The Carroll County Public Service Authority (PSA) has rescinded a controversial Conflict of Interest Policy it adopted during its March meeting and will now consider a new, narrower policy relating to inspection service providers. Carroll PSA Chairman Dr. Tom Littrell explained that the March policy was originally adopted because of work provided by Nehemiah Engineering. “Nehemiah Engineering has worked from August 2009 to the present for the PSA to provide third party inspection services,” Littrell said. “In essence, Nehemiah Engineering is the eyes and ears of the PSA as associated with contractors on building out water and sewer lines in Carroll County.” During that time period, the Carroll PSA has contracted for more than $18.4 million of projects that Nehemiah Engineering has been involved with including the Fancy Gap Water and Sewer. After the Fancy Gap project started, Nehemiah asked for additional funds above what they had contracted to do the inspection work, Littrell said. Representatives from Nehemiah attended the Jan. 9 PSA meeting and met with staff on Jan. 20 to once again ask for additional funds for the inspection services that Nehemiah had won contracts on. In both instances, the request was rejected. “Once the Inspection services were bid, the price was set by Nehemiah Engineering then there could be no adjustment from the PSA unless the scope of the project changed by expanding the project,” Littrell said. “In reality, the project was reduced and therefore the pricing of Nehemiah Engineering could have been reduced as well.” Littrell said at the pre-construction conference for the Fancy Gap project, there was a discussion between one of the contractors and Nehemiah where the contractor asked Nehemiah to prepare an Erosion and Sediment Plan for them for the Fancy Gap project. Nehemiah asked the county engineer if this would be allowed and before there was an answer, the Executive Director of the PSA said that the inspection service provider (Nehemiah) could not be working for contractors on the same job. “If this had been allowed, the PSA eyes and ears for the project would have been working for the contractor they were inspecting and it would have presented a clear Conflict of Interest issue,” Littrell said. Again on Feb. 27, Nehemiah asked the county engineer to work for another contractor of the Fancy Gap project to do a “blasting survey.” “Again, this appears to be a Conflict of Interest in that Nehemiah Engineering is inspecting the work of this Contractor as well,” Littrell said. After the second request, Littrell said the PSA instituted a Conflict of Interest Policy on March 12 regarding contractors providing services to the PSA. The policy stated that the PSA requires contract providers, including their subcontractors, under contract to the PSA to adhere to certain guidelines. Four days later, it was brought to the attention of the PSA by Nehemiah that the adopted policy was too broad and had the potential of shutting down the Fancy Gap project. After consultation with the PSA Attorney and PSA members, Executive Director Gary Larrowe placed a hold on policy until the Authority’s April 9 meeting. “The placing on hold by the Executive Director was clearly in his scope of duties since the policy could have been interpreted as too broad and unwanted consequences could have been had as a result,” Littrell said. “On March 17, Nehemiah Engineering started a protest of the Executive Director’s discretionary decision to place the policy on hold, however Nehemiah Engineering had asked for the policy change. Again, Nehemiah Engineering was notified that with legal consultation and comments from the PSA members, the policy was placed on hold until the April 9 regular meeting of the PSA.” After consulting with VDOT on how they treat their contract inspection services, Littrell said the PSA drafted a new proposed policy for consideration at the April PSA meeting. The new policy states that inspectors and companies providing services for the PSA must exercise independent judgment to ensure that the work being performed by any contractor performing work for the PSA is of the quality and quantity required by the contract and meets the highest standards of the industry. “Gifts, gratuities, favors, remuneration or promises of future remuneration of any nature shall not be given or offered by a PSA Contractor to any Inspection Service provider or any employee or subcontractor of any Inspection Service provider performing services for the PSA,” the proposed policy states. PSA member James Light wanted to know the difference between the first policy and the new proposed policy. PSA Attorney Jim Cornwell said the previous policy related to any contractor. The new proposal relates only to relationships between inspection service providers and contractors regarding inspections. “This is basically putting it into policy,” Cornwell said. PSA member David Hutchins said the new policy would basically prevent a company from inspecting its own work. It wouldn’t prevent a company from designing something for another party. Light said the PSA doesn’t want to be wrongly accused of anything, so having a policy up front is a good thing. He said he received a lot of complaints on the first policy, however, and thought it needed a lot of work. He said he still needed time to review the new proposed policy. Authority member Sam Dickson said the PSA immediately realized the first policy was too broad based on the feedback it was receiving. Cornwell said if the PSA took no action, it at least needed to rescind the previous policy. Hutchins said he thought a policy was needed and he thought it was a step in the right direction. Regardless, he said the PSA might want to look over the new policy for a while before voting on it. Light then said he would like the PSA to rescind the first policy and table the new proposal until it can be determined if any more issues need to be considered. Dickson seconded Light’s motion, which passed unanimously. Nehemiah’s Response Nehemiah Engineering President Jeremy Hendrick said following pre-construction meetings for the Fancy Gap Water/Sewer Project and understanding the workload, he consulted with Dana Phillips of the PSA concerning the desire to use up to five inspectors at maximum work load. A few weeks later, he said the company was notified that the number of inspectors would be limited to two due to an error in the budgeting process that didn’t provide sufficient funds for the projected amount of inspectors. He said Nehemiah expressed concerns to the PSA on Jan. 9 about the adequacy of two inspectors on a project with six contracts, five general contractors and up to 11 crews working simultaneously. “The concerns expressed by Nehemiah Engineering stemmed from an ethical obligation that a professional service provider is held to. The request was not for additional funds above what Nehemiah Engineering, Inc. was contracted to do,” Hendrick said. “The inspection services contract held by Nehemiah Engineering with the PSA is a fixed hourly rate for inspection of $34 an hour. The projects do have a budget associated with inspection. The amounts budgeted for Fancy Gap would only allow Nehemiah to use two inspectors.” At the request of Hutchins during the January 9 meeting, Hutchins said he met with PSA staff on Jan. 20 to further discuss the inspection budget. He said he requested additional funds from the contingency be moved into the inspection budget to allow for additional inspectors. “Dana Phillips told me that a work order would have to be completed and approved by Rural Development (RD) to allocate some of the contingency funds to the inspection budget. She stated that RD would never approve it at this time,” Hendrick said. “Knowing this, I asked that PSA staff and I be conscious of the contingency so later in the project we would be able to do a work order to cover additional inspection if needed. Dana and Jessica both agreed and also said that if I needed another inspector at this time that we could add one. As additional work crews began, Nehemiah moved a third inspector to the project who is only working part-time.” Hendrick said the reduction of the project was the result of inadequate funds available to complete the project in its entirety and a reduction was made in the linear feet of utilities to be installed. The same number of contracts, contractors, and crews still remain but the term of work may shorten due to the reduction in linear feet of utilities installed. “Of course if the work is completed sooner less inspector hours will be needed,” he said. “There is also the potential that the contractors may not finish on time which will require additional inspection hours.” Hendrick said Nehemiah also made two requests to work for other contractors on the Fancy Gap projects, one to provide an erosion plan and another to conduct pre-blast surveys. “Both requests were immediately directed to the PSA for approval. The proposed PSA policy references VDOT’s conflict of interest specification,” Hendrick said. “The VDOT specification says the ‘inspector’ cannot work for a contractor without written consent from the engineer. Being familiar with VDOT’s specifications we thought we were taking appropriate action. Both requests were unsolicited by Nehemiah Engineering, Inc.” Hendrick said the PSA report was true that Nehemiah notified the PSA of problems concerning the first policy that has since been rescinded. He said the company’s concerns were not in how it would affect Nehemiah, but how it would cause an immediate conflict with the Fancy Gap projects. “(County Administrator) Gary Larrowe said after discussion with three PSA board members they were placing the policy on hold. I asked if a special called PSA board meeting needed to be held to suspend or amend the policy. I was told by Gary that it would be addressed during the April meeting,” Hendrick said. “My concern was the authority being exercised outside the formal setting of a board room. I contacted their attorney, Jim Cornwell, and asked him what governing documents the PSA had that allowed the Executive Director to make those decisions. I was informed it was of no concern to me. Jim told me that if the PSA board had concerns they needed to direct those to Gary.” Hendrick said at that time he e-mailed the PSA chair and vice-chair expressing his concern, and asked that they call a special meeting to suspend the policy. He said he never received a response. “No other action was taken by Nehemiah Engineering. If a protest has risen it was done by people other than us,” Hendrick said. “To summarize, we were concerned with the way the policy was suspended.” Hendrick said based on past comments of PSA staff, Nehemiah Engineering has excelled in providing quality inspection services. He said the company is grateful for the opportunity to serve the PSA and takes pride in customer satisfaction. “Nehemiah Engineering, Inc. is also proud that it can provide quality services at a quality cost to taxpayers. In all three inspection service contracts advertised since 2009, Nehemiah Engineering, Inc. has been the lowest, responsible, responsive, and capable provider,” Hendrick said. “The taxpayers would incur a cost that is 25.5 percent higher for inspection services should the next highest bid had been utilized. This results in savings to the taxpayers of approximately $100,000.”