCE DN THE BOND COVENANTS
Bond Issuance and Covenants
Contract of Lease
Point of Clarity- Pg 74
Section 2 is inaccurate. Counsel did inform the OAG that the Waldbridge-dck contract
would need Commission approval if a change order exceeded the $220 Million Dollar
authorization given in August of 2011. This statement should be removed.
OAG Response:
The OAG based our comments on the following responses from Special Counsel
contained in a July 22, 2013 e-mail:
The Procurement Policy addresses this issue. I am assuming you are referring to the $0
change order. As the chief administrative officer of the WCBA, if a change order does
23
not entail a change in cost or a substantial change in scope, then it can be treated as the
same as a small purchase. It becomes an administrative duty.
It is the same issue with change orders for the Wayne County Commission. Even
though there is not a provision within the charter or some other document stating that
change orders must be approved by the Commission. I could not support that logic. I do
not believe the WCBA could approve a change order that substantially changes the cost
or substantially changes the scope without going to the Commission.(Emphasis added.)
Cause. This term was not written by administration regarding the Contract of Lease and
the powers of a building authority to bond. This term and the bond documents were
written by nationally recognized bond Counsel, using language that is necessary for the
execution of a Contract of Lease under the Building Authorities Act.. This statement is
misleading and should be removed.
Criteria
OAG takes exception to standard clauses within the Contract of Lease document. These
documents are written by bond counsel and we assert that their language is correct and
necessary under the Building Authority statue. Legally, the WCBA makes the bond
payments. Therefore, it must receive an allocation from the County for such payments.
This is currently being done during each years budget hearings on ALL Building
Authority Bonds. The creation of an IGA will not dismiss the requirement that the
County must make these allocations under the statutory provision of a Contract of Lease.
These cannot be done by an IGA. Furthermore, for your review we are attaching an email and memo that was provided to Commission Counsel regarding these provisions in
2010. These responses were completed with the assistance of bond counsel and address
the concerns you are noting. See Exhibit D, e-mail and Responses to Commission
Counsel
OAG Response:
The OAG recognizes that under Public Act 31 (PA 31) a contract of lease is required to
be executed. The required clauses may be standard within the Contract of Lease;
however, the language written by bond Counsel is not standard, but crafted specifically
for this Contract. (Emphasis added.)
PA 31, 123.961b. Ordinance or Resolution Authorizing Issuance of Bonds;
Adoption; Contents, Sec. 11b requires aresolution authorizing issuance of bonds
This requirement was satisfied by the WCBA as well as the Wayne County Commission.
PA 31, 123.96. 1f Additional Bonds, Sec. 11f, states: The commission in the ordinance
or resolution authorizing the bonds may provide for issuance of 1 or more series of
additional bonds to complete the project for which the bonds are issued
In November 2010, the WCBA passed a resolution authorizing the issuance of the Series
2010 Jail Facilities Bonds. Section 18. Additional Bonds states: Nothing contained in
24
this resolution shall be construed to prevent the Authority from issuing additional bonds
pursuant to Act 31 (a) to finance the construction of any new buildings or projects within
the scope of its corporate powers or (b) to complete, repair or alter the Project as
authorized in the Contract. (Emphasis added.) This resolution took into consideration,
and wrote into the Contract of Lease, both sections of PA 31 referenced above.
The Contract of Lease between the Wayne County Building Authority and the County of
Wayne contained, among other items, the following:
WHEREAS, the COUNTY and the AUTHORITY have determined that all or part
of the cost of phase one of the Project should be paid by the authorization and
issuance of bonds in one or more series by the AUTHORITYin the principal
amount of not to exceed Three Hundred Million Dollars ($300,000,000), with the
balance of the cost, if any, of the Project to be paid out of moneys to be made
available by the COUNTY to the AUTHORITY as herein provided (Emphasis
added.)
11. In the event that it should be determined that for any reason there are not
sufficient funds to complete the acquisition of the Projectit is agreed by the
parties hereto that this Contract may be supplemented or amended to provide for
the issuance of additional bonds by the AUTHORITY to provide sufficient funds
to completethe Project and also to increase the Cash Rental by an amount fully
sufficient to pay all principal of and interest on the Bonds herein referred to and
such additional bonds when due. Emphasis added!
Therefore, the OAG is still of the opinion that a risk exists for the county, despite
assurances provided by Special Counsel regarding concerns expressed by Commission
Counsel when the Contract of Lease was executed.
As further evidence that the standard clauses were crafted specifically for this Contract,
the OAG reviewed a Contract of Lease executed between the City-County Building
Authority and the County of Kent, Michigan. This contract was specific as to where all
funding would come from. Specifically:
the Building Authority proposes, in accordance with the authorization
contained in Act 31, to provide for the issuance of building authority bonds in the
aggregate principal amount of not to exceed Ninety-Five Million Dollars
($95,000,000) to defray a portion of the cost of the Project, and,
the balance of costs of the Project are expected to be paid through interest
earnings on the proceeds of the Bonds and State of Michigan and federal grant
funds, private contributions and funds contributed by the City of Grand Rapids
Downtown Development Authority and the CAA (the Other Contributions)
Based on the above, the OAG find no basis to amend our conclusions regarding this
matter.
25
A.
Section 11 of the Current Contract of Lease be amended to mitigate this perceived
risk to Wayne County.
OAG Response:
See all of the OAG comments above.
We disagree. The Building Authoritys Resolution of Intent is for $300 Million. The
WCBA did not have legal authority to issue bonds beyond its delegated authority. Any
bond issuance backed by the full faith and credit of the County needs Commission
approval. This statement did not legally divest the Commission of this approval. Bond
Counsel confirmed that the issues regarding payments and the requirements under the
Contract of Lease must be met. There is no legal means for the WCBA to issue bonds
without an amendment to the Contract of Lease or without County approval.
B.
In addition, an IGA should be established between the WCBA and the County of
Wayne to reduce risk and provide clarity and understanding between the two local
governments.
The County does not disagree with the idea of an IGA. However, please understand that
since Building Authorities are financing bodies, the Contract of Lease is the document
that will always usurp any other contract. The Contract of Lease is created to address
operational responsibilities and costs. Additionally, if an IGA were created, it would
need the approval of Bond Counsel to ensure that we have not violated any of the terms
of the Bond covenants.
OAG Response:
The OAG acknowledges managements disagreement with the recommendation.
Davis Bacon Act-Compliance
American Recovery and Reinvestment Act.
Compliance with IRS Regulations
The board should refrain from entering into personal service contracts, unless it is with an
individual that is registered as a company, because it could expose the WCBA to
unnecessary risk of incurring severe penalties if those individuals fail to file tax returns
for the compensation received in any given year.
Views From Responsible Individuals
26
M&B disagrees with this finding, and is confident that County is not responsible for
individuals failing to file tax returns. Utilizing personal service contracts can be a cost
effective tool for obtaining professional services from individuals who offer specialized
expertise. An independent contractor is an individual over whom the employer has the
right to control or direct only the result of the work and not the means and methods of
accomplishing the result.
Each independent contractor has a signed personal services contract with WCBA. The
contract explicitly defines the relationship between the individual and the WCBA in
section 5.01 and discloses that no liability or benefits will be accrued by either party as a
result of the contract. Upon M&Bs cursory review of the IRS 20 Rule Test for
establishing employment relationship, the personal services contracts, and the scope of
services, it is clear that each contractor is operating as an independent contractor and that
an employer-employee relationship does not exist.
The contract further explains in section 12.01 that WCBA will furnish information
returns, including Form 1099, to the contractor and appropriate government entities by
their required due dates and in accordance with applicable law. The County properly
issued form 1099-MISC to each contractor and filed with the appropriate taxing
authorities. However, the County assumes no responsibility or liability for the
contractors reporting of income or payment of taxes to the IRS. Each contractor is
responsible for filing and paying their own income taxes and self-employment tax.
OAG Response
The OAGs concern is the potential tax liability to the WCBA should the Internal
Revenue Service deem these independent contractors to actually be employees of the
WCBA. The OAG has also reviewed the IRS 20 Rule Test for establishing an
employment relationship. The OAG is of the opinion that some of the following IRS 20
rules may apply to classifying the independent contractors as employees of the WCBA.
Rule #6 Continuing Relationships: Continuing relationships between workers
and employers indicate that employer-employee relationships exist.
o One of the independent contractors was a WCSO retiree who performed
basically the same services as when he was an employee.
27
Rule #8 Full-time Required: If workers must devote full time to employers

businesses, employers have control over workers time. Independent contractors
are free to work when and for whom they choose.
o It is doubtful that these independent contractors worked for anyone other
than the WCBA.
Rule # 17 Working for more than one firm at a time: If workers perform
services for a number of unrelated persons at the same time, they are usually
independent contractors.
o It is doubtful that these independent contractors performed services for
anyone other than the WCBA.
Rule #18 Making services available to the general public: Workers are
usually independent contractors if they make their services available to the
general public on a regular and consistent basis.
o It is doubtful that these independent contractors made their services
available to the general public on a regular and consistent basis.
The OAGs recommendation is focused on avoiding any personal service contracts that
may be deemed an employer-employee relationship by the IRS, thus mitigating any
potential payroll tax liabilities.
Record Retention Contractors
Owners Representative
Point of Clarification. Results of Work Performed. The Director of Buildings was a
member of the Oversight Committee. The Director attended regular meetings and also
attended weekly meetings with Walbridge.
OAG Response:
We acknowledge this clarification and will amend the report accordingly.
Point of Clarification: Pg 89, again the Director of Buildings was a key member of the
Oversight Committee who attended Oversight meetings. The Director of Buildings also
attended weekly meetings with Walbridge and AECOM.
Point of Clarification Pg 88
OAG Response:
We acknowledge this clarification and will amend the report accordingly.
The County disagrees with your first paragraph regarding a budget. First, we understand
that the OAG has relied upon Cost Projection Sheets not budgets. That is understandable.
Upon reviewing such sheets carefully, along with the board actions taken by the
Commission and the WCBA you will see that the County has not authorized any
contracts that would allow the County to exceed the $300 Million Dollar allocation.
Please review the attached schedule. See Exhibit E, Contracted Costs. By February of
2012, the County had only contracted for $272 Million Dollars. Currently the Countys
contracted responsibilities continue to hover around that $270 Million Dollar number.
These figures include acquisition, CMAR contract, the AECOM contract and all known
contractual responsibility.
The County has a current disagreement with AECOM regarding their responsibilities
under the First Amendment. This Amendment states that AECOM is to ensure the
Project is programmed and designed to stay within the $300 Million Dollar allocation. If
the OAG reviews the documents currently available this will demonstrate that the County
has consistently indicated to AECOM that they must comply with this term. If the OAG
continues to misstate the facts or imply that the County knew or somehow agreed that the
$300 Million Dollar Allocation could be exceeded, then AECOM will have a justification
28
not to adhere to their contract. We would ask that the OAG consider revising such
statements to ensure that accuracy is reflected in this report.
OAG Response:
The OAG relied upon documented budget figures in support of our comments. The
OAG comments in no way stated, or inferred, that these costs were already contractually
obligated. To eliminate any confusion, the OAG will add the word estimated in front of
Project cost. Again, we were speaking to the fact that total estimated Project costs
exceeded the original budget of $300 million. This is not new information, but has been
a matter of public record for many months.
The OAG is familiar with the requirements of the First Amendment to the
AECOM/Ghafari contract. We believe it is a stretch on the Administrations part to infer
that our comments could provide a reason for AECOM/Ghafari to breach their contract
with the WCBA, since each contract must stand on its own merits and not conclusions
reached by the OAG.
Have the current County Project Manager become a leased employee from Wayne
County to the WCBA with specific job descriptions, duties and responsibilities that are
typical of an owners representative; or Issue a Request for Proposal for an owners
representative who would be independent and report directly to the WCBA Board.
In addition, the WCBA Chair should form a capital improvement sub-committee of board
members, similar to the COBO Hall Expansion Project. The CAO and Owners
Representative would report to the sub-committee and in turn will report to the WCBA
board on a monthly basis.
OAG Response:
Views From Responsible Individuals
Agree in part and disagree in part. We agree in Section A, that any Project Manager
should have a clear delegation of duties. Additionally, we would agree with what you are
implying regarding the leased employee. It is important to note that the WCBA is a
component unit of the County. Neither staff nor the board should be in a position where
it can be perceived that their fiduciary duties are separate to their duties to the County.
The WCBA exists in order to finance projects for Wayne County.
OAG Response:
Since the goals and objectives of the WCBA and Wayne County are the same, which is to
build a 2,000 bed jail facility and it is evident that WCBA are the owners of the project,
we fail to see how the Project Manager reporting directly to the board would create
separate interest, unless Wayne Countys intent is to completely control the project.
29
In regards to the recommendation for a sub-committee, we would agree that such a

committee would be useful. However, as we stated above we believe that allowing
Commission representation and creating an ad-hoc committee is a more transparent
manner in which to accomplish this issue. Creating a sub-committee that would divest
the WCBA Board of its statutory powers would not be a prudent decision.
OAG Response:
The OAG believes that if a super committee exists for the COBO Hall Regional
Convention Authority (CHRCA) which is a $279 million project and is very successful
- with a five member board and 3 members on the capital improvement sub-committee then why cant the same concept be used for the WCBA. This issue is being raised
several times to the administration, but no viable alternatives are offered. More
importantly, the oversight model the WCBA is currently using has failed to meet their
goals and objectives.
No Bid Contracts
Results of Work Performed- pg 92
As stated previously, this statement is inaccurate. AECOM had been paid approximately
$2 Million Dollars for the Regional Justice Center Study, prior to the decision to decrease
its scope to a consolidated jail. They had an approved contract that extended to
December of 2011. They utilized the National Institute of Corrections Best Practices,
presented their ideas to the County Commission and Administration, and engaged in
numerous meetings with staff from August of 2010 to December of 2010. They
demonstrated a program and a proposed operational savings. See Exhibit A,
Presentations, Best Practices. See also Exhibit F, Payment History of AECOM.
Furthermore, the Commission questioned the use of AECOM during Commission
meetings prior to the issuance of the bonds. The County was forthright in explaining the
need to retain them, rather than starting the process over. The County did not receive
objections from the Commission. We would have been pleased to present Commission
records of these meetings, but we have been informed that the Commission erases its
video records. Therefore, minutes and discussions regarding this matter with the Wayne
County Commission meetings are not available.
The OAG is suggesting that the County should have cancelled the AECOM Contract
after receiving the Bond Resolution and started the Project again. Not only would this
have taken several months, AECOM would have been precluded from bidding. The
County acknowledged and presented the fact that AECOM was going to be kept on as the
Program Manager when it approached the Commission. This decision would have cost
the County several million dollars.
30
OAG Response:
The fact remains that AECOM was awarded a no bid contract on August 1, 2010. It is
irrelevant that AECOM had a contract that extended through 2010 because: (1) an option
to renew was not exercised; and, (2) the scope and compensation of the original contract
was modified materially. The OAG did not suggest that the AECOM contract should
have been cancelled. The OAG merely pointed out that the contract was awarded without
bid, which is factually correct.
However, we did amend the report to state that the AECOM contract was originally bid
in 2006 and the decision to continue the use of AECOM services were due to the
Administrations desire to save costs.
Additionally, it should be noted that the WCBA was bound by the Countys Procurement
Ordinance in absence of an adopted policy. The County Procurement Ordinance allows
for sole source contract. The decision to hire Parlovecchio Building, Inc was not
impermissible under the Countys procurement ordinance at the time. A business
decision was made to provide a sole source contract by the Deputy CEO. This was
allowed under the Countys Procurement Ordinance.
OAG Response:
The OAG is aware of the Sole Source section in the Countys Procurement Ordinance, as
follows:
Sec. 120-33 Sole Source
Any request by an agency or department head that procurement be restricted to
one potential source shall be accompanied by a letter from the using department
signed by the department head stating why no other source will be suitable or
acceptable to meet the needs. A contract may be awarded for a real property,
supply, service, or construction item without competition when the Purchasing
Director or his or her designee determines in writing that there is only one source
for the required property, supply, service, or construction item or that the
proposed award to a single source is a permitted non-competitive procurement as
established herein.
After verification of a sole source vendor or the justification of a sole source
purchase is warranted, the Purchasing Director, or his\her designee, has the
authority to negotiate the price, terms, and conditions of the procurement.
The Purchasing Director may treat procurement as a Sole Source Procurement
under some documented circumstances where there are extremely limited
suppliers of a given commodity upon documented evidence from the requesting
department that the comparable sources for the desired product are not in the
Countys best interest. Examples of this comparable source situation could
include, but are not limited to, software applications, homeland security
equipment, certain employee benefits, or designated professional services.
31
The OAG agrees that the WCBA was bound by the Countys Procurement Ordinance in
absence of an adopted policy, as stated above by management. However, there is no
evidence that the above two sections of the procurement ordinance were followed in the
awarding of the Parlovecchio Building contract. The rationale to hire Parlovecchio
Building was provided by Special Counsel to the WCBA at a May 5, 2011 WCBA Board
meeting;
it came to our attention that Mr. Parlovecchio had worked with the county for
several years. He also indicated to us several weeks ago that it was his decision to
terminate his employment with Wayne County.At the same time, we had a lot
of confidence and so did the team of AECOM and Ghafari in utilizing him as an
owners rep on the Project. So AECOM and Ghafari through negotiationshas
agreed to hire Parlovecchio Building as an owners rep on behalf of the
Authority.
We think its important to disclose that for you because Mr. Parlovecchio was an
employee of the countyso we want everything above board. We want to make
sure the record reflects that hes being hired by AECOM, that AECOM is going
forward with the Authority and that theres been complete disclosure on
everything that is going on.
On May 5, 2011 the Special Counsel to the WCBA requested that the Building
Authority contract directly with Parlovecchio Building to become the owners
representative.
The OAG is of the opinion that the criteria for awarding this sole source contract was not
met and find it incredulous that Parlovecchio Building, (an employee of EDGE, who
resigned from the county less than one week before being awarded the contract), was the
only qualified person in all of Wayne County who could perform the duties of Owners
Representative.
More importantly, the CEO elected the option to terminate the contract with Parlovecchio
Building Company in December 2011, stating because it was not originally put out for
bid.
The WCBA should amend the procurement policy to establish a clear threshold as to the
dollar amount when contracts are required to be competitively bid.
Agree. We have no disagreement that a new section should be added to the WCBA
Procurement Policy addressing: Sole Source, Comparative Source, IFB, and other
32
relevant procurement issues. This would also include the WCBA being able to use the
MIDEAL website.
OAG Response:
Contract Elements
Missing Dates:
Addendum to Pre-Construction- We take note of the OAG concern, but would add that
attached to this Addendum is a certification which indicates the dates. However, the
OAG concern is justifiable.
OAG Response:
Wayne County Building Authority Resolutions are accompanied by a Certification that is
subscribed and sworn before a Notary Public. The Certification states that the
attached resolution is a true, correct, and complete original.
The Certifications do not contain specific contractual dates; they do contain the date the
WCBA Board approved the resolution.
First Amendment to Program Management and Architectural Services- There are dates
written on this agreement in its heading. Proof of this issue is on the Wayne County
Building Authorities website. We would ask that the OAG review and remove this
concern.
OAG Response:
The OAG obtained a copy of the agreement containing dates. The OAG will remove this
concern from the report.
Pre-Construction Services with Walbridge- We agree that the date was not filled in on
this agreement. This is an oversight since the anticipation was an August start date.
However, all contracts must be accompanied by a certification. This addresses the term.
We take note of the OAG concern.
OAG Response:
Wayne County Building Authority Resolutions are accompanied by a Certification that is
subscribed and sworn before a Notary Public. The Certification states that the
attached resolution is a true, correct, and complete original.
The Certifications do not contain specific contractual dates; they do contain the date the
WCBA Board approved the resolution.
33
CMAR Contract- The Commission originally planned an August approval date. We

agree a correction should have been made. Again, the certifications of such contracts
address the concern.
Missing Signatures
Sub-Consulting Services- The contracts in our possession and on the website include
executed copies. We are puzzled at your finding. We would ask you review your records
and remove this issue.
OAG Response:
The OAG obtained a copy of the agreement containing all applicable signatures. The
OAG will remove this concern from the report.
The WCBA, as well as the Wayne County Commission, should ensure that all required
elements of a contract are present before approval is granted to execute the contract. In
addition, a well defined scope of services is a critical element of a contract.
All of the elements of each contract are included in each of the contracts. All of the
contracts are executed by the necessary parties. This provision should be removed and
we disagree with the implication that elements are not included.
In regards to the Legal Service Contracts, we agree. There should have been a clear
scope of service instead of a generalized scope provided.
OAG Response:
Contract Analysis
The OAG has misstated the facts. Additionally, the OAG has not engaged in
conversations with counsel. The OAG did send an e-mail request, and Counsel
responded with an answer. An e-mail was sent to the OAG on July 23, 2013 providing
the six different sections where an audit is allowed under the CMAR. This e-mail is
attached for reference. See Exhibit G, e-mail on Audit Provisions
We recommend the Wayne County Building Authority amend the Walbridge-dck
contracts well as all other contracts associated with the consolidated Jail Project to
specifically include a clause granting the owner or their representative the right to audit.
34

We dont disagree with the OAG; we simply assert that the facts and conclusion are
misstated. The OAGs request for a generalized audit would not be sufficient in a
construction contract. This does not change the fact that construction agreements must
have the different audit provisions addressing different issues. We will continue to utilize
the six different sections. It should also be noted that Walbridge has indicated our right
to audit and we are working out a single audit for the close out of this contract. If the
OAG would like additional provisions, we will consider any additional provision that
adds protection to the County. However, any additional provision should be written
under industry standards. We would disagree that a generalized statement would be
sufficient in a construction contract. The OAG has not produced contracts in which the
right to audit is missing. We would state that assuming and professing a deficiency in
such contracts is not constructive. It is misleading and does not have any documented
support.
OAG Response:
The OAG did not misstate facts or conclusions.
On July 20, 2013, the OAG asked Special Counsel to the WCBA, via e-mail, the
following question:
Does the Walbridge CMAR contract include a right to audit clause?
On July 23, 2013 Special Counsel replied as follows:
Yes, however since it is a construction project, it is mentioned in several

places. Article 7.1- Audits on profit and fees. Section 7.1.3 Section audits
on subcontracted work, 11.2. Audits on payments to subcontractors, proof
of payments. 5.1.3. Audits on CCIP. Under general conditions, 8.3.6,
audits for delay. Section 14.3.4 Davis Bacon Audits.
The OAG is not disputing the existence of these audit clauses; rather, the OAG has stated
the audit clauses are vague as to who has the right to perform the audits. This is
evidenced by the language in the audit clauses referenced above by Special Counsel.
The following sections are contained in the GUARANTEED MAXIMUM PRICE
CONSTRUCTION MANAGEMENT AGREEMENT between the Wayne County
Building Authority and Walbridge-dck Joint Venture, dated February 9, 2012.
35
Section 5.1.3 The final value of the credit shall be determined at the
conclusion of the work through an audit of the project records and the
GMP shall be adjusted accordingly. (Emphasis added.)
Section 7.1 CMAR Direct Costs are subject to audit to verify accuracy,
including that no element of profit or overhead is included in the
submitted Direct Costs. Emphasis added!.
Section 7.1.3 If CMAR elects to subcontract any portion of the Work

required as part of CMARs Direct Costs, CMAR shall not seek or obtain
reimbursement for any overhead or profit on such costs, these costs shall
be subject to audit as set out above. Emphasis added!
Section 11.2 The staffing levels and payments to joint venture partners
in the amounts of the Declared Interest will be determined by audit of
hours charged to the Project during and after the performance of the
Construction Work. Initially this audit will be conducted together with the
audit of CMAR records for the purpose of confirming the Cost of the
Work incurred and paid by CMAR, however CMAR shall provide such
other and further documentation or proof of payments as may be requested
by Owners Representative as deemed necessary in the sole discretion of
Owners representative for the completion of the audit of joint venture
interests, staffing and distributions.Emphasis added!
The OAG is still of the opinion that the above audit clauses are vague as to who will
perform the audit.
An example of the right to audit clause language is contained in the Owner/Architect
Agreement between the Wayne County Building Authority and AECOM services of
Michigan, Inc. for Program Management and Architectural Services for the creation of a
new Wayne County Justice Center.
Section 12.8.2 Owner has the right to examine and audit all books, records, documents
and other supporting data, as Owner deems necessary, of the Program Manager/Architect,
or any sub consultants, or agents, performing services under this Agreement, whether
direct or indirect, that will permit adequate evaluation of the services performed by the
Program Manager/Architect and any subconsultants. Program Manager/Architect must
include a similar covenant allowing for Owner audit in any agreement it has with a
subconsultant or agent related to this Agreement. Owner may delay payment to the
Program Manager/Arcitect pending the results of any such audit. (Emphasis added.)
The following sections are contained in the General Condiitons of the Guaranteed
Maximum Price Construction Management Agreement for the Wayne County
Consolidated Jail Facility for the Wayne County Building Authority.
36
Section 8.3.6 Claims of CMAR for costs and damages resulting from the
Owners suspension, delay, or interruption of the Work shall be determined in
accordance with the following: These costs shall be subject to audit by the
Owners Representative. (Emphasis added.)
Section 14.3.4 CMAR consents to an audit of its books and records by the
Owner for the purposes of verifying compliance with Davis-Bacon and Related
Acts.
Upon further review, the OAG agrees that the above audit clauses are specific as to
who will perform the audit.
Sheriffs Transition Team

Point of Clarification; Page 103 indicates that the Oversight Committee was involved in
the hiring of the Sheriffs Transition Team, including interviews. This is inaccurate. The
Sheriff selected his team members and informed County staff of his selections.
Additionally, it is a misstatement that Oversight Members were not responsive. The
Sheriff was a member of the Oversight Committee. We are unaware of the issues that are
now being raised. Of more importance would be a request of a document that
demonstrates that the Sheriff believed $25-$30 Million more was needed for the Project.
We have provided you with the document demonstrating that in May of 2011, the Sheriff
signed off on the Programming of the new jail. Additionally, attached are documents
demonstrating not only the Sheriffs participation, but also the attendance of Sheriff staff
members at the weekly meetings with AECOM. Both documents, along with the
acknowledgement that the Sheriff and his team attended Oversight Meetings demonstrate
their involvement. See Exhibit B.
The OAG should also recognize that in March of 2012, AECOM presented a Cost
Projection Sheet demonstrating the Countys ability to complete the Project for $300
Million. See Exhibit H, March Cost Project Sheet. In May and June of 2012 the Sheriff
approached members of the Oversight Committee and indicated that he desired to have
AECOM explore the possibility of expanding the facility and increasing capacity to
approximately 2,400 beds. This request delayed construction, but was a reasonable
request to explore. These actions demonstrate an active involvement by the Sheriff in all
aspects of planning and development of the facility.
OAG Response:
The statement that the Oversight Committee participated in the selection of the Jail
Transition Team is based on statements from Sheriff Officials as stated in the report.
We were not able to find in the report that the Oversight Committee members were not
responsive. The report stated that Sheriff Officials had several concerns regarding the jail
construction which was voiced to the Oversight Committee and has continued to do so in
ongoing communication. As stated by Sheriff Officials, $25-30 million was needed. We
were not able to find in this section of the report where we state that Sheriff Officials
were not involved.
Jail Design and Capacity
RECONCILE CONSTRUCTION COST AND CASH BLANCES RECORDED IN
THE GENERAL LEDGER
37
We recommend that PM&A and the WCBA accounting personnel independently verify
their respective bond proceeds control ledger balances with the WCTO cash sub-ledger
report on a monthly basis and maintain a copy of that information in their files as part of
their books and records. This will validate the bond proceeds control ledger balances are
in agreement with the ledger balances being carried by the Treasurer.
In addition, the QuickBooks general ledger should be reconciled to the WCBAs general
ledger on a monthly basis and any adjustments be identified and corrected each month on
a timely basis.
Views of Responsible Officials
Wayne County Treasurers Office (WCTO) maintains a cash ledger in RESIQ2 at the
cash pool level and not at the individual fund level in the general ledger. The WCTO cash
balance for the Building Pool includes cash balances of multiple funds within J.D.
Edwards (JDE). Therefore, PM&A can not reconcile the jail project cash total (fund
level) to the WCTO cash ledger (Pool) balance. The jail project cash account in JDE is
only one of the cash accounts that makes up the total cash balance in the Building Pool.
M&B is responsible for the monthly reconciliation of the individual fund cash account
totals from JDE to the appropriate cash ledger (Pool) balances from WCTO; PM&A rely
on this process. The $127,886 reconciling item referenced in the conclusion section on
Page 9 of the OAGs report is a result of a timing difference between recording the
sheriffs transition team costs in the jail fund for June 2013 and the settlement of cash in
July 2013.
OAG Response:
With the assistance of the Wayne County Treasurer Office (WCTO), we were able to
confirm with them the bond proceeds cash balance being carried by them at the end of
each month.
We are suggesting the cash bond proceeds recorded by the WCBA, QuickBooks and the
WCTO bond proceeds cash balance all agree with each other at the end of each month.
We were in fact able to perform this procedure for several periods and noted there was an
in transit transaction in the amount of $127,866 at June 2013. If this reconciliation
process had not been completed for the month of June 2013 the $127,866 difference
would not have been corrected on a timely basis.
There are three separate accounting systems in which the jail bond proceeds are recorded.
Our recommendation is for Pierce, Monroe and Associates (PM&A), who has delegated
38
authority to maintain the books and records over the jail bond proceeds, and M&B, to
request on a monthly basis from the WCTO a cash balance confirmation report from their
RESIQ2 system to ensure the actual cash balance reported by the WCTO reconciles to
both the recorded cash balance reported in the QuickBooks and the countys general
ledger.
Maintaining the WCTO cash-sub ledger reports within their reconciliation files will
validate all three accounting systems are in balance as of the indicated date.
Therefore, since the Administration was able to perform this reconciliation process for
the periods we tested, we find it difficult to understand a reluctance to agree with our
recommendation to confirm bond proceeds cash balances at the end of each month for all
three sets of books and records.
Payment-Drawdown Schedule
IV.
SUSTANTIVE TESTING TO VERIFY CONSRTUCTION COST

INCURRED THROUGH AUGUST 16, 2013
No Authorized Signatures
Allowable Mark-up Formalized
We recommend the WCBA immediately execute an amendment to the agreement
between the sub-consultant and AECOM to ensure all allowable mark-ups for subcontractors are in accordance with the amended contract.
Mark Up. AECOM and the County agree. If the County were proceeding with this
contract we would implement this provision. Please note, this would be an amendment to
the AECOM Agreement. We cannot amend AECOMs agreement with its subconsultants.
OAG Response:
The OAG agrees with managements corrective actions to amend the AECOM agreement
for sub-contractors mark-up allowances.
Invoices Processed Prior to Pierce Monroe & Associates
Lack of Control over Payroll Processing
Recommendation 2013-17 Control Deficiency
39
Adopt Wayne County payroll policy and procedures to standardize time reporting
by all independent contractors and employees working on the jail construction
project.
Enhance procedures for the accounting firm when validating requests for payment
and payroll expenditures so that additional reliability can be placed on jail
construction project costs recorded.
Ensure payroll expenditures are in accordance with allowable percentages of
annual wages that can be charged against jail bond proceeds;
Ensure a written signature be utilized by all supervisors approving time activity
sheets and that pay rates be reviewed before time activity reports are approved for
payment and,
Establishing a time reporting requirement for the submission of time reports from
individuals and independent contractors working on the jail construction project.
The WCBA does not have employees therefore a timekeeping policy is not
required to be adopted. The County employees provide services to WCBA and
follow the payroll policies and procedures of County. The three findings outlined
on page 115 of the report are addressed below:
Law Clerk time reporting The Department of Corporation Counsel provided two law
clerks who worked exclusively on the jail project. The law clerks follow the County
payroll policy and procedures and their time is inputted and tracked in People Soft.
However, we agree with the OAGs recommendation that the supporting documentation
from Corporation Counsel should be more formal.
Sheriff Transition Team time reports and Authorization signatures- We agree with the
OAGs recommendation. We will ensure that sheriff transition teams time requests are
submitted to WCBA on a monthly basis. Further investigation by M&B Accounting
indicated that although there was a stamp being used initially for the months April
through September 2012, that practice has been eliminated. Therefore, we view this
finding as an isolated incident.
We agree with OAGs recommendation and will establish standardized procedures for
time reporting to address the following.
Timely submission of payment and reimbursement requests
Uniform time reporting formats
Signature authorization requirements for Wayne County employees and
independent contractors
OAG Response:
The OAG concurs with managements intended corrective actions to standardize the
timekeeping procedures for all county employees providing services to the WCBA.
These measures should provide consistency and uniformity when reviewing and
approving reported work hours by county employees. We also would encourage the
40
WCBA Board to adopt through resolution, the countys Time Reporting Policy,
especially given the fact it adopted the countys Ethics Policy.
However, management did not address the recommendation to ensure allowable
percentages of employees salaries that are charged against jail bond proceeds are
validated by the external accounting firm responsible for payment. The OAG
recommends the accounting firm establish a mechanism to validate submitted payroll
requests from county departments and not place reliance on the department to submit
accurate payroll requests for their county employees.
Factors Contributing to Cost Overruns

There are points of clarification that must be made on each of these assumptions.
First, we question if you have inadvertently used the wrong dates in your report. You
have indicated that in April of 2011 cost increases were reported to the County. We
believe you may be referring to an April 2012 projection. This would be logical since:
OAG Response:
As noted in the comparative schedule column Cost Increase/ (Decrease) from April
2011, the cost increases occurred between April 2011 through February 2012. The OAG
acknowledges the reference period as of April 2011 will be changed in the draft report.
In addition, the OAG will be inserting a new column in the chart titled Projected
Estimated Project Cost - August 25, 2011 to reflect the estimated project cost as of this
date.
In addition, based on estimated project cost schedules provided by the Program Manager,
for the periods of August 25, 2011 and February 1, 2012, while estimated total project
costs were $342 million for both periods, the OAG will be revising some line items
within the chart presented in the draft report. (Ref: AECOM Budget Narrative
document)
1. The price for the site acquisition was not finalized in April of 2011. Estimates and
beliefs regarding final acquisition cost were possibly known. However, there
could be no cost projection sheet that would demonstrate this type of cost. The
purchase agreement and cost for the property was completed in May and
approved in July an agreement for the cost of the property had not been agreed
upon by April of 2011.
2. Again, estimates regarding site remediation costs on the site were probably
project, however the County had not acquired the property and had not started
remediation. This occurred in August of 2011. You have listed a specific dollar
amount that was not known in April of 2011.
41
OAG Response:
The OAG was able to identify from two separate sources the purchase amount for the
new jail site. The OAG reviewed the WCBA board minutes of April 7, 2011. At this
meeting, Special Counsel discussed the Ratification of Option-Exchange Agreement and
asked board members to ratify the agreement which he indicated had been signed by
Greektown officials and the CEO. The WCBA issued resolution #11- 009 that identified
the new jail site property being conveyed to the Authority with an ascribed value of $14
million. (Ref: WCBA Resolution #11-009 and April 7, 2011 meeting minutes)
The Program Manager provided a budget narrative as of May 2011 that stated the
county reached an agreement to purchase the Mudd site in April 2011Final purchase
price as negotiated was $14.5 million. Cost of remediation was preliminary estimated
at $5 million and added to the project budget. The Program Manager determined an
additional $19.5 million could not be absorbed in the construction costs and therefore
added these items to the budget. (Ref: AECOM Updated Budget Narrative - May
2011)
3. A training budget was neither adopted nor even presented to the County until the
summer of 2012. Furthermore, the Sheriff represented that training funds would
very likely be financed from grants, specifically from the National Institute of
Corrections.
OAG Response:
Based on a subsequent review of the Program Managers budget documents, the
OAG will revise the February 2012 Estimated Project Cost schedule line item related
to training costs for the Sheriffs Office. While nominal training costs were identified
in January 2012 of approximately $65,000 for the Sheriffs Office, the OAG concur
the training cost for the Sheriffs Office was more accurately projected in August
2012. (Ref: AECOM Meeting Memorandum dated Aug. 15, 2012 Sheriff
Transition Basic)
4. The County had neither agreed, nor accepted a price for CCIP until after the
Contract was negotiated and the CMAR had started seeking bids based on the
executed agreement. There are no documents to support this line item from April
of 2011. The CMAR had not even been selected. There could not be a document
that identifies a CCIP from April when the County had not selected or even
determined which type of insurance program it would utilize.
OAG Response:
The OAG partially agrees with managements comments related to the CMAR Control
Insurance Program (CCIP) insurance cost. For clarity, the CCIP insurance cost is
reflected as of February 2012 and not April 2011. The OAG agrees the county had not
executed the CMAR contract, however, the Program Manager, delegated responsibility to
keep the new jail construction cost project within budget, identified in its Projected Cost
Summary schedule as of August 25, 2011, a projected estimate of the CCIP/Builders
Risk insurance costs in the amount of $5.1 million. The CCIP cost along with other
42
identified insurance cost of $1 million totaled $6.1 million at August 25, 2011. This
amount will be reflected in a revised OAG Estimated Cost Schedule. (Ref: AECOM
Exhibit C1- Project Cost Summary)
5. The Transition Team, and its requested budget was not even brought to the
WCBA until the spring of 2012, again, we are unaware of where you have
developed these numbers.
OAG Response:
The OAG was able to identify from the Program Managers Project Cost Summary
schedule the projected cost related to the Transition Team. The Program Manager
identified as of August 25, 2011, a line item in its Projected Cost Summary schedule $1.8
million in projected transition costs for the Sheriff Team.
The OAG relied upon this information in its projection. In addition, the $1.8 million cost
for the Sheriff Transition Team was also identified in the Final GMP that was presented
to the county administration in June 2013 and has been consistently reported from August
2011 until June 2013.
6. You have identified a Jail Management System of $3.9 Million. This is not an
eligible cost. Additionally, this JMS system was scheduled to be purchased an
implemented in the current facilities. This was never an approved cost within the
Countys allocation and should not be reported as such.
OAG Response:
Based on a subsequent review of the Program Managers projected costs schedules, the
OAG will revise the Estimated Project Cost schedule as of February 2012 for the line
item Other Project Related Costs. This revision will remove any cost associated with
the Jail Management System.
You have indicated that AECOM has provided you with this spread sheet. We
understand that AECOM has a strong desire to mitigate its responsibility for the issues
that have occurred on this Project. We would ask the OAG to demonstrate that this was a
Cost Projection Sheet that was given to the County in April of 2011. We suspect that the
OAG has relied upon a document that was created several months later. If such a
document does not exist verifying that these numbers were presented to the former
DCEO, EDGE Director or the Owners Representative in April of 2011, then leaving it in
this current report is misleading and damaging to the County.
OAG Response:
During the course of our review, we requested and received various Estimated Project
Cost documents from the Program Manager, which had delegated responsibility to keep
the jail construction project within estimated cost. The numerous project cost documents
were dated from November 2010 until the suspension period in June 2013.
43
The OAG relied upon the information received from the Program Manager as the most
reliable given the fact we were provided evidence that the information was discussed
with county officials overseeing the project and the WCBA board members throughout
the indicated time periods.
Within the Countys possession, and as previously provided to the OAG are cost
allocation sheets dated May of 2011. This sheet indicates a $321 Million dollars. These
sheets and their numbers remained consistent for several months. For the sake of clarity,
the County will address the projected costs identified in these sheets excluding the City of
Detroit in the Project. These sheets identify the following:
$6 Million is attributable to ineligible costs that could not be covered by bond financing;
these included the demolition of County Buildings. A Project Contingency of $17 Million
An unallocated reserve of approximately $5 Million.
A total of these costs allowed the County to remain below the $300 Million Dollar
allocation.
During your engagement, the County has cooperated fully with providing you with
documents. We have provided for your review the project cost allocations sheets that
were created by AECOM in the fall of 2010. You will note that in these sheets AECOM
identified, site acquisition, remediation and other costs that are now being reported by
AECOM as costs that were not included in the original cost projections. We would ask
that you look at the following in the exhibits. See Exhibit C, AECOM Projections.
Site Acquisition- AECOM and the County engaged in very frank discussions in the fall of
2010 regarding the acquisition of the current mud lot where the Consolidated Jail is
currently being constructed. You will see that AECOM included differing costs for site
acquisition and preparation in their 2010 cost projections. Additionally, we have also
provided you with the presentation that AECOM presented to the Wayne County
Commission in a closed session in October of 2010. This presentation demonstrated a
proposal for both the Sheriffs administration building and the mud lot. A closed
session was necessary due to the negotiations for the acquisition. AECOM represented,
and the County relied upon such representations that acquisition of the mud lot would not
create additional costs. AECOM represented that since the size and footprint of this lot
was larger than a phased demolition of the Sheriffs Administration Building, acquisition
would produce some savings. It should be noted that Wayne County Commissioners
questioned AECOM on whether the acquisition of the Mud lot would result in additional
Project Costs. AECOM responded no. The acquisition provided a larger footprint for
construction therefore acquiring the mud lot would be cost beneficial or a no cost to the
County. Since the Commission erases such records we cannot provide you with the
discussions on this matter.
OAG Response:
The OAG reviewed Exhibit A Presentation and Best Practices dated February 13, 2011,
and a PowerPoint presentation to the Commission, dated April 5, 2011, on the new jail
44
project. As noted on page 18 of the presentation, anticipated Project Budget totaled $267
million which does not include the $33 million in bond issuance cost. The OAG also
reviewed Exhibit C, AECOM Price Projection which contained an E-mail dated
September 9, 2010, from the Program Manager that identified various project
construction housing models which range in project cost from $173.5 million up to
$289.7 million.
However, we were unable to locate any evidence related to the countys acquisition of the
mud lot and remediation costs within the two Exhibits. Further, we are aware that the
$267 million estimated project cost was signed and executed by the Program Manager on
December 22, 2010 in its Certificate of Program Manager that was used for the
issuance and sale of $200 million in WCBA bonds.
Cause
The OAG has stated within this provision that neither the Commission nor the WCBA
were made aware of the potential costs on the project. For the sake of clarity the County
will respond to the documents that existed at the time which indicated that the project
costs were potentially $321 Million Dollars without the City of Detroit. As explained
above, these costs included ineligible bond costs and project contingencies that would
keep the budget below $300 Million.
OAG Response:
We fail to understand what difference it makes whether the costs are being paid from the
bond proceeds or other sources. We believe this cost still should be reported as part of
the jail construction overall projected costs.
We have also provided clear documentation that the County did not execute contracts
above $272 Million Dollars. Attached for your review are two spread sheets. One
showing the executed agreements, which include legal, site acquisition, CMAR,
AECOM, etc. These were costs incurred by February of 2012. The second exhibit
shows the current executed contracts. See Exhibit E, Contracted Costs
OAG Response:
We agree with your assertion that actual contract costs are less than $300 million to-date;
however, it still does not negate the fact that the current budget for the construction of a
2,000 bed facility is projected to be at least $342 million in August 2011 and February
2012.
County officials never exceeded their delegated authority. Additionally, the County
wrote into the First Amendment of the AECOM Contract that AECOM was bound to
design the new facility within the budget.
OAG Response:
The OAG reviewed the First Amendment to the Program Managers contract, Exhibit A,
and found as of May 17, 2011, estimated project costs totaled $321 million, of which
45
$6.4 million was considered ineligible cost. Therefore, estimated project cost netted to
$315 million, which exceeds the authorized $300 million in bond proceeds at this time. In
addition, the Amendment requested the Program Manager to include construction cost
estimated at $17 million for including the city of Detroit Processing Center. Adding the
citys construction costs to the total estimated project costs, the project totaled $332
million. Based on comments from the Assistant CEO, it was not until May 2012 that the
County was informed by City officials that they would not be partnering with the county.
In March of 2012, AECOM provided a Cost Project Sheet to the County that they could
continue to meet the $300 Million Dollar allocation. See Exhibit H.
Finally, in November of 2012 there is correspondence from the CFO that clearly states
that regardless of the issues that may have arose; the County was not releasing the
CMAR or AECOM from constructing a facility within the $300 Million Dollar
allocation. See Exhibit I, CFO Correspondence.
All of these documents clearly demonstrate that the County expected, and relied upon
AECOM to stay within the $300 Million Dollar allocation.
OAG Response:
Despite the expectation of the Administration, the reality still exists that there is
communication from both contractors, AECOM and Walbridge-dck, that the construction
of the jail could exceed the Countys cost expectations of $300 million as of August 2011
and February 2012.
It is inaccurate to state that a total budget should have been provided in August of 2011.
This issue was discussed. It was represented to the Commission that the CMAR contract
provided that a total budget would be provided when the final GMP was completed. It is
a term written into the CMAR contract that was approved by the Commission.
Information was not withheld and should not be presented in manner that shifts the
responsibility from AECOM to the County.
The implication is that County individuals had a belief that the project would exceed the
Bond allocation. That is a misstatement of fact. At the onset of any construction project,
there is a reasonable concern that final construction will exceed an AGREED UPON
budget. In the Fall of 2010, County individuals prudently had this concern. They
continued to have the same concerns when the CMAR contract was approve in
September of 2011 and February of 2012.
OAG Response:
We see no evidence that key administrative officials communicated to the governing
bodies in either instance that the 2,000 bed jail facility could exceed the $300 million
based on projections from the Program Manager.
But the facts do not demonstrate that these concerns were withheld from the Wayne
County Commission or the WCBA. Instead the facts demonstrate that in March of 2012,
46
AECOM was attempting to comply with the terms of its agreement and construct a
facility that was within the $300 Million allocation.
OAG Response:
The OAG points to the fact that the CMAR contract, presented to the Commission and
the WCBA on September 1, 2011 was in the amount of $220 million. This amount solely
represented the construction or hard costs for constructing the jail.
However, as projected by the Program Manager and discussed with county officials, the
total (both hard and soft costs) estimated cost of the project at August 25, 2011 was $342
million. The OAG maintains that the oversight bodies should have been informed that
total cost to complete the jail was estimated at $342 million at that time, based on the
intended design of the jail and cost projections, prior to a request to approve the CMAR
contract which represented more than 73% of the total jail construction budget.
The Approving boards should refrain from approving major capital improvement
contracts without requiring a budget be presented to construct the entire project, not just
the brick and mortar.
Views From Responsible Officials.
Agreed. Despite the gross inaccuracies within this report the County believes that
budgets should be created in a timely basis. However, we would again point to the
documents that you were provided in your engagement, and we have attached some of
these to emphasize the facts. The County consistently requested, required and expected
AECOM to provide a final budget within the $300 Million Dollar allocation. . We would
agree a more substantive policy regarding capital projects, financing, and budgets be
developed. We would conclude that this would appropriately be developed within the
capital improvement plans that are submitted to the Wayne County Commission. We do
not disagree with submitting budgets in their entirety. A budget was not available until
the GMP was established in May of 2013.
OAG Response:
AECOM
Walbridge-dck Joint Venture
Legal Fees
Point of Clarity, pg 126. We disagree with the statement that AECOM reported to the
Oversight Committee and not the WCBA. AECOM met and INFORMED the Oversight
Committee regarding progress on the project. The contract executed by AECOM clearly
demonstrates that they had a duty to report to the WCBA. Providing information to the
47
Oversight Committee did not relinquish AECOM of its responsibility. The County was
entitled to be kept informed on what was occurring on the Project. We would suggest
that this statement be removed, as it misleads the reader.
OAG Response:
The OAG disagrees with management presentation of the facts. During the referenced
time period, AECOM acted in the capacity as the Owners Rep for the WCBA and as you
acknowledge, they had a duty to report to the WCBA. The fact of the matter and the
OAGs assertion is that AECOM had a fiduciary responsibility as the Owners Rep to tell
the WCBA that based on current drawings the project would be $42 million over budget.
However, the OAG will consider revising the sentence to read as Owners
Representative, they held on-going discussions with the Oversight Committee on the
progress and cost of the jail project, which included written projected cost estimates
(Ref: See AECOM Meeting Memorandums).
Point of Clarity, pg 127. Area D was the area being planned for the City of Detroit. Area
F was a request made by the Wayne County Sheriff to explore the possibility of
expanding the new jail to a 2,400 bed facility.
OAG Response:
The OAG agrees to make the revision to the report.
Point of Clarity pg 130. We strongly disagree with your assertion that Bond Counsel
should be considered part of the legal fees for project costs. Bond Counsel is a Cost of
Issuance. Their fees are paid and accounted for as part of the issuance costs. This is a
practice that cannot change. You are asserting that they are part of the legal fee budget,
when their fees have already been accounted for under the issuance costs. We cannot
count them twice, and we it would be fiscally irresponsible to attribute them to on-going
legal fees.
Correcting this issue within your report is important and certainly demonstrates that the
legal fee budget is different than reported.
Please note that legal fees were anticipated to be front loaded. Use of outside counsel for
real estate matters and construction contracts were anticipated to be relatively complete
by the time the Initial GMP was completed. Kotz Sangster invoices have been
dramatically reduced since the creation of the Initial GMP Contract.
Dawda Mann invoices are above expected projections due to the Parlovecchio lawsuit.
However, as noted earlier in your report, these are not being paid out of the bond
allocation. Therefore, your number should be re-adjusted for Dawda Mann Contract.
OAG Response:
The OAG identified a line item budget for issuance costs that included expenditures
made to the law firm Miller, Canfield, Paddock & Stone as bond counsel. The OAG will
48
revise the draft report and remove the law firm from the legal fees analysis. (Ref: see
PM&A line item budget for Issuance cost & supporting schedule)
The OAG will revise the legal fee schedule to reduce Dawda Mann legal costs by
$42,467 related to the on-going Owners Representative lawsuit. According to Special
Counsel to the WCBA, these costs were paid from the WCBA General Operating Fund
which was generated from parking lot proceeds prior to starting construction on the jail.
(Ref: Litigation Cost section of report)
We recommend the WCBA execute a contract for all legal service to ensure the scope of
services is specific to services to be performed and billed. Also a purchase order should
be issued for all services rendered and charges be made against it.
Legal Contracts. 2013-11 and 2013-19 are the same issue. We would stand behind our
answers in direct response to the same concern.
As previously noted in M&Bs response to Recommendation XX the WCBA deemed it
would be more cost effective to use a voucher process in conjunction with the contracts
rather than using a purchase order system.
OAG Response:
It is important to note that WCBA has issued numerous contracts related to construction
of the jail and the use of a purchase order system prevents the processor from exceeding
the contract amount. This limitation does not exist with the use of a voucher system as
being recommended by the Administration.
Accounting Fees
Recommendation 2013-20 Operating Deficiency
We recommend the WCBAs Chief Administrative Officer consider executing a flat fee
contractual arrangement for service contracts related to the Jail Facility Construction
Project in order to better control costs.
The Chief Administrative Officer already had entered into discussions with PM&A for a
flat fee engagement before this engagement as she understands the benefits that can be
derived from such an arrangement. Although these fees might seem higher at the
beginning of an engagement, sometimes flat fee rates often come in lower than a
comparable hourly rate, particularly if the firm assumes all risks. All discussions about a
fixed fee arrangement came to a halt with the suspension of the jail project. Depending
on the plan for the jail project going forward, the Chief Administrative Officer will
resume those discussions with PM&A.
49
OAG Response:
The OAG concurs with the intended corrective actions and has no response to
managements comments.
Cost During Suspension Period
The Jail Project is at a critical stage and we recommend going forward, that the WCBA
as the Owner of the Project require written reports on the status of the construction of the
new jail facility as well as participate as decision makers in any other proposed actions
that are currently being considered by the executive branch.
Also we are suggesting that a separate accounting be maintained of all cost incurred
during the construction suspension period to determine if the cost is eligible to be paid
from bond proceeds
Written Status Reports. This recommendation regarding written reports is similar to the
recommendation in 2013-5. We would have you refer to that section. In regards to the
second clause regarding the WCBA remain as decision makers on the Project, we do not
disagree, but would clarify that under the Building Authority Act, the participation and
agreement of the Commission on certain items cannot be ignored pursuant to Michigan
Law.
The jail project was suspended in early June 2013 and WCBA had not incurred any
suspension costs until the middle of July. During this period, WCBA administration was
still in the process of discussing and formulating procedures on tracking and evaluating
suspension costs for bond eligibility. Since then specific procedures have been
established and separate accounts have been set up in Quickbooks (financial application
for the jail project) to track the suspension costs.
OAG Response:
The OAG has no response to managements comments.
Options on Construction of Jail

Point of Clarity- pg 138. The County appreciates the OAGs thoughts on how
construction could possibly proceed. However, certain thoughts have not been fully
explored by the OAG.
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The County is only considering a construction on an alternative site if a new

criminal court is included. Therefore, it should not be expressed that future
construction on a new site would not include a criminal court.
Any public private partnership will be reviewed and approved by underwriters,
similar to a bond transaction. We believe these options should be explored.
However, based on the City of Detroits bankruptcy and the Countys financial
condition, it is extremely doubtful that the County could obtain a P3 arrangement
without some assurance from the State to the private entity.
The Sale Lease Back of 600 Randolph was similar to a P3. As stated above it
would be explored.
CGL is an excellent company. However, the RFI that was issued was not specific
to a P3. The OAG is suggesting that the County conduct a negotiation for a nobid contract. We could not support this conclusion.
OAG Response:
In the report, the OAG stated the CGL proposal should be re-evaluated if the
administration decides to pursue a public-private partnership arrangement to build the
jail. The OAG did not suggest the county conduct negotiation for a no-bid contract
We share the same concerns expressed by Commissioern Price regarding the need for the
Administration to at least evaluate the CGL proposal to build 2,600 bed facility;
especially, since it appears to be consistent with the goals and objectives of the county.
The OAG needs to re-consider its statements regarding the collection of property
taxes and a lease. Any lease the County executes would require it pay property
taxes. A prudent owner understands their expenses and would ask the tenant to
assume such expenses. This implied cost benefit would not be realized.
OAG Response:
The Wayne County Assessor cautioned us that this property is located in the Downtown
Development Authority (DDA) district; therefore, special tax incentives can be offered to
developers by the city of Detroit Economic Development Corporation in which the
county has no control over. Consequently, the situation could change in the future.
The County, as always, will address the needs of a criminal court with the
assistance of the Third Circuit. We would disagree with the OAGs assertion that
the consent decree provides the court with certain decisions that currently rest
with the County pursuant to Michigan Law. We would ask that the OAG reexamine these statements. We are more than willing to engage in conversations
regarding this matter.
OAG Response:
Although the Administration is now talking about a criminal court there is no real
evidence how it will be financed and when it will be actually built. Therefore, until plans
are brought forth, we contend this should be one of the major factors in determining
51
where the consolidated jail will be located. At present, the criminal court facility is
located directly across the street from the consolidated jail.
The Commission and the WCBA should encourage the administration to perform a
financial feasibility study and in order to explore other means to finance the construction
of the jail in order for the Project to be completed at its existing site and avoid the
necessity to abandon the Project where over $533 million tax payers dollars are already
invested and obligated over the next thirty years.
Views From Responsible Officials:
The County does not disagree that any and all options should be considered in the
completion of a new jail facility. However, due to financing restraints, the County can
only proceed with assistance from the State of Michigan. Therefore, these options will
have to be explored through the State.
OAG Response:
We agree the county needs the State of Michigan assistance and approval; however, we
suggest in this instance as prudent decision makers, the county needs to set its own goals
and objectives and independently evaluate if they are consistent with the State of
Michigan and proceed accordingly.
REVIEW DOCUMENTS TO SUPPORT THE AUTHORIZATION AND
APPROVAL OF ALL CHANGE ORDERS BY THE PROJECT OWNERS
We recommend that formal change order policies and procedures be adopted by the
WCBA to include, but not be limited to, those that may require Wayne County
Commission approval before the change order is formally approved. Also, all change
orders should be evaluated to determine the impact they on the contracts price and, if
any the contract should be amended to reflect the change.

Change Orders. We Disagree. A change order and its methodology is a contract term. It
will be different based on the size and the scope of the project. If a change order
increases the CMAR contract, we agree, by law its contract must be amended. A policy
will not change this issue.
OAG Response:
Without argument, we are clear that a contract will supersede any policy that is adopted
by the Administration. Policies and procedures are meant to outline administrative
52
directives and processes to be followed to accomplish a particular objective. Policies and

procedures are primarily developed to provide for direction, uniformity and consistency
in carrying out a particular function.
We agree that a clearer role regarding Commission approval on Change Orders should
occur on capital improvement projects. If change order reduced the scope of the facility,
but left the cost for such facility at the same contracted price, this type of Change Order
should be submitted to the Commission. This would be a change in the CMAR contract.
As each capital improvement project is approved by the Wayne County Commission,
there should be some agreement regarding change orders. It would not be appropriate to
exclude the Commission. As stated earlier, issues such as these are best addressed
through the Countys Capital Improvement Plan that is presented to the Commission.
There can be policies created by the County either by ordinance or as adopted by the
Purchasing Department that could create some parameters regarding this concern.
However, we dont want to mislead the OAG. It is reasonable to expect that a Contractor
will want the change order process to be stated within the contract, not by reference to a
policy.
OAG Response:
It is the Administrations responsibility to develop policies and procedures not the
Commission. However, we acknowledge and appreciate that the Administration agrees
with the OAG that a clearer role regarding the Commission approval of changes should
occur.
The OAG has stated within their report that this change order process is identified in the
contracts. As stated on pages 141 and 142 of the OAG report the contract is clear
regarding the process and steps that both the CMAR and the Program Manager must take.
1. The CMAR was to submit documentation to the Program Manager.
2.
The Program Manager was to review and ensure that appropriate documentation
existed regarding the request for such change order
3.
If the Program Manager believed such change order was justified based on the
documentation, the WCBAs approval would be needed.
What is not documented within the Contract, but exists pursuant to the Contract of Lease
is when change orders have to go back to the Commission for approval. If a change order
increased the cost of the CMAR contract, it needed Commission approval. The WCBA
only had delegated authority for a $220 Million. Any change order exceeding $220
Million would have needed Commission approval, along with authorization for funding.
We believe addressing each of these issues in substantive manner prior to the
authorization of a capital project would be beneficial.
OAG Response:
After reviewing the Contract of Lease, the OAG could not confirm managements
statement regarding the Contract of Lease including language that allows for the change
orders having to go back for Commission approval. Since management infers this
53
provision exists pursuant to the Contract of Lease Agreement, the OAG would
recommend the Contract of Lease be amended and the Commission approval of change
orders be formalized into the contract.
PERFORMANCE OF PROCEDURES DESIGNED TO IDENTIFY UNUSUAL
AND/OR QUESTIONABLE TRANSACTIONS
Litigation Costs
Unallocated Cost to the Jail Project
Point of Clarity Pg. 145 Parlovecchio Building, Inc has not sued the County, they have
sued the WCBA. The County is not a named party.
OAG Response:
We agree the lawsuit is against the WCBA and not Wayne County and we will make the
change.
We recommend the Department of Management and Budget establish a policy that
county employees working for the WCBA and on the Jail Facility Construction Project
record the hours worked and allocate their personnel cost to the WCBA in order to be in
compliance with the OMB.

Payment of County Personnel. The County is not in violation of OMB Circular A-87, as
it relates specifically to federal grants and contracts. Currently, the Department of
Management and Budget is in the process of developing a policy that will address
services provided to all component units and reimbursement to the county for those
services. County personnel are keeping track of their hours. For example, Special
Counsel to the WCBA tracks all of his time in the Countys Pro-law system.
OAG Response:
We noted that the county has over $90 million in federal grants and used ARRA
(federally subsidized bonds) to finance the jail project with an interest subsidy of more
than $169 million.
OMB Circular A-87 requires cost to be allocated on an equitable basis and be based on
benefit being derived. Therefore, since direct and indirect cost is allocated to federal
grants, we believe the failure to properly allocate these costs posses the risk of the federal
regulatory agencies determining our allocation plan does not allocate costs in an equitable
manner.
54
The OAG concurs with the Department of Management Budget that developing a policy
to address reimbursement to the county for services provided to component units by
county employees, including those working for the WCBA and on the Jail Facility
Construction Project as they record their hours worked.
ADOPTION AND APPROVAL OF BUDGETS
Require the Administration to prepare a written budget for WCBAs general operating
fund to be presented for adoption and approval by the board on an annual basis.
Develop and adopt a realistic capital improvement budget for the construction of the jail
and amend it whenever increases/decreases become known or prior to expenditure being
made.
Adopt policies and procedures that require a capital improvement budget be required for
projects over a certain dollar threshold.
The jail construction project is part of the WCBAs capital projects fund and not the
general operating fund. The Michigan Uniform Budget manual does not require WCBA
to adopt a budget for capital projects nor does the Governmental Accounting, Auditing,
and Financial Reporting (Blue Book). The County believes the budget manual and Blue
Book to be guidance on best practice.
OAG Response:
An email from the auditing firm of Plante Moran confirms that if there is a general
operating fund balance in the Capital Project fund exists and it is not labeled under
GASB 54 as Capital Projects and any remaining activity in a fund reported as a general
fund should be budgeted in the future.12
However, prior to the jail bond issuance, a preliminary cost estimate was prepared by
AECOM, the program manager firm and presented to the Wayne County Commissioners
and the WCBA Board. During the course of the jail construction project, this cost
estimate was regularly reviewed and revised by AECOM and later by the Jail Oversight
Committee.
OAG Response:
We agree there were numerous jail construction estimated cost projections prepared by
the Program Manager over the construction period. However, from a practical viewpoint,
we believe a capital improvement budget should have been adopted for the jail and this
would have identified any funding gaps early in the construction phase of the jail.
12
Email form Plante Moran dated August 8, 2013.
55
This cost estimate served as a working budget and was never finalized. However, we
agree with the OAGs recommendations for adopting a general operating fund budget
although we do not agree that the general operating fund has $50 million available for
budgeting. The revenue generated at September 30, 2012 was $1.5 million. We also
agree with establishing procedures that require capital improvement budget for certain
dollar thresholds.
OAG Response:
We have stated that the WCBA government fund statements report an unrestricted
General Operating Fund balance of $213,000 as of September 30, 2012, and the
remainder is reflected as deferred revenue and other liabilities as of September 30, 2012.
Based on notes to the financial statements $49.2 million in deferred revenue represents
the future rent collections expected from the lease of certain facilities to other
governmental agencies. The audited financial statements state these funds will be used to
service the debt.13
Conclusion
We offer this conclusion only as a matter of clarity, and not in response to the Auditors
titled section regarding conclusion.
The inaccuracies within this report and the manner in which they are presented are
damaging to the County. The Countys Chief Financial Officer contacted and requested
that the OAG review the Project. This decision to engage the OAG was to be done in
conjunction with an independent architectural firm who could provide reports on issues
that occurred on the development of this Project. The County CFO provided an
engagement that requested the OAG to review financial issues associated with the Project
and assure the public that no fraudulent payments had been made and all public funds
were accounted for.
OAG Response:
We have gone through the entire memorandum submitted to the OAG alleging to
numerous inaccuracies and have found only a few instances where corrections are
required to be made to the report. And in the interest of accurately reporting the facts, we
have gladly made those changes.
The majority of the other changes were primarily due to opinions and conclusions
reached by the OAG and based on the information attached as exhibits did not meet our
criteria to warrant a change to the findings\recommendations.
13
WCBA audited financial statement dated September 30, 2012.
56
It is true that the county CFO did enter into an Agreed Upon Procedure engagement with
the OAG and we did not find any fraudulent payments had been made and all public
funds appear to be accounted for.
The Hubbel Roth report is clear. It provides an unbiased statement of responsibility and
identifies areas where the County must accept some responsibility. It clearly states areas
where the Countys vendors have not fulfilled their duties. In comparison, the Countys
Legislative Auditor General provides a narrative report that clearly examines the issues
and then utilizes documents which shift the responsibility to the County.
OAG Response:
The OAG report followed GAGAS and AICPA auditing standards which are designed to
provide for an independent and objective opinion as it related to a review of internal
controls, compliance with laws and regulations, construction cost incurred through
August 16, 2013, and approval of change orders and budgetary issues.
Because the auditing standards require the independent auditor to perform engagements
based on risk, it would violate the standards to not identify risk and perform work in
those related areas during the course of performing the engagement. Therefore, there are
numerous factors that determine the work being performed for a particular engagement.
Even more disturbing the Auditor indicates that he will not allow the County to view,
comment or clarify such documents until a later date. The County acknowledges that the
OAG has provided Recommendations that the County believes would be useful. In
addition the County believes the Hubbell Roth report was extremely beneficial in
identifying areas and actions in which the County now can proceed to obtain a remedy
for the actions that were taken. The facts and documents within the Auditors possession
clearly demonstrate that the County never exceeded their delegated authority. An
overview of the facts and documents are necessary.
OAG Response:
It is customary during the closing conference for the OAG to review the detail to support
findings with the auditee; however, the Administration elected to provide a 37 page
memorandum with responses to the OAG and suggested they be reviewed and meet later
for discussions, if needed. Because of their request there has been an opportunity to
provide detailed documentation to support those findings that are in question by the
Administration.
The County had AECOM meet extensively with stakeholders in the fall of 2010 to
ascertain the programming for the facility. These results were documented, utilized and
employed best practices. Presentations were given to the Commission. The Sheriff
signed an MOA agreeing to a formula to demonstrate his need to create a cost savings on
the Project.
57
OAG Response:
We cannot comment on this assertion because since we were not provided with the MOA
agreement.
OAG Position: The County did not complete its due diligence prior to the issuance of the
bonds.
The County asks and receives Cost Allocation sheets. It reviews such sheets and adds a
term to AECOMs contract that it must design within the allocation. It only authorizes
contracts up to the $300 Million Dollar Allocation. It receives a Cost Allocation Sheet
demonstrating that the Project can remain within budget in March of 2012. The CFO
sends correspondence to AECOM and Walbridge in November of 2012 informing them
of the need to design within the $300 Million Dollar Allocation.
OAG Response:
We agree there were attempts, as well as contract language designed to keep the jail
construction under the $300 million threshold; but, the Administration was not successful
in this endeavor.
Despite the efforts to control cost, we believe the Administration lacked the experience,
qualifications and skill sets required to successfully complete a public capital
improvement project of this size. Until recently, there was no one on the Administrative
team who possessed the skill set to effectively manage the consolidated jail project.
OAG Position: The Cost Allocation Sheets should be considered notice. The County
should have stopped the project upon receiving these estimates. The OAG also utilizes a
cost allocation sheet for April of 2011 that lists items that were not even known on that
date. OAG shifts the contractual obligation given to the Countys vendors and produces
a report that places the responsibility on the County.
OAG Response:
Our reference to the April 2011 date was in error and the OAG should have referenced
August 25, 2011 this correction has been made in the report. However, it still does not
rectify the fact that once a funding gap was identified key decision makers should have
been timely notified.
The WCBA is a financing entity allowed under Michigan Law. It cannot exceed its
delegated authority to bond or construct a facility beyond those duties that were given to
it by its incorporating unit. Michigan Law is clear regarding the limitations of a building
authority in its ability to finance.
OAG Response:
Despite the statement being made by the Administration, it still does not negate the fact
that language exists in the contract of lease that states: In the event there are not sufficient
funds the WCBA has the authority to issue additional bonds. Also, this same concern was
58
raised by Commission Counsel in a communication to the Administration in November

2010.
OAG Position: The OAG prepares a report indicating that bond documents created and
explained by a nationally known bond firm were crafted in a manner to purposely expose
the County to risk and empower the WCBA to exceed their statutory duties.
OAG Response:
Since there appears to be conflict between State law and the contract of lease, we suggest
this difference between Section 11 of the document be correctly aligned with State law to
address our concerns.
4.
The County ultimately has responsibility for the use of the facility and for the
actions of the WCBA. The County creates a committee of County staff to keep itself
informed on the project and create venue for issues to be discussed
OAG Response:
The creation of the Oversight Committee appears to be a good idea, we are just concern
that notes\minutes were not taken at these meetings and written reports were not shared
with the WCBA board.
OAG Position: The Oversight Committee was an entity that purposefully attempted to
usurp powers that were vested with the WCBA. The OAG shifts the contractual
responsibilities of AECOM to review and present issues regarding change orders to the
WCBA and suggests that the creation of a committee of County staff impeded AECOMs
contractual responsibilities. We question whether the OAG would have found a negative
finding in the alternative if the County had not created a committee in which to ensure
they were being kept informed on the project. The report portrays the Oversight
Committee of somehow directing AECOM not to fulfill its contractual duties.
OAG Response:
Since we found instances in which written status reports resulting from the Oversight
Committee meetings were not timely shared with the WCBA board, it leads one to
conclude as to the motive why transparency and open dialogue did not exist between the
committee and the board. Also, we still contend it was the responsibility of the Oversight
Committee and AECOM to keep the WCBA board informed as to the various issues and
challenges with the jail construction project.
At Commission Meetings, WCBA meetings, and the Commission Jail Task Force,
County staff remained cooperative and open regarding any and all communication or
information on the Project. County staff additionally met with Commissioners to discuss
the possibility of expanding the facility to a larger scope. A recommendation the OAG
also asks to be considered.
OAG Position: The OAG implies that staff members purposely wanted to withhold
information. It is obvious that there is no apparent gain for any staff member to withhold
59
information. Instead, as stated repeatedly, the County never waivered its expectation, nor
did it engage in any behavior that exceeded the delegated authority.
OAG Response:
Since this matter is under investigation by the PAO, we must refrain from commenting
on it at this time.
We would respectfully ask that the OAG look at these issues and the facts presented from
the Countys prospective. There are recommendations provided by the OAG that are a
benefit to the County. However, the narratives leading to these recommendations
definitively present an outlook that damages the Countys ability to enforce its rights and
remedies under its contracts.
OAG Response:
It is our intent to report that facts based on work performed and we have no desire to
impair the countys right and remedies under its contract.
The County has provided documents and explanations that clearly demonstrate that staff
members consistently enforced the terms of the contract and did not exceed the $300
Million Dollar allocation in its contractual obligations.
60

Wayne County Response To Jail Audit

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Wayne County Response To Jail Audit

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Wayne County Memorandum

Wayne County Legislative Auditor General

AGREED UPON PROCEDURES PERFORMED

Governance and Board Independence

State and Local Government at 100.

AICPA Professional Standards (June 1, 2012) 101.51

Consequently, the Auditor has failed to provide direct evidence to demonstrate

The WCBA prior to beginning a major construction project, stakeholders

Views from Responsible Officials

when there is a disagreement/dispute and not have it predicated on work actually

Views From Responsible Officials

Wayne County Building Authority Board of Commissioners pg 64

We recommend that monitoring of the consolidated Jail Facility Project be entrusted to

COMPLIANCE WITH THE CONSTRUCTION CONTRACT, THE DAVIS

Views From Responsible Individuals

Rule #8 Full-time Required: If workers must devote full time to employers

In regards to the recommendation for a sub-committee, we would agree that such a

CMAR Contract- The Commission originally planned an August approval date. We

Views From Responsible Officials

Yes, however since it is a construction project, it is mentioned in several

Section 7.1.3 If CMAR elects to subcontract any portion of the Work

Sheriffs Transition Team

SUSTANTIVE TESTING TO VERIFY CONSRTUCTION COST

Factors Contributing to Cost Overruns

Options on Construction of Jail

The County is only considering a construction on an alternative site if a new

Views from Responsible Officials

directives and processes to be followed to accomplish a particular objective. Policies and

Views From Responsible Officials

Email form Plante Moran dated August 8, 2013.

WCBA audited financial statement dated September 30, 2012.

raised by Commission Counsel in a communication to the Administration in November

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