Government & Politics  May 21, 2023

No bids required

Critics question lack of competitive bidding for TST’s Timnath work

TIMNATH — Just after roll call for the Timnath Town Council meeting on Oct. 26, 2021, John Barkley approached the microphone to provide public comment on agenda item 6a. To his front, council members — including Mayor Mark Soukup — sat on a large rounded dais before their own microphones, computer monitors and bottles of water.

On the council side of a decorative railing and to Barkley’s left sat Town Administrator Aaron Adams and Town Clerk Milissa Peters-Garcia, while to the right, at their customary positions, sat three individuals who, despite not being employed by the town, held official town roles and titles: Don Taranto, town engineer and director of public works; Kevin Koelbel, senior town planner; and Matt Blakely, community development director.

It could have been an uncomfortable moment for Barkley — though he didn’t show it — as agenda item 6a dealt with a professional-services contract with TST Inc. Consulting Engineers of Fort Collins, headed by Taranto, with Koelbel and Blakely both employed by the company. Barkley, then a member of Timnath’s Finance Committee but speaking on his own behalf, spoke in opposition to the contract.

“I just go into the belly of the beast, you know,” Barkley, a semi-retired certified public accountant, quipped to BizWest recently, reflecting on that appearance before the Town Council. 

For more than a decade, TST has been employed by the town in a variety of capacities — providing planning and engineering services and accumulating invoices in excess of $17 million since 2010, funds expended with no requests for proposals issued prior to the company’s selection. The payments covered work performed by the three full-time and several part-time workers.

The payments are reflected in monthly check registers published by the town, with some of the older registers obtained by BizWest through a Colorado Open Records Act request. BizWest initially requested records dating back to 2010; however, Town Clerk Peters-Garcia noted in an email that the Colorado Municipal Records Retention Schedule requires records of accounts payable to be kept only for seven years.

Check registers began to be included in council agenda packets in March 2011, and records not already included on the town website were provided back to March 15, 2011. The $17 million figure does not include billings from 2010 or the very beginning of 2011.

TST’s integral role

Timnath ranks as the second-fastest-growing municipality in Colorado since the April 2020 census, and TST plays an integral role in helping to manage projects that fuel the town’s growth, operating since 2010 under a series of contracts.

When new development proposals are submitted to Timnath — such as the massive Ladera/Topgolf project now being considered — it’s largely TST employees who review the proposals on behalf of the town. 

When the town itself requires planning or engineering services for municipal projects, it’s largely TST that does the engineering work.

TST employees have held the three main engineering and planning titles within the town, and other employees work on the town’s behalf on an as-needed basis.

Services provided by the company include:

  • General engineering and public-works.
  • Planning and community-development.
  • Potential design, engineering and planning of town capital improvements.
  • Review of development applications and annexations.
  • Review of building-permit applications.

Under the contract signed in 2021 — the one opposed by Barkley — TST operates under an “Annual Invoice Cap” of $175,421 for the town engineer and director of public works, $189,441 for engineering and $520,812 for planning.

But actual fees can be far higher.

“The Annual Invoice Cap shall not apply to building permit activities (grade certifications and building permit review) and extraordinary services,” the contract states, “including but not limited to capital projects, bond issues, litigation, major retail development project negotiations, or fees for services that are billed to the Town that are reimbursable to Town by third parties, whether actually reimbursed or not, in the discretion of the Town. When such matters arise, Contractor will discuss with the Town Manager additional budget amounts that may be necessary to pay fees for such work.”

Fees paid to TST add up quickly — the March 2023 invoices alone totaled more than $250,000, according to a check register published on the town’s website.

A voice in opposition

The lack of competitive bidding on the contracts has drawn the attention of some town residents who — even as the town moves toward taking the services in-house — argue that the no-bid contracts have not reflected good public or fiscal policy.

Barkley rose on that autumn evening in 2021 to address the latest proposed contract with TST that included a three-year term, with a potential three-year extension, potentially costing the town at least $6 million, Barkley said.

“This contract is very concerning to me,” he told the council members, with Taranto looking on attentively, occasionally taking notes.

View Oct. 26, 2021, Timnath Town Council meeting.

View minutes of Oct. 26, 2021 Timnath Town Council meeting, including Barkley letter.

Barkley questioned various elements of the proposed agreement, including the potential six-year term, insurance liability limits and the fact that no competitive bidding occurred prior to TST’s selection.

“I just don’t think that’s good business,” said Barkley, a Timnath resident who also provided a four-page critique of the proposed agreement.

“We didn’t follow the RFP process, even though I think we’re supposed to,” Barkley said, “or at least that’s the intent. … There might be exceptions to that rule, but I didn’t see any justification presented for the council to evaluate why the RFP process was skipped. How did all of this come about? I really think the analysis presented to the council lacks enough detail and thought.”

Barkley’s appeal fell mainly on deaf ears, except that the term of the contract was cut in half, to two years, with a one-year possible extension. In the end, the Town Council approved the TST agreement 5-0.

View TST’s latest contract with Timnath:

Debating the need for an RFP

Town Council members argued at that October 2021 meeting that TST has become integral to the town’s operations and discounted the need for an RFP, especially as the town had begun a process to bring planning and engineering services in-house.

“When is the right time to make those moves?” asked then-Councilmember Rick Collins, speaking of shifting away from TST. “It isn’t tonight. It isn’t tonight when we’re going to say we could go ahead and have a smooth transition. We need the people who are in place with TST involved, as I see it, with the major projects that are out there … You don’t throw people out of the car that you need to drive the car at that time.”

Then-Councilmember Aaron Pearson agreed.

“I think TST has done a great job for the town,” he said at the meeting, “and all of a sudden switching horses for a brand-new person, it would be an absolute disaster for our town. I fully agree with RFPs where it makes sense, but this is a place an RFP does not make any sense.”

Soukup ran for office in 2020 promoting issuance of RFPs by the town. Responding to a question about his top priorities for an April 2020 Q&A with the Fort Collins Coloradoan, Soukup responded: “1. Requiring Request for Proposals (RFPs) on all town contracts and capital expenditures.”

But in the October 2021 meeting, he said the TST agreement was an exception.

“I think everybody knows that I’m a stickler on RFPs and believe that we need it in the town,” Soukup told the council. “This is different in that it started … the contract really is an employee contract that’s set up as a services contract as opposed to an employment contract because of the town being so small three or four years ago, and we’ve evolved. We’ve gone from 600 people to 6,000 people. Well, you can’t just turn off the spigot then, either …”

Soukup noted that the town already was beginning to transition to in-house planning work with a couple of new hires.

Adams, in recent comments to BizWest, noted the institutional knowledge that TST brings to the town.

“What I would say is very common and consistent is that when you find a company or consultant that you think is doing good work, that it’s very common to stay with them for a longer relationship,” Adams said. “I think that would be much more unusual, unless you had a performance issue, it’d be much more unusual to sort of change horses in the middle of the race. That would more than likely eat up any potential savings you would have. If you change firms, they’re starting at square one. They’re learning your systems. It would not make financial sense, unless you’re not having a performance level that you need. Changing firms would certainly put you behind the eight ball.”

TST stepped in after town controversy

TST’s official role began as the town weathered controversy over its former town manager, who was placed on paid administrative leave in July 2010 over questions regarding  “invoicing, lack of documentation, fair treatment in the bidding process and town contracts,” according to an announcement from the town at the time.

The town manager, Rebecca Davidson, worked for years under a contract, after which she became a town employee. During her time as a contract employee, she also provided engineering services to the town through IB Engineering Corp.

Davidson resigned from her position in January 2011, receiving a payment of $140,000. She and the town signed non-disparagement clauses in the settlement.

As the controversy ensued, town officials turned to TST — founded by Taranto in 1989 —  to review some of the issues facing the town, including a lawsuit involving a contractor.

“What was going on when we got asked to come in and evaluate a couple of things, they had a town manager, who was the town manager and the town engineer and they had put her on administrative leave, because there were concerns about some things that were going on,” Taranto recalled to BizWest recently. “In addition to that, the town was in a lawsuit with a contractor.”

TST was asked to review contracts and the complaint filed by the contractor.

“They wanted a third-party kind of review of that so they gave me the contract to review and they gave me the lawsuit, meaning the complaints that the contractor had sued the town and asked me to evaluate that, and I did,” Taranto said. “And I sat down with them after that and explained the circumstances from my point of view and told them the things that I thought the town had done right, the things that I wasn’t sure of, and what my suggestion was, to settle this lawsuit.”

Simultaneously with the payment to Davidson, the town settled the lawsuit with the contractor for $500,000.

But the relationship and trust formed with TST endured, leading to a series of professional-services agreements with the town to provide a variety of planning and engineering services. Agreements were signed in 2010, 2011, 2012, 2013, 2016, 2019 and 2021.

Adams said that TST brought “independence and professionalism” to the town’s planning and engineering functions.

“There were issues in the town,” he said. “This was more than a decade ago. These things are publicly available. The record is out there, but the town was not in a good situation. … There were conflicts of interest, the way that those services were handled before TST came on board, and yes, they were brought in to consult specifically because the town found itself in a difficult spot.

“This sort of speaks to the genesis of the relationship between Timnath and TST,” he added. “But the town was in a bind. TST came in for what was thought was going to be a brief short-term, low-dollar-value job and helped the town to navigate out of that circumstance. And the professionalism of that firm was immediately apparent, and so the town at that point, again, many years ago, but the town decided that TST would probably better fill the role than some of the paths that we had used in the past that had gotten us into such trouble. And so, you know, TST has been an instrumental part of bringing professionalism to the town especially in those much earlier days when the town was smaller.”

Brian Kurth, a Timnath resident, founder of Revere Software Inc. and critic of the TST/Timnath relationship, has submitted a series of Colorado Open Records Act requests to secure information about Timnath’s relationship with TST.

He said the relationship between the town and TST needs more transparency.

“It’s just so rich,” he said. “It goes back so far. But here’s the thing: Don is trying to paint it as if he came in on a white horse to save Timnath or something. Truth be told, you know, I mean, yes, that is true. But you know, he replaced a bad situation with further lack of transparency and there’s such distrust in this town.”

Transitioning to in-house positions

Timnath has begun a process to transition away from TST, hiring Chad Kemper as town planner and Natalie Hansell as planning technician. The moves mirror other positions that have been brought in-house, including finance and the town attorney position, the latter of which has shifted back to a contract role while the town advertises for a new town attorney.

And one of the TST-held positions has shifted in-house. The town recently advertised for a senior town planner — the Kevin Koelbel position. The position was filled by Koelbel himself, who is no longer employed by TST, working for the town with a $95,356 salary.

Timnath also has advertised to fill the Don Taranto position — town engineer and director of public works — but after not finding a satisfactory candidate in the first round, the town opted to repost the job opening, Adams said. The position is advertised at a salary of $97,000 to $151,000 per year.

“We reworked that (job posting) a little bit, just trying to extend our efforts a little further,” he said. “The goal is to try and bring in more applicants and continue to work on that process to get that position filled as soon as possible.”

Adams said the town also plans to bring the community-development director position in-house.

He said he’s not certain what is driving interest in the TST contracts, given that the town is transitioning away from the relationship.

“I’m not sure where it’s coming from. I do find the timing interesting that the town is already on a path to bringing these positions in-house,” Adams said. “They’re pushing to have the town less reliant on TST. That’s great. That was decided a couple of years ago. We’re started down that path. And that’s the path we’re continuing on. So you should be happy I guess.”

News of a transition to in-house planning and engineering is a step in the right direction, Kurth said.

“Well, it’s long overdue,” he said of the shift to in-house positions. “The message there is, ‘Good. Fantastic. You know, we’re thrilled. It’s about time.’ I mean, the perception and the lack of transparency and the sense of perception of cronyism in this town is pervasive. So the more transparency, the better.”

What do other communities do?

Municipalities — especially small towns — routinely contract for outside expertise, such as planning, engineering, legal or accounting services. Smaller communities typically lack the financial resources to support staff positions to fill every need.

But the awarding of no-bid contracts can be controversial, and has garnered attention in other states.

The Citizens Campaign, a New Jersey-based nonprofit that educates citizens on political power, has created a model ordinance for cities and towns in New Jersey aimed at requiring competitive bidding for professional-services contracts.

“Competitive negotiation requirements help to ensure that the municipality awards professional service contracts (i.e. attorneys, engineers, auditor, etc.) with integrity and transparency. It is in a taxpayer’s best interests that their local government spends its money on the best and most cost-effective professionals available,” the organization states on its website.

“The Model Competitive Negotiations Ordinance requires municipalities to use an RFP process to secure competition among potential professional service providers, and allow a fair comparison of rates & services.”

Rob Horowitz, spokesperson for The Citizens Campaign, said in an email to BizWest that, “Generally speaking, cities and towns that adopt open competitive negotiations for professional services, where they establish standard criteria and seek proposals from multiple firms realize significant cost-savings and end up with higher quality services. Monopolies whether in the public or the private sector are costly to taxpayers and consumers,” 

Northern Colorado communities reviewed by BizWest vary in terms of requirements for competitive bidding for professional-services contracts. Frederick, for example, requires competitive bidding for purchases of $50,000 or higher, but exempts professional services from mandatory RFPs under the policy.

Longmont in December issued an RFP for planning and development-review services on an as-needed basis, and Windsor issued an RFP in 2018 for on-call land-use development-review services. Milliken in December issued an RFP for building-department services.

Nicholas Wharton, town administrator for Severance, said the town contracts out for a variety of services, including planning, engineering and building inspection, and routinely uses the RFP process for “multiple reasons.”

“The first one is obviously cost to make sure that we are getting the best cost for the tax dollars because it’s obviously not our money. It’s the taxpayers’ money,” he said. “So we want to make sure we’re getting the best services for the best cost. Second is the best services. Oftentimes or not. If you have a contractor that has been with you for 10, 15, 20 years, they like to take things for granted.”

Severance contracts with Colorado Civil Group for engineering, Ayers Associates for planning and Safebuilt LLC for building permits. The town also contracts out for legal services.

Wharton said he likes to go out for bid every three years “to make sure you’re getting the best services for the best cost.”

To RFP or not?

A regional consultant, who asked to remain unidentified, questioned Timnath’s reasoning for not putting the contracts out for bid.

“As an engineering firm, we’ve been asked by jurisdictions to put a bid in on similar type services in the past, but I’ve not seen anything that Timnath has ever put out,” the consultant said.

“I don’t know that it’s fair and ethical,” the consultant added. “It seems to me if you’re gonna spend … if there’s any sort of public money involved in something like that, it’s supposed to be a fair and ethical process to determine who or what firm or what consultant is selected for that. … For them not to do it, I don’t think it’s right.

“I don’t know how they can select a consultant to use public money without some sort of a bidding process, where they would look at either fees, hourly-type fees or qualifications, that sort of thing. That’s typically what they look at when they put those RFPs out. They want to know what your hourly rates are. They want to know what your experience and qualifications are. And then they do an interview process and they would select who would be the best for the project or best for the town.”

Taranto said there are reasons that the town has not issued an RFP for the services.

“What we do for the town is a little bit unique,” he said, noting that TST provides personnel billed on an hourly basis.

“What we evolved to is a public-private partnership where the town needed services,” he said. “They came to us and they felt very comfortable getting the services from us for hourly services. Everything we do for the town is hourly, they ask for an hour service. We give them an hour, and we charge them an hour. And it changes, and the number of people and everything that we give to the town changes monthly, weekly, daily on the demands that are there. That’s just how the services have evolved.

“We’ve been in other circumstances, absolutely where there was never an RFP process,” he added. “We have been in places where there were. And so the places that we weren’t, were in these very unique circumstances where we were asked to come in and help. And then what happens is you get a trust built up between the client and the provider.”

When asked about whether the current TST contract should have gone to an RFP, Soukup initially responded, “I don’t know. Sorry, I don’t know.”

He added: “I think Don is doing a great job, and Aaron was brand-new. He just took a position as town manager, and if Don left, the sense of history and how we interrelate with the other companies could be an issue.”

Timnath’s purchasing policy

Timnath’s rapid growth has meant growing pains in town processes, as it works to build procedures, policies and staff.

Barkley said he and other members of the Timnath Finance Committee had reworked what he said were unfavorable terms on the town’s debt, terms that had not gone out for bid.

“This brought along the whole topic of RFPs,” Barkley said, leading to greater emphasis on competitive bidding for town projects, with Soukup’s support.

Timnath’s town charter provides broad discretion to the town council to enter into professional-services contracts. A purchasing policy effective as of Jan. 1, 2021, includes contract bid guidelines that dictate that “For purchases over $35,000, the town will contract services through a formal, public bidding process.”

But the council may waive the requirement for any of a variety of circumstances, including:

  • Where the process may cause undue delay.
  • When deemed in the best interest of the town.
  • Only one sole provider exists.
  • If the bidding process would result in substantially higher cost to the town, injure the town’s financial interests or impede the town’s administrative functions.
  • Ongoing services provided to the town by an entity that has been identified as the most qualified and/or preferred provider so long as the provided services continue to meet the standard of performance acceptable to the town.  

But exemption of the TST contract from that policy grates on critics.

“Despite the fact that it may be, quote, ‘legal,’ you know, it does raise the ethical questions, and it doesn’t remove just the fact that just because you can doesn’t mean you should,” Kurth said.

Barkley agreed, saying that at the very least, the town should issue RFPs for engineering of town projects, such as roads, bridges, municipal buildings or other needs.

“The whole TST contract, with absolutely none of that being subject to an RFP,  I felt was wrong,” he said. …  “I still feel the same way. There’s been nothing that I know that’s happened to make me want to change my opinion on that.”

Although he said the town complied with the Purchasing Policy because the contract went to a vote of the Town Council, he still disagrees with the decision.

“I encouraged Town Council to do RFP bidding on it. And I lost that battle,” he said, referencing the October 2021 meeting. “So I disagree with their decision, but I agree that they had the capacity to make that decision. I’m not saying anybody did anything ethically wrong. But I don’t think we’re doing business in a smart way.”

Christopher Wood
Christopher Wood is editor and publisher of BizWest, a regional business journal covering Boulder, Broomfield, Larimer and Weld counties. Wood co-founded the Northern Colorado Business Report in 1995 and served as publisher of the Boulder County Business Report until the two publications were merged to form BizWest in 2014. From 1990 to 1995, Wood served as reporter and managing editor of the Denver Business Journal. He is a Marine Corps veteran and a graduate of the University of Colorado Boulder. He has won numerous awards from the Colorado Press Association, Society of Professional Journalists and the Alliance of Area Business Publishers.
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