Jim DeLine, whom the Council unanimously appointed as internal auditor on Aug. 12, is told that the city has a two-year, $1.2 million contract with Lansing-based Dewpoint Inc. as it builds its new Information Technology Department as part of Mayor Virg Bernero’s fiscal year
budget recommendation. But in an effort to dig up more information about the city’s contract with the company, how the bid process worked and what the city’s paying for, DeLine has apparently hit an administrative roadblock.
“I want to know, what are we getting for a quarter of a million dollars we spend with them,” DeLine said in an interview Monday. DeLine said the city paid Dewpoint $280,000 last fiscal year. “That’s a lot of money,” he said.
DeLine’s look into the city’s relationship with Dewpoint began after Sept. 16 when Lynne Meade, president of the Teamsters Local 580, raised questions about the contract at a Council Committee of the Whole meeting.
In an Oct. 23 report to the Council, DeLine wrote that his investigation was incomplete due to a lack of cooperation from the administration. He also learned that Dewpoint was chosen on a “sole source” basis, meaning no other companies were given the chance to bid on the work. Since Dewpoint has a contract with the state, the purchase could be given to them based on the city’s purchasing ordinance, DeLine says in his report.
Randy Hannan, Bernero’s chief of staff, said the two-year, $52,000 a month contract hasn’t been finalized, but that the city has a “project agreement” allowing Dewpoint to start work. In his research, DeLine found a July 5 purchase order for “project management” with an invoice of 2,088 hours worth of service at $90 an hour — that’s $187,920. Details only stated that an employee had worked those hours. “No detail as to services performed was provided in the invoice,” the report says.
He goes on to list a series of emails to the administration about when the information might be available.
“As of the date of this report, promises made by the administration to provide information have not come to fruition,” he wrote. “An analysis, at this point, would be incomplete. … Certainly, if Dewpoint is providing technical support services previously performed by City employees, the next step in this audit would be to ask the administration if a cost/benefit analysis (CBA) had been conducted.”
Hannan told the Council at a Committee of the Whole meeting Monday that Bernero’s executive order establishing a new Information Technology Department, along with a cabinet-level position, came forward in early June. But since then, he said the Council has not come forward with questions.
“Yet Mr. DeLine was asked by President (Carol) Wood to do an audit of Dewpoint. It’s like trying to write a book report about a book you’ve never read,” Hannan said. “What would be helpful is for the Council to invite the administration to do a presentation about the department.”
Hannan said after the meeting that the city has contracted with Dewpoint since 2008 “for a variety of purposes.” Notably, the company recently helped the city transition to a new email system. As the city makes IT upgrades — a $2 million bond proposal will soon be presented to the Council for new hardware and software — Dewpoint will oversee the infrastructure of that. He said city employees represented by the Teamsters would move to more customerservice-type jobs.
Meade, of the Teamsters, expressed concern on Sept. 16 that her member employees would be cut out of some of the new IT work, losing skill sets and limiting their “upward mobility,” as DeLine’s report says. At the Sept. 16 meeting, Meade also suggested that city employees could do the work at less than half the cost.
“We are concerned that we are not being fiscally responsible with the new reorganization,” Meade said during that meeting.
Hannan said he’s “very skeptical” of the claim that city employees could do the work at a fraction of the cost. He also noted that “no one’s been laid off ” because of the contract.
Per the City Charter, the internal auditor is tasked with checking the finances of city departments at least once a year and reporting any accounting regularities within the city to the Council and the administration.
DeLine recommended the administration be more forthcoming, an issue that’s been raised by Bernero’s opponents on Council, including Wood. It also suggests “extreme” measures that might have to be taken in order to get the information, such as submitting a Freedom of Information Act request. (Could you imagine, the city’s internal auditor submitting an open records request for the city’s financial information?) “The lack of cooperation does not bode well for them. It might lead the City Council, the press and the public to believe they are not willing to be forthcoming with how tax dollars are being spent,” DeLine wrote in his report. “A further lack of cooperation would indicate that I need to employ other forms of information gathering. Sadly, these include requesting information under the Freedom of Information Act (FOIA), and utilizing the subpoena power granted to the City Council by the City Charter. These steps are extreme and, hopefully, can be avoided.”
Hannan said “our people are working” on getting him the information. “We all have a lot on our plates.”
DeLine, who was the Lansing Police Department’s budget supervisor for over 18 years, said he isn’t trying to be “contentious.”
“What I’m trying to figure out is what’s going on today, now and into the future.”