A Classic Case of Pay-To-Play

Just when you thought it was safe to go back into Town Hall, the council has launched a classic case of pay-to-play just in time for election season.

RESOLUTION NO. 2011-97
RESOLUTION EXTENDING DESIGNATION OF SILVER OAK PROPERTIES, INC. AS REDEVELOPER FOR
THE PROPERTIES LOCATED WITHIN THE
ABERDEEN COMMERCE & TRANSPORTATION
CENTER REDEVELOPMENT AREA FOR
THE DEVELOPMENT OF A MIXED USE PROJECT

To capture the full breadth of outrageousness, let’s walk through all the steps.

First, a town council with a well-deserved reputation for pay-to-play designates a felon, who spent prison-time for flagrantly attempting to bribe an IRS auditor, as the lead developer for the town’s most prominent project, the proposed transit village.

Next, the town council gives a brief history and seeks to justify the shameful appointment.
>>> Read more!

Will Aberdeen End Pay-to-Play?

The title is a rhetorical question. Nobody expects the all-Democratic Aberdeen Town Council to forfeit their patronage game whereby they exchange contracts for campaign cash. However, the town council’s draft pay-to-play ordinance would be a large step in the right direction and I support it.

The ordinance is quite simple – any campaign contribution above the threshold limits (currently $300 for an individual and $2500 for a business entity) during the preceding 12 months would prevent that contributor from receiving a no-bid contract.

CME Associates would still be the town engineer and the council’s largest contributor. They would still receive over half a million dollars a year in engineering fees from local residents, businessmen, and developers. They would still get virtually every engineering contract from the township. But, for the first time in over a decade, they would need to bid on a contract, at least during an election year.

Even though professional service contracts don’t need to be given to the lowest bidder, my guess is CME would underbid the competition and then seek additional compensation for those “unforeseen” circumstances that seem to crop into every project.

Why, then, not support a total ban on political contributors from receiving municipal contracts? Two reasons.

First, we can’t discriminate between serial pay-to-players like CME and the Average Joe. Should any businessman be forced to choose between supporting a political campaign and his livelihood? Aren’t campaign contributions an expression of political speech?

Secondly, if we create a total ban, we’ll simply be shifting the campaign contributions from mainstream political organizations to shadowy groups that have no accountability, like the Educators for a Quality Education who supported Rubino and Ruprecht during last year’s school board elections.

Yet, I support the draft pay-to-play ordinance because at least we will have some request for quotes (RFQs) and, for the first time in the 21st century, finally see what these engineering projects truly cost.

If the townsfolk want to end pay-to-play, they can elect people who don’t play and punish those who do. Until then, with or without a new pay-to-play ordinance, expect CME and their ilk to continue dining at the town council’s table. >>> Read more!

Budgeting CME Associates Style

Six weeks ago, we discussed how Aberdeen Township appeared hell-bent on spending as much as they could before the next election cycle (see “Aberdeen Township Goes for Broke”). Among the flurry of expenditures was $237,071.25 in no-bid contracts to the township engineer and the council's largest patron, CME Associates. Our town council has chosen to begin August by rewarding CME Associates with another $625,006 in no-bid contracts. Everybody knows these no-bid contracts enable monstrous overcharges. The only question is “How much?”

For one example, let’s review the Aberdeen (Strathmore) Pump Station. On April 14, 2004, CME submitted two proposals for rehabilitating the pump station at a total cost of $249,500. Eight months later, “[b]ased on the latest data, and based on anticipated material cost increases (i.e. steel and concrete)”, CME raised the combined cost to $320,000. During those eight months, the prices of steel and concrete increased about 15% and 8% respectively. Let’s assume that material costs accounted for 30% of the original estimate. A 15% price increase in materials would have been under $12,000. Yet, CME raised their prices by $70,500.

But the story doesn’t end there. In the revised proposals, CME listed their combined engineering fees as $30,000. Nearly two years later, they raised their fees by 125% to $67,750. To justify the exorbitant increase, the cited the following:

• Cost to separate the proposal into two bids
• Cost to oversee a utility pole’s relocation

Never mind the proposals were always separated into two bids, that relocating the pole was part of the original project, or that the extra billings were bogus any way you looked at it, Aberdeen Township approved the additional charges.

Another example is the grant application for Fireman’s Field (Oakshades Park). Grant applications nearly always exaggerate the costs to cover any possible exigencies but look at CME’s forecasts. Lighting - $241,500 ($210,000 plus 15% contingency costs) and $78,681.33 for engineering and administrative costs (read “CME fees”). The actual cost for the lighting was nearly half that amount at $127,429 and the engineering component for the lighting was zero. CME Associates did not get one penny towards the field lighting despite their budget claims.

(So far, by my count, CME Associates lost over $150,000 during Stuart Brown’s tenure once you count the lighting at Fireman’s Field, cost reductions for the tax map revision, and the Aberdeen Recreation Master Plan. Makes you wonder why Brown got fired.)

To be fair, CME Associates is generally considered a competent firm but, as recent blog comments have noted, the road work on Gerard Avenue has demonstrated an astounding level of negligence. We know from prior experience that CME has trouble conducting a land survey but how did they miss the giant parcel of county land adjacent to the field (Block 169 Lot 9)? The lot isn’t listed on Aberdeen’s tax rolls and has never belonged to Aberdeen Tonwship. Hence, the work stoppage on Gerard Avenue – the township never received permission to work on county land. The cruel irony is that, not only had CME already reviewed the tax map for the Fireman’s Field project, CME was the company responsible for updating the tax map prior to the property revaluations.

From January 1st, 2005 through March 25th, 2008, CME received $3,692,445.72 from the township. (The total vendor payment sheet is 105 pages so I only uploaded the first and last pages.) Between no-bid contracts, a cozy relationship with the town council, and massively inflated billings, CME Associates is quite fortunate to never have to compete for any township work. Pumping money into the Aberdeen Democratic Party’s coffers is sufficient qualification. >>> Read more!

It Pays to Play for CME Associates

On October 10th, 2007, the New Jersey Election Law Enforcement Commission released its Pay-to-Play online database. The state defines Pay-to-Play as “[c]ontributions by for-profit business entities that have or are seeking New Jersey government contracts.” Of the 1775 political contributors who filed, Aberdeen Township’s engineer, CME Associates, is #3 on the list.

Government contracts are normally awarded to the lowest qualified bid. The major exception is in the area of professional services, which are deemed too complex to simply award to the lowest bidder (you don’t pick doctors and lawyers based upon who’s cheapest). Aberdeen adheres to the “Fair and Open” process which allows anyone, no matter how much money they’ve given to the officeholders, to bid for business, as long as the process is open to public review.

In 2006, the only year available in the online database, the three largest participants in Pay-to-Play were engineering firms. CME Associates was the third largest – they contributed $404,899 and won $19.9 million in government contracts. Law firms were the second largest group to engage in Pay-to-Play. Kudos to Norman Kauff whose firm, DeCotiis, FitzPatrick, Cole & Wisler, was number one in government contracts ($12 million) but only third in political contributions ($190,486). It’s no surprise that municipalities that hire Kauff also prefer to do business with CME Associates.

Despite the large figures, these numbers grossly underestimate the true level of contributions and government contracts. For example, they don’t count the $50,000 CME Associates donated to the Democratic Legislative Leadership Committee in 2006. Nor do they include the hundreds of thousands of dollars CME Associates collects in “fees” directly from the local residents and businesses in Aberdeen Township each year.

Over the past decade, CME Associates has donated more than $60,000 to the Aberdeen Democratic Executive Committee, not including any monies that may have been “wheeled” through the Monmouth County Democratic Party or given “off the books”. During that same period, CME Associates has been paid back two hundred-fold.

I recently received a copy of all vendor payments to CME Associates from January 7th, 2005, to March 18th, 2008. During that time, the township made 2,597 payments to CME Associates, totaling $3,692,445.72. Much of that money comes directly from the township, such as the $229,595 paid on January 12th, 2008, for road improvements, but most payments come from the locals.

The game works as follows – the township continually expands the range of permits that require review by an engineer. The homeowner/business owner is then required to place funds in escrow to cover any future expenses. CME Associates will drain the escrow account of all funds before they certify the property. The system becomes a scam as residents and local businesses are forced to pay for unwarranted services to a company that is the governing body’s single largest contributor.

If unnecessary and inflated payments to CME Associates were added to the tax levy, Aberdeen Township would have the highest tax rate in Monmouth County, compared to the number three position it now holds.

For less than $8,000 a year in political contributions, CME Associates gets to take over a million dollars a year from the township. Looks like Mayor Sobel has pimped out the township for “professional services” in a no-bid contract. >>> Read more!

Legislating Against Pay to Play

New Jersey has become renowned for its system of “Pay to Play,” whereby contractors contribute to political campaigns in exchange for special consideration on government contracts. Pay to play is often legal so long as there’s no explicit arrangement connecting a contribution to a government contract. Naturally, many communities have banned this practice by forbidding any government contracts being awarded to a political contributor. The question is whether Matawan and Aberdeen should outlaw “Pay to Play” as well. I would oppose such legislation based upon free speech rights and the “Law of Unintended Consequences”.

I’m well aware how our area has been affected by graft. In 2005, Matt Scannapieco, the mayor of Marlboro, pled guilty to accepting $245,000 in bribes from developers. In 2006, Barry C. Bowers, the engineering inspector for Old Bridge, pled guilty to receiving over $25,000 in home renovations from contractors. That same year, Paul A. Coughlin, the mayor of Hazlet, pled guilty to accepting a $3,000 bribe from an FBI cooperating witness pretending to be a contractor. Months later, John Merla, the mayor of Keyport, pled guilty to the same charges.

At the same time, both Matawan and Aberdeen have both been tainted by, if not in fact, the appearance of pay to play. In 2004, Councilman Buccellato donated $3,900 to the Monmouth County Republican Committee. A few months later, the county awarded him a $25,000 contract for “call-in professional architectural services”. Last month, while considering whether to call, and pay for, a recount, the county awarded him another contract worth $125,000 even though Buccellato’s proposal was at least $30-40,000 higher than the others. Councilman Buccellato has also been a vocal supporter of awarding the Transit Village Project to the Columbia Group, a developer run by Jack Morris, a county Republican power broker.

Aberdeen’s Township Engineer, CME Associates, has donated nearly $60,000 to the Aberdeen Democrats since 1999. Coppola & Coppola, the consultant hired to develop the township master plan and review zoning variances, has donated at least $5,500 to the Aberdeen Democrats over that same time period.

Yet, I still oppose legislation that prevents political contributors from seeking government contracts. First, I believe that political contributions are a form of political speech and therefore ought to be protected under our Bill of Rights. Forbidding someone from receiving a government contract because of a political contribution is the same as penalizing him for political activity. No citizen should have to choose between political activity and feeding his family.

Additionally, I fear the Law of Unintended Consequences. In the 1990s, President Clinton sought to punish “excessive” executive salaries and made anything over $1 million non-deductible from corporate taxes. This led to an explosion in executive compensation via cashless stock options. Then McCain-Feingold tried to regulate campaign financing and funding moved from well know committees and PACs to shadowy 527s. Sarbanes-Oxley tried to outlaw Enron-style accounting shenanigans and international corporations began going public outside the United States.

Politicians will always find a way to raise money and interested parties will always find a way to give it to them. Better it should be in the open than in the shadows. Rather, I would allow any person or organization seeking business with the government to contribute to any campaign but with the following requirements:

1. On the cover page of all proposals and bids, the vendor shall list all political contributions over $300 made by its executives and their agents over the prior five years at the local, county, state, and national levels where the town/borough council is located.
2. Prior to voting upon any contracts, the town/borough council shall review, in a public forum, the vendor’s political contributions and include a listing of such contributions in the minutes.
3. Should the vendor be found non-compliant, the town/borough shall nullify the contract or be awarded penalties up to 50% of the contracted amount.

People have a right to free speech and unencumbered political activity. But they don’t have the right to anonymity when the public good is at stake. When the government awards money to a political donor, we should all know about it. >>> Read more!