Crain's Detroit Business - December 20, 2010 - (Page 4)

Page 4 CRAIN’S DETROIT BUSINESS December 20, 2010 Contracting: Detroit procurement officer leads reform effort ■ From Page 1 tem. He was not in office during the time of the alleged criminal activity. Brown noted that the Board of Water Commissioners, Infrastructure Management Group, and a federal judge also were overseeing the contract approval process. The council generally must approve all contracts with a value greater than $25,000; the Detroit Water and Sewerage Department has been under federal judicial oversight since 1977. Kilpatrick, as a court-appointed special master, could award some contracts without the council’s approval. However, scrutiny of the city’s policies is necessary, said former Councilwoman Sheila Cockrel, who was a sharp critic of the Kilpatrick administration during her lengthy tenure on council. “I think there’s a whole number of things that need to be done differently,” said Cockrel, now an adjunct professor in Wayne State University’s Irvin D. Reid Honors College and owner of Crossroads Consulting. “If you have people who are running a criminal enterprise and are engaged in bid-rigging, you’re never going to stop them. … But there are a whole set of policies that were put in place (during the Kilpatrick administration) that need to be examined to see what was the real purpose, what are the econom- ic consequences to the city, what were these policies designed to do? I think this is something the mayor and council will take up.” The council’s research and analysis division provides a weekly report to the council that explains the need for each change order, Brown said, and council members are free to investigate contracts, subcontractors and draw their own conclusions. Change orders are part of doing business, he said — often more fiscally prudent than bidding out a new contract. But one fact is immutable: the council relies on receiving reliable information from the departments presenting contracts or change orders, Brown said. “Even if there was an ordinance requiring council approval of subcontractors, we don’t know if it would have made a difference because council members often rely on the department heads’ rationale for approval,” he said. “Unfortunately, there are allegations that the department head was a part of the illegal activity.” Too much regulation can be as damaging as too little, Harris said. “The purchasing policies are cumbersome and they’re cumbersome because people are trying to keep people from cheating,” he said. But, Harris noted, the system does work, pointing to last week’s indictments. “When we went to the Federal Bureau of Investigation (in 2004) and provided them with the information … they said it stinks to high heaven but it ain’t against the law,” he said. “I can tell you that they were investigating back then, but they couldn’t tell me anything. I kept waiting and waiting, and six years later, guess what? The indictments happened.” The indictments, Brown said, send a strong message that pay-toplay is over at City Hall. “You can’t send a stronger message than this type of public transparency,” he said. It’s important to separate Detroit from the alleged wrongdoing of the Kilpatrick era, Cockrel said. “When Dennis Archer was mayor, three casino franchises were awarded, two stadiums were built, General Motors moved into the Renaissance Center and nobody went to jail,” she said. “There was not an undercurrent about corruption that was part of the discussion then. Mayor Bing had clearly set a new tone, and (post-Kilpatrick interim Mayor Ken Cockrel Jr.) had also. The minute the Kilpatrick crew was out, the tone began to shift.” Nancy Kaffer: (313) 446-0412, nkaffer@crain.com Companies issue statements on probe In the indictment of former Detroit Mayor Kwame Kilpatrick; his father, Bernard Kilpatrick; Kilpatrick associate Bobby Ferguson; former Detroit Water and Sewerage Department Director Victor Mercado; and top aide Derrick Miller, the federal government identified several companies by initial only — Company I, Company L and so forth. Click here to see the indictments. But after Detroit News stories identified the companies — Inland Waters Pollution Control, Walbridge, Lakeshore Engineering Services Inc. and A&H Contractors — using public records and interviews, two have issued statements. According to the indictment, companies with water and sewer contracts were pressured to pay Ferguson’s companies to subcontract on projects, even when Ferguson’s companies did no work. In other cases, the companies were expected to make cash payments to Ferguson, with Kilpatrick’s clout as mayor used to cow the companies into submission. The U.S. attorney’s office has said that some companies are considered victims, while others have been granted immunity. Inland Waters Pollution Control President James Tighe issued a statement Friday saying that the company had cooperated with the investigation “in all respects. … It has been confirmed by the U.S. attorney’s office that Inland is neither a subject nor a target of the investigation.”A statement issued by Lakeshore’s executive office said in an e-mail to Crain’s that the indictment had exposed “inappropriate” activities by the Kilpatrick administration. “When hundreds of people are counting on Lakeshore for employment and it loses one city contract without explanation and then another city contract without explanation and we were the lowest bidder with the highest value on both, we were faced with a dilemma of choosing between putting people out of work in this economy or giving in to the former administration’s demands,” the e-mail said. “We are pleased with the professional atmosphere that has been created by the (Detroit Mayor Dave) Bing administration.” — Nancy Kaffer MEDC: Outgoing CEO says agency should streamline programs ■ From Page 1 ies, biofuels, solar power and wind power. Under his watch, the MEDC analyzed the value chain for each of those industries, identified the businesses best positioned to come to Michigan or grow here, and set up tax credits to serve as incentives, Main said. “It’s not like we’re building solar farms or a lot of windmills, but we are becoming the place where this equipment gets manufactured, and that was our goal. “I’ve made the recommendation that (the MEDC) continue to focus on diversification of the economy, because I think that’s pretty vital,” he said. He counts the MEDC’s work to improve access to capital and financing, particularly for automotive suppliers, among the MEDC’s achievements. “We created programs where we could work with banks to reduce their risk on credit lines to suppliers,” Main said. “Our work has really been the basis for what is now a national program, enacted by the Congress, of helping states do things similar to what we’ve done.” Main also points to the MEDC’s support for creating “an entrepreneurial ecosystem” with a network of service providers, funding and other support such as direct counseling services for those starting new businesses. There are always things you would do differently or better if you had the chance, Main said. As an example, he pointed to the Pure Michigan marketing campaign. It was named by Forbes magazine in 2009 as one of the 10 best tourism campaigns of all time. “Should I have anticipated we were going to have trouble with funding (the Pure Michigan campaign) and spent more time convincing legislators?” he said. Customer service should also be a priority, he said. During the gubernatorial campaign, there was talk of the MEDC having spent too much time chasing companies outside Michigan and not enough time working with state-based businesses, Main said. That sparked the MEDC to review its allocation of dollars and human resources over the past three years, Main said. That review found that an average of 60 percent of the agency’s financial and human capital resources over the past three years — and as much as 80 percent in at least one year — were spent working with Michigan companies, Main said. “We’re already spending the majority of our effort for in-state companies, which is contrary to most people’s belief,” he said. But when you work with a company here that adds 20 jobs, it doesn’t get quite as much attention or media coverage as does a company from somewhere else adding 500 jobs. “We’re already concentrating most of our resources on Michigan companies. … The recommendation is to keep doing that,” Main said. Finney was expected to present his own list of 20 to 30 recommendations for the MEDC to Gov.-elect Rick Snyder on Friday.Those recommendations aren’t expected to be released until January after the MEDC’s newly appointed executive committee is in place and Finney has been officially appointed by the committee, said Snyder’s communications director Geralyn Lasher. Snyder has said he’d like to put more focus on retaining jobs in Michigan as opposed to focusing as much on pulling people from other countries and states, Lasher said. Snyder also has called for a review of incentives “to make sure we’re getting reportable results and being transparent,” Lasher said. Snyder has said consistently that government doesn’t create the jobs, Lasher said. “We can create the environment for them to flourish and grow, but we need to be working closely with our partners in private industry and communities” to do so. The MEDC has done “a really good job under tough circumstances, but they do have to take a different direction given the economic challenges the state faces,” said incoming MEDC Chairman Doug Rothwell, who is president and CEO of Business Leaders for Michigan and the first CEO of the MEDC. “But I really think it’s a great opportunity to reinvent the MEDC.” Sherri Welch: (313) 446-1694, swelch@crain.com World Cup: Madison Heights business scores work for 2022 ■ From Page 3 Europe and elsewhere. “They give us the specifics, and we look for people who can bid on them,” said Rick Weaver, PAT Engineering USA’s vice president of business development. The office is negotiating two World Cup deals right now but cannot provide details until they’re signed. PAT Engineering USA has non-World Cup deals with NSA Architects, Engineers, Planners Inc. in Farmington Hills, Plymouth-based Advanced Environmental Management Group LLC and Troy-based storage-space company AME Vertical Inc. In Qatar, PAT Engineering WLL, which has about 1,600 employees overall, has contracts to build parking structures and water and sewage treatment plants for the tournament. Weaver declined to say what PAT Engineering’s jobs are worth. The work is part of the creation of a 200,000person city called Lusail that will host the World Cup. Construction includes 12 outdoor climate-controlled soccer stadiums, split between Lusail and the capital, Doha, worth $4 billion, and a light-rail system for $25 billion. The stadiums will be climate controlled because the average temperature in Qatar in July is 115 degrees. Qatar can afford the construction work be- cause it’s the world’s biggest liquefied natural-gas exporter which, along with oil revenue, gives the country the world’s second highest per-capita income (after Lichtenstein). The emirate is a 4,416-square-mile stub of land on the northwest edge of the Arabian Peninsula jutting into the Persian Gulf and bordered only by Saudi Arabia to the south. It’s home to 1.6 million people. Bill Shea: (313) 446-1626, bshea@crain.com http://www.crainsdetroit.com/assets/PDF/CD720561217.PDF

Table of Contents for the Digital Edition of Crain's Detroit Business - December 20, 2010

Crain's Detroit Business - December 20, 2010
Department Index
Keith Crain
Mary Kramer
Opinion
Calendar
People
Business Diary
Classified Ads
Briefly
Rumblings
Week on the Web

Crain's Detroit Business - December 20, 2010