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NCORR disputes PW’s coverage of its Hurricane Matthew recovery work: their complaints, our responses

This is one of hundreds of homes damaged by Hurricane Matthew that remain unfinished. (Photo: Lisa Sorg)

The NC Office of Recovery and Resiliency is disputing a previous Policy Watch story that Rescue Construction Solutions received preferential treatment in the bidding and scoring processes. We are publishing their rebuttals and our responses in full, unedited. NCORR sent these rebuttals via email, which are public under state open records law.

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First NCORR rebuttal and Policy Watch responses, May 11, 2022:

Dear Laura-

We have reviewed your email and have included our responses to each item below. Let me also say that we certainly appreciate many of the difficulties your agency has encountered over the years in fulfilling its mission (most of which were referenced in our reporting).

As you will see, however, it remains our firm conviction that, except perhaps with respect to a small handful of very minor matters that do not impact its overall thrust, the story is completely accurate.

Simply put:

  • North Carolina received hundreds of millions in federal recovery dollars to distribute to help lower income families rebuild after Hurricane Matthew.
  • Five and a half years after the storm, hundreds of families remain homeless and their abodes uninhabitable.
  • Over a period of time, NCORR awarded contracts for around $80 million to Rescue Construction Solutions even though it almost certainly should have realized that the company and was in over its head, provided false information in its prequalification application, and has consistently delivered poor performance.
  • Rescue was the beneficiary of NCORR contracting decisions not accorded to other contractors.

As has always been the case, however, we stand ready and anxious to receive additional information – e.g., requested documents and other records — that would shed more light on the matter. In particular, we would very much like to conduct interviews with Ivan Duncan and Sheila Brewington – both of whom have thus far not made themselves available to discuss this important matter with which both were so intimately involved.

Our responses to each of the 20 points you raise appear below.

Sincerely,

Rob Schofield
Director
NC Policy Watch

Lisa and Rob –

NCORR requires the following corrections to sections of the May 9 story that are misleading and, in some instances, false. In addition, to ensure an accurate portrayal of the agency and program, the accompanying opinion piece should be amended to reflect the corrected information as well. Should Policy Watch decline to make any of the corrections, please provide an explanation and supporting documentation which demonstrates why inaccurate information should remain in the story. Specific corrections are shown below with direct quotes from the story in italics.

  1. “At least 1,780 houses belonged to low-and moderate-income households.” – As we discussed yesterday morning during our interview, if this is a FEMA number, it has no bearing on the number of homeowners we will be able to help. FEMA does not measure eligibility for CDBG-DR. It is misleading to use a number from another federal agency that is not associated with CDBG-DR eligibility to set a false expectation.

Response: We do not believe it is at all misleading to report FEMA’s count of the total number of homes damaged by Matthew. We find it somewhat surprising that you would need to ask us if this is a FEMA number.

2. “Yet five years after the state received its funding”; “Over the past 4 years – NCORR has only been in existence for 3 years. I understand that for people seeking assistance, the specific entity within the state providing assistance is secondary, but if this article is supposed to be about NCORR, reference the correct timeframe.

Response: The story accurately reports when and why NCORR was created. It reads “The legislature created NCORR in late 2018. Gov. Roy Cooper, with the support of then-DEM Director Mike Sprayberry, appointed Laura Hogshead NCORR’s chief operating officer to get the state on track.”

3. “Rescue received preferential treatment” – All procurement actions were done in accordance with state procurement policy, Rescue did not receive preferential treatment.

Response: Our reporting, including conversations with numerous experts and impacted individuals led us to this conclusion regarding Rescue’s treatment. The story also reports your response.

4. “…that rewarded one company” – The changes we have made in accordance with state procurement policies have benefitted more than one company, as stated in our email sent to you on May 8, 2022. Suggesting that only one company benefited is false and misleading.

Response: As with #3, our reporting led us to this conclusion. We also reported your response. If you could provide documentation as to the other contractors who benefited in the same way, we would be very happy to receive it.

5. Rescue Construction has completed 135 construction projects. Of the 529 projects cited, 226 are in the pilot modular program and not on the same schedule as other rehabilitation or construction projects.

Response: We say 134 projects have been completed based on the documents we’ve received. We would be happy to update this number if another home has been completed since we received that report. And obviously, the hard fact remains that – whatever the schedule to which homes are assigned — the overall shortfall in performance remains enormous.

6. It is misleading to state that we changed our stance on retroactive increases. The increases we have implemented have not been for contracts already executed, but for future work. Increases were only given for projects without NTPs and for change orders which had not yet been submitted. Our contracts allow for price increases. The only reference to price changes in the NCORR Procurement Manual is on page 25 and allows for changing prices. The statement in the article is false.We have a document in our possession which lists a home for which a contract was let in 2019, the NTP issued in 2021, and the price increases approved in 2022.

7. “Also in 2021, before NCORR awarded Rescue a $52 million contract to install modular homes, it changed performance requirements in a way that ended up favoring the company. Had NCORR not amended those requirements, Rescue would have been ineligible to bid.” – This statement is flatly FALSE. As explained in an email yesterday morning, the scorecards have no bearing on the IFB process.

Response: Among other things, there appears to be some confusion here about acronyms. In your interviews and previous emails to us you do not use the term “IFB.” It’s also clear from the record that NCORR failed to take account of Rescue’s inaccurate pre-qualification application.

8. Sam Cockrell is in the process of relocating his home to his desired location, but he denied his original award, which prolonged the process. There is no doubt that this process can be cumbersome, but it’s important to include context on why delays can occur.

Response: We reported this.

9. The Pinions signed an award agreement in December. Until they were qualified and signed the award, it is inaccurate to place the blame for their living situation on NCORR. NCORR cannot use HUD funds until the family is determined eligible. Again, a lack of context is misleading.

Response: We reported the December date. It has now been six months without activity for this family.

10. The contractors that were “driven out of the state” were never in the state to begin with. They were out-of-state contractors, who typically follow CDBG-DR money from state to state and try to profit from it. We have not been informed that any contractor lost between $500k and $750k – they may have a reduced profit, but none of them have reported that they lost money on our projects. Is there evidence to back this claim up?

Response: A contractor need not be a North Carolina resident to be “driven out of the state.” We stand by our reporting here.

11. “At this rate, it will take another 7 years to complete all of the modular homes” is misleading. The pilot is designed to bring more and more factories on board, which will speed up production. Manufacturing has certainly slowed due the COVID-19 pandemic, as factories are experiencing the same workforce and materials challenges that the rest of the construction industry is facing.

Response: The number is accurate. If there is additional information available indicating that a production speed-up will be forthcoming, please provide it to us or indicate where we can access it.

12. “Rescue would’ve been temporarily ineligible to bid on future contracts, performance reviews show, had NCORR not changed the rules” and the resulting section is flatly FALSE. As described to you in writing yesterday morning, the scorecard has NO BEARING on the Modular IFB.

Response: Again, it appears that we may have a conflict here with respect to the acronyms referenced in your interviews and emails – “RFP” and “IFB.” If you provide documentation here, we’d be happy to update the story.

13. “However, the modular invitation clearly states it is for bids” is misleading, at best. The method used for inviting bids is “Invitation for Bids,” but is clearly separate from the process used with our pre-qualified GCs to bid on construction projects. Conflating the language is misleading to readers who are not in the industry.
Response: See responses to Numbers 7 and 12 above.

14. We did not drop the “capacity” section in the scorecard. This is flatly FALSE. Please provide sourcing on this claim, it is incorrect.

Response: The story does not say it was “dropped.” Our reporting here is based on the interpretation provided by expert sources.

15. “Of the 226 modular projects awarded to Rescue, just 11 have an NTP.” This is misleading. Projects receive an NTP as the factory is ready to build the modular home.

Response: We do not think it at all misleading to report that so few homes are moving forward. If it’s your position that this matter is all the fault of modular factories, we’d be happy to receive documentation.

16. “For two years, the Cades lived in their moldy house before they were approved for the program.” This is misleading. Until they qualify for the program, we cannot move them out of their home.

Response: This is an accurate description of the situation the Cades find themselves in.

17. The Cade family has experienced a required abatement process and 5 change orders, increasing the scope significantly and leading to delays in obtaining materials.

Response: We do report the fact that other factors have contributed to the Cades’ situation. These facts do not explain or excuse the fact, however that, as of the date of our interview with Mr. Cade, months have passed since he had seen any activity on their home.

18. Denisa Raye’s home was changed from a rehab project to a reconstruction project because of significant structural issues. We are currently waiting on the county to issue a building permit.

Response: Our reporting indicates that it’s been seven months that Ms. Raye has been waiting for a simple ramp. Is it your contention that this is exclusively the fault of Cumberland County?

19. The Joint Legislative Emergency Management Oversight Committee held a meeting on March 17, 2021 at which Director Hogshead testified.

Response: We regret the omission and have updated the story.

20. Laura Hogshead is the Director of NCORR, not Chief Operating Officer as stated in the story.

Response: The NCORR website lists you as “Director” and the “Chief Operating Officer.”


Second NCORR rebuttal received on May 13, 2022, plus Policy Watch response:

May 16, 2022

Dear Laura-

Please find below our responses to your email of Friday afternoon May 13. Once again, I hope this demonstrates to you that:

  1. our reporting in this matter is based on hours upon hours of research and analysis, numerous interviews with knowledgeable individuals and directly impacted parties, and scores of documents;
  2. the situation highlighted therein constitutes a genuine human tragedy for numerous displaced families; and
  3. there is a desperate need for NCORR to review and improve its efforts and those of the companies it has hired to do this vitally important work.

As I noted last week, we certainly appreciate many of the difficulties your agency has encountered over the years in fulfilling its challenging mission. This is hard work at a tough time. But you must agree that, at this point – nearly six years after the hurricane – it’s simply unacceptable (or should be) for a such a vital mission to have gone so long without coming close to being completed.

As I also mentioned last week, we would also renew our request to conduct an interview with Ivan Duncan, who is at the center of this matter.

Finally, in keeping with our ongoing effort to be as transparent as possible with all concerned, I would alert you to the fact that we will be publishing the content of both of the email communications you sent to us in which you questioned the story, along with our responses – including those that appear below.

Sincerely,

Rob Schofield
Director
NC Policy Watch

Hello Rob –

I certainly hope you are feeling better and can return your attention to the inaccuracies in this story. There are number of factual errors that appear to be the result of incomplete or inaccurate documentation on your part.

You are incorrect in your assertion that “the office should have realized that the company was in over its head, omitted important information in its prequalification application, and has consistently delivered poor performance.” And you are wrong that “Rescue was the beneficiary of NCORR contracting decision not accorded to other contractors.”

As the Director of NCORR, it is my responsibility to answer for my office and I have been willing to do so and to provide documented evidence showing how our processes work.

I am attaching documents (and sending a SharePoint link) that would have mitigated the need for you to work during your COVID convalescence.

1. Rescue Construction did not receive preferential treatment. The documents that prove this are numerous. First, for the May 28, 2021 increase, there are Change Orders that include a 43.7% increase as a line item for several GCs. The files are too large to attach here, so we have created a SharePoint site for you to access so you can see those Change Orders. We will send you the link to access that SharePoint in a separate email (that email will come from Jeremy Burnette). We have included a sample of Change Orders that show that the following GCs benefitted from the May 28, 2021 price increase: CRSC, Persons Construction, RHD Construction, Fuller Center Disaster Recovery and Excel Construction. Each Change Order is lengthy, but you can see the line item for the increase.

In addition, the March 22, 2022 price increase benefitted G&N Construction and Remodeling, Famlock Construction, and Fuller Center Disaster Recovery. I disclosed these names in an email on Sunday to Lisa. It is completely confounding to me for your outlet to believe unnamed sources instead of the person running the program and the records of NCORR, but we are providing the evidence that her sources are wrong. Proof that those GCs received the increase is also in the SharePoint site.

PW Response: We reported that contractors received price increases for change orders. However, change orders are not the same as retroactive alterations to a competitive bid.

2. It is false to state that we changed our stance on retroactive increases. The increases we have implemented have not been for work already performed, but for future work. Increases were only given for projects without a Notice to Proceed (NTP) and for change orders that had not yet been submitted. Our contracts allow for price increases. The only reference to price changes in the NCORR Procurement Manual is on page 25 and allows for changing prices. We provided that information to Lisa last Sunday.

You provided an Excel spreadsheet this morning that purports to show a project that received a price increase after receiving an NTP. It is unfortunate that your sources provided wrong or intentionally misleading documents. AECOM erroneously included that project (APP-03083) on the list to receive an increase, our staff caught the mistake, corrected it and executed the attached contract with Rescue at the lower, original price (not the increased price). When reporting, it is important to have the final document. If Lisa had shared that document with me in the course of the nearly two-week span in which I gave two interviews, I would have corrected her mistake before it was published. (Attachment – “Response #2”)

PW Response: We have posed the question again to our sources and asked them for documentation. They provided documents for seven homes that had executed work orders/Notices to Proceed prior to the competitive bid changes.

3. I will fully admit that I use the terms “IFB” and “RFP” interchangeably, as they are very similar in the contracting world and I should be more clear. But the fact remains that the scorecards that we use to assess GC performance had no bearing on the Modular IFB. You say that you are updating the story, but this was a major part of your insinuation that NCORR was steering contracts to Rescue and is worth much more than an “update.” That needs a full retraction.

PW Response: We reported and updated the story to underscore NCORR’s position.

And your response this morning changes the question – instead of now focusing on the scorecard, which you now admit has no bearing on the IFB process, you are asking about litigation. I’m happy to answer that and would have been happier to do it before the article was published. The Terms and Conditions attached to the Modular IFB make clear that it is the State’s option to perform a background check, but it is not required. IF the State requires a background check, THEN the vendor is obligated to disclose any civil litigation. For the Modular IFB, she did not hide information and we procured that contract according to our state policies. Criticism of a state policy is one thing, but falsely stating that required steps were broken is unacceptable. (Attachment – “Response 3” shows the Terms and Conditions attached to every DOA procurement. These T&Cs are widely available.)

PW response: We asked about civil litigation during the pre-qualification process in the first interview. Your response was “That’s a good question and I will look into it.” The modular invitation to bid has similar language asking about civil litigation as in the pre-qualification form.

4. The assertion that it will take until 2029 to accomplish the modular builds is ridiculous. We are working with factories to increase production but, to be frank, they are reluctant to work with Federal funds after having projects canceled by FEMA in the last few years. This is another instance where Lisa would have been well served to look for the context.

PW response: We reported that “at this rate” it would take seven years to complete the modulars, meaning at the current rate of three homes in nine months.

5. On the issue of whether or not “Rescue would’ve been temporarily ineligible to bid on future contracts, performance reviews show, had NCORR not changed the rules,” that is not accurate . As I provided to Lisa on Monday morning, May 9:

You brought up the issue of the Scorecards and the fact that the scoring was changed from 80 to 75 in July of 2021. You’re right – that scoring was changed (actually on June 3, 2021), and I’d like to better explain why we changed that scoring. First, it’s not the first time that we have changed the scoring threshold. Previously, the threshold was 85, but only Rescue Construction and CRSC were able to meet that threshold, so we lowered it to 80. Scorecards are done in the best interest of the State. It was determined that having more GCs eligible to bid creates more competition, which is a benefit for the program.

Let me illuminate a little more clearly when we made changes and the resulting bids that we received.

On June 3, 2021, as stated above, we changed the threshold from 80 to 75.

On June 22, 2021, we put out two Reconstruction RFB packages. Rescue did not bid. Only CRSC bid, but we could not award because they bid $180/sqft, which was over the stated $146 cap.

On July 12, 2021, we put out 6 MHU RFB packages. Not one single GC on our list bid on those projects. Again, we could not award.

On Aug 13, 2021 we put out 2 Reconstruction packages. Timberline was the only bidder and it was $248 per sqft. Again, that was over the cap and could not be awarded.

Rescue did not bid on anything for 2 months after the threshold was lowered.

To make it clear, we lowered the threshold to increase competition, and for the next 10 RFBs, we received no bids that could be awarded per state procurement rules.

I can only conclude that Lisa did not read the information provided to her by me, the Director of the program, in response to an interview, and decided instead to publish the story she had already written. This is inaccurate and disappointing.

PW Response: We did read the information and included a summary. As for the story being already written, we actually held the piece because the state requested a second interview.

6. We’ve been very transparent with your organization and will continue to be. Unfortunately, you have not been transparent with us about the primary sources for this article, upon whose word you are printing baseless and damaging accusations. These “experts” have provided you incorrect, incomplete, and misleading information – information that we could have helped you to understand if you would have shared it with us. If you’d like to base your reporting on actual experts on contracting and procurement, backed up by documentation, instead of blind sources, we are able and available to walk through contracting decisions and to continue to provide relevant documentation.

PW Response: Our sources are confidential, but not anonymous. Based on further documentation and NCORR’s responses to us, we believe their fear of retaliation is justified.

We have asked for relevant documentation from NCORR, dating back to public records requests filed as early as April 12 and 13. The only records we have received are an organizational chart and lists of pre-qualified contractors.

7. For clarity, I was hired as “Chief Operating Officer” of NCORR in October of 2019 and became “Director” in August of 2021.

PW Response: We used the title that was in your bio on the website. It is also on your LinkedIn page.

One last thing – I do not mind having my interviews posted. I do find it to be in incredibly bad faith, however, for Lisa to have posted them after stating during each interview that she was “only recording for accuracy.” Shame on you all. I should also note that, as people who protect our applicants from having their identities exposed, you may want to be careful about how much Personally Identifiable Information is in the material that your “sources” are sending to you. Your sources certainly do not care about protecting people’s information.

PW Response: We posted the interviews only after receiving a text from State Senator Mike Woodard stating that someone at NCORR had forwarded the interview to the Governor’s communications director, Ford Porter. Since the first interview was circulating at the highest levels of state government, it was/is our belief that the public has a right to know what it contained.

We posted the second interview in order to show any follow-up questions and answers.

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NCORR disputes PW’s coverage of its Hurricane Matthew recovery work: their complaints, our responses