Three months ago, the Board of Estimates approved a 42% increase in water rates over the next three years.
If you’ve wondered how City Hall is proposing to spend some of this money, look no further.
Unless the mayor and her staff change course, an obscure company backed by a big political name is in line to win a gigantic water contract.
Dynis LLC, of Columbia, has emerged as a front runner to replace 400,000 water meters with “smart” meters in Baltimore City and County, despite its minimal experience and a $185 million proposal that is fully $101 million higher than its competitor, Itron Inc.
As it now stands, the Board of Estimates – consisting of the city’s three top elected officials, Mayor Stephanie Rawlings-Blake, City Council President Bernard C. “Jack” Young and Comptroller Joan M. Pratt – are expected to award the contract in about a month. Currently, the matter is “under review” by a technical committee, according to the mayor’s office.
J.P. Grant Connection
What makes the bid by this small company extra intriguing is that Grant Capital Management stands to gain from the deal.
The firm’s founder and CEO, James (“J.P.”) Grant, was Mayor Stephanie Rawlings-Blake’s top campaign contributor in 2011. A fixture in political circles, he is best known to the public for agreeing to take over the Baltimore Grand Prix in 2012 and 2013 – losing money, he says.
Now he’s in line to make some hard cash by financing the city’s cost for meter replacement program with a master lease purchase agreement.
Take a Look –
Bid prices were opened on September 26, 2013 for WC-1223, a contract to install new wireless water meters for residential homes and businesses in Baltimore City and County.
Liberty Lake, Wash. = $83,516,633.80
Columbia, Md. = $184,748,010.86
Grant is proposing to finance the water meter project at a 3.85% interest rate, according to the bid documents, or one full percentage point above the master lease financing proposed by Itron.
If the Dynis bid and Grant’s financing are approved by the Board of Estimates, ratepayers are likely to face a total bill of about $240-$250 million. (Grant did not disclose the final cost of his proposal – and further states that the city’s interest rate is “subject to change as it is indexed to U.S. Treasuries or Municipal Market Data indices.”)
By comparison, the Itron bid says that the total cost of its financing proposal would be $97.5 million.
Grant has been friends with Dynis’ founder and CEO, Earl Scott, for years. The two men worked together at IBM, and Grant says he’s had “20 years experience working with Dynis,” whose modest one-story headquarters is located near Grant Capital Management’s office suite in Columbia.
Like Grant, Scott is a generous contributor to the mayor and other local officeholders.
Dynis gave $4,000 (the limit for individual contributions) to Rawlings-Blake in 2011 and $1,000 to City Council President Bernard C. “Jack” Young.
Three subcontractors on the Dynis bid – R.E. Harrington Plumbing, L/B Water Services and Early Morning Software – contributed $12,000 to the mayor’s coffers.
The Maryland State Democratic Central Committee is another benefactor of the Grant-Dynis largess. With no legal limits placed on contributions, Grant has kicked in $155,000 (since 2008), while Dynis forked over $10,000, according to state election board records.
Itron Hires Political Muscle
Itron is not listed as a contributor to Maryland officeholders in the election board records.
But that doesn’t means that the $2.2 billion conglomerate is bereft of political pull.
In June, it hired City Hall super-lobbyist Lisa Harris Jones to represent its interests in the meter contract.
City disclosure reports show that Jones is on the Itron payroll until December 31, 2013.
Mayor: Dynis is Qualified
The Dynis and Itron bids are now quietly sitting at the Bureau of Purchasing. There has been no publicity about the contracts – and few people even in City Hall are aware of the proposals.
The mayor’s office was asked about the Dynis contract – and the company’s ability to undertake such a big project. In response, the mayor’s spokesman, Kevin R. Harris, said, “Dynis was a pre-qualified installation vendor, who submitted a proposal in partnership with Sensus, a pre-approved technology vendor.”
The city’s Request for Proposals (RFP) called for prime contractors with a minimum of five years of experience in advanced metering installation for utilities similar in size to Baltimore.
A review of Dynis’ application indicates that the company’s biggest water projects involved cell transmission communications done for the Altoona, Pa., Water Authority (worth $3 million) and the Aliquippa, Pa., Water Authority (worth $1.5 million).
These two contracts are in keeping with Dynis’s chief expertise in wireless tower repairs. To handle water meter data management, Dynis proposes to farm out duties to Utiliworks of Baton Rouge, La., and to subcontract the supply of Sensus metering equipment to L/B Water Services based in Selingsgrove, Pa.
Scott did not respond to phone calls and emails by The Brew requesting an interview. Grant also did not return messages left at his office.
Under normal circumstances, the Dynis’ high price would eliminate it from consideration by the Board of Estimates. By law, the board is suppose to award city contracts to the lowest responsible and responsive bidder.
But this contract is different.
The bid price will account for only 30% of the final determination of the winner, while 70% will come from “scoring” the Dynis and Itron proposals by a technical review panel.
Because of the heavy weight given to technical scoring, Dynis could easily overcome its price difference over Itron and emerge the “lowest” bidder.
Asked about this arrangement, mayoral spokesman Harris emailed the following: “The technical aspect of this project is very important to the city; therefore, the technical scores was weighted at 70% of the overall score. This is not uncommon when the contact services require a high level of technical proficiency.”
Asked who is on the technical committee, Harris replied, “The city does not release the names of of committee members, but the committee is composed of mostly IT professionals and water engineers.”
From the beginning, this contract (WC-1223) was limited to a small group of companies.
Five water meter manufacturers responded to the city’s call for interest in the replacement program. Last October, the technical committee ruled that Neptune Technology Group and Badger Meters were “non-responsive.”
That left three potential bidders: Itron, Sensus and Aclara Technologies. On July 17, the purchasing department had a big surprise.
Sensus disappeared from the bidding process, and Dynis appeared.
After a review by the law department, it was determined that Dynis’ technical proposal could proceed. Essentially, Dynis had become the prime contractor, and Sensus served as its supplier of water meter hardware and IT expertise.
On July 25, City Comptroller Joan Pratt disqualified the Aclara proposal. “The above-mentioned contract, after legal review, was considered non-responsive due to your company’s deviations, exception, modifications and /or alternations place on the proposal,” the comptroller told the company, writing as Secretary to the Board of Estimates.
On August 6, Nancy Rich, the firm’s senior vice president, wrote back, saying, “We firmly and sincerely believe that Aclara’s bid was indeed responsive.” Rich asked the city to reconsider, but on September 25, the Board of Estimates formally rejected her request.
That opened the way for just two vendors, Dynis and Itron, to give detailed price bids on the contract.
Comparing the prices between Dynis and Itron on specific items in the contract is revealing. For example:
• Dynis will charge the city $3.5 million for “mobilization” of its workforce, while Itron will charge $2.1 million.
• Dynis will charge $27.3 million for the supply of single-port radio transmitters (200,640 of them), while Itron will charge $22.9 million.
• Dynis will charge $17.7 million for the supply and installation of 3/4- to 1-inch copper pipe, while Itron will charge one-fifth that price – $3.5 million – for the same amount of pipe.
• Dynis will charge $6 million annually for “software support and maintenance” of the new water meter system, while Itron will charge $1.6 million.
Up to the Mayor
The decision of whom to award this contract comes down to the mayor, who controls the Board of Estimates through her three votes (her own and the votes of two appointees, City Solicitor George Nilson and Public Works Director Alfred Foxx).
The contract is expected to reach the spending panel in about a month.
We sent questions to her spokesman yesterday to try to gauge her thinking on the matter. Among our questions:
• Is she concerned about the high price of the Dynis bid?
• Could her personal friendship with Lisa Harris Jones, Itron’s lobbyist, or the campaign contributions of Grant Financial and Dynis, influence her thinking?
• What involvement did she or her staff have in the drawn-out proceedings that have now left the city with just two bids to choose from?
We have not yet received a reply. We will publish it when we do.
– Mark Reutter can be reached at firstname.lastname@example.org