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Bill to address housing contracts raises questions

CHARLESTON, W.Va. — This is a story about a bill that went nowhere.

Leading into last week’s special session for the House of Delegates, the governor placed a variety of additional issues on the call.

One of those was a bill relating to bids for contracts on construction work performed as part of disaster mitigation or recovery. The bill would have allowed for open-ended contracts in those instances.

But when legislators started examining the bill, they wound up with more questions than answers.

They questioned whether the open-ended nature of the request would have created unintended consequences. They also wondered whether the proposed bill truly addressed the problem.

“Is this the crisis that’s solved by this bill,” asked Delegate Dean Jeffries, R-Kanawha, “or do we have another crisis?”

Today, on the third anniversary of a catastrophic statewide flood, building houses for disaster victims is an area where West Virginia has continued to struggle.

The state drew down $149 million from the U.S. Department of Housing and Urban Development to provide housing after the June 23, 2016, flood.

HUD continues to list West Virginia as a slow spender, a designation that reflects the pace toward closing out the grant. Of the original draw-down, West Virginia still has $134,975,882 remaining.

So far the state has completed only 51 homes out of more than 400 cases. Three of the completed homes were “stick-built,” meaning constructed on site, and the others have been mobile homes.

The state originally had three housing contractors, but now has just one active.

Danhill Construction has been out since last fall. Appalachia Service Project, which put up the three stick-built homes, ran into contract entanglements and has been pulling out of that role.

That has left Thompson Construction as the only contractor still going. Thompson has placed the mobile homes.

Dean Jeffries

“I am under the impression, as you are, that we’re at a standstill,” said Jeffries, co-chairman of the Joint Legislative Committee on Flooding. “I’ve been asking for quite a few weeks what is the status of Appalachia Service Project. After speaking with them directly, they are on hold with building houses for the RISE program.

“When asking our RISE officials that, they say it’s a problem with the contract. I’m not so sure that’s completely the problem. I think we do need to look at a way to bring in more contractors to expand the capacity of homes that can be built.”

The bill intended to address construction during disaster relief was assigned last week to the House Judiciary Committee. It was then assigned to a joint subcommittee with members of Judiciary plus members of the flood committee.

Both committees discussed the bill for a couple of hours each but took no action, saying more work must be done to refine it.

Barbara Fleischauer

“I’m concerned about the open-endedness, the open-ended contract,” said Delegate Barbara Fleischauer, D-Monongalia. “We’re opening ourselves up to being ripped off.”

The bill as written refers to work resulting from a declared state of preparedness or emergency.

Bids for construction could be “on an open ended basis so long as the open-ended nature of the contract is disclosed in the solicitation and the type of work to be completed is generally known and identified in the solicitation in a way that allows for fair and competitive bidding.”

The description includes not only buildings such as houses but also roads or highways.

James Meadows, general counsel for the West Virginia Purchasing Division, told delegates that the flood recovery effort needs to be able to move more quickly with more housing projects.

“What this would allow us to do is go out to bid for a much larger group of homes,” Meadows said.

Right now, he said, recovering homeowners must go through a full case management process before they wind up in a group of about 10 homes going out to bid.

“What you wind up with is a fairly significant period of time lapses from the time the person is identified and 100 percent certified and able to receive a house,” he said.

“What you end up with is this continual bidding of small chunks of procurement for homes. That takes more time.”

Delegate Jeffries didn’t dispute that, but said the problems seem to extend beyond what was being described.

“When this bill was presented, it kind of took the appearance that it was urgent, to pass this bill to get houses right now,” he said. “I’m not under the impression that that’s really the problem right now.

“I understand there is a need for this bill and we need to streamline the purchasing process, but to say that’s the problem holding things up now — I think we have more of a problem with our agreements with contractors or how they’re being reimbursed. I think we need to look at that, rather than running a bill through quickly that may not solve the problem.”

The proposal could have unintended consequences, said Steve Connolly, general counsel with the state Auditor.

“This is a very broad, sweeping bill,” Connolly said while addressing the joint subcommittee.

He said the setup runs the risk of having contractors underbid on the front end, knowing the agreement could go on in perpetuity.

“Are we creating a massive power grab for state officials or local officials to be able to circumvent a proper bidding process?” Connolly asked.

Rodney Miller

Delegate Rodney Miller, D-Boone, also raised questions about the open-ended nature of the proposal.

“There’s lots of concerns whether we’re opening things up down the road that causes more problems,” he said. “We need to get more people back in their homes quicker, but do we want to open the code up to various situations that causes a faster pace without what most people believe is needed scrutiny?

“We can’t just give any entity, including ourselves, just a free willy to do as they deem necessary without a certain balance because we’re dealing with the public’s money.”

The House of Delegates adjourned the day after the bill was discussed without taking any action on it.

Miller boiled the situation down to one question.

“What are we trying to fix?”

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