Serving Gogebic, Iron and Ontonagon Counties
Serving Gogebic, Iron and Ontonagon Counties
By RICHARD JENKINS
Hurley — An oversight of a little-known rule in federal procurement regulations means Iron County has to rebid the engineering contract for the rebuilding of Saxon Harbor.
In August, the county awarded the contract to plan the rebuilding of the harbor after it was destroyed by flooding in the July 11 storm to a team of companies led by Coleman Engineering.
Last week, Forest and Parks Administrator Eric Peterson informed the Iron County Board of Supervisors that the county hadn’t followed the procedures required by federal rules when awarding the contract.
Peterson said the discovery came when the United States Office of Inspector General audited the county at the end of October and found that the county “improperly procured our engineering contract.”
“The part that we improperly procured was the fact that we did not meet the requirements for socio-economic-disadvantaged businesses. We did not directly solicit them,” Peterson told the board.
According to Peterson, the county needed to reach out to an “adequate number” of qualifying female-owned small businesses, minority-owned small businesses and labor-surplus-area small businesses to comply with the requirement.
He explained there is a list of qualifying contractors maintained by the Federal Small Business Administration, and the contractors had to be on the list to meet the requirement.
The audit finding means the Inspector General’s office is recommending the Federal Emergency Management Agency not reimburse any funds spent on the engineering contract. To date, Peterson said, the engineering costs have been approximately $90,000.
He said that while that is the recommendation, FEMA isn’t bound by the Inspector General’s office and likely would still pay if the costs are deemed reasonable.
Luckily for Iron County, the audit discovered the error relatively early in the rebuilding process and not before the project was completed.
“Right now, we have to roll the dice on the $90,000 — submitting it and getting reimbursed for it, we may or may not. But if we had continued under that contract, all the money we spent on there may have been not reimbursed,” Peterson said. “The fact that they were here and red-flagged that right away allowed us to stop it before it got really bad.”
Peterson told the board that even the FEMA and state representatives overseeing the region’s rebuilding efforts were unaware of the requirement and that the whole thing was an unfortunate learning experience at the county’s expense.
“We were the direct (cause of a recent) training session for FEMA,” Peterson said. “Now they know, now everybody knows. Unfortunately, they know at our expense.”
A specific date has yet to be set for when the engineering contract will be rebid, as federal rules also require the contract include a very specific scope of work — meaning the county needs to decide on at least a general design before awarding the contract.
The county board agreed to hold a workshop with Northwest Regional Planning Commission representatives to get some ideas on where it can go with designing the harbor and what the potential costs could be. This will help the county give direction when soliciting engineering contracts.
The requirement also meant the county had to rebid the contract for debris removal at the harbor — however, the need was discovered before any work was done.
The county had awarded the contract to Snow Country Contracting for $109,928 in October. It re-awarded the contract to Snow Country after it was again the low bidder, this time at a cost of $139,712. The other bidder, from the federal list of qualifying contractors, was Superior-based Alliance Steel Construction.
While this new bid is slightly higher than the $123,681 cost estimated by FEMA, the project’s size means it qualifies for reimbursement at the actual rate rather than estimate cost.
“Because we got into a large project category with FEMA, FEMA will pay actual costs. So we will be getting reimbursed 75 percent from FEMA and 12.5 percent from Wisconsin Emergency Management for actual costs of that cleanup,” Peterson said.
During a discussion regarding the possibility to use grants to help fund the county’s 12.5 percent of the costs to rebuild the harbor, Peterson said his understanding of the local match requirements were that grants couldn’t cover work also being covered by FEMA.
“That’s our commitment to making sure the project gets done,” Peterson said, regarding why FEMA required the county to cover its 12.5 percent without grant funding. In-kind work may be able to be used as a local match, however, Peterson still needs confirmation of that fact.
