59

effectively was undermined by their environment, where class-
rooms were not safe, where heating and air conditioned went
unrepaired, where many roofs leaked and toilets frequently did not
work.

As you know, the majority of the schools date back to around the
turn of the century. Many have never seen roof repairs or any sig-
nificant modernization made either to comply with applicable
building codes, to provide basic amenities or to protect safety. The
Authority immediately asked the new board of trustees to focus on
the problems of the schools’ facilities.

In establishing the powers and responsibilities of the trustees, we
noted that operating methods in effect at the time were frequently
counterproductive and hampered effective service delivery. The Au-
thority emphasized that schools should be free to adopt policies and
procedures that would promote greater efficiencies while simulta-
neously ensuring responsible stewardship for public funds.

In the course of the schools’ repair program last summer—and I
do want to focus on that directly, Mr. Chairman—the Authority,
along with a number of other agencies, determined that considering
the rapid pace of activities, a review of the program’s operations
and procedures should be conducted. Rather than see a series of
separate reviews instituted, the Authority decided to consolidate
inquiries and initiate an audit of the program. We initiated that
audit.

I would also note that the Authority initiated the audit as part
of our overall program to improve procurement in the District Gov-
ernment. Procurement reforms remain an important management
goal of the Authority, both in the public schools and throughout the
rest of the government. Therefore, as part of the effort to reform
procurement in the public schools, the Authority sought to audit
the procurement program used for execution of fiscal 1997 capital
contracts. We believe that the findings from the audit will be bene-
ficial to improving not only operations of the schools but the oper-
ations of other District agencies as well.

And as you know, Mr. Chairman, the audit was completed by
Cotton & Co., at the end of December. The audit found a number
of problems related to process, to the process used by the schools
to conduct their procurement operations. On January 13th the Au-
thority released the audit report to the public.

We asked Cotton & Co., to determine the following: Whether the
schools had an effective procurement system in place during fiscal
year 1997 for capital improvement projects. We asked them to de-
termine whether the procurement system met the statutory, regu-
latory and program needs of the schools. The audit concluded that
the schools did not have an effective procurement system in place
and that the system did not meet statutory, regulatory needs of the
schools.

The Authority is concerned about the serious nature and scope
of the audit findings. I want to emphasize that we take these audit
findings very seriously. As a result, the board members met with
Cotton & Co., to review their findings, and we have asked the In-
spector General of the District of Columbia to review the audit
findings and to make any further recommendations as necessary


123

Chuck Williams” sound decision to get at the root cause of the problem, and actually fix it - even
though tume was short and emergency procedures would be needed.

We also knew that you and your colleagues worked hard to get us a capital budget, and to provide
funds from the privatization of Connie Lee and Sallie Mae, so that we could finally start restoring
our aging school facilities. Had we deferred repairs for another school year, Congress would be
justifiably skeptical of future capital budget requests.

In retrospect, the Trustees have learned some important lessons in the past year. One of them has
to do with timing and priorities. There is no question, for example, that we needed to close school
buildings — and still face a situation of serious overcapacity. But the political firestorm occasioned
by these decisions put a strain on us and on the organization, and diverted attention from the effort
to reform academics.

On the matter of roofs, though, there can be no question: immediate action was demanded because
the safety of children was at stake

Focusing on the Children. The motto we adopted a year ago is “Children First.” In the last few
weeks, it has been difficult to hear that phrase amid the din of charges and counter-charges. There
really is waste going on right now, but it’s not the kind the tums up in an audit.

It's the waste of children’s minds, the loss of their futures, that we should be worrying about.
While this city of lawyers and consultants and reporters buzzes about the latest school-system
rumor, there are about 2400 second graders who are “below basic” in reading skills. This is the
year we start to implement promotion gates, as mandated by Congress in the DC School Reform
‘Act, and those 2400 children are at risk of being held back. Our Chief Academic Officer has
called for enough volunteers to tutor each of those children, one-on-one, and give them a fighting
chance to do well enough to make third grade next year. What will it take for us to focus on those
children?

| urge each of you to read the Emergency Board's annual report, which was recently published,
and which I am submitting for the record. It discusses why we had to give such a high priority in
this first year to stabilizing school facilities and creating safe leaming environments for our
children

But safe schools are only a start. Now we should be tuming the comer and facing squarely our
promise to educate these children. Our new academic officer, Arlene Ackerman, has laid out an
ambitious plan including whole-school redesigns, an end to social promotions, reconstitution of
failing schools, and teacher and principal evaluations based heavily on student achievement. It will
take years to tum this school system around, but as acknowledged in yesterday's Washington Post
editorial, the Trustees have “laid a foundation for progress.”

[As you know, the Emergency Board has been placed in jeopardy by a recent appeals court ruling. I
will not use this time to address proposals for legislation to restore the authority of the Trustees.
But | will say that today’s discussion underscores the need for oversight that is expert, nonpartisan,
willing to make tough decisions, and focused solely on improving the District's public schools.


25

However, closing schools is a sensitive matter involving many variables. During the
development of the Long Range Facilities Master Plan, DCPS conducted an evaluation of
the instructional space on hand, the current number of students using space and other
criteria, Based on this assessment and data on file, 18 schools were identified for
potential closure, After careful consideration of all factors surrounding the closing of
schools, the Emergency Educational Board of Trustees voted to close 11 of those schools
on April 28, 1997.

DCPS ha acted to liquidate excess property, generating funds that can be re-invested in
capital improvements to aging facilities. To date, DCPS has gathered or will gather the
following amounts:

+ Sales Closed $400,000

© Sales Pending Sellout $750,000

* Sales Approved Pending Control Board $410,000
Approval

© Sates Approved Pending Legal Review $9,040,000
and Control Board Approval

© Sales Awaiting Processing $9,000,000

These are the first successful dispositions of excess DCPS buildings in many years and
the first action on an inventory of more than 60 excess properties, many of which have
stood empty and become eyesores in their communities.

+ “DCPS has never developed a strategic facilities plan that prioritizes the use of its
limited resources. Such a plan must consider educational needs, demographic
characteristics, real estate factors, and building needs.”

The Long Range Facilities Master Plan was issued with $ volumes of backup 4
documentation data” including demographic data, a Real Estate Disposition Strategy and
both internal and external assessments of building needs

Mouing Toward an Exemplary Syatem A Report on the First Year's Effors o Reform DCs Pathe School


154

patching and ultimately paying more than if you had done whole
roofs.

Your testimony leads me to believe, however, that you think the
cost was worth it in the delay in closing schools. And the reason
I ask that question is that I think you paid a terrible price for the
delay and that it has obscured much of your record.

Therefore, I would like to ask you whether in the future you be-
lieve that such a cost might be worth it or whether you think open-
ing the schools on time is the primary responsibility that you must
face, given the history of this issue.

General BECTON. Ma’am, if I were faced with the situation again,
and given the conditions under which I would be faced, such as on
July 11th the Court ordered all schools closed that were leaking,
and all schools closed that we had planned on replacing the roofs
on. That was not something that we had planned on. There was
no—

Ms. Norton. You could have rescheduled—look, you still have
roofs that you have to repair, and you obviously didn’t have plans
to repair all the roofs. So you could have, at cost, decided the cost
of not opening the schools versus the cost of additional money of
repairing the roofs was such that you should have opened the
schools. And I am saying that, in my judgment, the failure to open
the schools, that was not worth—would have been more than worth
the cost, because if for no other reason than people don’t remember
much of the work of the Board of Trustees, and your own work now
because of one single issue and one single experience.

So, I mean, the notion that, OK, we do it again, under the same
circumstances, says to me that that experience and the controversy
had no effect on how you would weigh your options in the future.

General BECTON. Let me, if I may, recast that statement that I
made. The judge did not give us any leeway. She said, what are
the schools where you are planning on replacing roofs? General
Williams gave her a list of all schools. She said, as of this date,
those schools are closed. We had no choice.

Would you please go into detail?

General CHARLES WILLIAMS. Yes. Delegate Norton, we had com-
pleted our rounds of fire code abatements and had a clean slate of
schools in July. If schools were open in July, we would have had
no problem. I received a call to appear at the court over lunch
hour, and I was asked by the court, “what are you planing—I un-
derstand you have work planned. Will you tell me what is
planned?” And I listed the schools. And on that day she closed the
schools, the schools that were cited by me.

Ms. Norton. Did you or anyone in the school system ask the
judge to use her good offices to try to bring everybody to the table
for a settlement?

General BECTON. Did I?

Ms. NorTon. Or anyone.

General BECTON. No, she would not talk to me.

Ms. Norton. Mr. MacLaury.

Dr. MacLaury. I did not so request.

Ms. Norton. I am absolutely with you on the issue of the judge,
there is no question about it, and the folks who see the judge as


149

diate that matter—or General Becton and General Williams might

have found somebody in the Control Board, because I would hold

them responsible as well—for trying to do that, so that we would

not have had the position where the auditor’s report is very conten-

tious, despite what you regard as your best efforts. And I want to

know, were you aware that there was this problem with the audi-
pr

Dr. MacLaury. Ms. Norton, first let me say that, if it appeared
there was bitterness in my statement, I did not choose my words
well. That is not my state of mind in the least. I am anxious to
put the record as straight as I know how, and that was the purpose
in saying what I said.

With respect to the question about lack of cooperation, I heard
for the first time today, in testimony from Mr. Cotton, that there
was some question about files being handed over and then with-
drawn and handed back. That is news to me.

Like General Becton, I was aware that the audit was going on.
The audit firm never contacted any of the trustees, to my knowl-
edge—certainly not myself—so there was never any opportunity in
that respect to have input into the audit.

Yes, I was aware there was a substantial controversy about the
representation letters, and whether or not they should. be signed,
and in what way they should be signed. I was not passive in this
respect; I have consulted with a number of very senior people in
the auditing business about what should and what should not be
expected by way of representation letters in a “process audit” as
distinguished from a “financial audit.” When there are balance
sheets and income statements, it is a pretty set routine.

As to what one is expected to sign, this is a process audit, and
it is by no means a cookie cutter one. So when the letters were pre-
sented by the auditor as drafts to be signed—I did not know he
presented them as drafts, I thought he was presenting them, “to

signed”—there were five letters to five different officials, and
there was, perhaps, one word or so difference among these.

The auditor was suggesting that General Becton sign the same
representation letter as the head of contract processes. That struck
me as quite strange, to put it charitably. And in the end, it is not
simply that these letters have now been signed and therefore could
have been signed earlier. The letter that General Becton signed
last night is a totally different letter from the one that was pre-
sented to him by the auditor. He signed a one-page letter saying
that, to the best of his knowledge and belief, all the relevant infor-
mation had been turned over to the auditors. He did not sign about
20, as I recall, paragraphs of an affidavit with respect to the details
of the audit, which he should not have signed.

To summarize, I have been in process of talking with people in
the audit profession, and I have given the general counsel of the
schools and General Becton my advice based upon that.

Mr. STEPHENSON. Can I just add an additional comment about
that? I mentioned in my statement I spent 26 years with the Gen-
eral Accounting Office. In these types of audits—and I distinguish
this from a financial audit; I understand management the use of
representation letters. In this type of audit, however I found this
to be surprising. I had never asked anybody to sign a management


COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California

J. DENNIS HASTERT, Illinois TOM LANTOS, California

CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, Jr., West Virginia

CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York

STEVEN SCHIFF, New Mexico EDOLPHUS TOWNS, New York

CHRISTOPHER COX, California PAUL E. KANJORSKI, Pennsylvania

ILEANA ROS-LEHTINEN, Florida GARY A. CONDIT, California

JOHN M. MCHUGH, New York ‘CAROLYN B. MALONEY, New York

STEPHEN HORN, California THOMAS M. BARRETT, Wisconsi

JOHN L. MICA, Florida ELEANOR HOLMES NORTON, ‘Washington,

THOMAS M. DAVIS, Virginia

DAVID M. McINTOSH, Indiana CHAKA PATTAH, Penneyivania

MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland

JOE SCARBOROUGH, Florida DENNIS J. KUCINICH, Ohio

JOHN B. SHADEGG, Arizona ROD R. BLAGOJEVICH, Illinois

STEVEN C. LATOURETTE, Ohio DANNY K. DAVIS, Illinois

MARSHALL “MARK” SANFORD, South JOHN F. TIERNEY, Massachusetts
Carolina JIM TURNER, Texas

JOHN E. SUNUNU, New Hampehire THOMAS H. ALLEN, Maine

PETE SESSIONS, Texas HAROLD E. FORD, Jr., Tennessee

MICHAEL PAPPAS, New Jersey —

‘VINCE SNOWBARGER, Kansas BERNARD SANDERS, Vermont

BOB BARR, Georgia (Independent)

DAN MILLER, Florida
Kevin BINGER, Staff Director
DantEL R. Mou, Deputy Staff Director
WILLIAM MOscHELLA, Deputy Counsel and Parliamentarian
JuprrH McCoy, Chief Clerk
Pui ScHmino, Minority Staff Director

SUBCOMMITTEE ON THE DisTRICT OF COLUMBIA
THOMAS M. DAVIS, Virginia, Chairman

CONSTANCE A. MORELLA, A, Maryland ELEANOR HOLMES NORTON, District of
ILEANA ROS-LEHTINEN, Florida Columbia
STEPHEN HORN, California THOMAS H. ALLEN, Maine
EX OFFICIO
DAN BURTON, Indiana HENRY A. WAXMAN, California

RON Ham, Staff Director
Bos Dix, Professional Staff Member
ANNE MACK, Professional Staff Member
ELLEN BROWN, Clerk
Cepric HENDRICKS, Minority Cousel

aD


119

We were still operating, or thought we were operating and would
be operating, under Judge Christian’s hand. That is why we en-
dorsed Chuck Williams’ sound decision to get the roof problem fixed
at its root even though time was short and emergency procedures
would be needed. We also knew that you and your colleagues had
worked hard to get us the capital that we needed to get that job
done; consequently you would ask us, properly, questions about
why we had not spent that money, even under adverse cir-
cumstances, and then came back to you asking for more money.

The motto General Becton adopted a year ago is “children first.”
In the last few weeks it has been difficult to hear that phrase amid
the din of charges and countercharges. There really is waste going
on right now, but it is not the kind that shows up in an audit; it
is the waste of children’s minds, the loss of their futures that we
should be worrying about.

While this city of lawyers and consultants and reporters buzzes
about the latest school rumor and other rumors, I might note there
are about 2,400 schoolchildren in second grade who are below basic
in their reading skills. If they are not helped this year, they will
be forced to stay back, and that is what we are focusing on and
should be focusing on.

I urge that each of you read the trustees’ annual report, our first
annual report and perhaps, our last, that we would like to submit
for the record. It discusses why we had to give such high priority
in the first year to stabilizing school facilities. But safe schools are
only a start. Now we should be facing squarely our promise to edu-
cate these children.

As you know, the emergency trustees have been placed in judicial
limbo by a recent appellate court decision. Whatever the decision
of the Control Board and Congress on the future role, if any, of the
trustees, I believe that today’s discussion underscores the need for
oversight that is expert, nonpartisan, willing to make tough deci-
sions, and focused solely on improving the District’s schools.

hope, in conclusion, Mr. Chairman, that Congress will support
in the future, as it has in the past, with funds and with your good
offices personally, that long and demanding work. Thank you.

[The prepared statement of Mr. MacLaury follows:]


Future Conditions
So far in my testimony, | have outlined the conditions that led to the
findings and criticisms contained in the audit. Let me now turn to the future and

explain how the Authority is dealing with the issues involved.

As you know, Public Law 104-134, “The Omnibus Consolidated
Rescissions and Appropriations Act of 1996,” passed by Congress on April 26,
1996, provided that the Authority assume direction and oversight over Public
Schools’ facilities. In November, 1996, the Authority merged the Schools
Construction Authority into the new Schools Administration. The responsibility
to carry out the school construction program was delegated to the Schools’
Chief Executive Officer. In turn, the CEO delegated authority over schools

construction to the newly created Office of the Director of Schools’ Facilities.

In light of the audit findings by Cotton & Company, the Authority has
already re-emphasized to the Schools’ CEO the nature and requirements of
duties for which a Director of Schools’ Facilities is responsible. Establishing the
capacity to ensure an effective, but responsible, procurement operation must be

a priority of the School system.

Since the audit's completion, the Authority and the Schools have worked
closely to review the recommendations and to ensure that a program of reform is

implemented to eliminate both the problems and the underlying causes of the


152

Dr. MacLauRY. Ms. Norton, let me try and summarize. There are
three issues regarding bonuses. One is signing bonuses, the second
is incentive bonuses, and the third is gross-ups, or paying taxes on
any kind of a bonus. Those are the three issues.

You heard Dr. Brimmer’s testimony, and he defends, in principle,
the idea of a signing bonus if it is necessary to attract key people.
You, yourself, I believe, Ms. Norton, said it should be restricte
a very small number, if it is necessary at all. I agree.

Ms. Norton. But I gave an example that I think maybe Dr. Ack-
erman fit if she had another offer and if you felt there was nobody
else who could do the job.

Dr. MacLaury. She did have another offer, to the best of my
knowledge, and we were told that. We knew we were bidding
against Cambridge, MA, for a higher salary than we could pay, and
it was an open and shut case, so far as I was concerned, that a
signing bonus was called for in that instance. In the case of Gen-
eral Williams, he took a cut in pay to come to work with the
schools. That is not unusual.

Ms. Norton. General Williams, you retired from the-——

General CHARLES WILLIAMS. I was in the private sector when I
came here. I had been retired -——

Ms. Norton. Are you or General Becton receiving your full pen-
sions for your armed services?

General BECTON. I am. The pension I earned after 40 years of
service I am receiving.

Ms. Norton. Are you, General Williams?

General CHARLES WILLIAMS. After 30 years, yes, ma’am.

Ms. Norton. How much are those pensions?

General BECTON. My retired pay, I think, is $76,000.

Ms. Norton. And how much is your pension, General Williams?

General CHARLES WILLIAMS. $62.

Mr. Davis. Not as good as the congressional pensions, though.

Ms. NorTON. Well, your pension wouldn’t be anything like that,
sir; nor would mine.

Mr. Davis. If I were here for 30 years, it would be, absolutely.

General BECTON. I spent 40 years to earn that. I fought in three
wars. I think I deserve it.

Ms. NorTON. We are not begrudging you your pension, but the
fact is that, normally, if you had been a Federal worker, you
couldn’t receive your full pension and come back to work.

General BECTON. Yes, ma’am, I could.

Ms. Norton. If you had been a District worker—who is it that
can’t?

Mr. STEPHENSON. People who worked in the Federal Government
for the District, who worked for the District, prior, when they were
Federal employees. But in 1994, that was changed to allow for any-
body—if they have never worked for the District of Columbia—to
receive their full Federal pension. So, in fact, that is——

Ms. Norton. I know there is an exception for cops who come
back. Some of that has been abused. But there is an exception for
cops. Some came back and sat down behind the same desk they left
instead of getting out on the street. But there is an exception there
for District workers.


79

Our review of 31 contract files covering 57 DCPS-managed projects showed that the contracting
process was poorly documented, and files were poorly maintained. Even though none of the contracts
has been closed, much of the information necessary to document the observance of sound procure-
‘ment and contract management procedures even for unclosed contracts was missing from the files.
‘The results of our search for documentation in the 31 contract files covering the 57 DCPS-managed
projects are on Table 1.

Sound management principles dictate that clear and complete records be maintained of contractual
actions and decisions surrounding selection, award, and administration of contracts. FAR Subparts
4.801, 4.802, and 4.803 establish the requirement for maintaining complete contract files and stipulate
the contents of contract files.

‘The disorganized and incomplete files precluded a determination that proper procedures were followed
in the selection and award process. Further, incomplete files may result in confusion about contractu-
al actions such as change order approvals and funds availability and obligation. Finally, the
disorganized files will make it difficult to review and resolve disputes (if they occur), make contractor
payments on a timely basis, and close out contracts in an orderly manner.

DCPS personne! have said that it is premature to expect contract files to contain complete informa-
tion. We did not expect contract files to have complete information. We expected them to have
complete information on all decisions and actions that had taken place up to the time of our audit.

Mr. Chairman, that completes my prepared statement. We will be happy to respond to any questions
you or other members of the Subcommittee may have at this time.

Page 8


15

Why we think this is so, and some suggestions on what we can
do about it: In terms of the cost of the program, it has been re-
ported from the Cotton report that we paid a $7.2 million premium
for this stabilization program. I estimate it conservatively at $15
million, money which the District can scarcely afford to misappro-
priate.

One of the things that led to this overspending is that the Dis-
trict replaced roofs on 13 schools that were less than 10 years old.
This amounted to $8.9 million on roofs of less than 10 years. The
District also paid, on average for the built up roof—and if I can
take advantage of the visual over here—$19 a square foot. We are
talkin, about only the flat portion of this roof. We only looked at

roots.

In looking at the 17 roofs, all of which had 90 percent or more
of the flat roof replaced, the District paid an average for the base
contract of $19 a square foot. In Prince George’s County, they have
typically been paying to remove the roofs, replace them, an average
of $6 to a square foot. On just these 17 roofs, that represents
a $6 to $7 million overpayment. This is a problem.

Now, you know, we can say that these were incredible situations
that we were working under, and it will be different next time.
There are suggestions, in terms of the fiscal year 1998 budget, to
suggest this will not be the case, that we are heading down the
same path.

The school system said it will replace windows in 22 schools this
summer at an average cost of $800,000 a school. The school system
has replaced windows before. In the last 4 years and they did it
at a cost of about $340,000 a school. Even when we adjust this for
inflation, we are looking at cost estimates that are 100 percent
higher. The same is true with the boilers.

There may be explanations for these enormously inflated esti-
mates, but with no oversight of the capital program, there have
been no explanations asked.

Why do we continue to have problems in the capital program? I
could have given you testimony similar to this before this adminis-
tration came in. We identified much of it in the preliminary facility
master plan, which we wrote for the Task Force on Education In-
frastructure in 1995.

Why do we continue to be plagued by problems? First of all,
there is still no master plan and adequate capital planning in the
District. We still don’t have credible enrollment numbers. We don’t
have standards on school size and utilization. We don’t have a long-
term education plan that clarifies issues, and we still have not
taken this plan out with the proper technical parameters to the
community for their input. We do not have systems in place, and
the Cotton audit, I think, identified that accurately, and you will
no doubt be hearing more about that.

Third, we don’t have oversight. The board of trustees essentially
took the position that what the administration would recommend
was OK, they approved the master plan which was inadequate,
they approved a capital plan which had estimates that were out-
landish, and they approved the late initiation of this stabilization
program when the scope was entirely beyond the division of facili-
ties management, for niany reasons which I can explain later.



128

STATEMENT OF JULIUS W. BECTON, JR.
(CHIEF EXECUTIVE OFFICER AND SUPERINTENDENT
DISTRICT OF COLUMBIA PUBLIC SCHOOLS
BEFORE THE
SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA
COMMITTEE ON GOVERNMENT REFORM
U.S. HOUSE OF REPRESENTATIVES
ON
JANUARY 23, 1998

Mr. Chairman, thank you for providing me the opportunity to testify today about the District of
Columbia Public Schools FY97 capital improvement plan.

As you know, in Washington, perception often substitutes for reality. Too often, what people
perceive is what they believe. Some members of the public, and some in Congress, have
expressed concems about the massive capital improvement program undertaken by DCPS in
FY97. And, based on most of the media reports about the recent audit of that effort by Cotton &
‘Company, I’m not surprised. That's the perception. Today I’m going to talk about the reality.

I’m not going to say we did everything perfectly In fact, I know that there was room for
improvement. We learned lessons last summer and are using them to make changes to the way
‘we do procurement and manage capital projects. General Williams, DCPS" Chief Operating
Officer, will talk about some of those lessons, and the new systems he has implemented as a
result. Mr. Ed Stephenson, DCPS’ Chief Financial Officer, will talk about changes that have
already been made te the procurement operation, and provide you with details on additional
changes that are underway. Having said that, | do want to restate what I have said before, a
number of times: I believe that, under extremely difficult conditions, we made substantial
progress in addressing what was clearly a facilities crisis in our schools, and I don’t want that
accomplishment, and the hard work of those who made it happen, to be lost.

BACKGROUND

When this administration was put in place by the DC Financial Responsibility and Management
Assistance Authority fourteen months ago, we inherited a $2 billion infrastructure problem. The
average DCPS facility was over 50 years old and routine building maintenance had been neglected
for years. Our facilities were literally crumbling -- roofs leaked, boilers were inoperable, and fire
code violations were plentiful. We had millions of square feet in excess capacity and no long range
facilities plan.

Over the past year, we have made substantial progress: we developed a Long Range Facilities
Master Plan, abated more that 1,600 fire code violations, and replaced or repaired roofs in over
one-third of our schools. We closed eleven schools and began selling or leasing excess DCPS


1384

joints. All of that had to be stabilized. And then there is standing
water. So when you look at a school like this, there is no other
place to compare it with, unless you get another one just like it.

Next slide. This shows damaged roof and membrane. As you can
see, there is the membrane on the vertical part of the roof, not the
horizontal part. That is tearing away. That must be replaced. Down
here is very tight quarters. Contractors look at this. They pay a
premium for this, because they have to work with one person in
there versus a piece of machinery. There is blistering here, which
indicates long, long years of delay.

The next slide, which is also a pictorial description at M.D. Lee,
shows alligatoring. This is a term used when the roof just bubbles
up. We had several of these, which would indicate that the sub-
strate in the deck is bad. That is a major piece of construction,
again, not just replacing the roof, but you have a lot of stabilization
to do. You can also look at the patchwork. Now, this is what we
could have done and gotten past G.O., and then we would have had
60 roofs that would have had the potential of disruption for the
rest of the school year. That is why I think General Becton sup-
ported the decision that we and the trustees made that we correct
the problem.

This next slide will get to the cost of it. Now we have compared
roof to roof. This shows all of our schools, the GSA-managed
schools and ours. This is what it cost. This was the government es-
timate that was prepared just prior to bidding, and all of the costs
that we can accumulate to date, including change orders, is $31.5
million. You saw this the other day. We are showing an overrun
or an overage, if you will, of $1.4 million or 4.8 percent. I think the
national average is somewhere around 7, and people get awards for

at.

This is the change order picture. There are fewer than 30 change
orders. It is less than $1.7 million. That is represented by 5.4 per-
cent of cost growth.

We have learned some lessons. We have learned some lessons as
a result of this process. Funding should be in place from the outset.
This was a major management problem for us because, as Dr.
Brimmer correctly stated, we could not obligate any funds. I could
not hire staff because our staff is charged against the capital pro-
gram. So until money was available to me, not in the District but
available to us, we could not move ahead.

We feel that GSA, that is No. 2, GSA’s expertise should be used.
Bill Larson has said there is no issue there, we will work together.
An appropriate level of staffing should be in place from the begin-
ning, and then of course the transfer of all funds to GSA when they
are executing the projects. GSA has a very difficult situation to
work when they do not control the funds. if they are going to
be involved, I say the funding should go, however it has to flow
through, but it should go on to GSA so they can get on with their
work.

Now going forward, we have new construction protocols. I have
already admitted and said to you that we are not proud of the pa-
perwork in the process. We did the very best we could under the
circumstances. But that is correctible and no laws were broken. We
have preconstruction conferences now before each of the jobs start.


4

DCPS issued a Request for Qualifications (RFQ) on May 19, 1997, for projects it intended to
manage. This resulted in the apparent prequalification of 26 potential contractors. On July 1, 1997,
already well into the limited school construction season, an Invitation for Bids (IFB) was issued for an
anticipated single contract for roof replacements at 15 schools and boiler and chiller replacements at 5
schools. Because work needed to be done by the beginning of September, bidders were only given 14
days to respond. This strategy failed when contractors informed DCPS that they were unwilling to
bid om this large total “package.” DCPS then issued an addendum to the IFB on July 11, breaking
the procurement down into 8 separate, smaller packages, 6 of which were for roof replacements at 48
schools. Bidders were then given until July 21, or 10 days, to respond.

Responses to this revised strategy were disappointing and resulted in contracts for only 2 of the 8
packages—roof replacements at 15 schools. With the time available to complete the work rapidly
diminishing, DCPS changed its strategy once again. On July 25, 1997, the prequalified bidders were
requested to submit bids within 3 days for any of 23 schools on which they wanted to bid. Bidders
were told that the work still needed to be completed by September 11, 1997. Few bids were
received, and those received were generally high. Four contracts were awarded for roof replacements
at 9 schools based on bids received. Five contracts for roof replacements at 10 schools were awarded
based on undocumented negotiations. Plans for work on 4 schools were either dropped or changed.
Contracts for work on 3 other schools not previously included in any solicitations were awarded, but
the contract files did not document the basis for these awards.

Following the unsuccessful initial DCPS-managed work strategy and the limited success of the revised
strategies, DCPS project managers began contacting small groups of contractors (without public
advertisements) and, according to DCPS's Chief of Contract Administration, urging them to bid.
Project managers would invite three to five contractors (some prequalified and others not) to inspect a
site, provide them with site specifications, and ask them to provide bids within hours. This final
strategy resulted in contracts for work at 20 schools.

DCPS contract files had no records of the extent to which the CIP requirements were advertised. The
DCPS Chief of Contract Administration told us that he did not have a clear recollection of the extent
to which the requirements were advertised. He said he thinks the initial RFQ was advertised in the
"Washington Times because DCPS was on credit hold with the Post,” and provided to companies
referred by Chief Operating Officer's (COO) staff and other vendors who called and requested it. He
said the requirements were not advertised in the Commerce Business Daily. One subcontractor told us
that he had not seen any advertisements of the requirements, because they had not been advertised in
the “traditional way.” He stated that these types of construction requirements are usually advertised
in the Dodge Report.

A significant element of DCPS's original contracting strategy was to prequalify companies capable of
performing the work that would later be advertised. Prequalifying companies in advance would
reduce the amount of time required in the award process. DCPS appears to have prequalified 26
companies or joint ventures. Contract files for 20 of the 31 DCPS-managed contracts indicate,
however, that project managers decided which firms to invite to bid. Some contract files contain
project manager memorandums stating that a specific number of “prequalified” bidders was invited
for a site tour. Of the 45 firms that submitted price proposals for these 20 contracts, 38 firms (or 84
percent) were not on the prequalified contractor list. Based on the prequalified contractor list
obtained from the DCPS procurement office, only 7 of 31 DCPS-managed contracts were awarded to
“prequalified” contractors. Uncertainty appears to have existed regarding the prequalification process.

Page 3


32

PREPARED TESTIMONY OF JONATHAN MILLER, AJA
Associate Vice President -- Daniel, Mann, Johnson & Mendenhall
BEFORE THE UNITED STATES HOUSE OF REPRESENTATIVES
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA
January 23, 1998

Good Morning. My name is Jonathan Miller. Iam an Associate Vice President with the
architectural and engineering firm of Daniel, Mann, Johnson, & Mendenhall (DMJM), and am a
registered architect in Washington, DC and Maryland. I am appearing before this panel in my
capacity as the Project Manager for the DC Public Schools project. My 20 years of design and
construction experience in the Washington, DC metropolitan area have allowed me to become well
versed in Federal sector projects, including projects for GSA, Department of the Treasury and the
FBI. I recently served as the Lead Architect for design management for the New Terminal at
National Airport.

DMJM is a 52 year-old, multi-disciplined professional services firm with over 1400
professionals in 20 offices worldwide. We provide architecture, engineering and construction
management services to a range of public and private sector clients, and we have been serving the
metropolitan Washington community for 43 years. We are currently providing program
management services for the Pentagon renovation, Department of Labor Job Corps Centers located
across the nation, National and Dulles Airports, and the Federal Emergency Management Agency
(FEMA). Unlike these projects, we are not providing comprehensive Program Management or
Construction Management services to DC Public Schools. Rather, as I will explain more fully in

a moment, we provide technical advice and field representation on numerous tasks.


103

© DCPS did not adhere to a single set of established procurement policies and
procedures in carrying out the Fiscal Year 1997 Capital Improvement Program
procurements;

«DCPS emergency procurements for repair resulted in additional costs of roughly $7.2

million.

commendations

The audit concluded that because of lax procurement and contract administration,
opportunities for fraud and waste opportunities were enhanced. The audit recommended
twelve specific improvements, including four items of relevance to the financial

organization at DCPS:

© DCPS, Congress, and the Authority must work together to assure timely funding and
to implement stronger controls and more efficient procedures for paying its bills.

¢ Ensure that funds availability is certified before contractors are directed to proceed
with contract modifications;

Establish written procedures defining the mandatory process to be followed to ensure
compliance with the Anti-Deficiency Act;

© Take other steps necessary to close quickly all contracts, assess liquidated damages
where warranted; make equitable adjustments to contract prices where warranted and

make final payments in a timely manner.


39

I ‘5
mek :

DS =
= \

SKYLIGHT

SATELLITE DISH

| eth. LADDER



164

Charles E. Williams, MG USA (Ret,)
January 5, 1998
Page Three

In addition to school facilities made safe for students, the emergency repair program generated an
additional benefit that will serve DCPS and the District into the future. DCPS developed and put in
place a process for managing the work even as work progressed, a challenge under normal
circumstances. That DCPS accomplished not only the construction program, but the equally difficult
task of adapting its management structure to address an emergency program, and subsequently
ongoing facilities repairs, deserves note. Consistency of inspections, cooperative and reasoned
assistance from the building code officials, and a single-minded focus on the need to build quality into
the work, all helped to achieve not only the reroofing program, but also the management infrastructure
necessary to address the next construction program.

In this past year in Washington, many noteworthy building programs have come to completion: The
New Terminal at National Airport and the Expansion of Dulles, the MCI Arena, Jack Kent Cooke
Stadium, and the Ronald Reagan Building.Given the schools’ impact on the future of the City’s
residents, children and adults alike, we would count the DC Public Schools among these programs.
Each had a different budget and schedule; each was complex in its own way.

DMJM plays a key role on some of the largest construction programs ongoing in the Washington
‘metropolitan area. We are proud to have contributed to this program and your success in
accomplishing what few organizations have ever achieved: Emergency repairs delivered well, under
extreme scrutiny and time constraints.

Congratulations.

Sincerely,

DANIEL, MANN, JOHNSON, & MENDENHALL

Director of Operations

cc: Andrew Brimmer, Chairman, DC Financial Responsibility and Management Assistance
Authority
Bruce McLaury, Chairman, DC Public Schools Board of Trustees
General Julius Becton, Chief Executive Officer, DC Public Schools


64

i would also note that the Authority initiated the audit as part of its overall
program to improve procurement in the District Government. Procurement
reform remains an important management goal of the Authority, both in the
Public Schools and throughout the agencies, as evidenced by the Management
Reform projects in this area. Therefore, as part of the efforts to reform
Procurement in DCPS, the Authority sought to audit the procurement process
used for execution of fiscal year 1997 capital contracts. We believed that
findings from the audit would be beneficial to improving not only operations of

the Schools, but the operations of other District agencies as well.

As you know, Mr. Chairman, the audit, completed by Cotton & Company
LLP, at the end of December, 1997, found a number of problems related to the
process used by the Schools to conduct their procurement operations. On

January 13, 1998, the Authority released the audit report to the public.

We asked Cotton & Company to determine the following:

(1) Whether the Schools had an effective procurement system in place

during fiscal 1997 for Capital Improvement Projects, and;

(2) Whether ‘the procurement system met the statutory, regulatory, and

program needs of the Schools.


148

In other words, I think the key problem now for the District is
not overspending but really, on an optimal basis, matching re-
sources and results. You know, if the elected officials in the District
have given an agency $60 million, the agency ought to provide
products and services that match that $60 million, not $55 or $52,

ecause we couldn’t get our act together.

Ms. NorTON. You have given the idea a certain amount of
money. Then when he is going to get whatever he needs, one won-
ders where that money would come from. I am concerned about
controls, in that money can just be slopped around from one place
to the other.

Mr. ANTHONY WILLIAMS. The Authority did a memorandum on
this point, and basically the point of the memorandum was that,
henceforward, reprogrammings of funds, whether they were within
an appropriation line or between appropriation lines, would go
from the Mayor to the Council, to the Control Board for review,
and if they were between appropriation lines, they would come to
the Congress for review as well. And I continue to believe that. I
don’t think we have a big tub of money we can just move around
on a fungible basis.

Ms. NorTON. Maybe this is a lot of loose talk, but it doesn’t in-
spire confidence when J have been up here saying to the Congress
we need every cent we can get, and if we get less than that—and
then these folks get anything they want.

Mr. ANTHONY WILLIAMS. But in fairness to the Authority, I think
when they direct resources, I think there is an implicit request as
well that we obviously follow the appropriate safeguards and con-
trols.

Ms. Norton. It is not the safeguards I am worried about, I am
worried about the availability of money. We were told that the
budget was so tight that we could not—a very substantial reduc-
tion in the budget, in the appropriation, or at least in your spend-
ing authority, was proposed by Mr. Taylor, and we fought a major
fight up here on the theory that no such reductions could possibly
be absorbed anywhere in the District, and, again, if that is not the
case, we don’t need to be making those representations.

Mr. MacLaury, I can understand your disappointment, I think
echoed in your own testimony, and there is a bit of bitterness, I
think, in your remarks, which is perfectly understandable, as an
pnpaid person who had to take brickbats for trying to do the best

can.

I can assure you, this committee is not interested in paperwork,
but, again, as unfair as it may be in time, once you get in the
Kitchen, there is heat there and there is just no way to avoid that

eat.

There is appreciation in the Congress for what you have done
and for what General Becton and General Williams have done, but
it is impossible, as an act of appreciation, to forgo legitimate criti-
cism.

I want to indicate that while we are not interested in paperwork,
we are concerned that the auditors reported the kind of lack of co-
operation, which seems to me to be manifest now because the letter
was signed, and it was signed late, and I don’t think that is paper-
work. And it seems to me that perhaps you might have tried to me-


35

Orders, DMJM augmented the DC Public Schools field staff, by reviewing proposed design details,
providing daily reports on each roof, and monitoring progress.

During the summer, we were also asked by GSA to provide traditional construction
management services on three additional DC schools. Unlike the tasks performed for DC Public
Schools, DMJM provided a more traditional range of management services on these schools,
including review of the construction progress with the contractor, issuing field directives, and
making recommendations on contractual issues, such as Change Orders, and requests for payment

We believe our contribution in 1997 has helped to make a difficult, crises-laden situation
better than it might have otherwise been. Now that emergencies have subsided somewhat, much
important work remains for DC Public Schools to undertake. We look forward to any future
contributions we can make towards bringing DC Public Schools facilities up to first-class condition.

Attached is a Stewardship Report we prepared earlier this month, reviewing the events of the
past year, and addressing issues of cost and quality on the overall re-roofing effort. Also attached
is an illustrative sketch, demonstrating some of the complexities typically encountered in renovating,
older school buildings; the type that comprise much of the DC Public Schools inventory.

I would be happy to answer any questions the Committee may have at this time.


67

and supplies. They were denied this request. The cost to DCPS’ local budget
was massive. Transportation cost to make-shift classrooms was estimated at
$20,000 per day, and lunches had to be provided outside of DCPS’ regular food
services program. In total, these extra costs may have amounted to about $4.3

million. There was no provision in the School's budget to cover these costs.

By the time the Schools finalized the summer 97 repairs program, it was
the height of the regular construction season. As a result, there were few
contractors available to do the work, and materials were scarce and available
only at high prices. Much of the work had to be done on weekends, and may
construction workers had to be paid overtime rates. Clearly, this was not a
normal environment. Yet, the Schools had little choice except to implement the

construction program as best they could.

Let me stress, however, that the Authority still expected - even under
difficult conditions — that the Schools would follow appropriate procurement
procedures. | can understand why Schools managers—caught in tight
situations—chose to use abbreviated procurement procedures to meet short
deadlines. But they were then obligated to review their methods to ensure that
their actions were appropriate. | have been assured that for cases where the

files are still open this review is being done.


104

We are working with the CFO at the schools to implement these recommendations and
continue to improve the financial operations at the schools as we have done in the other

city agency financial organizations. This includes improvements in the following areas:

« more timely vendor payments
improved internal controls
© enhanced budget monitoring and execution

« improved capital spending planning and execution

We will continue to make the necessary improvements in the financial operations of the

DCPS. I commit to the Committee to continue to work towards that end.

The Capit rove Process
At this point, I want to move on to discuss my Office’s role in the financial operations of

the DCPS particularly as it relates to the Capital Improvement Program.

In general, the Capital Improvements Plan and Budget is planned and developed by the
Mayor, Council, and Authority and monitored by the OCFO’s Office of Budget and
Planning (OBP). OBP issues a budget request to agencies for both new capital project
requests and changes in existing projects. Following a priority setting framework, the

OBP and Capital Review Team recommend projects for inclusion in the six-year plan,


167

many contractors postponed prior jobs to help get the schools open on time.

Dr. Brimmer, you are aware of the unfortunate circumstances leading to a three-week delay in
school opening. Ata recent hearing convened by Congressman Tom Davis’ Subcommittee on
the District of Columbia, Congresswoman Norton heard the District's top administrators say that
the District’s cash flow problems led to a lack of availability of repair funds. Administrators
also stated that DCPS’s Chief Financial Officer could not get the school funds released from the
District’s Chief Financial Officer because the Mayor was evaluating reallocating some of the
funds. Testimony before the Subcommittee was clear that there was confusion about when the
D.C. Financial Authority released funds to the District and when the District released funds to
DCPS. Congresswoman Norton astutely noted that the three-week delay in funds transfer is the
same three weeks that school opening was delayed. This is what led to the emergency
contracting that pushed costs up.

Our association looks forward to the results of the Inspector General's review requested by
General Becton. Hopefully, it will accurately reflect our experience. The real story in the repair
of D.C. Public School roofs is Mr. Williams’ assiduous leadership and the tireless efforts of a
team of contractors who took on a challenge to do what had never been done before... . major
repair to the upper portion of these old buildings.

It is easy to second guess decisions that Mr. Williams made to get the schools open. Given the
daily fines DCPS was incurring from the oversight judge and the desire to get the schools open
on time, what other choice did he really have?

As contractors and taxpayers, we look to District leaders to create a business friendly
environment. This is the surest way to guarantee a quality supplier base and jobs for the District
of Columbia.

Thank you for the opportunity to share our views.

Sincerely,

Michael Parrish
President

ce: The Honorable Tom Devis
The Honorable Eleanor Holmes Norton
‘The Honorable James Jeffords
The Honorable Lauch Faircloth
‘The Honorable Bob Livingston
‘The Honorable Marion Barry
The Honorable Linda Cropp
General Julius W. Becton
Keith Harriston, City Editor, The Washington Post


126

the students and teachers who occupy them are now able to focus
without distraction on teaching and earning,

That is as it should be. However, the perception, at least by
some, is that the summer roof replacement program was not as ec-
onomical and efficient as it should have been. Some have implied
that the program was marred by waste, fraud and abuse. Today I
would like to set the record straight. Let us look behind the head-
lines at the findings of the audit itself. According to the report, and
I will quate directly, and you have heard this before, the auditors
concluded that the D.C. Public Schools contracting process
“. . met this program objective to the extent that the school clos-
ing crisis was substantially abated by mid-September, 1997.” At
the same time, the auditors argued that DCPS, “did not have an
effective procurement system in place.”

In my view, these two statements reflect an apparent failure to
grasp the fundamental nature of the project. The primary objective
of the capital program this summer was to stabilize our crumbling
infrastructure so we could open schools and get back to the busi-
ness of educating our children. We accomplished that goal in a re-
markably short time, under extraordinary circumstances; 61 roofs,
you heard that before. You know that we were able to do that with-
in 5 percent of our government estimate for the work, and, accord-
ing to the auditors’ own report, “. . . no direct evidence of fraud
was found.” In my mind, to allow that we met this objective, as the
auditors do, and then to say that we are not effective is to draw
conclusions that directly contradict each other.

Furthermore, for the auditors to state that they found no evi-
dence of any misappropriation of funds, kickbacks, or other fraudu-
lent behavior on the part of DCPS personnel or our contractors and
still imply that fraud may have occurred because the emergency
procedures used created conditions conducive to fraud is simply not
responsible.

By the way, I was never asked to be interviewed by the auditors.
I was never interviewed by the auditors. At no time did they even
suggest that I be interviewed by the auditors. From my perspec-
tive, a few simple threshold questions should be asked by anyone
seeking to fairly evaluate the summer capital program. With your
permission, I would like to briefly state a few of them, and answer
them and let the subcommittee draw its own conclusions.

What was the primary objective? Our primary objective has been,
as stated already, to stabilize the facilities and get the schools
open. Did we accomplish the objectives? The answer is yes. What
would happen if we Tad failed to accomplish those objectives? Had
we failed to accomplish those objectives, over 60 roofs might still
be leaking and the Parents United lawsuit would still be ongoing,
the court would probably still be closing schools on a daily or week-
ly basis, and students would be still shuttling to temporary sites
where opportunities for substantial learning were greatly dimin-
ished. In short, the system would have remained in a state of cri-
Sis.

In view of earlier comments, I wish to note an important impact
that appears to have been overlooked. As of July 11, last year, the
court ordered that any building that leaked would be closed and
roofs would have to be replaced. Patching, in our judgment, would


45

One thing that is pointed out here, though, is that you cannot
take for granted, in dealing with the city, that the job was com-
pleted, a good job was done and warranties were established. And
it looks like that didn’t always happen in the past. Those are
things that you might take for granted in other jurisdictions but
you can’t here.

At a minimum, you have to give the school system credit for
making sure that those kinds of problems are not revisited and it
wasn’t just patching it up, it was substantive work. You can lose
sight of what that cost of wages can be if that had not been done
correctly.

Was the availability of or the access to funding a factor in the
ultimate goal of GSA, or GSA’s involvement in the process, Mr.
Lawson?

Mr. Lawson. Well, initially we worked out an agreement to carry
out the projects between the schools, the Control Board, ourselves.
We did end up with a funding and a funding authorization process
that was cumbersome to enable us to manage projects, let’s say, as
freely as we would like to have.

On occasion, we did experience delays in which contractor pay-
ments and a few procurements to make up schedules, and we did
have to accelerate—try to accelerate the construction projects. And
it was, bottom line, a challenge to carry out the projects and to
meet the objectives that we had agreed to with the school with the
kinds of processes that we had in place.

I believe it was—back to your question, it was a factor in the
spring, when we were helping to prioritize what became the emer-
gency work and the 40-plus roofs, when we sat down with the
schools and gave them our best plan and schedule under the cir-
cumstances to deliver the work. And, frankly, the scheduling that
we could commit to just could not fit within the timeframes that
the school system was under.

And we mutually agreed that—and there was another factor
that, in the time that we were doing work for the schools, they
were able to mobilize their own resources to manage the program.
And that was the ultimate goal that I think we were all under, and
that is for the GSA to help the school system until they could carry
out their own program.

But at that point, General Williams and our staff and his staff
agreed that it would be in their best interest that they manage
their own program simply because we could not commit to the
timeframes that they were under.

Mr. Davis. The way I understand the funding—and we will let
our future witnesses testify concerning the funding—is you had
about $11,500,000 from carryover funds. You had some Connie Lee
and Sally Mae money kick in, from a settlement of about
$18,250,000 million that was not available until April.

Mr. Lawson. Correct.

Mr. Davis. You couldn’t do anything with that until you were
sure it was going to happen. And then it was July before you got
the proceeds from the bond sales. So that would impact the cash-
flow and planning.

Mr LAWSON. si believe that’s the timeframe, but I’m person-
ally——


87

Mr. BRIMMER. Mr. Chairman, just to show you how fast an im-
pression can get mixed up, the check was presented with the First
Lady standing by.

ir. Davis. I remember.

Mr. BRIMMER. And the schools. We were all together. We walked
through the schools together. We talked about the project. We
talked about the need for decent funds. Yes, everybody was in-
formed and knew.

Mr. Davis. But they sat there basically unencumbered and unau-
thorized.

Mr. BRIMMER. Mr. Chairman, we hold all of the funds.

Mr. Davis. I do not think the schools did anything with that in
terms of authorizing this money until April 14th.

Mr. BRIMMER. Mr. Chairman, again, the schools, like every other
spending unit in the city, informs, the message comes to us. We do
not initiate the request.

Mr. Davis. I understand. I am not trying to go after anybody.
Now look at it from our point of view. We are out of the loop. You
have members, you have a Control Board coming to Congress say-
ing, we need more money, we need more cash. For a 6-week period
of time you have Connie Lee money, $18.25 million lying around
that the schools haven’t obligated. Then we have a 3-week period
that another $20 million bond sale, where the money is not being
obligated, and you are up here asking for money. That is where it
strikes me we need better communication on this. I think we are
going to have to do better.

I now yield to Ms. Norton. I know she has some questions.

Ms. Norton. Thank you, Mr. Chairman. First, may I acknowl-
edge that Council Member Hilda Mason has come and we are
pleased to have her. She was a member of the Council of Education
for many years and worked very diligently on D.C. education
issues. May I also say, Dr. Brimmer, that the Everybody Reads

rogram is a very gi and important initiative that the D.C. pub-
‘ic schools have begun. I have sent a Dear Colleague to Members
and their staffs asking for volunteers so that the goal of Everybody
Reads, that students can read by the end of the third grade, will
be accomplished. You need tutors apparently who are willing to
read with second grade students twice a week for 35 minutes. We
believe we will be able to get—we have even had Members of Con-
gress, I think we will be able to get staff members to volunteer in
this program. I think that program, the goals you have set for per-
formance by students, the year round school, these are the kinds
of initiatives that I think parents have long been waiting for. I
want to congratulate you and the school system for moving forward
with concrete programs of that kind that we are sure can make a
difference. May I also say that the program that started on a tem-
porary basis when the schools were in closing, we have now made
permanent. There were 250 students who got internships and they
so impressed Members and they seemed so enthusiastic that I have
asked Members to participate in a permanent D.C. high school in-
ternship program. We have only begun this now. So far, they begin
in February. We have 58 students in 45 offices and more calling
every day. We think it will be valuable to D.C. students not only
to work in the offices of Members of the Senate and House on a


8

Ms. Norton. Thank you, Chairman Davis.

I want to thank the chairman for calling this hearing on the D.C.
public schools as part of the subcommittee’s oversight responsibility
and abiding concern about the District’s children and their edu-
cation. The achievement of excellence in education is not only a pri-
ority for District residents, improvement in education is used by
Members of Congress as a bellwether issue for whether the city
itself is improving, and appropriately so. The future of this genera-
tion of schoolchildren is tied to the future: of the city itself.

Today, the two overriding goals for the D.C. public schools are
a delicate balance between steady but rapid improvement on the
one hand and stability and predictability on the other. These some-
times competing goals are both necessary if learning is to occur,
performance of the children and the system is to improve, and the
confidence of parents and residents is to be restored.

A combination of external events and internal problems have
militated against stability and predictability. We can appreciate
that General Becton and General Williams put a priority on fixing
as many roofs as possible because leaking roofs had been a major
cause of school closings before the two new administrators came.
The decrepid D.C. government financial management system and
the chaos caused by congressional rejection of the city’s supple-
mental funding request may have hurt the roof repair effort. So did
the extraordinary rigidity of the judge in the Parents United case,
who failed to use her good offices to facilitate a settlement. How-
ever, the failure to get the roofs finished in time would have been
more easily accepted by the general public if the leadership had
been more flexible in devising a back-up strategy. Instead, like gen-
erals on a battlefield, they marched against the enemy, leaky roofs,
ignoring the fact that it was school closings that had precipitated

ie memorable and acute crisis that ultimately brought new lead-
ership to the school system in the first place. There were many op-
tions, including reworking the schedule for replacing roofs, espe-
cially since so many roofs remained to be done. Here is where con-
sultation with those with deeper knowledge of the community, es-
pecially the elected school board, members of the city council, the

layor, and parents, would have been useful.

The issue of consultation, of course, raises a problem that has
vexed not only the generals, but also the board of trustees and the
Control Board. Consultation is often messy, even tiresome, but re-
sults are almost always better, and less contentious when decisions
are shared. If leaders insist on full steam ahead in their own tank,
they had best make sure their armor is shatterproof, because all
the complaints will come their way.

The failure to take consultation seriously, of course, has been
most seriously felt in Shook v. District of Columbia Financial Re-
sponsibility and Management Assistance Authority. Although both
the chairman of this subcommittee and I are lawyers with experi-
ence in fending off litigation, our suggestion that would have avoid-
ed a lawsuit altogether spelled out in detail to the Control Board
was not taken seriously. By contrast, after a meeting I had with
the elected school board, its members agreed to delegate their au-
thority under existing D.C. law, and in addition to accept an advi-
sory board. In this instance, it was the elected school board that


D.C. PUBLIC SCHOOL 1997 REPAIR PROGRAM
AND FACILITIES MASTER PLAN

FRIDAY, JANUARY 23, 1998

House OF REPRESENTATIVES,
SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA,
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT,
Washington, DC.

The subcommittee met, pursuant to notice, at 11 a.m., in room
2203, Rayburn House Office Building, Hon. Thomas M. Davis
(chairman of the subcommittee) presiding.

Present: Representatives Davis and Norton.

Staff present: Ron Hamm, staff director; Howard Denis, counsel;
Bob Dix and Anne Mack, professional staff members; Ellen Brown,
clerk; and Cedric Hendricks, minority counsel.

Mr. Davis. If we can have the first panel. Good morning and wel-
come. This is our first hearing of the year, the start of a very busy
session. Our experience in this subcommittee over the past 3 years
indicates that we will not have a shortage of subjects to address
in se

Today, we are going to be addressing the D.C. public schools with
an emphasis on the repair program and the facilities master plan.

In creating the Control Board, Congress stated in the preamble
of the law that the District of Columbia government fails to provide
its citizens with effective and efficient services in areas such as
education. The conference report spoke of a severe mismanagement
of the District of Columbia public school system and says that a
strong immediate action must be taken to reverse the situation.

It remains the case that nothing is more important to the overall
recovery of the District than to achieve more positive results in
helping students obtain a quality education. While there has been
some progress during the last couple years, I am concerned too
many significant issues remain unresolved.

The efforts of local school officials are very much appreciated, in
fact many of their achievements are remarkable. The new regime
came on board following the Authority's order on November 15,
1996. They moved into a crisis situation, whose Primary character-
istics were turmoil. They had to deal with school closings, a school-
by-school assessment, and an excruciating court case with, I might
add, some very bizarre decisions handed down.

We must remember that while it was always intended that re-
pair work would be done during the summer of 1997, it was never
anticipated that all schools would have to be repaired by the open-
ing day of classes. When the court ruled that no work could be
done when anyone was inside the buildings, the crisis accelerated

c6))


150

representation letter in my work with the General Accounting Of-
fice, and I did all kinds of procurement and management studies,
et cetera. So it took me by surprise, especially the extent to which
the statements that were in re, and many of them were false
for me. In many areas, I was not responsible for, and it was un-
clear to me I could change this letter.

So it was an unusual process, to say the least. And I have
checked with other people, and this is an unusual process for this

of—_

Ms. Norton. I won’t ask General Becton and General Williams
to go through the same process of explanation. I am sure that
would endorse at least much of what you said. I will say only this,
that everybody in here is grown up and that what you got out of
it was a contentious audit, and what could have been avoided, it
seems to me, was this kind of, “he said, she said, I signed, he
si ?

, in fact, there had been some actor willing to step up and me-
diate the matter, it probably would have either been either in the
Board of Trustees or in the Control Board, but the Congress—and
so what we are left with is really an audit that doesn’t tell us very
much. And of course you all tell us we shouldn’t even rely on the
audit. And it looks as though there was lack of cooperation when
there might not have been, when there might have been mis-
communication and misunderstanding.

We recognize that part of the problem is so many actors in the
system, it is hard to find somebody who can play a given role, be-
cause people don’t have the same kind of assigned roles we are
used to having. We regard that as very unfortunate and prevent-
able.

General BECTON. May I make a comment?

First, I want to tl you. When I presented my prepared state-
ment, you were not here, and I wanted to make sure that the
record reflects appreciation for the “Dear Colleague” letter you sent
out to all of your colleagues in the House of Representatives to help
us to get more tutors. Everybody Reads, DCPS’ new literary Rr.
gram, is something we want more people to do, and you made a
great step to get us started.

The second point I want to make deals with the lack of coopera-
tion. I saw the auditors twice; that is, at two exit briefings. At no
time did the auditors come look for me. I even asked to see them.
At no time was I interviewed; at no time did I know about this,
quote, lack of cooperation. I am the agency chief, and it seems to
me if we had a problem, I would be the first person or at least the
second person to know about it.

Ms. NorTON. Unfortunately, auditors, particularly brought in in
the middle of a quarrel and controversy of this kind, sometimes do
have a “got you” mentality, and perhaps this was in part what was
at work here.

I just think that the lack of a figure who could say, look, every-
body get in the same room, let’s figure this out, is what was miss-
ing here. I can understand that the fact you ultimately signed the
letter must have meant there was a letter that could be signed.

General BECTON. The letter the auditors initially wanted us to
sign prepared by them included about 20 different affidavits of one


42

records. It was an EPDM-type roof. We suspected that there might
be some problems. There was evidence of leaking. We took a core
sample, which removes a cylindrical portion of not only the roof,
but the insulation below it. When we removed the core sample, the
hole that was left behind immediately filled up with water. That
roof was 7 years old.

Mr. Davis. Were there any quality controls or warranties on that
from the construction done 7 years ago?

ut MILLER. We were not able to find those records to establish
that.

Mr. Davis. OK.

Mr. MILLER. The second one, if I could quickly go on, was Park
View School, which also had a fairly new roof. The building custo-
dian told our staff on the way up, when we made the first visit,
there shouldn’t be any work required up here, since the roof had
been worked on in the last couple of years. Our staff got up
through the roof scupper, and it appeared in the area they were
looking at like a new roof, but as soon as they walked over that
area and onto the next one, they found a very old roof. So we
weren’t sure what the record showed about Park View, but at least
the people living below this believed they had a new roof, when,
in fact, they did not.

Mr. Davis. Thank you very much.

Mr. Lawson, let me ask you a few questions. You talked on your
own knowledge of the conditions of the District of Columbia Public
School facilities. Do you have an opinion as to what led to these
conditions? Does a fundamental lack of routine maintenance on fa-
cilities affect the useful life as well as the old cost to effectuate the
repairs; is that part of the problem here?

Mr. LawsoNn. No. I think in our work on the schools, that is what
we discovered. On the roofs and the boiler projects that we worked
on, as well as some that we were involved in in reviewing surveys
and assessments that were previously done for the school system,
many of the roofs had exceeded their life expectancy with little or
no apparent maintenance on them. Many of the boilers apparently
had little, if any, preventive maintenance, which could also acceler-
ate the deterioration and shorten the life expectancy. So generally,
I think that we could summarize the condition of the roofs and boil-
ers that we were involved in and as well as those that we provide
technical support for were conditions that resulted from years of ei-
ther disrepair or lack of maintenance.

Mr. Davis. General Williams will have a chance to answer this
later, but it is a question raised by Mrs. Filardo. It seems when you
start comparing roofs here to roofs in other jurisdictions and cost,
that you had to do more extensive work in these cases, the record-
keeping wasn’t good, there weren’t warranties, and that could ac-
count for at least some of the cost differentiation between what you
might encounter in other jurisdictions.

Mr. LAWSON. Well, yes, there are a couple factors you have to
look at in looking at the cost. One you have heard of earlier, the
time to deliver a project or roof work. Roof work is very labor-inten-
sive, it is not typical construction where you can accelerate the
time by sequencing work concurrently, erecting work concurrently.


161

Orders, DMJM augmented the DC Public Schools field staff, by reviewing proposed design details,
providing daily reports on each roof, and monitoring progress.

During the summer, we were also asked by GSA to provide traditional construction
management services on three additional DC schools. Unlike the tasks performed for DC Public
Schools, DMJM provided a more traditional range of management services on these schools,
including review of the construction progress with the contractor, issuing field directives, and
making recommendations on contractual issues, such as Change Orders, and requests for payment.

We believe our contribution in 1997 has helped to make a difficult, crises-laden situation
better than it might have otherwise been. Now that emergencies have subsided somewhat, much
important work remains for DC Public Schools to undertake. We look forward to any future
contributions we can make towards bringing DC Public Schools facilities up to first-class condition.

Attached is a Stewardship Report we prepared earlier this month, reviewing the events of the
past year, and addressing issues of cost and quality on the overall re-roofing effort. Also attached
is an illustrative sketch, demonstrating some of the complexities typically encountered in renovating
older school buildings; the type that comprise much of the DC Public Schools inventory.

I would be happy to answer any questions the Committee may have at this time.


13

(GSA) contractor to develop plans and specifications. For 20 later projects, however, the contract,
files do not reveal specific plans and specifications or who developed them. Consequently, we could
not determine if plans and specifications were adequate.

Process utilized to develop the project cost estimates.

Contract files did not clearly document who developed project cost estimates or how they were
developed in all cases.

‘An architectural engineering firm under contract with GSA prepared estimates for 48 schools.
According to that firm, the estimates were higher than would otherwise have been the case for the
following reasons:

= Shorter-than-normal time allowed for bid preparation
= Shorter-than-normal time allowed for work to be done

= The need for simultaneous work on approximately 50 schools and the resultant
pressures on the available labor supply

= The need for DCPS work to be done during the same construction season that other
jurisdictions were using

= The need for contractors to use labor from outside the local area on short notice and
at premium rates

= The need for work to be done during nights and weekends and the resulting labor cost
premiums

= The need for detivery of materials from outside the local area, because of the high
demand on the supply of materials

In some instances, contract files indicated that DCPS Capitol Project Office (CPO) project managers
prepared the cost estimates, although the identity of individuals who prepared the estimates was not
always clearly documented. We noted one instance in which the government estimate was prepared
by a CPO project manager after bids had been received. We also noted 4 instances in which no
government estimate was documented. In 11 cases, an estimate was stated, but its source was not
documented.

Process utilized to identify qualified bidders.

‘The Authority initially enlisted the support of GSA for 5 roof replacement projects in October 1996,
By January 31, 1997, 20 additional schools were closed for fire code violations. DCPS requested
GSA’s assistance in March and April 1997 for roof replacements at 2 schools and in June 1997 for
roof replacements at 3 schools. This work was performed by contractors already under contract to
GSA.

Page 2


82

pay out funds, make the transfer of funds, when the institutions,
when the agencies request them.

Mr. Davis. I understand that, but when did you notify, if you can
try to just take a minute, when did you notify the schools that you
had the money?

Mr. BRIMMER. I’m told we did it immediately, on the date of re-
ceipt.

Mr. Davis. So on June 2nd.

Mr. BRIMMER. The day it was available, they were told it was
available.

Mr. Davis. Who was told?

Mr. BRIMMER. In this case, the schools were told.

Mr. Davis. Do you know who told them? Who in your shop told
who in the schools?

Mr. BRIMMER. Dexter manages this. Dexter, was it the CFO? The
CFO, which is the usual procedure. The CFO.

Mr. Davis. The CFO of the schools?

Mr. BRIMMER. Yes.

Mr. Davis. I think he'll get an opportunity to testify.

Mr. BRIMMER. The CFO for the city is informed, which is our con-
tact. The CFO for the city, the chief financial officer is Tony.

Mr. Davis. Tony Williams. He’s here. So he knew June 2nd. But
who told the schools on June 2nd that.this money was available
and they could come down and pick up the check and obligate the
money, do you know?

Dexter, you’re not under oath. 'm going to have to swear you in
if you say anything, or you can tell Dr. Brimmer and he can an-
swer.

Dr. Brimmer, we will allow Dexter to tell us in a minute, but I
think what we're trying to understand is whether the supplemental
was needed. It was entered about this time, and we need to under-
stand the flow of cash that was available to the school system, in
which so many different questions were asked. We have heard tes-
timony about where in the procurement cycle you could bid these
out and it was going to affect the total school system. I know we’re
back here 6 months after the fact, but it is important we know on
the record what happened so that we can learn from that experi-
ence.

Mr. BRIMMER. Mr. Chairman, you are really asking a question
about the operations not of our office but the operations of the chief
financial officer of the city and the operations of the schools. From
a letter——

Mr. Davis. I am. But understand this. On June 2nd the money
was available to the Control Board. We know that. You have testi-
fied to that. That’s a fact. The money didn’t get over to the schools
until sometime later, 6 weeks later. It appears from Mr. Stephen-
son’s testimony—we will allow him to testify when he comes up, he
hasn't testified yet, but just from his printed testimony given to us
in advance—it was 3 weeks later until they really knew the money
was available to them.

So there is a 3-week gap in terms of them being able to have the
money available for contracting it out and obligating it, and that
could delay the procurement cycle. And the schools opened 3 weeks
later.


D.C. PUBLIC SCHOOL 1997 REPAIR PROGRAM
AND FACILITIES MASTER PLAN

HEARING

BEFORE THE

SUBCOMMITTEE ON THE
DISTRICT OF COLUMBIA

OF THE

COMMITTEE ON
GOVERNMENT REFORM
AND OVERSIGHT
HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS
SECOND SESSION

JANUARY 23, 1998

Serial No. 105-123

Printed for the use of the Committee on Government Reform and Oversight

Se

U.S. GOVERNMENT PRINTING OFFICE
48-873 CC WASHINGTON : 1998

For sale by the U.S. Govemment Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-057121-9
3S
SPO,



108

The above chronology and narrative accurately sets forth the facts surrounding the

requisition of funds by the DCPS for capital projects.

At this time, I would be glad to answer any questions that the Committee may have.


131

I emphasize the word emergency here, because the Authority did not choose that word by

chance. They took this dramatic action after concluding that “...in virtually every category and
for every grade level, by virtually every measure of performance, the public school system has
failed to provide a quality education for all children and a safe environment in which to learn.”

The Authority said the District’s children were “in crisis” and their school system was in a state
of emergency. They gave my administration less than three years to undo decades of damage, and
we acted quickly, and forcefully, to turn things around. I would simply ask you, and the rest of
the Subcommittee, to remember where we started and to give us the time we need to get the job
done.

I would be pleased to answer any questions you may have. Thank you, again, for the
opportunity to testify.


159

DMIM's relationship with the DC Public Schools project actually grew out of an existing
relationship with the General Services Administration (GSA). DMJM was awarded an indefinite
delivery contract from the GSA in 1994, having competed in a qualifications-based selection. ‘That
contract enabled authorization of Task Orders, utilizing pre-negotiated hourly rates. When DC
Public Schools first requested assistance from GSA, we were among several firms under contract
to GSA, all of whom were made available to DC Public Schools. DMJM participated in several
carly tasks which were ultimately for the benefit of DC Public Schools, but which were carried out
under GSA direction and guidance. In early summer 1997, GSA delegated tasking authority directly
to DC Public Schools, enabling DC Public Schools to utilize the GSA contract. As the tasks became

more chal jing, with shorter and shorter time frames, some firms were unable or unwilling to

respond to DC Public Schools's emergency needs. DMJM tried to remain responsive to the needs
of DC Public Schools throughout the remainder of the 1997 year.

We actually provided a number of different services for DC Public Schools during 1997. Our
first involvement with the roof replacement program was two tasks performed directly for GSA,
involving design of new roofs and related work for two schools. We also provided services during
construction for these schools throughout the summer, including review of shop drawings, and
periodic field observation.

In June, DC Public Schools authorized DMJM, through the GSA contract, to provide Scopes
of Work for roof replacements at 15 schools. DC Public Schools required these scopes within three
weeks, in order to allow sufficient time for procurement and construction. DMJM deployed several

teams, working evenings and weekends to accomplish the task.




109

Attachment 1


30

Mr. Davis. Mr. Miller.

Mr. MILLER. Thank you. Good morning. Thank you for the oppor-
tunity to speak today. My name is Jonathan Miller. I am an associ-
ate vice president with the architectural and engineering firm of
Daniel, Mann, Johnson & Mendenhall, and I am a registered archi-
tect in both Washington, DC, and Maryland.

I am appearing before this panel in my capacity today as project
manager for the D.C. public schools projects on which we have
worked. My 20 years of design and construction experience in the
Washington, DC, metropolitan area have allowed me to become
well versed in Federal sector projects, including the General Serv-
ices Administration, Department of Treasury and the FBI. I re-
cently served as lead architect for design management for the new
terminal at National Airport.

Daniel, Mann, Johnson & Mendenhall, or DMJM, for sake of
brevity, is a 52-year-old multidisciplined professional services firm.
We have 1,400 employees in 20 offices across the world. We provide
architecture, engineering and construction management services to
a range of public and private sector clients, and we have been serv-
ing the metropolitan Washington community for 43 years. We are
currently providing pro; management services for the Penta-
gon, the Department of Labor Job Corps centers located across the
Nation, both National and Dulles airports, and the Federal Emer-
gency Management Agency. Unlike these projects, we are not pro-
viding comprehensive program management or construction man-
agement services to D.C. Public Schools. Rather, as I will explain
more fully in a moment, we provide technical advice and field rep-
resentation on numerous tasks.

Our relationship with the D.C. public schools project actually
grew out of an existing relationship with the GSA. DMJM was
awarded an indefinite delivery contract from GSA in 1994, having
competed in a qualifications-based selection. When D.C. Public
Schools first requested assistance from GSA, we were among sev-
eral firms under contract to GSA, all of whom were made available
to D.C. Public Schools. DMJM participated in several early tasks,
which were ultimately for the benefit of the D.C. public schools, but
which were carried out under GSA direction and guidance.

In early summer 1997, GSA delegated tasking authority directly
to D.C. Public Schools, which enabled D.C. schools to utilize the
GSA contract. As the tasks became more challenging, with shorter
and shorter timeframes, some firms were unable or unwilling to re-
spond to D.C. public schools’ emergency needs. DMJM tried to re-
main responsive to the needs throughout the remainder of the 1997
year. We actually provided a number of different services for D.C.
schools during 1997. Our first involvement with the roof replace-
ment program was two tasks performed directly for GSA involving
the design of new roofs and related work for two schools. We also
provided services during construction for these schools throughout
the summer, including review of shop drawings and periodic field
observation.

In June, D.C. schools authorized DMJM, through the GSA con-
tract, to provide the scopes of work for roof replacements at 15
schools. D.C. schools required these scopes within 3 weeks, in order
to allow sufficient time for procurement and construction. DMJM


89

had a conversation with the schools immediately and the files were
returned to the auditors. I was struck also by the question of a lack
of cooperation. In our conversation with the auditors, after the re-
port was in our hands, we asked them whether there was a time
horizon during which there was cooperation and then lack of co-
operation. We got the response which said that until the draft went
to the schools, probably sometime around December 9th or there-
abouts, until then there had been cooperation but that after that
date or thereabouts there was a change in tone. The other item
that we focused on, which suggested a lack of cooperation, was at
the signing of the certification letter, the specification letter. I un-
derstand the school authorities had been advised by their counsel
that the draft of the—the particular draft of the letter should not
be signed. Our counsel, our advice to the school authorities was
that it would be better to sign that letter, a letter, and to do so
quickly. It was my understanding that they were in the process of
reviewing and drafting a new letter to be signed at the exact point
where the report was put to press. So the auditors’ report came out
with the draft in it, the draft of the letter which had been a source
of concern. As a matter of fact, the school authorities, General
Becton, in the meeting we had yesterday with him, talked about a
number of other things, not just that particular thing but about the
schools, in particular talking about the future or how they would
be operating, signed the letter in my presence yesterday. So he also
gave me copies of certification letters which several other persons
in the school system had signed. So there is a signed certification
letter as of today. That is my——

Ms. Norton. Mr. Cotton, did you bring this matter to the atten-
tion of any staff or others in the Control Board in time to get this
document signed?

Mr. Cotton. We—when we gave the draft management rep-
resentation letters to DCPS, we gave copies of those drafts to our
point of contact at the Control Board. We also, when we—

Ms. Norton. Who was that?

Mr. Corton. That was Allison Farris. When we learned that
DCPS officials were not going to sign the management representa-
tion letters, we included in a draft of our report essentially what
you see in the final report, the qualification along with the text of
the letters not provided. And we gave that to the Control Board on
December 23rd.

Ms. Norton. Dr. Brimmer, I think you will find that Members
of Congress would expect that this is the kind of matter that would
have been mediated quickly so that we do not have the letter
signed weeks after the report is issued. You did the right thing and
in doing an audit, you audited promptly. You got an auditor
promptly. You have a—you have a leadership that is the leadership
you have chosen. I know you well enough to know that if you tell
them sign the letter, it is going to get signed the next day, not after
the report is in. I can’t understand the hiatus here.

Mr. BRIMMER. Excuse me. We discussed this matter with the
schools promptly. Yesterday was not the first time we had a con-
versation. I. said the letter was signed in my office yesterday. I
didn’t say we had no conversations.


84

So you actually got this estimate from the District of Columbia
public schools officials and you worded it just the way they told
you?

Mr. Corton. Yes, sir.

Mr. Davis. In addition to that, the $7.2 million is not an overrun
or it is not alleged waste; it is a guess as to what the public schools
may have had to pay as a premium for the conditions that it was
operating under, the court orders and everything else. Again, these
are their numbers. It is not some number somebody went through
and audited and found; is that correct.

Mr. Cotton. That is correct.

Mr. Davis. Actually the $7.2 million number doesn’t mean any-
thing. It is just a guess and doesn’t relate directly to a specific
overall calculation of what the program should have cost, does it?

Mr. Corton. We did not attempt to measure the excess cost. I
have been taken to task for not using a $20 million plus number.
We know there is a dispute about the excess cost. We also under-
stand that the General Accounting Office is focusing specifically on
that issue.

Mr. Davis. Let me read you a quote from a newspaper article:
The shoddy contracting system used when D.C. school officials
spent millions of dollars for emergency roof repair last year put
honest school employees in compromised positions and led to $7.2
million in additional costs as the work was rushed to completion,
according to an audit released yesterday by the D.C. Financial Con-
trol Board.

Is that accurate?

Mr. Corton. I think I read that article and I think you read it
correctly, yes, sir.

Mr. Davis. So it is not, the article is really not-——

Mr. Corton. I think that is a mischaracterization of what we
said in our report.

Mr. Davis. I just wanted to get to that. Thank you very much.
Mr. Cotton, there seems to be some misunderstanding of the role
and the responsibility of the auditor as it unrolled in this instance.
For example, could you explain to the subcommittee the role of an
auditor in making judgments about factual findings, whether they
need to be included in an audit? I am particularly interested in
your responsibility to report facts as you find them and to raise
issues where the potential exists for abuse.

Mr. CoTTON. One of our responsibilities as auditors is to look at
the control systems that are supposed to be in place and adherence
to those control systems in practice. When we see problems in that
regard, we have a responsibility to call that to management’s atten-
tion and recommend corrective action. An audit is based on an as-
sumption of cooperation by the people being audited and we con-
ducted ourselves accordingly.

Where we saw facts that we couldn’t independently verify and we
thought those items needed to be mentioned in the report, we at-
tribute those to the source. Where we could verify underlying facts,
we would accept those facts and present them in our report.

Mr. Davis. On page 2 of your report, where you discuss the exist-
ing potential for abuses, you conclude by stating, “These conditions


12

The issue of consultation, of course, raises a problem that has vexed not only the generals
but also the Board of Trustees and the control board. Consultation is often messy, even tiresome,
but results are almost always better and less contentious when decisions are shared. If leaders
insist on full steam ahead in their own tank, they had best make sure that their armor is
shatterproof, because all the complaints will come their way.

‘The failure to take consultation seriously, of course, has been most seriously felt in Shook

‘Although both the Chairman of this subcommittee and I are lawyers with experience in fending
off litigation, our suggestion that would have avoided a lawsuit altogether, spelled out in detail to
the control board, was not taken seriously. By contrast, after a meeting I had with the elected
school board, its members agreed to delegate their authority under existing D.C. law and, in
addition, to accept an advisory board. In this instance, it was the elected school board that
showed the greater maturity and willingness to sacrifice power and the control board that took a
needless risk that has unecessarily reintroduced uncertainty into the conduct of school affairs.

At the same time, | appreciate that the contro! board, following the Shook decision, has
not plunged ahead unilaterally. The next steps by no means are clear. There must be a dozen
options. We would hope that the parties would strive for a resolution that ensures a seamless
transition back to the elected board as planned by 2000 without disruption. Unfortunately, the
public has not heard from the elected school board in months. However, if the elected board, the
Board of Trustees and the control board engage in thoughtful and disciplined problem solving, 1
believe that gradual power sharing can work. Such a transition would have to occur slowly,
incrementally proceeding from one step to the next only as demonstrable success is apparent,
because the public will not tolerate a return to needless quarrels, power trips and failure to act. A.
reintegration of the elected school board that has four new members who have never had the
‘opportunity to exercise the authority given them by the voters is essential to assure that the
lected schoo! board is fully prepared to assume its role as planned by the year 2000. However,
the necessary transition cannot begin now unless a structure and an approach are found that
guarantee that there will be no reversion or slow down of the progress of reform. I urge the
parties to do so.

‘The Board of Trustees has taken a fair amount of heat, in part, because of raised
expectations and the felt need of parents for rapid change. However, there have been some
‘noteworthy accomplishments, among them an education plan already being implemented and the
closing of some schools, without which there may well have been congressional interference.
Gradual power sharing could help legitimate the Board of Trustees which is still mistrusted by
‘many parents because of the paucity of representation of the public.

Tam disappointed, however, that there are rumors that some members of the Board of
‘Trustees want to be THE board and the only board, notwithstanding the Shook decision. I hope
‘that these rumors are untrue. The Trustees demean their service if they attach it to such hubris. I
hope that the Trustees will act in the spirit of public service that brought them to this thankless

2


54

On oversight? They haven’t done enough oversight. But one of
the reasons that the Board of Education-elected board was criti-
cized is the total absence of oversight.

Ms. FILARDO. But I would like to take issue. There is sort of a
mythology that there has been no work done in the District of Co-
lumbia Public Schools. There was $100 million spent between fiscal
year 1991 and fiscal year 1995 as part of the capital budget. They
replaced doors, if you remember, which is partly why the schools
were closed before. It was the big issue before roofs. And they were.
They did massive door replacements.

's. NORTON. Ms. Filardo, don’t make me sound like an apologist
for the D.C. public schools. I recognize that there was work being
done. After all, the schools had been closed. So of course they were
doing work.

The fact is that when somebody says a major part of your prob-
lem, one that guarantees that schools will be closed, the roofs, so
we're going to do all the roofs, that is the kind of systematic think-
ing that we like to see, and I give them credit for that thinking.
I come up real short with them when their systematic thinking is
so systematic that no matter what they discover as they move to-
ward that goal doesn’t stop them, doesn’t make them rethink,
doesn’t make them reschedule, doesn’t make them understand par-
Hicularly that if you close schools, that is really the end of the game
for you.

T don't criticize your assessment. I do say that, in judging the
school system, that I am willing to it them that they have cho-
sen an important priority and that they did not accomplish it.

Mr. Lawson, was the GSA ever asked itself to serve in a project
management or oversight role, given your greater experience with
doing massive jobs all around the country and having to get them
done on time or answer to Congress if you don’t?

Mr. LAWSON. Well, yes, we were, on those projects that we ac-
complished on the initial stages. That was, I think, nine roof
projects, roof repairs, and six boiler projects, and the planning——

Ms. Norton. Well, I ask you—I know about those projects. I ask
Xen about the project management and oversight role in light of

is. Filardo’s testimony. Because she says still you really don’t
have a delivery system in place. You know, things are going to get
done maybe, but she says you don’t have it in place.

So what I'm really asking is if you have—if one wanted to make
sure that things occurred, if your system is being put in place, you
try to look for something that might serve the pu or help the
purpose while it’s being put in place. I’m really asking whether you

ve been asked to serve in this role while a new system for project
management and oversight of jobs is being developed.

Mr. Lawson. Not beyond the scope we’ve previously indicated.

Ms. NorTon. One oft the first things that I spoke with you about,
Mr. Lawson, was the procurement system. I saw GSA’s procure-
ment system as something of a magic bullet both for the police de-
partment and for the public schools. And I know that you have at-
tempted to help with procurement, which has been a major prob-
lem in the D.C. government.

I would like to know whether—what role your procurement sys-
tem is playing now, or your procurement work, the use of GSA pro-


71

‘Mr. Ron Hamm
Page 2

© ADCPS staff told us that a folder letters evidencing ial project
completion had been compiled. On 4 occasions, we asked 3 different DCPS staff members

for access to this information. (Our last request for this was in writing on December 12°.)
‘We did not receive this information,

‘One of our audit objectives was to assess the qualifications of personnel responsible for
procurements, We asked (orally, and then in writing on December 12*) for specific
Confirmation of the lst of all individuals who had been responsible for the procurements.
We did not receive this information.

‘+ We discovered from non-DCPS sources late inthe audit that 2 DCPS procurement
personnel had pleaded guilty to accepting bribes and illegal gratuities from a construction
Contractor. We were led to believe that these individuals had no involvement in the Fiscal
‘Year 1997 CIP procurements. We asked for documentation about these illegal acts.
Following a delay, we were provided with a copy of the prosecutor's information to which
the employees reportedly pleaded. We asked (several times orally, and then in writing on
December 124) for more detailed information about the specifics surrounding these illegal
‘acts. We did aot receive this information.

‘Our concerns about not being able to obtain, examine, and evaluate this potentially crucial information
were exacerbated by the subsequent refusal by DCPS personnel to provide the written management
representations we requested.

Regarding the management representation letters:

‘The DCPS panes testimony Friday conveyed the impression that our request for written management
representations was unusual, inappropriate, and unfair. Mr. MacLaury and General Becton stated that
they consulted other audit professionals on this matter, and were told that our request was unusual or

inappropriate. General Becton also conveyed an impression chat our request for these leters came as a
surprise to him, and that we did not adequately explain them to DCPS staff. Mr. Stephenson stated that
be had never heard of the use of management representation leters in a performance audit during his
26 years with GAO. I think clarification on these important matters is needed.

Use of management representation letters is a required audit procedure for financial audits, a
recommended but optional procedure for agreed-upon procedures engagements, and an optional
procedure in performance audits. Specifically, the General Accounting Office position on this is
contained in Government Auditing Standards, 1994 Revision, Chaptet 6, Fieldwork Standards for
Performance Audits, paragraph 6.55, as follows:

“Auditors may find it useful 0 obtain from officials ofthe auditee wrinen representations
‘concerning the competence ofthe evidence they obtain. Wristen representations
‘and

‘misunderstanding concerning the matters that are the subject of the representations.


96

ment to the public was necessary, and to indicate in writing. Since
you are in ‘ge, you cannot pass this off to those who work for
you.

In the same way, I have to ask you about performance bonuses.
We people hear that the schools did not open on time, but the word
is—and so I am going to ask you, is the word correct—that General
Becton nevertheless—General Williams nevertheless qualifies for a
large performance bonus. They need some explanation as to what
the standards are for achieving a performance bonus.

So I am going to ask you whether or not the Control Board has
any standards it is willing to pass on. If you are willing to stand
behind those who are given the signing bonus, have you any stand-
ards you are willing to pass on for how every performance bonus
should operate, again, because there is a huge controversy in this
city, and it might go away if people understood what the standards
were, and then said, “Measured against these standards, perhaps
we understand.”

So I need an explanation about signing bonuses and whether you
think they are going to continue, whether you think they are ap-
propriate. I need an explanation about performance bonuses and
what are the standards for awarding them throughout the D.C.
government.

Mr. BRIMMER. First, with respect to the terms for employment
for the school officials, as I said earlier, those were set by the CEO,
with approval of the board of trustees.

Ms. Norton. You have no responsibility in that?

Mr. BRIMMER. We delegate it to the CEO.

Ms. NorTONn. Do you think in light of what happened that you
ought to look again at how they have handled that delegation?

(r. BRIMMER. They establish compensation with approval of the
trustees.

Now with respect to General Williams, and again General Becton
can give you the details, it is my understanding that as a part of
General Williams’—the terms of his employment, they indicated
that he would be eligible for consideration br a bonus dependin
on the amount of savings, the amount of savings which he effected.

Ms. Norton. He owes the school system money, if that is the
standard.

Mr. BRIMMER. General Becton will describe that. I was told by
General Becton that with respect to any performance bonus, that
he had decided he did not want to be considered for such a bonus
at this time. I understand further that all considerations of per-
formance bonus have been deferred until the end of the school year.
So it is my understanding that none of this is actively on the table
now.

Now, the more general question, what about compensation ar-
rangements, yes, I do believe that the standards ought to be made
explicit ahead of time, and they are. In our own case, we are estab-
lishing performance standards throughout the provinces under our
jurisdiction. One of the things the CEO is working on from the very

eginning, it establishes such standards.
10 to summarize again, Ms. Norton, I do believe that incentive
compensation ought to be a part of the total compensation of gov-
ernment employees. Too, I believe that a bonus is the proper form


170

COTION& COMPANY

(Cernieo Punuc Accounranrs, LLP
333 NORTH Famsax Staset © SUTE4O1 © ALBUNDUA, Vincnan 22314

1. C18 Sut W Cais CPA CFE uss Rem CPA
Bow, Ae Cope t Rocio Ntsc fron CS
January 28, 1998
Mr. Ron Hamm
‘Staff Director

Subcommitee on the District of Columbia

House Committee on Government Reform and Oversight
2157 Raybum House Office Building

Washington, DC 20515-6143

Dear Mr. Hamm:

[listened with interest to the DCPS panel's testimony last Friday. I am concerned that some statements
‘made during that testimony might, if not clarified, mislead the Subcommittee. (1 am certain that neither
General Becton nor General Williams would deliberately or knowingly mislead the Subcommittee or
deliberately or knowingly allow anyone under their command to mislead the Subcommitice. Rather, I
suspect that General Becton and General Williams may bave been inadequately informed by their staff
regarding mauers related to the audit.) 1 offer the following supplemental information in order to make
sure that the Subcommittee has a complete and accurate understanding of matters that occurred during
‘our audit. Please share this information with Subcommittee members and supplement the hearing.
record, as you deem appropriate.

‘Regarding noncooperation during the audit:

In response to a question regarding noncooperation, Dr. Brimmer stated that the DCPS contract files
were initially given to us and then taken back for a time atthe audit's beginning. General Becton took
vehement exception to this and indicated that this was the first that he had heard of this problem.
While it was true that we had difficulty obtaining all of the contract files at the audit's beginning; we
id not at the time view this as noncooperation by DCPS personnel. (In later discussions with the
‘Authority concerning the need to extend the audit's performance period, we cited this as a delay and
disruption beyond our control.) 1 regret not having spoken up to clarify this on Friday.

[fear that General Becton’ statements, however, may be construed as indicating that we failed to alert
DCPS about these problems. Although we did not view this matter as indicative of noncooperation, the
DCPS staff was fully and repeatedly informed about problems that we encountered gaining access 10
the files. Our writen progress reports dated November 7th, November 14th, November 21st,

D Ist, and De ‘Sth highlighted these problems under the bold heading

Delays. I can provide copies of these progress reports for the record, if you wish.

‘The Subcommittee may also need to be aware that noncooperation extended beyond not obtaining the

requested management representation letiers. In fact, we were hopeful that obtaining the management
representation leners would resolve some other issues. The following unresolved and significant issues
arose during the audit:

704.836.6701 © Fxx703/836.0941 © HITP//eWwW.COTTONCACOM © E-NAL: OCOTTONBCOTTONCR.COM


15

Information obtained from the CPO indicates that some contractors may have been prequalified
without a determination that they met all of the prequalification requirements.

The DCPS COO told us that if a contractor was on a roofing material manufacturer's list of certified
installers, had previously done satisfactory work for the District, or was on GSA’ list of approved
contractors, the contractor was deemed to have achieved prequalified status. We found no documen-
tation, however, that these qualifications had been verified.

Procedures implemented to develop appropriate Requests for Proposal (RFP).

As described above, initial CIP projects were procured through existing GSA contractors. DCPS
representatives told us that they had no contract files for these GSA-managed contracts.

For the initial DCPS-managed procurements, a formal invitation for bids (IFB) was used that
contained preliminary specifications developed by a GSA-contracted architectural engineering firm.
This IFB appears to have followed 1987 DCPS policies and procedures and resulted in roof replace-
‘ment contracts for 15 schools. According to the DCPS Chief of Contract Administration, this was the
only formal bid opening conducted by procurement staff. All other contracts were awarded based on
“requests for pricing through competitive negotiation,” and formal IFBs or RFPs were not prepared,

‘The process referred to by the DCPS Chief of Contract Administration as "competitive negotiation”
was not documented, It appears to have been carried out at the direction of the DCPS COO. We
found no formal documentation detailing the emergency procurement procedures that the COO
intended would be followed. Two undated, informal, handwritten memorandums appear to outline his,
mentions. Both are addressed to the DCPS Chief of Contract Administration, the Deputy Facilities
Management Director, and the Chief of Capital Projects. One states: "Guidance [on] our capital
procurement-- want to eliminate the old notion of Jow bid and substitute it with the most responsive
offer. We do not want any more IFB but responsive to our request for proposal ... the low bid issue
hhas gotten us in trouble." The other states: “I want to emphasize once again that the administrative
procedures (are]: 1. Technical Evaluation; 2. Cost Evaluation; 3. Source Selection; 4.
COO/Approval; 5. Chris (contracting officer) for process."

Subsequent process utilized to determine bid awards.

As noted above, the Chief of Contract Administration stated that only one formal bid opening
‘occurred in which some contract awards were made to low bidders. Contract files do not document
the basis for awards made under what DCPS refers to as "competitive negotiation."

‘Subsequent process utilized to track actual project costs and potential cost overruns along with
managing contract amendments or change orders.
We noted problems regarding certification of funds and change order processing. We found a consis-

tent pattern in which contractors were instructed to proceed with contract work prior to DCPS
obtaining a certification that funds were available.

Page 4


January 5, 1998

Charles E. Williams, MG USA (Ret)
Chief Operating Officer

Director of Facilities

District of Columbia Public Schools
415 12th Street, NW, Suite 903
Washington, DC 20004

Dear General Williams:

Daniel, Mann, Johnson, & Mendenhall (DMJM) regularly reviews our work on noteworthy projects to
provide what we call a Stewardship Report. We felt that the beginning of 1998 would be an
appropriate time to review the events of the past year and summarize our efforts on behalf of the
District of Columbia Public Schools (DCPS). We are exceptionally proud of the legacy of work
completed in 1997 on behalf of DCPS and trust you share our sense of achievement.

We began work in February with the prioritization study — a three-week compilation and assessment
of existing facilities documentation for all 165 schools including a walk-through sampling of 16
schools. As we worked, we created a data base to identify needs, set priorities, and establish budgets,
for the deficiencies throughout the school system, which numbered in the thousands.

Roof repairs emerged as the single most important deficiency requiring immediate attention. We
developed a series of Scopes of Work that outlined the performance requirements and broad
construction methods required to protect 48 of the most critically damaged schools from further
deterioration from leaky or otherwise seriously damaged roofs. These Scopes of Work, including
specifications, formed the technical components of the design/build contracts executed between DCPS
and the numerous General Contractors involved in this past summer's reroofing efforts. Eventually the
roofing program was expanded from the 48 to encompass 56 schools. Once the roof repairs were
underway, we provided Construction Administration services, including a daily presence, seven days a
week, for each of the 56 roofs.

Although the term “reroofing” is used most frequently to describe the work, it is partially a misnomer.
Certainly the work that was completed in nine weeks by DCPS focused on protection of the building
envelope, primarily the roofs. However, we found extensive related damage, often resulting from the
deteriorated roofs, that required additional repairs far beyond the initial scope of the roofing

1525 Wiesos BoLLEY AD, SLITE 1100, ARLINGTON, ViHGSIy

Sage anon Fey ase



48

what I read in the press and conversations I had with D.C. schools,
that they did not have funds in place, and we simply took the tasks
when they gave them to us, and that left plenty on our plate.

I might just add quickly that we initially surveyed 48 schools in
2 groups, and not all 48 of those schools were worked on during
the summer. We did find schools where we recommended that only
minor repair work be done. That was generally done by in-house
forces. Those were not part of the 1997 summer programming.

So why 40? Why 40 and why compressed I can’t really address,
but I can say we were careful to make sure the ones that did re-
ceive work needed it.

Ms. Norton. Ms. Filardo, do you have any view on this?

Ms. FILARDO. Yes, I do. Part of what happened before the new
administration came in under facilities, is Hat there had been no
capital money and the capital staff had been greatly reduced. There
had been a RIF of about 21 people before General Williams came
in.

Also, one of the first things he did was terminate the Service
Master contract. Service Master had been taking over more and
more management responsibility. They were very involved in the
roof door replacements, and they had been involved in the manage-
ment of level two management, which involved a lot of prior formu-
lated repairs.

So within 2 weeks of the new administration there was no Serv-
ice Master; there had just been a staff cut right before Franklin
Smith left; there was virtually no capacity in the District of Colum-
bia public schools to manage a capital program; and so there just
wasn’t the time to prepare the scopes of work, the analysis, the in-
formation. It just wasn’t done.

My sense is that the bids went out in July because it just took
that long to get the work done, and it was not the funding, because
they didn’t need the funding until they had——

Ms. Norton. Whether we are talking funding or the deeper prob-
lems in the delivery system, as it were, that you describe, Ms.
Filardo, I would like your expert opinion, Mr. Lawson and Mr. Mil-
ler, confronted with these problems. After all, General Becton and
General Williams were confronted with these problems; they
weren't problems of their making.

Confronted with these problems, facing a late start in doing the
roofs, would not the better professional approach have been to re-
schedule the number of roofs that could be done within the allotted
timeframe rather than press the timeframe, given the matters out-
side of their control that they found?

Ms. FILARDO. Well, I sent a memo to Bruce MacLaury on August
9th of this summer, after it was clear that the school system would
be not able to complete roofs in a timely fashion to open school.
And one of the things I would like to say is, we talked about
schools being closed before; they were closed for 2 days. We were
looking at weeks. I mean, we're not in the same realm in terms of
the cost educationally to the District of the fire code suit before, but
it was not unfamiliar.

And in this memo, I suggested that there were lots of reasons
that we had these problems: They were old, and they were not
going to go away quickly. But in the meantime, what they needed


117

Mr. Davis. Thank you very much.

Mr. MacLaury, welcome.

Dr. MacLaury. Thank you, Mr. Chairman, Ms. Norton. I am
Bruce MacLaury, chairman of the emergency trustees. You know
our position is legally somewhat in doubt at this stage of the game.

Mr. Davis. We are happy to have you here, whatever the status.

Dr. MacLaury. As a citizen. Thank you, Mr. Chairman. I have
tried to shorten my comments. You do have them for the record.
Let me speak as quickly as I can.

The crisis in DEPS, the public schools, has many faces, but none
was so vivid as the decrepit and dangerous condition of the school
buildings. Against that background and with all due respect, I do
say that today’s hearings have something of a surreal quality. Two
of the people on this witness stand, Julius Becton and Chuck Wil-
liams, in my opinion, did more in one summer than their prede-
cessors had accomplished in decades of procrastination. They ended
the misguided practice of patching roofs, a practice that had wasted
millions. If we are talking about waste, the patching wasted mil-
lions of taxpayers’ dollars in the past. They have given us a school
system that is virtually free of fire code violations and 61 buildings
with new, warranted roofs. Now, instead of celebrating this feat,
we are debating whether the paperwork during the crisis was done
properly.

Mr. Chairman and members of this subcommittee, you were
right to convene these hearings. An atmosphere of suspicion and
mistrust has been created over the past months. In recent weeks
that atmosphere has been exacerbated by an audit that again, in
my opinion, applies business as usual standards, and makes legal
j ents that auditors, in my understanding, are not necessarily

ualified to make. I am not a lawyer myself, I would not make
these judgments. It also suggests in an inflammatory way that, as,
Mr. Chairman, you pointed out, conditions in our capital program
were conducive to fraud, waste and abuse, although, as we have
heard, none as yet has actually been found. I emphasize the words
“fraud and abuse.” Waste there was, because of the circumstances.

Before my colleagues tell you the rest of the facts in the case, I
would like to say a few words about the legal and policy framework
in which the capital program took place. In its order of November
1996, the Authority said that the provisions of the D.C. code and
municipal regulations usually governing procurement did not apply
to the board of trustees. It directed the emergency board to adopt
“such policies and procedures, rules and regulations, with regard to
procurement as will carry out this order.” It explicitly went on to
say that the emergency board could incorporate such rules and reg-
ulations of the Board of Education “. . . as it considers necessary
or appropriate to enable it to carry out its activities.”

This is important. Given this clause, and given, in my view, the
impossibility of rewriting in our first year the entire body of Board
rules, the trustees decided to let stand the Board of Education’s
rules and regulations in all areas except those in which the trust-
ees decided that changes were imperative. The auditors would have
understood our views on this point if they had asked. There was
never any question by them to me as chairman of the trustees dur-
ing the audit or afterwards.


53

So that if that is what Dr. Ackerman is trying to do with young-
sters, she has to say not that youngsters in the D.C. public school
system are doing so poorly and must do X, she is trying to show
that they, in fact, have improved over the year, which is really the
only way you can approach a situation when you find people, stu-
dents, or a system in the sorry shape that ours is in.

So what would be most useful to me would be some standard
against which to measure where they have come, where they were,
has there been improvement, improvement in what, rather than
the notion that all of it is terrible, because we understand that, and
we think it is going to be terrible for some time to come. So we can
only know if they are getting us there if we know—have some
benchmarks, however they are framed, to tell us whether there are
steady improvements.

Ms. FILARDO. I think that we have done that, basically. One of
the first things is a master plan that’s based on standards and
credible information, et cetera. We did not get that from this ad-
ministration. We did meet yesterday for the first time since we put
out the alternative plan on master planning, and I think that was
good. But we didn’t see the planning.

So my sense is that, no, it has not gotten better. A lot of what
was missing is process, procedures, plans that were transparent
and that were based on sound information. I don’t think that we
have gotten that in this first 14 months. I think we have lurched
from crisis to crisis, which is what we used to do. And whether it’s
closings or getting out a plan or getting to a hearing or getting
groups done, it has been business as usual.

But I do think that with proper oversight, had it been there by
the board of trustees or the Control Board, that there is at least
a willingness to change things. But what I haven’t found in place,
is the understanding of how to institute systems, the building of a
system.

It’s one thing to follow a system that is there, and to do it well;
it is another thing to create the systems. We haven’t created the
systems. Perhaps you will be able to hear from them that they’re
developing it. I’m not aware of it.

Ms. Norton. Well, I appreciate that, because I do think that a
process standard is appropriate. I think you will find that parents
and students will also use a standard of whether or not there is
anything different in the school in which they happen to go. And
I think it really does matter to a student if a roof does not leak.
I think it really does matter to students that there is going to be,
take something out of your jurisdictional area, if there is going to
be a year-round school.

In other words, I think that in judging a school system—and I
couldn’t agree more that process is important, because, frankly,
that is the only way to systematize anything and, therefore, show
improvement. But in all fairness, I think that it was not business
as usual to undertake to do a set number of roofs. It was far from
business as usual.

They failed to accomplish their mission, but there was no work
being done on roofs.


138

Capital Program Management Procedures

Now I would like to address the specific questions you raised regarding the Cotton &
Company audit,

believe that we must first put into perspective the conditions and situation that I faced when
asked to come and deal with the facilities issues at DCPS. I accepted the position of Chief
Operating Officer/Director of Facilities because I believed that I could use my thirty-five
years of professional experience to create a better and safer learning environment for the
children of D.C. When I was approached by General Becton for this job, it was made clear
that the Control Board and General Becton firmly believed that we were in a crisis situation
and emergency conditions existed. As I have said, these emergency conditions were
intensified by the involvement of the Court.

Emergency powers were granted to the Trustees and General Becton by the Control Board on
November 16, 1996. Their resolution was a clear declaration of the emergency: they found,
and I quote, “that a state of crisis presently exists in the District of Columbia public school
system, which mandates that the Authority exercise the statutory powers granted to it by
Congress on an emergency and temporary basis.” We were given the authority to exercise
good judgment in implementing accelerated procurement practices and, honestly, without
this authority, I would never have taken the job because it would have spelled failure from
the very beginning.

‘What did I face in the first week of January 1997? There was no long-range facilities master
plan, no capital funding that had not already been committed, no capital staff and a 157
crumbling schoo! buildings. Of the small amount of capital funding that was available,
approximately $11.5 million already was committed to several roof, boiler, fire damage and
structural projects being executed by the General Services Administration, as described by
Bill Lawson.

In your letter, you asked sbout the assessment process that was the first step in the FY97
program. As you know, in recent years, several assessments of DCPS facility conditions had
been made. We also did our own conditional assessment survey for each school. I
personally visited every school in the District. These surveys were reviewed and prioritized
by DMJM, a consultant made available through GSA, into the Capital Improvement Plan
(CIP), with the associated parametric budget estimates.

Each project then had a detailed scope of work prepared by our consultant, and in a few cases
by DCPS staff. Detailed scopes of work were prepared, and estimates were developed for
the projects. These detailed scopes were used as the basis to procure the services. Cost
estimates for the project were made based on the detailed scopes, using standard cost
estimating procedures and data, with appropriate adjustments for area and other related
factors.


49

to do was to revise their plan, that they could do some repairs, they
could do the stabilization, which doesn’t necessarily involve going
down to the substrates, it involves stopping the roof from leaking
so that you could get the kids into the schools, and that they could
perhaps manage a more modest program this summer so they
wouldn’t jeopardize the school year.

And that was my recommendation to him August 9th. And I
never got a response from that, and so I—I don’t know. All I can
say is what I had to say.

Ms. Norton. Mr. Lawson, did you have something you wanted
to add?

Mr. Lawson. One important milestone in this whole sequence
that evolved from the urgent to an emergency situation: In the
spring, when we were prioritizing and planning these 40 roofs, I
believe it was contemplated that the schools at that time would
stay open while the roof repairs were being done. I think that was
the initial plan of the—and the presumption, at least that was
within the project team, as we prioritized the work.

And then, subsequently, the decision was made that the schools
could not stay open. And I think that’s what—it was at that point
that the crisis—it became from an emergency to a crisis, and then
the timeframe——

Ms. Norton. Of course, that was before school opened. And at
whatever point you find out the work can’t be done and the schools
are going to be closed, you can make a decision to reschedule the
number of roofs that you repair.

Mr. Lawson. Correct. But I think that occurred in the summer,
midsummer, if I’m not correct. And I know that the initial plan-
ning, back in spring, April-May timeframe, assumed that this work
would be done while the schools were open—that the schools would
remain open while this work was done.

Ms. Norton. I am only trying to get an answer to—since they
assumed the schools would be open, then you have to assume that
they were ready to open schools the whole time. And so if at some
point you find you can’t get the roofs done, then let me ask you,
since I sit on your committee—subcommittee, if this was a Federal
building—and the chairman also sits on your subcommittee—would
you have rescheduled the work at the point when you learned that
you would have to go into a crisis mode and do something analo-
gous to what had tobe done here to the school?

Mr. Lawson. If I were told I could not occupy space? I’m trying
to draw the analogy.

Ms. Norton. Whatever is the analogy. You would know what it
is better than I do. I am asking you for your professional judgment,
whether—

Mr. Lawson. I understand.

Ms. NorToNn. Whether—given the circumstances as you know
them here, whether you think the work should have been resched-
uled or should have gone full tank ahead, the way they did? What
is your judgment?

Mr. Lawson. I think they should have gone with the alternative
of trying to complete the work as quickly as possible as the best
alternative. That is my opinion.

Ms. Norton. Even if it meant closing the schools?


18

‘Were any contract administration procedures violated?

‘Sound procurement and contract administration procedures require careful monitoring of contractor
‘compliance and careful and complete documentation and filing of contracting decisions and actions.

At least some of the CIP contractors were required to comply with the following:

= Contract Works Standards Act of August 13, 1962 [76 Stat. 357-360]

= Buy American Act of March 3, 1933 {c.212, Title III, 47 Stat. 1520, as amended)
Walsh-Healy Public Contracts Act of June 30, 1936 {c.881, 49 Stat. 2036, as

amended]

Service Contract Act of 1965 [Public Law 89-286, as amended)

Mayor’s Order 85-85 of June 10, 1985

Minority Contracting Act of 1976, as amended

Other minority and female utilization rate requirements

Davis-Bacon Act [40 USC 2763.a(7), as amended}

Copeland (Anti-Kickback) Act [18 USC 374 and 40 USC 276C]

Contract Work Hours and Safety Standards Act [40 USC 237.330]

Contract files lack evidence that DCPS assured that these compliance requirements have been met. In
one instance, the contract file indicates that the contractor failed to pay Davis-Bacon Act wages, and
DCPS "set aside the $13,604.41 wage difference in an escrow account for a period of one year to
accommodate any employee claim under [the] Davis-Bacon Act ....” (This noncompliance was not
discovered through DCPS compliance monitoring. The contractor completed work before seeing the
contract document and objected to the requirement.)

The Chief of Contract Administration stated that his office was unable to monitor contractor
compliance with the statutory requirements during contract performance, because his office operated
in a crisis mode daily.

DCPS's response to our draft audit report stated that Section 2561 of Public Law 104-134, Omnibus
Consolidated Rescissions and Appropriations Act of 1996, exempted DCPS from most of these
compliance requirements until April 24, 1998. Our analysis of Public Law 104-134 indicated that the
subtitle in which Section 2561 resides ceased to be effective as of November 15, 1996, the day the
Board of Trustees was designated responsibility for DCPS facilities. Whether or not the subtitle's
waiver provision outlived the subtitle, the requirements listed above were, in fact, included in
solicitation number 050-AA-04-0-7-SS which resulted in 11 contracts covering 37 of the 57 DCPS-
managed projects. Whether these requirements were also included in the remaining contracts is
unclear from the contract file contents.

The impact of not monitoring compliance with these requirements is difficult to assess. This impact
is exemplified, however, by the situation involving the Davis-Bacon Act, noted previously. The
contractor was ordered to proceed and, in fact, completed the work before a contract was executed.
‘The contractor was unaware of Davis-Bacon Act wage requirements, and DCPS had to take extraordi-
ary steps to resolve the resulting dispute.

Page 7


88

volunteer basis but also to be able to put that on their college ap-
plication forms. So we are pleased that Members are indeed re-
sponding to that program as well.

May I begin by commending the Control Board for ordering a
prompt audit. Again, this is a new culture in D.C. public schools.
Do not fend off the criticism. Find out what happened so you can
do something about it. I think that is a very important initiative
the Control Board itself took without prompting by anybody except
their own sense of what was appropriate.

Before I begin, may I ask you, Dr. Brimmer, if you are beginning
to have conversations outside the Control Board and consultations
with others on the Shook decision?

Mr. BRIMMER. As you noted, we are talking with all the board
members and are fully engaged. We have had a number of con-
versations, exchanges with the board of trustees.

Ms. NorTON. Do you intend to consult with elected officials be-
fore you reach any conclusions about how to proceed with respect
to the Shook decision?

Mr. BRIMMER. I am already engaged and so are some of my col-
leagues in having discussions. I have personally had discussions
with several of the Members of the Congress. You and I had a brief
conversation. I have been seeking opportunities to talk with the
chair of this committee, and we have been missing each other. We
are trying to get together on it. We not only will have, we are hav-
ing discussions.

's. NORTON. I was referring to locally elected officials, the school
board members, the council members, the Mayor, who represent
parents and residents in the city directly.

Mr. BRIMMER. We will have such discussions.

Ms. Norton. Thank you.

Mr. BRIMMER. Let me say one thing now because this issue has
been raised. With respect to the elected school board, the question
of what the school board will do vis-a-vis an appeal and so on, that
is still an open question. Here, I am not a lawyer, but their lawyers
have had some conversation with our lawyers. I am told, I have
been advised that we, that I should wait to see the course of those
discussions at that level before I would seek to participate in dis-
cussions with the principal. And those discussions are still going
on.

Ms. Norton. Dr. Brimmer, one of the matters that concerned us
was the report of the auditors that there had been a lack of co-
operation or at least extensive cooperation as they were doing the
audit and the scope of the audit. Was this situation brought to your
attention during the course of the audit and, if so, what action was
taken to achieve greater cooperation? Has any action been taken
since to assure cooperation in an audit that the Control Board itself
ordered the school system to participate in?

Mr. BRIMMER. The question of cooperation or lack thereof stood
out in the auditors’ report. We looked at it. We have talked about
it and I have went back and reconstructed as follows. First, at one

int into the audit, our staff was informed that some files which

id been provided to the auditors had been returned to the schools.
The schools had retrieved them and they were therefore not avail-
able to the auditors. Our executive director looked into the matter,


43

nwt Davis. But the procurement cycle is an important piece of
at?

Mr. Lawson. Certainly that, to get the highly qualified contrac-
tor, but particularly the work has to be done in such a sequence,
at a certain time, with heavy labor, to get it done. If you are going
to speed up a project, there are not many options in roof work to

ed it up, other than to do double time, triple time, that kind of
shift, which you will pay overtime. You will pay extra costs for ac-
celerating that work.

The other factor that the long-term deterioration influences are
what you would really find in unforeseen conditions. If you were
properly maintaining a roof, one could replace it or repair it with
minimum, let’s say, damage or minimum improvement to the struc-
ture or the membrane that is below a roof. If it deteriorates, you
look at the probability of damage to the insulation, to the basic sur-
faces and to the structure.

Mr. Davis. So you are repairing more than the roof in this case?

Mr. Lawson. Yes, sir, and in some cases, we found that condi-
tion.

Mr. Davis. Do you think that GSA or any other organization
could have more effectively, efficiently or expeditiously carried out
such a program as the schools implemented in 1997 in that re-
spect——

Mr. Lawson. The simple answer——

Mr. Davis [continuing]. And at a lower cost?

Mr. Lawson. Let me put that at a point in time when we worked
with the school system to help identify and prioritize the emer-
gency work, and the timeframe or turnaround time that was man-
dated to get that work done. I don’t think that, frankly, GSA could
have done a better job than the D.C. Schools did on their own in
carrying out the, I think, 48 roof projects in about a 60-day turn-
around time.

Mr. Davis. How about the cost?

Mr. Lawson. I don’t know the detailed costs of their projects to
really fully advise you intelligently on that. I could compare it to
some of our cost experiences, and the general numbers that I saw
in the audit report that refer to the possible markup of 30 percent
are comparable to the kind of premiums that I think we have expe-
rienced or that we have seen in the work that we did. On average,
our costs, I think, were around between $11 and $12 a square foot
for the work we did for the schools. Industry standards are around
$8 to $10 a square foot, so that is compared.

Mr. Davis. Let me ask each of the other witnesses if they have
any comment, any other organizations or a different way of doing
it cheaper and getting the same quality.

Ms. FILARDO. I just want to comment that GSA managed the
roofing project at Nalle Elementary School, and that was done for
$266,000, and it averaged out to $8.12 a square foot. And that was
not done as part of the emergency program, but it does indicate
that we have the capacity to do roofs at reasonable prices when not
bidding in July for work to be done by September Ist.

Mr. Davis. I mean, I think you would agree, that is because it
was part of a planned process, it was not an emergency, you got
it at the right end of the procurement cycle.


129

properties, which, in the past, were allowed to stand empty and deteriorating for years. The
proceeds from these disposals will be used for badly-needed capital work in operating schools.

As you are well aware, these achievements did not come easily: school closings are never
popular, property disposal can be controversial, and the Parents United lawsuit forced us to
make facility repairs under extremely difficult conditions, However, this administration was put
in place to make difficult decisions, to do what is right for children, and to withstand pressure
from both inside and outside the system to preserve the status quo.

We made some mistakes, but I firmly believe that we have made unprecedented progress in
restabilizing DCPS’ school infrastructure. In fact, the size of our FY97 capital program dwarfed
any efforts undertaken in recent memory. As a result, our schools are safer, drier and warmer, and
the students and teachers who occupy the are now able to focus, without distraction, on teaching
and learning. This is as it should be.

FINDINGS OF THE FY97 CAPITALIMPROVEMENT PLAN AUDIT

However, the perception, at least by some, is that the summer roof repair effort was not as
economical or efficient as it should have been. Some have implied that the program was marred
by waste, fraud and abuse. Today I would like to set the record straight.

Let’s look behind the headlines, at the findings of the audit itself. According to Cotton &
Company's report, and I will quote directly, the auditors concluded that DCPS’ contracting
process “met its program objectives to the extent that the school closing crisis was substantially
abated by mid-September 1997.” At the same time, the auditors argued that DCPS “did not have
an effective procurement system in place.” * In my view, these two statement reflect an apparent
failure to grasp the.fundamental nature of the project.

The primary objective of the capital program this summer was to stabilize our crumbling
infrastructure so that we could open schools and get back to the business of education children.
We accomplished that goal, in a remarkably short period, under extraordinarily difficult
circumstances: 61 roofs were repaired or replaced, 20-plus year warranties were secured for each
new roof, contract prices were within 5% of our government estimates for the work, and,
according to the auditors’ own report, “no direct evidence of fraud” was found. In my mind, to
allow that we met this objective, as the auditors do, and then say that we were not effective is to
draw conclusions that directly contradict each other.

Furthermore, for the auditors to state that they found no evidence of any misappropriation of
funds, kickbacks, or other fraudulent behavior on the part of DCPS personne! or our contractors
and still imply that fraud may have occurred because the emergency procedures used created
conditions “conducive” to fraud is simply not responsible.

TCotion & Company audit, “Results in Briel," page 1.


113

STATEMENT OF EDWARD H. STEPHENSON, JR.
CHIEF FINANCIAL OFFICER
DISTRICT OF COLUMBIA PUBLIC SCHOOLS

before the

SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA
COMMITTEE ON GOVERNMENT REFORM
U.S. HOUSE OF REPRESENTATIVES

on

JANUARY 23, 1998

Good afternoon, Mr. Chairman, my name is Ed Stephenson and I am the Chief Financial
Officer of the District of Columbia Public Schools (DCPS), a position I have held since
last May. Prior to my taking this position, I was at the Financial Responsibility and
Management Assistance Authority (Control Board), and before that I spent 26 years with
the U.S. General Accounting Office.

As part of the D.C. Schools management team, I report to General Becton. I also report
to Anthony Williams the City’s Chief Financial Officer, as a part of the District’s
financial team. During fiscal year 1997, I was responsible for overseeing the financial
management of the DCPS capital program. On October 1, 1997, the DCPS procurement
function was transferred to my office. This afternoon, I briefly want to discuss the
availability of capital funds to DCPS in fiscal year 1997, my actions to ensure the
effective financial management of these funds, and, finally, changes that my office has
instituted in the DCPS Procurement Office.

Before I specifically discuss funds availability, let me describe the capital funds financial
process. First, I want to point out that all capital funds for DCPS are maintained by the
Control Board. The Control Board notifies DCPS when new funds are available and then
it is DCPS’ responsibility to input fund amounts into the District’s Financial
Management System (FMS). Funds are pre-encumbered when Request-for-Proposals
(RFP) are issued, obligated when contractual documents are approved, and expended
when invoices under these contracts are paid. The D.C. Treasurer’s Office notifies the
Control Board that capital funds are needed to pay invoices and the funds are transferred
by the Control Board to the D.C. Treasurer to pay these invoices.

DCPS received four major sources of capital funds in fiscal year 1997.

* In October 1996, DCPS was allocated $11.5 million from the District’s fiscal year
1996 capital borrowing. Nearly all of these funds were obligated to boiler and roof


122

‘+ Responding to the Authority's directive to close at least six school buildings, the Operations
office conducted extensive facilities and space assessments prior to recommending 18 schools
for closure in late March. That office continued to bear major responsibility for this matter as
the Trustees prepared for their decision, in late April, to close 1] unsafe and underutilized
buildings and then bore additional responsibility for ensuring that receiving school facilities
were ready for thousands of new students.

© Thenew COO inherited more than 10,000 outstanding work orders, a figure which has now
been reduced by roughly 75 percent.

‘* Abatement of more than 1600 fire code violations was a top priority, successfully completed
by early summer.

© Even before Judge Christian's July 11 order, DCPS was subject to time-consuming court
supervision of the school’s physical plant, with the COO’s office responsible for each school’s
biannual fire code inspection.

All of this took place as Gen. Williams was replacing staff, some of whom could not brought on
until capital funds were available to support project work. This is worth recounting in some detail
because the “emergency” was not an abstraction. A finite number of people were working at an
extraordinary pace, with a remarkable degree of success.

Oversight Rite. How did the Trustees approach our oversight responsibility in this context?
Throughout our first year, we had relied on the procurement contract review procedures of the
Authority, which reserved the right to review every sole-source contract over $9000, every service
contract over $25,000, and every goods contract over $50,000. In the case of roof replacements,
the Authority saw the impossibility of applying normal contract review procedures, and explicitly
exempted the school administration from pre-contract review

Implementation of this expedited process was generally left to Gen. Becton and his COO, but the
Emergency Board met weekly with Gen. Becton, and was briefed by Gen. Williams about the
struggle to get this job done under adverse conditions. We heard, for example, about the difficulty
of attracting firms that could take on emergency contracts to complete major jobs in such a
compressed timeframe.

During these meetings, Gea. Williams told us quite frankly that the cost of roof replacements under
such conditions could easily run 30 percent above costs in other jurisdictions under normal
conditions. We understood this, and encouraged Gen. Williams to do the best he could under these
nearly-impossible circumstances. We asked ourselves the same question Congress and the public
should ask: Is it worth spending a few more dollars in order to get the job done?

This town is full of Monday moming quarterbacks, and some of them now contend that we
shouldn't have done so many roofs, or should have started them earlier, or should have stopped the
program dead when Judge Christian forbade work in occupied school buildings. In reality, the
choice was obvious. Roofs left unreplaced, or patched, would lead to continued fire code
violations and unscheduled school closings throughout the school year. That's why we endorsed


127

not stop the leaks for the rest of the school year. These replace-
ments would not wait. Schools that hadn’t had replacements were
closed after the school year had begun, if we may remember. That
is what we were faced with.

What laws have we broken? None. What evidence of fraud or
abuse was found? None. How much money was wasted? None.
DCPS asserted from the beginning that the emergency nature of
the project, with its high volume and comprehensive time line,
combined with the fact that it was to be conducted in the District
of Columbia, which has a highly unfavorable reputation with con-
tractors, would result in higher costs than might otherwise be in-
curred for a similar effort under different conditions in a different
jurisdiction.

Far from attempting to hide this reality, we stated it repeatedly
during the summer and fall. In fact, it was our estimate that the
unique conditions under which we were operating would increase
the total or could increase the total cost up to as much as 30 per-
cent.

Based on the answer to these threshold questions, I would re-
spectfully assert that the summer capital program met this objec-
tive and that the public trust and the public investment were pro-
tected. Mr. Stephenson has already provided some information, and
General Williams will provide more details to respond to the audit
in his comments. So I will leave you with one final statement. I
urge you to consider the information you receive today in its proper
context.

Thank you for the opportunity, Mr. Chairman.

(The prepared statement of General Becton follows:]


151

sort or another. We ultimately signed management letter; I signed
one, and all these folks signed them, except one; that is general
counsel. In her view, she should not be required to sign it, and I
can support that.

Ms. NorTON. Because, you know, parents and residents have ab-
solutely no patience for that, you know, “Who signs? Will he sign?
Will she sign?” That distracts from the very important work that
you are doing. I would like to get those kinds of issues off the table
from here on in.

Could I ask, you now have—I will call him, I don’t know if this
is the right name—a special master, rather than this judge looking
at you. Can I ask what the special master has discovered and how
that process is working at this time?

General Becton. He is an adviser by title, not a special master,
and he would be here, but this is Friday and he goes elsewhere on
Friday. He is ve supportive of what we are doing. His name is
Don Brown. And I would like for General Williams to explain the
relationship that he has established with Don Brown to bring
about what we think is appropriate rapport.

General CHARLES WILLIAMS. Don Brown has been one of the best
things that could ever happen to me. He is a very good friend, he
understands the business, he is very critical when he has to be,
and he passed me a lot of helpful hints. I arm him with as much
information as I possibly can to make certain he can connect with
the community. He attends and has an open invitation to, all of my
staff meetings. He also sits through all of the process work we do—
e.g., such as source selection, committee work and et cetera. Addi-
tionally, he goes out to the schools and participates in our
preconstruction conferences. He was with me at Dunbar High

hool yesterday when we did the 50 percent progress report on
the gymnasium project. So in summary, we have a good profes-
sional relationship and understanding.

Ms. Norton. This is the way to go at it, this kind of preventive
work, as opposed to having a judge look after the fact, is precisely
the way to go. And you will note that I was not one of those who
regarded the judge as a hero. She should have seen that this was
the way to do it. That is her job. I think she was as much respon-
sible as you were for keeping the schools closed.

Let me ask you, Mr. MacLaury, about bonuses. You heard what
Dr. Brimmer said, it is not him, it is you, who has been signing
these signing bonuses and performance bonuses, and of course now
General Becton and General Williams are foregoing any bonuses,
and I think that is very wise. But I don’t understand how these bo-
nuses came up in the first place, and therefore I would like to know
what actions you are taking to at least keep that form of conten-
tion—you have enough contention.

But it seems to me it was perfectly foreseeable, as these kind of
bonuses became known, that you would have something else laid
on your back. Are you still into signing bonuses and performance
bonuses, or do you adopt the views of the chairman that the:
should be—they should only be incentive bonuses, only for stand-
ards spelled out in advance, and the rest of what it seemed to me
he agreed to?


155

the hero in this don’t know the facts as you know them and as I
know them.

Dr. MacLaury. May I make one comment on this question that
you asked General Becton, if he would do it over again, because
you absolutely correctly portrayed the public’s disgust with opening
the schools late. There is no question about that. We are not talk-
ing about that.

The question is, of the administration and the trustees—would
we be better off in the view of the public if schools continued to
have to be shut by the judge’s order every time they leaked? We
went through that. We don’t have to guess.

We know that the public supported the judge, apparently that
she had made herself a heroine. The decision was not to get a few
roofs replaced and save some money, the choice was to get the roofs
replaced to minimize the risk of disruption throughout the school
year, as schools had to be closed by the judge and children shuffled
off to other buildings; that was the decision.

Ms. Norton. I understand that the choice was not well under-
stood by the public, you are absolutely right, and I think that from
here on in, if we recognize whatever priority it should have, in the
ordinary course of things, opening the schools probably should have
the first priority now.

you, Mr. Chairman.

Mr. Davis. Ms. Norton, thank you very much.

Let me get back to the pension issue. I am not trying to silence
anybody on the pension issue, but I think what somebody makes
in the outcome, what they have inherited, what they have earned
in previous pensions, it really shouldn’t be part of it.

Ms. NorTON. That, too, is a matter of public record.

Mr. Davis. Sure it is, but it shouldn’t be part of the discussions
on compensation here.

Ms. Norton. I disagree and take exception to it.

Mr. Davis. I think you served your country well and earned that
pension.

Ms. NorTON. No one said they shouldn’t have the pension.

Mr. Davis. I have the floor now.

Ms. NorTON. Well, you interrupted me and I am going to inter-
rupt you on that score. I am going to ask whatever questions I
want to ask.

Mr. Davis. Regular order.

Ms. Norton, this is really not called for. I have indulged you at
length. I am just giving my philosophy on it.

You have served the country well. What you have earned—I feel
the same for civil servants. Once people have earned their pen-
sions, they have served their time, they should not be penalized in
getting other jobs. It hurt us in local government when we would
not allow members who would serve the county to come back and
work in other jobs, and we ended up——

Ms. Norton. No one is suggesting they should be penalized and
should not receive their pension. I will not have it characterized
that way.

Mr. Davis. I am not characterizing it that way.


CONTENTS

Hearing held on January 23, 1998 ...
Statement of:
Brimmer, Andrew, chairman, District of Columbia Financial Responsibi
ity and Management Assistance Authority; and David Cotton, Cotton
& Co., accompanied by Ed Fritts, senior mai and Marvin Allmond,
managing partn ond & Co.
Filardo, Mary, director, 2lst Century
FAIA, Assistant Regional Administrator, Public Buildings Service, Gen:
eral Services Administration; and Jonathan Miller, project manager,
Daniel, Mann, Johnson & Mendenhall Architects
Williams, Anthony, chief financial officer, government of the District
of Columbia; Ed ‘Stephenson, chief financial ncial officer, District of Columbia
Public Schools; Dr. Bruce Macla ofaury chairms an, District of Columbia
Public School “Emergency Tru: Gen. Julius Becton (USA,
Ret.), chief execut ve officer, District of Columbia Public Schools; and
Gen. Charles E. Williams (USA, Ret), chief operating officer, District
of Columbia erat Schools ..
Letters, statements, etc., submitted for the record by:
Becton, Gen. Julius, ” (USA, Ret.), chief executive officer, District of Colum-
bia Bublic Schools, prepared statement of ...
Brimmer, Andrew andrew, chairman, District of Columbia Financial Respon: pon
ent sistance jority, prepared statement ot
Cation, David: Cotton & Co’ provared statoaeat or
Davis, Hon. ‘Thomas M., a’ Representative in Congress from the State
Virginia, prepared statement of ..
miler Mary, director, 2lst Century School Fund, prepared siaiement

MacLaury,
‘Trustee Board, prepared statement of
wane jonathan, project manager, Daniel, Mann, J
Architects, prepared statement of ...
Norton, Hon. Eleanor Holmes, a Re;
District of Columbia, repared statement of
Stephenson, Ed, cial officer, Dis!
‘Schools, pre} Peres ra
Williams, Anthony, chief financial officer, governm
of Columbia, prepared statement of ...
illiams, Gen. Charles E., les E., (USA, Ret.), chief operating officer, District
of Columbia Public Schools, , prepared statement of

«uD

58

14

128

62
72

7

28
120
32
ll
113
102
136


145

called as is and to be reengineered. So we are not only, as we prom-
ised, putting in new hardware and software but we are also looking
at making major corrections through the operations people and
processes, some of which, quite frankly—and led to some of this.

Ms. Norton. Yes, that was going to be my next question. If there
had been a state-of-the-art financial management system in place,
could you give us some notion of what kind of difference it would
have made in this situation?

Mr. ANTHONY WILLIAMS. Well, for one, Congresswoman, I think
a lot of our problems, almost like epistemological problems of what
actually happened or is happening is because of this lag in the sys-
tem,

It takes, right now, with a Herculean effort on our part, 60 days
and up to get agency directors, oversight bodies, investors, decent
information on our status. And, obviously, if you have a situation
like this where every moment counted, if you are talking about 60
days lag, that is clearly unacceptable.

Ms. Norton. How much lag time should it take?

Mr. ANTHONY WILLIAMS. You should be able, to find this in real
time. In other words, you——

Ms. Norton. Push a button.

Mr. ANTHONY WILLIAMS. Well, you push it, if you want to know
the weather right now as opposed to the weather 2 months ago in
another city.

Another feature of the system is that we are not basically driving
a truck around with all these documents between various offices.
We are able to transport both the forms and the component data
on line as part of a wide area network. That is also, I think, a key
component.

And then, third, a key component is, again, a necessary part of
this. There is a reengineering that takes place in putting in your
system, and what you do in that reengineering is, you try to con-
solidate and define and try to rationalize all these different control
points.

I believe one of the problems that led to this, the messy parts of
this, were because you had all these different control points with
an old system. You need to get a new system which clarifies one
point of contact and service control point. One person has to be re-
sponsible; you can’t have five people all responsible, or else you get
everybody pointing fingers at one another. Now I think that this
is a big part of the new system introduction, is clarifying that point
of accountability and responsibility, and that is Mr. Stephenson, in
the case of the schools.

Ms. Norton. When do you think a complete financial manage-
ment system—I know you are doing your pilot; you are doing it ex-
actly right; you have to do that first. When do you think the whole
city will be on line with one financial management system?

Mr. ANTHONY WILLIAMS. The whole city will be on line by Octo-
ber Ist of this year, and the new system will then be what we call
the system of record.

Ms. Norton. That is the most promising and encouraging news
that can come. I just don’t think anything we are doing in stream-
lining the Government, reforming the Government, restructuring
the Government, has any meaning if this financial management


106

Third Quarter. On April 14, 1997, the schools requested an FMS budget
modification to load $28.5 million in its capital program, which was approved by OBP
the same day. In addition, on June 4, 1997, the Authority received $20 million from the

June 1997 G.O. Bond proceeds.

Fourth Quarter. On July 14, 1997, the schools requested an FMS budget
modification to load the-$20 million from the June G.O. Bond proceeds, which was
approved by OBP July 22. In addition, on September 8, 1997, the Authority received

$36,789,516 from the sale of Sallie Mae Warrants.

These events listed below are summarized in Table 1 on the following page:
© The receipt of capital funds;

© The availability of funds in FMS;

* DCPS" requests to load capital funds into FMS;

© The associated approvals.


66

violations and to pay for other priority repairs. On that basis, on April 14, 1997,
the Authority requested from the Congress that it provide a Supplemental
Appropriation to cover the additional costs of these repairs. The U.S. Senate
responded favorably, and provided $31 million in its supplemental appropriations
bill for the District, $22.3 million of which was earmarked for Schools’
construction. The House of Representatives, however, declined to provide any

additional funds, so the Supplemental was not approved.

Without all of the necessary funds in hand, therefore, the Schools were
forced to rearrange many of the projects to repair buildings in time for the
September deadline of the new school year. An already delayed start at repairs
was further exacerbated by the Parents United lawsuit. Ultimately, the Schools
could not be worked on without the express permission and supervision of the
Court. In the meantime, no one could enter the Schools to prepare for the next
school year, which adversely impacted a host of education-related programs. In
fact, in several instances, when Judge Christian began closing schools after
September 22, principals were given fifteen minutes to have all children out of
the building. Under such short time constraints, students were forced to leave
textbooks and school supplies in their lockers. Teachers did not have ample
time to retrieve grade books or instructional materials. This meant that children
would sit in crowded auditoriums, church basements, and community centers
without any learning materials. School officials asked the Judge to allow

custodians and schoo! administrators to enter the closed schools to gather books


52

We had hoped to have been able to do a plan in 1995, but there
were enrollment count problems, there was no education plan,
there was other standards that were missing about school utiliza-
tion, so we made a long series of recommendations on what needed
to be done to do a complete plan, and the school system said, thank
you very much, we'll finish it.

So we were monitoring this, at the same time working on the
public-private development partnership issues, and, by fall of 1996,

etting a little nervous, we were a year later and we still didn’t
ave the plan.

Congress had given the District until April 1997 to complete this
plan. So we prepared some standards as part of my participation
in Goals 2000, as co-chair of the facilities committee, to begin to
complete some of the work for the foundation for an actual plan.

The school system had also been working on collecting utilization
information and other kinds of data. When the new administration
came in, we went to them immediately and said, whatever we can
do to help you, we will help you. And they said, well, we want to
do it as an internal document, and we said, no, we think you need
us. So they said, well, all right, and stuck us on a task force which
met for about 6 weeks.

In the end, they produced a document with our name on it, in
fact, but which in no way met the standard that we felt was accept-
able. And so we tried to work again with the District from Feb-
ruary 18th, when the draft was submitted to the council, to April
25th, to revise that document. And there were some revisions
made, but basically what came out on April 25th, we found still not
acceptable. So we decided that we should stop trying to get them
to get it right and try to do it ourselves.

Ms. NorTON. Do you have any contact? Are you working with the
school system at all?

Ms. FILARDO. Yes, actually. Throughout this entire period, we
have been working on the Oyster public-private development part-
nership, and so we have continued contact with them on that.

Ms. Norton. I am talking about facilities.

t Ms. Finarpo. I’m sorry, that is a facility. That is a school con-
ract.

Ms. Norton. I am talking about the subject matter of this hear-
ing with respect to the overall_——

Ms. FILARDO. The plan? No. After we submitted that to them,
and we transmitted to the board of trustees, to everybody, to your
office, in fact, too; and you sent it on to Becton——

Ms. NorTON. Your assessment has been very detailed and very
helpful and very thoroughgoing. The difficulty I have with it has
nothing to do with its pro fessionalism, which I think is outstand-
ing, but with my inability to compare where you say the schools
should be to something. That is to say, everyone agrees with you,
first and foremost, that what they found in place was abominable.
So that when you say they don’t have, and then you go through
dozens of things that could not be clearer, what I don’t have a
sense of is whether or not there has been appropriate improve-
ment.

You see, it is very difficult to judge anybody in the D.C. public
schools based on anything but that, given the state of the beast.


Mr. Ron Hamm
Page 4

We were instructed that our official point of contact within DCPS was Mr. Stephenson, and that all
contacts with DCPS personnel should be made through him. Accordingly, we shed urease
conference through him. We that he would DCPS officials

that intial meeting. We beld that meeting on October 29. Tas surprised when the only DCPS oficial
in attendance was Mr. Stephenson. At that meeting we specifically asked Mr. Stephenson who he
thought we should meet with during the audit. General Becton's name was not mentioned. (My
impression atthe time was that our audit was not deemed to be of significant importance to warrant
General Becton's attention.)

We held weekly progress meetings with DCPS staff members. Again, these were scheduled through
Mr. Stephenson. 1 think it would have been inappropriate and presumptuous for us to have tried 10
dictate who from DCPS should have attended these meetings. These meetings were held on November
7h, November 14th, November 2ist, December Ist, and December Sth. At each of these meetings we
discussed with DCPS senior staff the problems and findings that were being encountered and identified.
More importantly, we provided each attendee at these meetings with a writen summary of these
problems and potential findings. believe it was DCPS staff's responsibility to gage what General
Becton would deem worth his interest and keep him fully advised.

‘Ac the November 21st progress meeting, most of the final report's findings were outlined and explained
to those in attendance. Members of the DCPS staff sai that ic was essential for us to talk to General
Williams (and we had 2 subsequent meetings with him). 1 specifically asked DCPS personnel if we
should also talk to General Becton. They said no. Again, te impression I received was that they did
not view the audit and its results as of significant importance to warrant General Becton’s attention.

‘At no time prior to December 9th did anyone tell us that General Becton wanted to talk with us. On
December Sth, we were informed that General Becton wanted to meet with us that afternoon, I was in
San Antonio, Texas that day, and Mr. Frits asked if the meeting could be delayed until the following
‘morning. He was told that it could not. On my return on December 10th, General Becton asked to see
us again and we complied without hesitation. At all times we remained accessible to General Becton.

1 will be glad to share with you and the Subcomminee copies of documents provided to DCPS staff
during the audit that will substantiate our “no surprises” approach to the audit

1 continue to be concerned that DCPS is not taking seriously our recommendations regarding

strengthened control procedures. At the absolute minimum, DCPS should be ordered to do the

following to protect the government's valuable assets and the organization's honest employees:
‘+ Insist on strict segregation of key procurement and contract management duties.

‘© Insist on maximum and open competition for contract.

‘+ Establish and enforce key supervisory review and approval requirements for all key
Procurement and contract management actions and decisions.

‘= Insist on careful, complete, consistent, and contemporaneously maintained documentation
of all procurement and contract management decisions, actions, and approvals.


101

With that, Mr. Chairman, and the lessons that I take from this,
I would be happy to answer any of your questions at the conclusion
of the opening remarks.

Mr. Davis. Thank you.

Mr. Stephenson.

(The prepared statement of Mr. Williams follows:]


26

Comparison of numoer of stuuents tested on Stanford 9. spring 1997 and

(Official OCPS Membership 1996.97 SY

Official Membership 1996-97 78,648
Preschool (not tested) -1,105
Kinder (not tested) -7,469
7th grade (not tested) 4,875
9th grade (not tested) 4,951
12th grade (not tested) -3,042
NONGRADED (not tested) -3,581
Special ed students tested 2,688
100% of official membership to be tested 56,313
# of students actually tested ~43,445
Difference (22.8%) 12,868
If absentee rate is 10 % -5,631
Students unaccounted for 7,237

‘Sources. OcPS Ofte! Menoaninp Cctbe 3, 1908
‘rere of Coker Pit Sere, Shoot y Sos RaautsorSpag 197 on tre Str  Acanerent Tet

Prepared by the 2131 Century Schoo! Fund!


Moving Toward an
Exemplary System

A Report on the First Year’s Efforts to
Reform D.C.’s Public Schools

‘The District of Columbia Public Schools

November 1997


105

which is then presented to the Mayor, the Council, the Authority, and Congress for their

Teview.

Once the Capital Budget is approved, each agency provides a spending plan that outlines
planned expenditures by quarter for the current fiscal year and by year for the out-years.
The spending plans, which are updated quarterly, are compared to requests for financing

to ensure the appropriate scheduling of financing.

Requests for financing are reviewed for consistency with budget authority and spending
plans as well as financial availability. The OBP maintains an average turn-around time of

3 days. These steps are summarized in Attachment 1.

5 - Roof Repai
In FY 1997, the schools received capital funding totaling $86,541,596. Funds were made

available each quarter as follows:

First Quarter. On October 3, 1996, the Authority received G.O. Bonds proceeds,

of which $11.5 million were allocated to the schools.

Second Quarter. On February 27, 1997, The Authority received $18,252,080 from

the U.S. Treasury from the privatization of Connie Lee.


162

January 5, 198

Charles E. Williams, MG USA (Ret)
Chief Operating Officer

Director of Facilities

District of Columbia Public Schools
415 12th Street, NW, Suite 903
Washington, DC 20004

Dear General Williams:

Daniel, Mann, Johnson, & Mendenhall (DMJM) regularly reviews our work on noteworthy projects to
provide what we call a Stewardship Report. We felt that the beginning of 1998 would be an
appropriate time to review the events of the past year and summarize our efforts on behalf of the
District of Columbia Public Schools (DCPS). We are exceptionally proud of the legacy of work
completed in 1997 on behalf of DCPS and trust you share our sense of achievement.

We began work in February with the prioritization study — a three-week compilation and assessment
of existing facilities documentation for all 165 schools including a walk-through sampling of 16
schools. As we worked, we created a data base to identify needs, set priorities, and establish budgets
for the deficiencies throughout the school system, which numbered in the thousands.

Roof repairs emerged as the single most important deficiency requiring immediate attention. We
developed a series of Scopes of Work that outlined the performance requirements and broad
construction methods required to protect 48 of the most critically damaged schools from further
deterioration from leaky or otherwise seriously damaged roofs. These Scopes of Work, including
specifications, formed the technical components of the design/build contracts executed between DCPS
and the numerous General Contractors involved in this past summer's reroofing efforts. Eventually the
roofing program was expanded from the 48 to encompass 56 schools. Once the roof repairs were
underway, we provided Construction Administration services, including a daily presence, seven days
week, for each of the 56 roofs.

Although the term “reroofing” is used most frequently to describe the work, itis partially a misnomer.
Certainly the work that was completed in nine weeks by DCPS focused on protection of the building
envelope, primarily the roofs. However, we found extensive related damage, often resulting from the
deteriorated roofs, that required additional repairs far beyond the initial scope of the roofing,

Isa wuLsos Been SEITE Ton annem, Vinci 2320
Pakoos Futon aod


165

|

|



169

byo'Lgs'r$ _ |860'1$ z9z'6el'e$ —_[SOr'e EERETZ) AWLOL
eer'zeo' L$ [6201S LLL'p6L$ gel lOO 'v6L (4 SHf YELI LE
sos‘26$ Lb L$ yOO'SZ$ la) OOP‘ ZL v $3 YEPPo}S/O}
90S'6Ze$ ez6s legr'ese$ ELe (00S'¥S 8 $3 SMojs/ 6
beg'eres eSL'b$ boe'LeL$ 991 008" Ze Z 0003 Apogesd| 8
e06'ESs$ S90'L$ 6L0'92¥$ oor S96'601 4 $3 puepezoey} 2
SLO'Z6$ |Z60'L$ (LZ9'VL$ 89 joor‘ZL £ $a fey[9
692 '€6$ OLL'LS Oeh'2Z$ Ei) loop ZL b $3 1s/e90H| S
eS LLe$ Era 6Lb'EL2$ LOL oos'ZL £ $a Apiey| y
e86'ores EOL'LS yL6'997$ (444 (000'96 Z SHf sfouel3] €
bez'z9s$ gso'Ls loze'zer$s 60y, OOL'LZ v $3 siaed) Z
286027 L$ _——[ZSt'LS L2z'6e6$ sis (000'SLz b SHf euMosg] |
suun
3809 [BIOL MOPUIM 48d | 3809 39041q | MOPUINA | 4S PAY
peyeuinsy | 3s00 eGeseay | peyewysy reo | Suypying | prem Jooyas: #

SALVWILSA LSOD MOGNIM 866} Ad SdOG



34

DC Public Schools planned to use these Scopes of Work as a part of a Request for Proposal
(RFP) package, to procure a design-build contract, via competitive bidding. Design-build contracts
utilize a single entity to provide both design and construction services and can be employed to
shorten the overall duration of a construction project. The Scopes, therefore, were not a complete
design, but described the design intent, and formed the technical component of the RFP, DMJM
sought to define two key items for each roof Scope:

1. the location and extent of the required work; and

2. the quality level of the installed products.

In developing the Scopes, DMJM visually surveyed each roof, reviewing and photographing existing
conditions. For each school, we prepared a diagrammatic roof plan, a narrative of the required work,
a technical specification establishing quality standards for each component, and a cost estimate.

Just as we were completing the first 15 Scopes, DC Public Schools requested DMJM to
prepare an additional 33 Scopes. We again provided these services within a three week time frame.
The challenge for the remainder of the summer was now clear - replacing approximately 50 roofs
in less than two months.

DC Public Schools asked DMJM to assist them in monitoring the construction, to verify that
construction was in accordance with the requirements of the design-build contract. We staffed the
project with over 30 people to accomplish the work, many of whom worked 7 days per week
routinely for the next two months. Night work was also common, particularly because contractors
needed cooler temperatures to effectively remove old roofing membranes. While DC Public Schools

administered the contractual aspects, such as directing the Contractor and negotiating Change


115

In addition to using the FMS, which lacks some real-time capability, we monitored
immediate fund balances by entering all information on a computer spreadsheet. Thus,
through the use of both the official and unofficial methods we ensured that adequate
funds were available for all contractual obligations and no contracts were executed that
exceeded budget authority.

In addition, an assessment of the financial management of capital funds is part of our
annual financial statement audit, which is currently underway. We expect a “clean
opinion” on our financial statements. Incidentally, DCPS balanced its books in fiscal
year 1997 for the first time in five years.

Three months ago on October 1, 1997, I assumed responsibility for DCPS” procurement
office. I had asked for this responsibility to better integrate the procurement and accounts
payable functions. The transfer of this function helps to ensure better coordination
between these related functions, strengthens internal controls, and improves service to
vendors and DCPS program managers.

In November, | installed a new procurement management team led by Karen Chambers,
who had been in charge of procurement at the Control Board. Ms. Chambers has moved
quickly to professionalize the procurement staff, improve the efficiency of operations,
develop new procedures, and enhance the connections between internal and external
customers. Ms. Chambers has prepared a strategic plan of the actions she plans to take
over the next several months to reform the procurement office. Mr. Chairman, I would
like to submit a copy of this plan for the record. Ms. Chambers is here this afternoon.

In summary, Mr. Chairman, my office ensured that the fiscal year 1997 capital funds
were properly managed and we are taking steps to improve the procurement function and
better integrate it with our other financial operations in the future That concludes my
statement, I would be glad to respond to questions you may have.


136

STATEMENT OF CHARLES E. WILLIAMS
CHIEF OPERATING OFFICER
DISTRICT OF COLUMBIA PUBLIC SCHOOLS
BEFORE THE
SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA
U.S. HOUSE OF REPRESENTATIVES
ON

JANUARY 23, 1998

Good morning, Mr. Chairman and members of the Committee. I am Charles Williams, Chief
Operating Officer and Director of Facilities for the District of Columbia Public Schools.
‘Thank you for providing me with the opportunity to update you on our recent efforts to
address the major facilities issues we are facing and to describe our plans for the future.

‘As General Becton stated, this administration inherited a $2 billion infrastructure problem, as
identified by the General Services Administration and confirmed by our own facilities
assessments. The average DCPS facility is over 50 years old (some date from the 1880s) and
most of the building systems have passed their useful life. We were facing an emergency
situation with our facilities when I came on board last January, and I want to say right up
front that although we have made tremendous progress, the stabilization of our facilities is
still an emergency effort. The Court’s actions related to the Parents United suit intensified
the emergency, but at no time since we resolved the suit have we stopped treating this
situation as an emergency.

The Long-range Plan

In response to a congressional directive, almost immediately after I arrived we began
working to develop a Long-range Facilities Master Plan. We formed a task force to draft our
plan which included representatives from the General Services Administration, the Office of
the Mayor, the Goals 2000 Committee, the 21 Century School Fund, the DCPS academic
office, and my staff. We released our first draft of the plan in February, in compliance with a
deadline set by the D.C. City Council.

Counciiman Kevin Chavous, Chairman of the Council's Education Committee, then
appointed a citizen group to review the draft and we incorporated a majority of their changes
into the draft as a result of that review. Unfortunately, the Council did not act either to
approve or reject the plan and we ultimately forwarded it to Congress without their approval
to meet the congressionally mandated deadline of April 25, 1997. Our Trustees did approve
the plan, and we have been operating in accordance with it for the past nine months.

‘The Long-range Plan serves as both an interstate road map to high quality, safe public school
facilities and a detailed schedule for capital projects and budget projections. It is a “living
document” and will be continuously modified as academic needs or priorities change,
additional funds become available, or emergencies arise. In fact, the plan will be subject to a
comprehensive review beginning this month. As part of that process, we will hold a series of
public hearings, to receive advice and recommendations from the community. Just


58

tify later that will respond to some of these issues. Thank you all
for being here.

Mr. Lawson. Thank you, Mr. Chairman.

Mr. Davis. I would now call our second panel to testify. It will
consist of Dr. Andrew Brimmer, chairman of the Control Board;
and Mr. David Cotton, who is the managing partner of Cotton &
Co., the firm that did the performance audit of the District school
system under contract to the Control Board.

It is the policy of the committee that all witnesses be sworn be-
fore you can testify, so if you would rise and raise your hands.

[Witnesses sworn.]

Mr. Davis. Please be seated. I ask unanimous consent that any
written statements will be part of the permanent record. We would
ask that you try to limit your oral statements to 5 minutes. As you
can see, we have a lot of time for questions, and members of the
committee have read the testimony to date. So we appreciate your
being here.

Mr. Cotton, you would just identify the people with you so we
can get that on the record?

Mr. Corron. Yes, Chairman Davis. I would like to introduce to
my left Mr. Ed Fritts, senior manager with Cotton & Co.

ir. Davis. Mr. Fritts, welcome.

Mr. Cotton. And to his left Mr. Marvin Allmond, managing
partner of Allmond & Co. Allmond & Co. assisted us on the audit.

Mr. Davis. Excellent. Thank you both for being here.

Dr. Brimmer, thank you for being with us once again. You are
a fixture at these hearings, and we appreciate your waiting
through the first panel. Please proceed.

STATEMENTS OF ANDREW BRIMMER, CHAIRMAN, DISTRICT
OF COLUMBIA FINANCIAL RESPONSIBILITY AND MANAGE-
MENT ASSISTANCE AUTHORITY; AND DAVID COTTON, COT-
TON & CO., ACCOMPANIED BY ED FRITTS, SENIOR MAN-
AGER; AND MARVIN ALLMOND, MANAGING PARTNER,
ALLMOND & CO

Mr. BRIMMER. Thank you very much, Mr. Chairman, members of
the committee. I appreciate the opportunity to appear before the
subcommittee today to discuss several important issues related to
the public schools.

First, let me say that the Authority takes seriously its respon-
sibility under our statute to improve the lives and the educational
future of the children of the District. The Authority, after intensive
study during the summer of 1996 of the condition of the public
schools and the dwindling opportunities for our children’s effective
education, took action that we believed would improve the condi-
tion of the schools. And we took that action on November 15, 1996.

From the context of today’s discussion, we did two things that
are relevant. We created an emergency transition education board
of trustees and we created the position of executive office of super-
intendent and charged them with implementing far-reaching
changes to improve the system.

Now, one oft the most troublesome areas that the Authority found
in its review of the schools was the condition of schools facilities.
It became quickly evident that the ability of the children to learn


112

Karen Chambers, who was in charge of procurement at the Control
Board. Ms. Chambers has moved to quickly professionalize the pro-
curement staff, improve the efficiency of operations, develop new
procedures, and enhance connections between internal and external
customers.

Just last week we entered into a blanket purchase agreement
with GSA of the type Mr. Lawson mentioned and testified to earlier
today. We are currently revising our procurement regulations using
the D.C. Bar’s recently completed revision of the District’s overall

rocurement regulations, and I intend to present these draft regu-
lations to General Becton by February 28.

Ms. Chambers has prepared strategic plans of the actions she
plans to take over the next several months to reform the procure-
ment office, and, Mr. Chairman, I would like to submit a copy of
this plan for the record.

Mr. Davis. Without objection, so ordered.

Mr. STEPHENSON. Ms. Chambers is here this afternoon, I would
like to introduce her to let you know the kind of professional that
I think we have now in procurement in the D.C. schools. Karen
Chambers.

In summary, Mr. Chairman, my office has ensured that fiscal
year 1997 capital funds were properly managed, and we are taking
steps to improve the procurement function and better integrate it
with our other financial operations. I will also be ready to respond
to your questions after the other witnesses testify.

[The prepared statement of Mr. Stephenson follows:]


16

Of $30,011,738 of initial contract awards by DCPS, $23,151,460 (or 77.14 percent) was attributed to
contracts under which the contractor was issued a notice to proceed prior to the certification of funds
availability. Funds availability was certified up to 63 days after notice to proceed; the average delay

was 13 days

Contract files evidenced $1,196,454 in change orders on 14 of the 31 DCPS-managed contracts. The
files contained no evidence that funds availability was ascertained and certified prior to change order
approval. Evidence of an additional $916,460 in requested change orders (documents indicated
approval by the CPO but not by the contracting officer) was found at the CPO. These additional
change order requests were not in the contract files. Because all work on all DCPS-managed projects
was (according to the Chief of Capital Projects) substantially complete by September 18, 1997, this
additional change order work may have been done without contracting officer approval or certifi
of funds availability.

The Chief of Capital Projects stated that this change order work was “directed by the project manager
in the field ... to prosecute the work in a timely manner. Negotiations to ratify these directed extras
are ongoing, based on labor and material records, and [documentation] will be added to the file when
complete.”

The Chief of Capital Projects’ statement may indicate that additional, as yet unidentified, change
orders may still be processed for work already completed. DCPS does not have a control to ensure
funds availability to cover the cost of these project-manager-directed changes. The DCPS Chief
Financial Officer (CFO) stated that he is confident that sufficient funds remain uncommitted and
available for use. This practice, left uncorrected, could result in the over-commitment of available
funds, violation of the Anti-Deficiency Act, and prolonged disputes between DCPS and contractors.

Contract files indicated that $7,521,147 (25 percent of the obligated amount) remained unpaid on
these contracts as of December 15, 1997.

The absence of adequate procedures to ensure that funds certification and obligation occur in a timely
manner shows a lack of management control and accountability and creates the possibility for DCPS
to commit more funds than it has available.

Even under emergency conditions, any recognized body of procurement policies, rules, and regula-
tions requires an organization to follow sound processing procedures and maintain basic management
controls over or within those processing procedures. The Anti-Deficiency Act, 31 USC 1341,
prohibits a government employee from making or authorizing an expenditure or obligation exceeding
an amount available in an appropriation.

The DCPS CFO stated that he is confident that sufficient funds were uncommitted and available for
use for the Fiscal Year 1997 CIP contracts. In a December 11, 1997, memorandum to the DCPS
Chief Executive Officer (CEO), the CFO stated:

As you know the draft capital audit has noted that the Chief Financial Officer did not
officially certify that funds were available for capital projects. While this is technical-
ly true, my office specifically entered obligations and expenditures in the Financial
Management System (FMS) and this information along with a separate spreadsheet
monitored funds availability and ensured that contractual obligations did not exceed
available funds.

Page $


28

Good morning Mr. Chairman. My name is William R. Lawson and I am the
Assistant Regional Administrator for the Public Buildings Service of the
National Capital Region at the General Services Administration (GSA).
Thank you for inviting me here today to provide testimony that will assist
with the review and evaluation of the activities associated with the
completion of the repairs of the District of Columbia Public Schools

(DCPS) facilities.

Shortly after General Charles Williams’ appointment, we met with him and
his staff to establish a collaborative understanding of GSA’s potential
support of the DCPS Capital Improvements Program. We agreed that DC
would pay GSA to provide temporary planning, contractual and other
support services while DCPS mobilized its operation to ultimately handle
the program on their own. The urgent situation they asked us to deal with
initially was to contract on their behalf so that immediate roof repairs to five

schools and replace boilers at six others.


94

Mr. BRIMMER. First of all, with respect to the school bonuses, we
did not, because we were not asked, we were not required, we were
not asked and we did not approve, we did not approve any bonuses.
We did not approve any salaries for any of the people who brought
this except for General Becton. His compensation was arranged
back in 1996, in November, when he was engaged: There has been
no adjustment to his compensation at all. The only thing we said
at that time was that he would have an opportunity to be consid-
ered for a performance quota ex post. There has been no evaluation
with that in mind. So there has been no adjustment in General
Becton’s compensation.

Now, with respect to the compensation and bonuses for school
system ple, my information is that, first, that General Becton
established those compensation packages and it was my under-
standing that these would be approved by the board of trustees.
Let me repeat, they were not sent to us. There was no reason, no
obligation. They were not required to.

Now, with respect to the composition, I understand that, and
again General Becton can give you all the details on this, that Gen-
eral Williams was engaged with an annual salary of $120,000, that
there was a signing bonus of $30,000. I have been told, and I have
been briefed on this, that in the accounting for that there were mis-
takes made with respect to grossing up; that is, we ended up essen-
tially paying the taxes applied on that.

I understand that Mrs. Ackerman’s compensation was $120,000
and she had a signing bonus of $25, and so on. But again, General
Becton decided those approvals and they were approved by the
board of trustees. As to my own attitude and the view we take, I
believe that the signing bonuses are an appropriate component of
compensation packages, that they should be geared to what is nec-
essary to align the compensation being offered to meet the market.
But that is a view I have had of compensation all along. It is my
understanding that in the Federal Government, the Federal Gov-
ernment, signing bonuses are used as a way to help close the dif-
ferential between what is available as a base salary and the mar-
ketplace. In the private sector, it was done all the time. That is
where most of my experience has been. Now, with respect to per-
formance bonuses, believe strongly that total compensation
should have an element of risk involved; in other words, some in-
centive so that—in my own professional work, I have sat on a num-
ber of compensation committees and advise on a number of these
things and always look for a salary, a performance, some kind of
incentive and look at the total compensation. So, yes, I believe we
should have, we should make use of a performance and signing
bonus. Again, the Federal Government does use signing bonuses,
as I said, as a recruitment device.

Ms. NorTON. Well, let me tell you one thing, you have rep-
resented that the Federal Government does signing bonuses. This
Member is going to look into that because I have never heard that
before. So we will find out whether that is done. I would really
wonder about that. If so, I would wonder if Congress understood.
that there are people getting signing bonuses. So that is something
that we will look into. Our information is that signing bonuses are
rarely nonexistent in the public sector generally, that they are not


9

showed the greater maturity and willingness to sacrifice power and
the Control Board that took a needless risk that has unnecessarily
reintroduced uncertainty into the conduct of school affairs.

At the same time, I appreciate that the Control Board following
the Shook decision has not plunged ahead unilaterally. The next
steps are by no means clear. There must be a dozen options. We
would hope that the parties would strive for a resolution that en-
sures a seamless transition back to the elected board as planned
by the year 2000, without disruption. Unfortunately, the public has
not heard from the elected school board in months. However, if the
elected board, the board of trustees, and the Control Board engage
in thoughtful and disciplined problem solving, I believe that grad-
ual power sharing can work. Such a transition would have to occur
slowly and incrementally, proceeding from one step to the next,
only as demonstrable success is apparent, because the public will
not tolerate a return to needless quarrels, power trips, and failure
to act.

A reintegration of the elected school board that has four new
members who have never had the opportunity to exercise the au-
thority given them by the voters is essential to assure that the
elected school board is fully prepared to assume its role, as
planned, by the year 2000. However, the necessary transition can-
not begin now unless a structure and an approach is found that
guarantees that there will be no reversion or slow down of the
Progress of reform. I urge the parties to begin.

e board of trustees has taken a fair.amount of heat, in part
because of raised expectations and the felt need of parents for im-
mediate change. However, there have been some noteworthy ac-
complishments, among them an education plan already being im-
plemented, and the closing of some schools, without which there
may well have been congressional interference. Gradual power
sharing could help legitimate the board of trustees, which is still
mistrusted by many parents because of the paucity of representa-
tion of the public. I am disappointed, however, that there are ru-
mors that some members of the board of trustees want to be the
board, and the only board, notwithstanding the Shook decision. I
hope that these rumors are untrue. The trustee’s demean their
service if they attach it to such hubris. I hope that the trustees will
act in the spirit of public service that brought them to this thank-
less volunteer work in the first place. No one seeks to displace
them quickly, yet it would be irresponsible not to use the Shook de-
cision as an opportunity for planning and beginning to implement
the inevitable transition to the elected school board that will occur
in just 2 years. Given the difficult decisions that lie ahead, the
trustees might well find that the best thing that could happen now
would be to begin some sharing of the decisionmaking that would
mean that the blame could also be appropriately shared.

All of the relevant subcommittees of the Congress agree that the
Shook decision does not require a legislative solution. Each is clear
that the parties should resolve the matter among themselves. A
legislative solution would take months. Anyone who observed the
long battle surrounding the last appropriation, as well as the ear-
lier supplemental, will realize that we cannot discount the possibil-
ity of congressional provisions that no one in the city would want


i

‘This memorandum also pointed out a technical problem with certifying capital funds availability,
because the Authority maintains capital funds for DCPS, and the Authority has provided neither the
exact amount of funds available nor documentation supporting the funds available. In the interim,
DCPS has entered “available” funds into the FMS based on verbal information and press releases.
As a result, the CFO said that he could not technically certify that capital funds are available.

Were any laws, regulations, or procurement provisions violated?

Public Law 104-208, Title V--Additional Appropriations, Sec. 5201, dated September 10, 1996, was
the legislation that mandated the DCPS facilities improvement initiative and authorized its initial
funding. It states that:

The Authority shall have the authority to contract with a private entity (or entities) to
carry out a program of school facility repair of public schools and public charter
Schools located in public school facilities in the District of Columbia, in consultation
with the General Services Administration ... {pJrovided, ...[t{hat contracting autho-
rized under this section shall be conducted in accordance with Federal procurement
rules and regulations and guidelines or such guidelines as prescribed by the Authority.

On November 15, 1996, the Authority issued a Resolution, Order and Recommendation establishing
the DCPS Board of Trustees. The Order stated that:

The Board of Trustees, in addition to exercising the authority, powers, functions,
duties and responsibilities herein provided, shall oversee all facility planning,
construction, improvement, repair, rehabilitation, and maintenance and is hereby
delegated the powers and responsibilities of the Authority under Sections 5201 and
5206 of Public Law 104-208 with respect to school buildings and grounds.

We concluded that the intent of Public Law 104-208 is clear in stating that Federal procurement rules,
regulations, and guidelines were to have been followed until other procurement procedures were
adopted. The Authority delegated this responsibility to DCPS in total. We found no evidence that
the Board of Trustees (1) formulated and adopted its own policies, procedures, rules, and regulations
as the Authority’s Order directed, (2) adopted the Board of Education's policies, procedures, rules,
and regulations, or (3) was aware of the Public Law 104-208 requirement to follow Federal
procurement rules.

Although we found no direct evidence of fraud within the limited scope of our audit, in our opinion,
the combination of (1) not following any documented procurement policies or procedures, (2)
operating in an emergency mode with compressed timeframes, and (3) not maintaining accurate and
complete documentation of procurement decisions and actions created conditions conducive to fraud,
waste, and abuse. Specifically, we concluded that conditions were conducive to collusive bidding and
created opportunities for bribes, kickbacks, and illegal gratuities. At a minimum, these conditions
placed honest personnel in compromised positions where their actions and decisions become suspect.
We understand that the Authority has requested that the District of Columbia Inspector General
conduct more detailed analyses of certain specific matters that we identified during our audit.

Page 6


83

Mr. BRIMMER. Mr. Chairman, the money never goes to the
schools or to any other agency. The money goes to the city’s chief
financial officer.

Mr. Davis. Let us say it never touches the schools. The question
is, when did the schools know they could go out and contract and
obligate this?

Mr. BRIMMER. Mr. Stephenson has stated as follows: He says
that in early July, the schools—he was informed that the $20 mil-
lion in funds would be available.

Mr. Davis. That is a month after they were actually available.

Mr. BRIMMER. Well, but he was informed by the city CFO. He
works for the city CFO. He is—he reports to Tony Williams. So he
was informed by his own superiors.

Mr. Davis. In July?

Mr. BRIMMER. In early July. How they did that in that order——

Mr. Davis. The point is that you didn’t notify the schools because
that is not your job.

Mr. BRIMMER. Our job is to make the money available to the
CFO, first, when the money came in, available to us and in very
early July.

Mr. Davis. It came to you early June?

Mr. BRIMMER. It came to us in June. The CFO for the city was
informed immediately. Then the CFO then informed the CFO for
the schools in early July. Why that was the case I have no idea.

Mr. Davis. That is all you can testify to. If that is your testi-
mony, that is fine. That is all we are trying to understand. Maybe
that had no ramifications or maybe it delayed the whole process a
month at a time when the schools could have used that month. I
think that is what we want to determine here. I am sure the GAO
will be looking at that and will be issuing a report sometime in the
future, but that is what we are trying to get.

Mr. Cotton, thank you for being here today. Some people seem
to believe that your report questions the quality of the work per-
formed and the oversight of that performance. I do not find that
in your report. Rather, you point out that the management of the
procurement process was lacking. Is that a correct interpretation
and do you have any comment on that?

Mr. CoTTon. Yes, Chairman Davis. That is accurate. We did a
little bit of work at the capital improvement office looking at the
project inspection files. Those were files that we understood were
maintained by DMJM. Those files appeared to be well-organized
and reasonably complete. The only potential concern with respect
to that project inspection process an possibly quality was an indi-
cation in some of the files that we looked at that contractors were
allowed to proceed with the construction work before they had got-
ten their design approvals. But other than that we did not see any
problems with design or quality.

Mr. Davis. I have also seen and heard and it has been reported
that your report, states that there was a $7.2 million cost overrun
or that the program cost $7.2 million more than it should have. I
read your report and that is not how I read your report. Right on
page 2 you say, the District of Columbia public school officials esti-
mate that the extra costs are about 30 percent. Based on these offi-
cials estimates, the extra cost may have been $7.2 million or more.


fact many of their achievements are remarkable. The new regime came
on board following the Control Board’s Order of November 15, 1996.
They moved into a crisis situation whose primary characteristic was
turmoil. They had to deal with school closings, a school-by-school
assessment, and an excruciating court case.

We must remember that while it was always intended that repair
work would be done during the summer of ‘97, it was never anticipated
that all schools would have to be repaired by the opening day of classes.
When the court ruled that no work could be done when anyone was
inside the buildings, the crisis accelerated and deepened. There were
virtually daily court hearings, and new buildings were found to require
repairs. And the same people responsible for the repairs were also
responsible for the school children and for procurement. Throughout this
difficult time it was even unclear exactly how much money would be
available.

So I recognize the accomplishments that were made. But there are
nevertheless many troubling issues that need to be addressed and
clarified today. For one thing, the Performance Audit released by the
Control Board this month indicates that the school system believed it
could operate without sufficient rules. And the school system apparently
took contradictory positions, seemingly complaining of the very
regulations they had themselves imposed.

I’m troubled by the Audit’s finding that the school system had “no
process” with regard to procurement, RFP's were poorly conceived and
then hastily amended, all to no avail. I am particularly concerned
because the Audit makes it clear that viable options were available. For
example, and I find this very irksome, some have claimed that the
General Services Administration was not utilized, despite explicit
congressional authority to employ their expertise. A consultant could

2


111

Mr. STEPHENSON. Good afternoon. My name is Ed Stephenson. I
am the CFO of the D.C. schools. I have been there for less than
9 months. Prior to that I was at the Control Board, and prior to
that I spent 26 years as an auditor with the U.S. General Account-
ing Office. As part of D.C. schools, I report to General Becton. As
part of the District’s financial team, I report to Tony Williams, who
you just heard from.

During fiscal year 1997 I was responsible for overseeing the fi-
nancial management of the capital program; On October 1, the
DCPS procurement function was transferred to my office. This
afternoon—and in my statement I basically outline and discuss the
availability of capital funds and the effective management of these
funds, as well as changes my office has instituted in the Office of
Procurement. My statement does provide a number of details about
when funds were available and what the process is. But since the
timing of the June incident in terms of the fiscal year 1998 capital
funds was discussed previously, when we were notified of those
funds, let me elaborate briefly on that.

During the month of June a member of my staff and I personally
inquired about the status of the District’s $150 million borrowing
that I knew had been borrowed by the city in early June. I was told
by the Control Board staff that the city was considering reallocat-
ing the funds and a decision on the amount of the funds DCPS
would receive was not final. Any reallocation of funds would need
to be approved by the Control Board.

Near the end of June the Associate CFO that works for the city
called the Control Board to inquire about the status of these funds,
as I had inquired of her about those. She was informed at that time
that the funds were not going to be reallocated and that we were
able to load those funds into the financial management system, and
we did so soon after that. But let me further point out that even
before June, I inquired about when the District was going to be al-
lowed to borrow the $150 million in funds. As I mentioned, I was
at the Control Board at the time. I knew the city was going to be
borrowing funds.

Mr. Davis. Who did you inquire of? It was not an anonymous in-

uiry.

q Mr. STEPHENSON. Andrew Reece, who was a staff member, one
of my staff members, inquired of individuals in the city, the CFO
office. But let me further point out that, like I said, even before
June I was inquiring about when the city was going to borrow $150
million in funds. I had been at the Control Board. I knew the city
was going to do it. The borrowing had actually been scheduled for
much earlier in the year. Then we borrowed the money in June. I
can respond. I have a chart in my testimony that talks about and
shows the availability of funds.

I might point out that even at that time, in June, there was some
$2 million in unobligated captial funds, even without this $20 mil-
on.

Let me just talk about a few of the things that I have made in
DCPS’ office of procurement. As I noted before, I assumed the re-
sponsibility for the procurement office on October 1.

Dr. Brimmer noted in his testimony today a number of these
changes. I installed a new procurement management team led by


81

Mr. Davis. Thank you very much. Let me walk through the fund-
ing issues. Dr. Brimmer, you addressed them earlier. It is really
critical in terms of how you plan, in terms of how much money you
have available and when it’s available. It has been subject to a lot
of discussion here on Capitol Hill in other committees.

As I understand, the capital bond sale was conducted on May 27,
1997. That was approximately about $20 million. There were funds
at the Control Board. Those funds were at the Control Board on
June 2nd, and in Mr. Stephenson’s testimony, they were notified of
the $20 million available in late June and requested by the schools
July 14th. That is what the testimony is going to show. That is a
lag of about 6 weeks. So it is a 3-week notification, just notifying
the schools they had the money available.

Now, Dr. Brimmer, do you know when the public school system
was notified of the availability of the $20 million; if there was a
delay? If there was a delay, why did it happen, when they des-
perately needed the money available for obligation?

Mr. BRIMMER. First, the schools started off—

Mr. Davis. They had $11.5 million carryover.

Mr. BRIMMER. They had $11.5 million carryover from the 1996.
ie Davis. Correct. They also had $18.25 million from Connie

e.

Mr. BRIMMER. Next, the Connie Lee funds were available on Feb-
ruary 27, $18.25 million. The funds for the general obligation, from
the 1997 general obligation bonds were available on June 2, 1997.

Mr. Davis. Right. But when were the schools notified and able
to obligate those dollars? That’s a critical question. A period of
time, I might add, when every week was counting. Schools were de-
layed 3 weeks to get things done. If they had had that money 3
weeks earlier, who knows.

I think that’s the fundamental question here. And the testimony
today appears to be conflicting on tl

Dexter, if you want to come up, please sit here, and Dr. Brim-
mer, this is an important question to get on the record. We're look-
ing forward, not in the past. We want to try to understand how
this occurred.

Mr. BRIMMER. Mr. Chairman, I have an exact chronology. I want
to locate it.

Mr. Davis. Sure, please take your time.

Mr. BRIMMER. And put it into the record, if you will give me a
minute, please.

Mr. Chairman, the question you asked, as follows: As I said, the
Connie Lee funds were received February 27th and made avail-
able—made available at that time. The public schools loaded into
their system $29.75 million in April.

Mr. Davis. Correct, April 14. Now, that was money from the car-

over from Connie Lee. My question says that the bond money
that was available in early June through the Control Board evi-
dently had a waiting period before the school authorities were noti-
fied so that they could act and obligate that. At least that appears
to be what the schools are going to testify to today. And I wonder
if you have any information on that as to why there was a delay.

r. BRIMMER. The funds come to the Control Board and the ulti-
mate users of the funds are notified that they are available. We


107

TABLE 1: TIMELINE OF EVENTS REGARDING FUNDS AVAILABILITY

FOR SCHOOL REPAIRS, FY 1997
October 3, | Authority receives $11.5 million in
1996 FY 1996 G.0 Bond proceeds.
February 27, | Authority receives $18.25 million in
1997 Connie Lee proceeds
April 14, | DCPS requests a FMS load for $28.5 | April 14, | DCPS” April 14, 1997 load
1997 million* 1997 request is approved by OBP.
Financing is available from
FY 1996 G.O Bond proceeds
and March 4, 1997 Connie
Lee proceeds, for the schools
April 14, | $18.25 million in Connie Lee
1997 proceeds are available in FMS
June 4, 1997 | Authority receives $20.0 million in
FY 1997 G.O. Bond proceeds
July 14, 1997 | DCPS requests a FMS load for $20.0
million
July 22, 1997 | $20.0 million in FY 1997 G.O. Bond | July 22, | DCPS” July 14, 1997 load
proceeds are available in FMS 1997 request is approved by OBP.
Financing is available from
FY 1997 G.O. Bond
proceeds

* Total new funding was $29.75 million. Total requested load was $28.5. The
difference is a result of new funds unable to be expended for existing debt of 1.5

million.


92

serves credit for trying very hard to get an agreement with the
House. That ultimately became impossible. But I do believe that
Congress shares part of the blame here, at least with respect to the
amount of money that became available. Then there is the question
of whether or not if all of that money had been made available it
could have been used given what happened with the money that
was available. So I guess my question is, when it became clear that
you didn’t have $86 million but you had to cut back to $50 million,
was there a downsizing of the plan that occurred that the Control
Board found satisfactory, or did the—was there a failure to in fact,
perhaps I should be asking this of Mr. Cotton, was there a failure
to in fact cut back to a manageable plan when the money that you
anticipated was no longer available?

Mr. BRIMMER. Ms. Norton, let me respond to that. I will do so
by drawing on a response to a series of questions that Chairman
Davis had put in August. First, what was the source of the $86 mil-
lion target, the plan to spend $86.6 million that consisted of the
emergency spending for 1997? First, the school system had worked
out a three part plan. The first part was the plan to cover fiscal
1997 to fix those facilities in order to abate fire code violations.
That was the main thrust. There was another piece that was to fix
plumbing and so on. The key point is this, when they learned they
could not, would not have the $86 million available, they then re-
vamped that program. What did they do? They decided to con-
centrate on the roofs. They eliminated that part of the plan which
was to replace boilers and to make the improvements to meet the
Americans with Disabilities Act. Why did they concentrate on the
roofs? Because the task was to abate the fire code violations and
the roofs were the source of much of the water leak that led to the
exposure to electrical fires. Once they made that decision, they
were then in a position to see what they could do to get contracts.

The other point I want to make with respect to availability of
funding, they could not obligate, they could not enter any contracts,
they could not sign any contracts, a part of the general city’s re-
quirement, unless they had the money in sight; in other words, un-
less they knew they had the money and not will have, not promised
but had. Otherwise they couldn’t issue one contract. And they did
not have that assurance until July. That is when they started
issuing the contracts.

And in the course of a few days, a week at the most, between
July 18th and August 1, they let the host of contracts to fix the
roofs. That is why the lack of availability of funding authorit , of
spending authority, was a major obstacle to getting this work done.

ven though they had difficulty negotiating and identifying con-
tractors, which you heard that problem described in some detail,
until they had the funds they could not obligate. So given the task
to abate the fire code, they had to concentrate on the roofs. And
that is why, Ms. Norton, they decided they had to go for that many
roofs because the judge had indicated she would not let the schools
open if there were any fire code violations.

Ms. Norton. Yes, and they were working in good faith to try to
see that they didn’t have them by doing the roofs and there is
every reason for them to have wanted to do the whole roof rather
than patch up the roofs. The real question becomes whether or not


60

for correction and improvement of the schools’ procurement oper-
ation.

Mr. Chairman, you have already had a lot of testimony this
morning on the repair program, and I won't go into details, but I
would want to say that the program that was undertaken, was un-
dertaken during the summer to correct fire codes. They were under
a great deal of pressure and court mandate to undertake those re-
pairs. And I want to stress that they did that. They carried out
what was, in fact, as has already been mentioned here today, a he-
roic job in a hectic environment. And many of the flaws that turned
up in the audit with respect to controls and procedures have their
origin in that hectic environment in which they were operating on
an emergency basis.

Now, in fiscal 1997, the schools had approximately $50 million
of committed funding for emergency repair programs at a time
when the facility repair needs were estimated to cost $86 million.
This left the schools some $36.8 million short for critical programs
necessary to ensure the elimination of the fire code violations and
to pay for other repairs.

I describe in my testimony the steps we took to try to help the
schools close the funding gap, which included, as the committee
will recall, a request to the Congress for supplemental funds to
cover the needed repairs. The Senate responded favorably and pro-
vided $31 million in its supplemental appropriations, $22.3 million
of which was earmarked for school construction. The House of Rep-
resentatives, however, declined to provide any additional funds so
the supplemental was not approved.

Now, let me pause to say that—and I will refer to the earlier dis-
cussion—I want to pause and say something about the availability
of funds, when the funds were available, and what impact the la
of availability had on the ability to put contracts in place and
when, and I will come to that in a minute, if you will permit me,
Mr. Chairman.

So what I want to do now is to stress that I have had a briefi:
from the schools’ administration the last couple of days. I focused
on trying to find out what have they done with respect to assuri
that the kinds of problems with respect to policies, procedures an:
controls do not arise in the future.

First, we have refocused. We at the Authority have refocused on
our own responsibilities with respect to school construction. The
committee might recall that under the statute the Authority is
charged with the administration of school repair funds. The Au-
thority is charged in another statute with overseeing the school
construction program. We decided to fold into the school adminis-
tration the school facilities authority, and we vested that respon-
sibility in the chief executive officer of the schools. He, in turn, del-
egated that responsibility to a director of schools’ facilities.

We have decided, and I particularly have decided that in the fu-
ture I will pay more attention directly with respect to oversight of
that function. It will remain in the CEO, but there will be closer
monitoring of that function.

In the meantime, the Authority has decided that a number of
crosscutting functions in the city as a whole should report to the
Authority. it responsibility will be delegated to the chief man-


56

with them how we make that procurement. I’m not certain where
they stand, but I believe they’re moving in that kind of direction.

Ms. NorTON. But you're not involved in that?

Mr. Lawson. Directly, no.

Ms. Norton. Finally, Mr. Miller, you emphasized that you did
not provide comprehensive management, I think you said, but only
technical assistance, so I don’t understand your role. Who was pro-
viding the comprehensive management, and what do you mean
that you provide only technical assistance?

Mr. MILLER. From project to project the range of services that we
provide can vary. On D.C. schools, let me give a contrasting exam-

le. We provide facility services for the Job Corps centers for the
Department of Labor, also arguably an educational function located
across the country, and we’re much more involved in the manage-
ment. We’re involved in procurement procedures, we're involved in
schedules, costs.

On D.C. public schools we simply weren’t involved in those
issues. We wrote scopes, we investigated conditions, we developed
technical data, we advised them on technical—advised D.C. schools
on technical issues, and I think I have already hit on the construc-
tion monitoring role that we played. We simply weren’t involved in
a lot of the procurement procedures that I think you are examining

y.

Ms. NorTON. No, I’m not asking about procurement procedures.
Tm asking about the management of the work.

Again, { refer back to Ms. Filardo’s notion that D.C. hasn’t had
the time, let’s say, to develop the full state-of-the-art comprehen-
sive management system you would expect to be in place if you are
doing something as ambitious as replacing a whole set of roofs in
your system.

You say that your job was only technical assistance. You almost
make it sound like on an ad hoc basis. Who was doing the com-
prehensive management?

Mr. MILLER. The short answer is D.C. schools was doing the com-
prehensive management. Let m« ‘ive me one moment.

By contrast, what I would call more traditional construction
management that we provided for three GSA projects done for D.C.
schools this summer involved some tasks which we simply didn’t
perform for the majority of our work with the schools directly: Re-
viewing construction progress payments with the contractor, mon-
itoring the schedules, and basically work resolving any kind of
schedule anomalies, issuing field directives directly to the contrac-
tor, making recommendations on contract instruments, such as
change orders.

We were involved in estimating, preparing government estimates
both for the base job and occasionally for change orders. But in
terms of directing the contractor, we didn’t do that. So the project
managers onsite who worked, the D.C. school employees, were the
people most responsible for directing contractors.

T could——.

Ms. Norton. Yes.

Mr. MILLER [continuing]. Skip back to a comment you made ear-
lier concerning what have we learned and are we going down this
same road again.


18

Th following are areas that continue to plague DCPS

1 There is still not an adequate educational facilities master plan

2 The recent roofing “emergency” illustrates a host of flaws in the management of the schoo!
system's capital program

3 Both the FY 1997 and FY 1998 capital programs indicate grossly inflated costs

On the DCPS Educational Facilities Master Plan

Were missing

© credible enrollment numbers;

‘+ along-term education plan that clarifies such issues as whether or not DCPS will institute
universal pre-k or middle schools throughout the system,

‘+ adoption of standards on schoo! size and utilization for the current building inventory.

‘* input from communities on their educational facility needs.

‘The segregation of stabilization, functionality and modernization in the school system's plan
serious problem. The roof, boiler and window replacements undcraken as part of “stabilization
result in significant funds being spent in schools, such that it will be unlikely that the District will
‘celurn (0 these buildings to do the important work of bringing the building up to a quality
standard to support education. The State of Maryland, for example refuses to fund these multi-
systemic projects, because when they are done, the school systems rarely yo back to address
educational issues.

Without an adequate facilities master plan, we will continue to lurch from crisis to crisis. not

utilize scarce capital resources effectively. and -- most importantly ~ continue to have

inadequate school buildings for our children to learn in

2. The recent roofing “emergency” illustrates a host of flaws in the capital management system-
- of. more accurately, reveals that there is no system in place.

‘© The decision to replace not repair (while lauded by many) was too simplistic. DCPS had
replaced roofs at 66 schools in the last ten years, and 13 of these roofs, which no doubt had
leaks, but were less than ten years old were replaced this summer.

© The extremely late initiation of the roofing program, at a scope way beyond the capability of
the Division of Facilities Management, indicated poor decision making in the administration
and a complete lack of oversight on the part of the Control Board and the Board of Trustecs.

* The Cotton audit, which you will no doubt hear much more about, documents that nv
systems were put in place for standard contract management or procurement. You may nox
remember that in the summer of 1997, two former DCPS contract officers and a contractor
were convicted for taking and giving kick-backs for DCPS facilities contracts under the
previous administration, in what was a similar environment

Without a responsible, transparent, system in place, that public employees are required to
follow, the District gets tess than what it pays for. Contractors, wary of a muddled process are


AT

course, what we have is a heroic effort that deserves a lot of praise,
and they will get that praise from me. I don’t think you can get
people coming and then get them going to say, hey, get it done in
60 days, and, by the way, you have spent too much money getting
it done in 60 days. That strikes me as—that kas a taint of unfair-
ness to it.

The real question is, why did 40 roofs have to be done in 60 days,
not whether or not, if you had 60 days, how many roofs could you
accomplish in 60 days. And the question I have for you is a tougher
question, which is why, Mr. Miller, and why, Mr. Lawson, was, in
your judgment, this work compressed to 60 days so that we are

ere talking about a proposition that really shouldn’t have been on
the table in the first place?

Why was not this work, in your judgment—you were there from
the beginning—why was this work not done in the longer time-
frame, the more reasonable timeframe that would conceivably not
have resulted in the payment of premiums and in the other mat-
ters that you have justifiably raised in making your evaluation?

Mr. Lawson. Do you want to do this, John?

Mr. MILLER. You go first.

Mr. Lawson. I will try to answer it. I can give you really a lim-
ited answer, but I think I would have to defer to the D.C. public
schools to give you a more intelligent answer, because I don’t think
Tm directly privy to all the factors leading up to authorizing and
executing the projects.

Ms. NorTON. When did you begin your work, Mr. Lawson?

Mr. Lawson. When did T begin it? We started work for the school
a year or so in advance—prior to the emergency.

s. NORTON. Was your work finished before school was sched-
uled to open?

Mr. Lawson. The work we did on the phases, yes, we did, I be-
lieve, for the most part. I’m not absolutely sure of the schedules,
but I think they would have finished before.

Ms. Norton. In other words, you were assigned a specific num-
ber of schools and your work was done before the scheduled open-
ing of schools?

Mr. Lawson. Yes.

Ms. Norton. Mr. Miller, why was the work not begun early
enough so that there was not a last-minute finish-line approach
that caused a premium and other problems to arise?

Mr. LAWSON. Could I interject just one point, Mrs. Norton, that
I think would help? I do generally understand that it was a fund-
ing and budgeting process that may have delayed some of the
starts of the work, but I don’t know the details of that problem or
that process.

But I believe from when we were authorized to work and as work
came to us, it was authorized as soon as—as I understand it from
the school system—as soon as work was funded. And my under-
standing is that there was perhaps a delay in the funding process.
I don’t know any more than that, and I think the school system
would have to answer any more detail than that.

Ms. Norton. Mr. Miller, you were there.

Mr. MILLER. That’s my understanding as well, though I don’t
have firsthand knowledge of the funding availability. But from


51

selves. Are you prepared to help the District public schools to do
any more of this roof work?

Mr. Lawson. Sure, absolutely. And General Williams and I have
had ongoing discussions. We did provide technical support to the
schools.

Ms. Norton. Are you prepared to do any more roofs or boiler
work? Let me be clear.

Mr. Lawson. Yes, we are.

Ms. Norton. Have you been asked to?

Mr. Lawson. No, we haven’t to date. But if we can work out a
plan to do it, and a plan that is a reasonable one to get work done,
sure, we stand ready to help.

Ms. Norton. As I understand it, there are 40 or more roofs to
do this year. You have not been asked to help with any of those
roofs?

Mr. Lawson. Not directly, no. I don’t believe so.

Ms. Norton. I am simply asking because I want everybody to be
at the ready at the beginning of the year in case we get anywhere
close to the situation we found ourselves in before.

Ms. Filardo, I would like to find out more about your involve-
ment. You say that you have done work not only with the D.C.
public schools but with other big city schools. What other schools?

Ms. FILARDO. We have—part of our job is, we have been doing
public-private development partnership work, and we had a na-
tional conference this summer on public-private development part-
nership.

Ms. Norton. I am talking this kind of work.

Ms. FILARDO. No, no, we have not provided direct services to
other schools.

Ms. Norton. How did you become involved with the D.C. public
schools?

Ms. FILaRDo. I’m a parent of three children. I’m a District resi-
dent for 25 years. I have one child that graduated, and actually
started out, obviously, because of my background in facilities, work-
ing with Oyster on the public-private partnership network many
years ago. And Sara, my colleague, worked for 2 years in the school
system, in their Facilities Planning Division, and also for the State
of Maryland in their facilities branch, working with the State and
with a number of counties on planning and school design.

Ms. Norton. Now, you served on the task force that developed
the preliminary plan.

Ms. FILaRDO. The preliminary facility master plan. We were
staff. In 1995——_

Ms. NorTon. You were staffed. Were you paid by the D.C. public
schools?

Ms. FILARDO. We were in 1995, yes.

Ms. Norton. Now, then, you undertook to develop an alternative
process and an alternative plan. Would you explain, having partici-
pated in one plan, what led you to develop your own alternative?

Ms. Fiuarpo. As I said, we were staff to the preliminary facility
master plan and prepared that in 1995. And at the direction, I
think it was part of the appropriation direction, was to complete
that preliminary plan.


eed

Table 1
Information In Contract Files

In Not In
Attribute of Interest Contract | Contract File
File
Government's estimate cu 4
Evidence of advertisements of the procurement (ot manner of
potential contractor selection) B 18
Evidence of certification of funds available for base contract 26 3
Evidence of centfication of funds available for change orders 0 4
Evidence of evaluation criteria to be used 2 29
Completed bid forms attached to DCPS Form 0076 for winning
bidder 2 19
All required representations and certifications for winning bidder “4 "7
Bid bond forms for winning bidder 7 ”
Performance and payment bond forms for winning bidder 19 5
Required declarations for winning bidder “4 0
‘Summary of bid opening resules 6 0
Evaluation of winning bidder responsibilty 2 29
Evidence of all evaluation results 1 30
Clear evidence of cost and price analysis 1 30
Evidence of all negotiations and discussions with offerors 2 2»
Evidence of award justification and approval by procurement 28 3
official
Lists of all subcontractors used and evidence of DCPS approval of
all subcontractors L 23
Complete contract and all modifications 8 ES)
Invoices and evidence of approvals and payments 15 16
Progress monitoring and inspection reports 0 u
Evidence of technical evaluations of modifications/change orders 3 u
Evidence of procurement evaluations of modifications/change 0 4
orders
Evidence of DCPS determinations that contractors complied with
the Davis-Bacon Act and all other applicable laws and regulations 0 31

Page 9


142

Of the $20 million in the 1997 bond proceeds on June 14, this
was actually received by the Authority on June 4th and was actu-
ally made available or was requested by DCPS in the FMS on July
14th, and after error corrections were made. This is actually typical
by our agencies, and is going to be greatly expedited by the new
financial management system. It usually takes 4 to 5 days to cor-
rect all of the errors.

The point of the matter is, it is a general understanding—not-
withstanding any presentations that are made here, it is the gen-
eral understanding by the agencies that as soon as a bond resolu-
tion is passed, and certainly as soon as bond proceeds are avail-
able, that the funding can be melded, and then loaded into the fi-
nancial management system.

Now, I understand that Mr. Stephenson was told by someone in
my office and someone in the Authority that basically these funds
couldn’t be made available until the Mayor had reallocated the cap-
ital. The only problem with that scenario is that in 1997 the $20
million allocation for school capital was enshrined or was incor-
porated into the 1997 District appropriation. That is Federal law.
So it really is irrelevant what anyone down in the District level
wants to do with that $20 million because it, is now Federal law.
It is kind of a basic principle.

Mr. Davis. I understand, but the money didn’t get out. It should
have gone right away. Tony, we admit mistakes were made, be-
tween the communication, that money should have come out a lot
faster. It didn’t, for whatever reason. The word didn’t get through
the system.

I am not here to try and point blame. I appreciate everybody's
candor on this and admitting, yes, we could have done a better job.
We don’t know what the costs were, but we cannot afford to let it
happen again. But do you think that the current system of notifica-
tion of capital funds availability should be reviewed and improved,
or do you think it is now satisfactory?

Mr. ANTHONY WILLIAMS. Moving forward, I think we are in much
better shape to avoid these problems because each of the agencies
now understand that they will operate on a post-audit basis. So in
other words, they understand that they received their full load of
operating funds for the year, they understand that immediately
upon receipt of bond proceeds they have fully available to them
their capital proceeds as well, and it is up to them to meet all the
necessary rules, regulations, and criteria and the expenditure
thereof.

Mr. Davis. Let me ask you, Mr. Stephenson, I know—and I am
not trying to put anybody on the spot, do you agree or do we
need——

Mr. STEPHENSON. I agree. This incident we knew about last
spring, there was some questions about, or early summer—that in-
cident in and of itself helped to clarify what the policies and proce-
dures are. I do not think that kind of thing will happen again. I
think there is still a potential, not with the city’s bond borrowing,
but if in fact any kind of additional special money comes available,
we need to make sure we have the coordination there.


135

We have a document control team in place now and a manager
with some specialists working with him who does nothing but track
documentation, and I don’t think we will ever have this problem of
paper in the process again. Thank you very much for your atten-
ion.

[The prepared statement of General Charles Williams follows:]


18

volunteer work in the first place. No one seeks to displace them quickly. Yet it would be
irresponsible not to use the Shook decision as an opportunity for planning and beginning to
implement the inevitable transition to the elected schoo! board that will occur in just two years.
Given the difficult decisions that lie ahead, the Trustees might well find that the best thing that
could happen now would be to begin some sharing of the decision-making that would mean that
the blame could also be appropriately shared.

All of the relevant subcommittees of the Congress agree that the Shook decision does not
require a legislative solution. Each is clear that the parties should resolve the matter among
themselves. A legislative solution could take months. Anyone who observed the long battle
surrounding the last appropriation, as well as the earlier supplemental, will realize that we cannot
discount the possibility of congressional provisions that no one in the city would want to live
with. [ certainly want to make my own position unequivocally clear that I will strongly oppose
any effort by the control board or anyone else to come to Congress for a legislative solution.

No one ever promised that running the District, representing the District, or fixing our
public schools would be a rose garden. However, rebuilding this city and its schools is more
than doable if we all work together, consult before we leap, and are methodical in our approach.

| thank the Chairman and I welcome today’s witnesses.


137

yesterday, we met with the 21" Century School Fund to solicit its input for the revision. The
plan has three phases: stabilization, functionality, and modernization.

‘The FY97 Capital Improvement Program

As part of the stabilization effort, I am pleased to report that we completed 61 roof
replacements and 5 major roof repairs in FY97. We made the decision and commitment to
replace, not patch, leaking roofs whenever possible. Our roof replacement effort was
substantially complicated by the lawsuit brought against the District of Columbia five years
ago by Parents United. Unfortunately, this suit, which was initially brought in order to force
the city to provide capital funds for much-needed repairs to school facilities, resulted in the
imposition of multiple Court orders restricting our ability to do capital work, especially the
requirement that buildings be vacant before any work could commence. As I noted before,
the Court’s orders intensified what was already a crisis situation in our facilities.

‘The Court action forced us to compress the 6-month remainder of a 12 month capital
program into 7 weeks. The Court closed schools and forced us to bring contractors into those
schools on 24-hours notice, making normal procurement procedure impossible. The Court
required us to revise our plan to include schools that were not scheduled for work in FY97.
The Court required us to develop monumental amounts of documentation, which had to be
compiled by the same small staff that otherwise would have been ensuring that the contract
files were complete. We spent countless hours in Court, describing, in excruciating detail, the
status of work. We acknowledge that our contract files are not as complete as they should be,
and we intend to ensure that those files are complete before they are closed and contractors
receive their final payments. This process normally takes six months. Again, it should be
noted that we were working under extraordinary circumstances, with limited staff, and with
tremendous additional administrative burdens.

We also abated over 1600 fire code violations during just the first half of FY97, and we have
developed a productive relationship with the Fire Department which allows for regular
inspections of our schools and timely abatement of any new fire code violations in a manner
that does not disrupt the education of the children. We know that another 40-plus schools
have roofs that have outlived their useful lives, and they are scheduled for replacement
during FY98, pending full funding of our FY98 capital budget. Finally, our FY98 plan also
calls for repair or replacement of 44 boilers and the installation of some windows.

Congress also directed the school system to address the issue of excess capacity in the
system, and we acted on that directive. We have closed 11 schools and converted two schools
into swing space to accommodate students displaced by emergency situations or
modemization programs. This effort produced annual savings of $6,786,000 in operating
costs. Finally, we have begun disposing of surplus school property. The Dent School has
been sold and funds received, the Edmonds Schools sale has been approved by the Control
Board and the Buchanan School is currently being reviewed for approval by the Control
Board. These three sales total $2,350,000. Another $9.5 million is currently in the pipeline
and we expect to settle on over $20 million in sales by October 1998.


55

curement facilities is playing in the D.C. public schools or any
other agency at this time.

Mr. LAwsoN. Well, we have a range of support that we are pro-
viding the city. We are helping the police department with procure-
ment of, as you indicated, of a number of their services, and in pro-
viding them procurement services until they get their whole oper-
ation up and running on their own. We were providing some ad-
ministrative support to the Superior Courts, D.C. Superior Courts.
Let me think off the top of my head.

Ms. Norton. What did you say you were doing in the school sys-
tem?

Mr. Lawson. The school system, we actually—there are a couple
of things still ongoing. We do provide operating supplies.

Ms. Norton. Do you do any procurement work with the school
system?

Mr. Lawson. We're not, I don’t believe, doing any procurement
work for the facilities side of the school system, but we do provide,
under our Federal supply service, operating supplies for the
schools.

Ms. Norton. Is it your view that the procurement system is
working for the D.C. Public Schools?

Mr. Lawson. I really don’t know enough about their procurement
system, but it must be if they have got the work done that they
did get done in the timeframe they got it done.

Ms. Norton. You are not citing that as an example of a working
procurement system, surely.

Mr. Lawson. Well, I just don’t know enough.

Ms. Norton. I mean you also said they didn’t have access to
money and the rest of it, which would seem to implicate the pro-
curement system.

Mr. Lawson. I really don’t know how well their procurement sys-
tem works.

Ms. Norton. So you haven’t been asked to help develop a state-
of-the-art procurement system within the public schools?

Mr. Lawson. Within the public schools, no.

Ms. Norton. How long does it take a job to get in place, if you
do it, on a typical roof job, let’s say, of the comparable size in the
Federal Government?

Mr. Lawson. Well, what we have available we used in the first
phases with D.C. public schools, as Mr. Miller mentioned. We have
indefinite quantity—what we call indefinite quantity, indefinite de-
livery contracts. That is, we have contractors on board that we can
procure it under competitive process who we can task with work
on an as-needed basis. And we have agreed to unit costs and labor
costs for that work with no particular quantity identified at the
time we contract with them, so we don’t have to go through a labo-
rious procurement process to task them to do the work.

Ms. NorTON. That strikes me as wonderfully efficient. Perhaps
D.C. doesn’t have this yet. Do you believe that that would be an
appropriate system for the D.C. government, much less the D.C.
school system. to put in place?

Mr. Lawson. I do. And I think that General Williams’ staff does
as well, and we've, I think in our work, worked with them to share


2

and deepened. And I might add, at my own children’s school out
in Fairfax County, they stayed there while repairs were being done,
and normal operations around this region, as near as I can tell, are
that children are allowed to remain in. So the ruling was bizarre
and I am sure unanticipated.

There were virtually daily court hearings and new buildings were
found to require repairs, and the same le responsible for the
repairs were also responsible for the schoclchildren and for pro-
curement. Throughout this difficult time it was even unclear ex-
actly how much money would be available.

So I recognize that accomplishments were made. But there are,
nevertheless, many troubling issues that need to be addressed and
clarified today. For one thing, the performance audit released by
the Control Board this month indicates the school system believed
it could operate without sufficient rules, and the school system ap-
parently took contradictory positions, seemingly complaining of the
very regulations they themselves imposed.

I am troubled by the audit’s finding that the school system had
no Process with regard to procurement. RFPs were poorly conceived
and then hastily amended, all to no avail. I am particularly con-
cerned because the audit makes it clear that viable options were
available. For example, and I find this very irksome, some have
claimed that the General Services Administration was not utilized
despite explicit congressional authority to employ their expertise.
The consultants could also have been utilized for the duration of
the repair job, and I have not seen any evidence that any of these
options were pursued. .

Perhaps most troubling of all is the audit statement that the
school officials were noncooperative. I don’t understand how this
could be possible in view of the fact that the actions were bei
taken by authority of the Control Board itself and that the Contro!
Board was doing the audit by virtue of the powers vested in it b
Congress. During this hearing, I hope that the Control Board wil
advise the subcommittee how they view the situation and what
they intend to do about it.

In addition to issues of the repair program, I am also concerned
about the facilities’ master plan. Many of my concerns about this
issue and others will be addressed in the form of questions to the
witnesses who will be testifying under oath today. Suffice it to say,
I hope we will have a status report of the master plan and what
the next steps may be. As the master plan was based on an
unaudited school census, I am curious as to whether or not the
master plan is deemed to be final and to what extent Congress
should rely on its findings as we make fiscal decisions.

I have already communicated my grave misgivings about the
“signing bonuses.” While the money to cover the taxes and the bo-
nuses has been rescinded and has been referred to as a mistake,
I remain really shocked by the entire incident.

What has been most disappointing is that this subcommittee has
not been kept sufficiently informed by those who should have need-
ed no encouragement whatsoever to keep us advised. On my part,
I made many sincere efforts to communicate my own views to the
Control Board and to the school system. I have urged repeatedly
that true communication on real issues be forthcoming. But the re-


114

‘Mr. Ron Hamm.
Page S

| will be happy to provide you and the Subcommittee with copies of key workpapers that will
‘substantiate the fact that we kept DCPS staff fully informed at all times during the audit as summarized
above, Please do not hesitate to call me.

ce: Mr. Jobn W. Hill, Jr.


163

‘Charles E. Williams, MG USA (Ret.)
January 5, 1998
Page Two

replacement. Substantial flashing replacement, repointing of masonry, and overall stabilization of
adjacent parapets, for example, contributed to a program that grew in size, even as best efforts were
made to control costs.

We believe it is fair to say, however, that the approach taken by DCPS, requiring the contractor to
attend to broader protection of the schools, resulted in long-term savings. The building components
that were repaired should require no more than normal maintenance during their useful 20-year life
Had DCPS chosen a more literal approach, i.e., the specific replacement of selected roof areas and no
more, then much of the investment in the roofs would have diminished as adjacent damage would have
continued to fuel the deterioration of the recent repairs.

Much public discussion occurred during the summer months, comparing the work to maintenance
efforts in surrounding counties and questioning whether DCPS paid unacceptable premiums for
procuring such a large amount of work in such a short period of time.

‘The discussions failed to recognize, however, that the DCPS program was not an ordinary, ongoing
maintenance reroofing program; it was an emergency repair program. As such, it is not comparable to
reroofing programs (or costs) experienced in the surrounding counties. In addition, the discussions
overlooked a truly long-term benefit to DCPS: the quality of the constructed work.

We can jointly attest that the contractors who completed the roofing efforts under extreme time
constraints met the quality requirements set forth in the Scopes of Work, and the roofing contractor
community itself has acknowledged the quality of the installed roofs.

Finally, the diversity of roof types encountered across the city, and even on a single school, contributed
to the complexity of the repairs and required the use of multiple roofing specialists. Built-up roofs
require different installation skills than clay tile roofs; sheet membrane systems differ from shingle
systems; and metal roofing is yet altogether different.

The contractors were required to mobilize quickly, finalize design, secure necessary permits, secure
the roofing and building materials, and determine a staging and phasing plan, even as they were
demolishing the existing roofs, sometimes finding unforeseen deterioration.

‘The overall quality and the simple act of completion of the roofs seem to have been lost in the
discussions of cost. Cost control clearly was an issue, though. DCPS was required to competitively bid
work that by its nature carried premium costs: Night and weekend work, occasional loss or theft of
materials, unforeseen conditions, and aging buildings all contributed to the “above norm” costs that
were noted in the bids. Again, what has been overlooked by the media and other observers who seek to
compare DCPS with surrounding counties is that the inventory of DCPS buildings is from a different
era, a time when the simplicity of modem construction and generic roofing systems found on the
schools built from the 1960s to 1980s did not exist. Thus, the contractors were forced to account for
out-of-the-ordinary conditions.


12

Chairman Davis, Delegate Norton, and Members of the Subcommittee:

Lam pleased to be here today to discuss the results of our performance audit of the District of
Columbia Public Schools (DCPS) Fiscal Year 1997 Capital Improvement Program (CIP) Procurement
Process. ‘The audit was conducted at the request of the District of Columbia Financial Responsibility
and Management Assistance Authority (the Authority).

1 am accompanied this morning by Mr. Ed Fritts, a senior manager with Cotton & Company, and
Mr. Marvin Allmond, CPA, managing partner of Allmond & Company. Mr. Allmond and his staff
assisted us on the audit.

The audit was requested for the purpose of determining if (1) DCPS had an effective procurement
system in place during Fiscal Year 1997 for the CIP projects and (2) the procurement system met the
statutory, regulatory, and program needs of DCPS. We issued our report, dated December 15, 1997,
to the Authority on January 12, 1998.

Your invitation to me identified 12 specific areas of interest and concern to the Subcommittee. Some
of these areas were either outside the scope of our audit objectives or not directly related to our
primary audit objectives. Also, we are unable to give you detailed conclusions, because of audit
scope limitations and restrictions.

1 note that two areas of particular concern to the Subcommittee and others are (1) the question of
when funding became available to DCPS and (2) the extent of extra costs incurred by DCPS when it
operated in an emergency procurement mode. We did not expend extensive audit resources on these
two particular issues, because these are the primary objectives of an audit currently being conducted
by the General Accounting Office in response to a request by Senator Brownback, Chair of the Senate
Committee on Governmental Affairs.'

Consequently, we focused our resources on the primary objectives of determining the extent to which
DCPS (1) followed sound procurement policies and procedures and (2) complied with applicable laws,
rules, and regulations. I believe that the Authority’s main objective in requesting that our audit be
completed quickly was to identify procedural problems that require correction prior to commencement
of the Fiscal Year 1998 facility repair process.

Let me now address the specific Subcommittee concerns that fell directly within the scope of our
audit.
Process utilized to develop the necessary scope of work and to pursue project design.

‘Some contract files did not clearly document who developed project designs. For 37 projects
addressed early in the Fiscal Year 1997 CIP, DCPS relied on a General Services Administration

* Government Auditing Standards, at paragraph 6.65, state that “[o}ne factor underlying GAGAS audits is that
federal, state, and local governments and other organizations cooperate in auditing programs of common interest so
that auditors may use others" work and avoid duplicate audit efforts.”

Page |


27

Mr. Davis. All right. Mr. Lawson.

Mr. Lawson. Mr. Chairman, first of all, thank you for allowing
me the opportunity to be here this morning. I do have a brief open-
ing statement, but for the sake of time, if the chairman would per-
mit, I will enter it for the record and be available for any questions
that you may have.

Mr. Davis. Thank you very much, and your statement is a part
of the record.

[The prepared statement of Mr. Lawson follows:]


70

of the District that the school system can meet the management challenges that

they face in delivering the highest quality education to our young people

As Chairman of the Authority, | plan to devote more of my time to
ensuring that the Schools’ construction program is handled in a responsible, but
effective fashion. | believe that, through the institution of the measures | have
described here this morning, we will improve the procurement practices of the
District Government, and the Public Schools. The program | have outlined, and
to which the Authority is committed to implementing, will ensure that the types of

problems revealed in the Cotton & Company audit are unlikely to recur.

This concludes my testimony. | would be pleased to respond to any

questions that the Subcommittee has at this time.


146

system is further delayed, which is why the chairman and I and
many others believe that whatever you can do with the existing
system simply would not have been sufficient to get you to where
you now say you can be by October Ist with a state-of-the-art sys-

tem.

Mr. Davis. Also, will the personnel be there ready to run it? That
is always the other question. You can have the system up, but you
need the trained personnel to do it. Will we be ready for that?

Mr. ANTHONY WILLIAMS. Yes, sir. As you know, the last couple
years, we have gone through some pai: adjustments in person-
nel, and this year and forward, we are now and will continue
spending an enormous amount of time investing in our people, both
practical training—in other words, going to other agencies, whether
they be Federal, State, or local, in other places, that are doing the
job well as part of this new financial management system. Every-
one, from both those folks who were ac! ly working on the sys-
tem and ultimately the agency heads, will be trained on how to use
the system to their advantage because, as you know, Mr. Chair-
man, this isn’t our financial system, it is really a system for the
Government, for managers in the Government.

Ms. Norton. Mr. Williams, I think that there is, in the city, and
perhaps even here, at least with this Member—there has been
some confusion or some tendency to get you mixed up with the
Control Board, where the controls really are. There is a CFO, there
is a Control Board, and part of your testimony has sought to dif-
ferentiate the rolls.

What I don’t understand is, once we have a CFO, why there
would be a lot of controls from five volunteers in the first place.
And, you know, the congestion I can understand in an unreformed
system below. But essentially, it would seem to me that at the Con-
trol Board level, it would be very difficult to monitor you on what
looks like the same basis upon which you are monitoring your own
employees.

I yeu can straighten me out on your relationship with the Con-
trol Board, how much oversight you get, how much independence
you have, and whether there is any congestion between you and
the Control Board.

Mr. ANTHONY WILLIAMS. Yes, I thank you for that question.

Ms. Norton. I was not fed that question.

Mr. ANTHONY WILLIAMS. It is a painful question to try to answer.
I will put it this way. I have had discussions with John Hill, who
is the executive director of the board, and Camille Barnett, the new
chief management officer, on the need over the next year or 2 years
to begin to try to streamline and rationalize a lot of the oversight
support mechanisms.

think one of the key things we have to do, as we move out of
the control period, is try to streamline and simplify the oversight
of the Financial Authority and yours truly because, you know, I
work for the Financial Authority, essentially, and then also begin
to reintegrate and streamline, simplify, the relationship between
my office and the agency heads because, as the chairman
knows, from the Government Reform and Oversight Committee in
general, the key financial manager in a government agency is the
program manager, ultimately, it is not the financial manager.


63

environment where classrooms were not safe, where heating and air
conditioning went unrepaired, where many roofs leaked and toilets frequently did
not work. The majority of the District's public schools date from nearly the turn of
the century. Many had never seen a roof repaired or any significant
modernization made either to comply with applicable building codes, to provide

for basic amenities, or to protect students’ safety.

The Authority immediately asked the new Board of Trustees to focus on
the problems of Schools’ facilities. In establishing the powers and responsibilities
of the Trustees, we noted that operating methods in effect at the time were
frequently counterproductive and hampered effective service delivery. The
Authority emphasized that the Schools should be free to adopt policies and
procedures that would promote greater efficiencies, while simultaneously

ensuring responsible stewardship over public funds.

Schools’ Audit

In the course of the Schools’ repairs program last summer, the Authority,
along with a number of other agencies, determined that, considering the rapid
pace of activities, a review of the program's operations and procedures should
be conducted. Rather than see a series of separate reviews instituted, the

Authority decided to consolidate inquiries and initiate an audit of the program.

nv




Charles E. Williams, MG USA (Ret.)
January 5, 1998
Page Two

replacement, Substantial flashing replacement, repointing of masonry, and overall stabilization of
adjacent parapets, for example, contributed to a program that grew in size, even as best efforts were
made to control costs.

We believe itis fair to say, however, that the approach taken by DCPS, requiring the contractor to
attend to broader protection of the schools, resulted in long-term savings. The building components
that were repaired should require no more than normal maintenance during their useful 20-year life.
Had DCPS chosen a more literal approach, i.e, the specific replacement of selected roof areas and no
more, then much of the investment in the roofs would have diminished as adjacent damage would have
continued to fuel the deterioration of the recent repairs.

Much public discussion occurred during the summer months, comparing the work to maintenance
efforts in surrounding counties and questioning whether DCPS paid unacceptable premiums for
procuring such a large amount of work in such a short period of time.

‘The discussions failed to recognize, however, that the DCPS program was not an ordinary, ongoing
maintenance reroofing program; it was an emergency repair program. As such, it is not comparable to
reroofing programs (or costs) experienced in the surrounding counties. In addition, the discussions
overlooked a truly long-term benefit to DCPS: the quality of the constructed work.

We can jointly attest that the contractors who completed the roofing efforts under extreme time
constraints met the quality requirements set forth in the Scopes of Work, and the roofing contractor
community itself has acknowledged the quality of the installed roofs.

Finally, the diversity of roof types encountered across the city, and even on a single school, contributed
to the complexity of the repairs and required the use of multiple roofing specialists. Built-up roofs
require different installation skills than clay tile roofs; sheet membrane systems differ from shingle
systems; and metal roofing is yet altogether different.

The contractors were required to mobilize quickly, finalize design, secure necessary permits, secure
the roofing and building materials, and determine a staging and phasing plan, even as they were
demolishing the existing roofs, sometimes finding unforeseen deterioration.

The overall quality and the simple act of completion of the roofs seem to have been lost in the
discussions of cost. Cost control clearly was an issue, though. DCPS was required to competitively bid
work that by its nature carried premium costs: Night and weekend work, occasional loss or theft of
materials, unforeseen conditions, and aging buildings all contributed to the “above norm” costs that



157

General BECTON. You got a commitment from us.

General CHARLES WILLIAMS. Mr. Davis, if I may, because my
boss asked me to strike the word “shakedown,” it was a way of —

Mr. BECTON. Rehearsal.

Mr. CHARLES WILLIAMS [continuing]. Rehearsal.

Mr. Davis. Without objection, all written submissions from wit-
nesses will be made part of the permanent record. The record will
remain open for 20 days for the purpose of receiving additional
written answers to questions propounded by subcommittee. The
subcommittee will continue to work with all interested parties in
an ongoing effort to achieve a higher quality of education in the
District of Columbia.

Next week, on Friday, January 30, at 9 a.m., the subcommittee
will hold a further hearing on the implementation of the manage-
ment reforms which have been enacted. At that time, we expect to
hear from the new chief management officer appointed by the Con-
trol Board, Dr. Camille Barnett.

These proceedings are closed. Thank you.

[Whereupon, at 3:56 p.m., the subcommittee was adjourned.]

{Additional information submitted for the hearing record follows:]


57

We're encouraged from our perspective that, as of today, there
are 20 roof scopes for the fiscal year 1998 program and 12 window
projects which are nearly complete. And by that I mean they will
be complete by the end of this month.

Ms. Norton. Is that according to a schedule? Is that on sched-
ule?

Mr. MILLER. I have not seen D.C. schools’ schedule to know
whether it’s on schedule, but I can say it’s 6 months earlier than
where we were last year. So it looks like a substantial abatement
of emergency.

Ms. Norton. Mr. Chairman, I don’t have any more questions. I
do want to say this; that as I listen to you, in particular, in com-
paring the experience and the work that the GSA has done, and
the GSA has been very charitable, Mr. Lawson has been very chari-
table and generous, and perhaps that’s appropriate, it does seem
to me that if Ms. Filardo is correct—and perhaps even General
Becton and General Williams would concede that you are largely
correct because, after all, they haven’t been here long enough to
have constructed a new delivery system—if she is correct, I gather
from your testimony that the leadership put themselves in some-
thing of an impossible position by not finding agents who could un-
dertake the comprehensive management, such as the delegation
that occurred to you, Mr. Lawson.

That is to say, if you want to do a set number in a set time and
don’t want to reschedule your work, and that’s what your goal is,
then you have to find a way to get it done in that time. Now, one
way to get it done is not to leave yourself open to attack by saying,
“Tm getting it done and I’m going to do it all. And I know I’m
working with a decrepit delivery system, and I’m still going to do
it all.” You say, “Wait a minute, if I am going to do this schedule,
Tm going to find an agent.”

Mr. Miller, in the way you say you worked with the Youth Corps,
or whoever, GSA and its work with the Youth Corps, or Mr.
Lawson, the way in which you worked with the 10 buildings, this
is an alternative if you really want to meet that schedule. If, on
the other hand, you find that the schedule is impossible to meet
and you don’t want to contract with an agent, maybe for reasons—
maybe because you don’t have the money, maybe you insist that
you need to use your own employees for that reason—then it seems
to me that you have to make the decision to reschedule the work.
And it seems to me those were the alternatives open. And I’m de-
riving this entirely from your testimony.

The testimony has been very useful to us in giving us some un-
derstanding of what occurred. I hope that it will prove as useful to
the school system. Thank you very much.

Mr. Davis. Thank you very much. And let me just say to our
panel, Mr. Miller, thank you very much for the quality assurance
your firm has provided in your testimony here today. Mr. Lawson,
we have had an ongoing relationship with the District. I think Mrs.
Norton has appropriately said you have been a friend of the Dis-
trict. We appreciate your efforts. Ms. Filardo, thank you for being
here raising some questions, giving us some yardsticks to measure
and judge the efficiencies. We will have some of the witnesses tes-


Facllitles Management

dings are in Disrepair and Underutilized and a Lack of an overall facilities
plan results in ineffectively targeted facilities funding”
tot

“
On February 2871997, DCPS submitted a Lotig Range Facilities Master Planto | W°Y'( Cr
Congress. This plan, which has been revised and updated as conditions have changed,
was the basis for the major capi tive the Summer of 1997. The Plan will serve as
the basis for all future capital improvement initiatives and provides a vehicle for all
interested parties to participate the formulation of subsequent DCPS long term plans.

* “Fire code violations are abundant”

When the Becton Administration arrived in November, the new team inherited over 5.000
fire code violations. By May of 1997, this number had been reduced to 0. Monitoring
and abating fire code violations is a high-priority, ongoing activity to ensure that DC
‘school children can benefit from a safe and hazard free school environment.

+ “Aging buildings seriously hamper the District's learning environment”

The statement exposes a reality that DCPS continues to conftont: the average age of a
DCPS facility is 65 years (some are over 100 years old) and most of these buildings had
not been properly maintained for many years.. Obviously, the initial focus of the
administration was the stabilization the existing facilities inventory. The Long Range
Facilities Plan lays out a three-phase process— stabilization (to make existing buildings
safe and free of hazards), functionality (to upgrade existing facilities) and modemizatiox
(to provide 9 state-of-the-art learning environment). At present DCPS has undertaken the
following to address the crisis in facilities:

Rese CPT |, Remiseiobe | tnimaied Cont] —Comptevon —)
Repue Type | Revincements Needed | RepuredRepleced | (a maons Date

Roofs 4 | 47 s19 Augtist }

Boilers 2 40 $26 December om

Chillers: 38 38 $20 March

Windows 112 schools 22 schools $18 ‘August “8S. |

Hing Toward an Exemplary Stem A Report on he Fit Years Effone io Reform DC Pable Shas 3


144

o together to the Control Board with a negotiated piece of paper,
Betore the end of the month, to point out what the costs are going
to be, because we, as you know, don’t have the money in the schoo!
system. The Control Board has said they will find the money.

Mr. Davis. It depends on how much it is.

General BECTON. That is true, and I can only say what I was told
by the chairman. There will be two tranches, to use an expression
Chuck used, of funds, one for current employees, and then a second
one for those employees from back in 1993 who are no longer in
the system.

And rather than saying what that negotiated percentage may be,
let me just say that I feel comfortable that the funds will be rea-
sonable and that employees will be brought up to parity, and I feel
comfortable that we will avoid any work stoppage or avoid any
interruption of our schools.

Mr. Davis. Thank you. I think that is reassuring to the parents
and all of us that are concerned about it.

Mr. MacLaury, I don’t have any questions for you except to say
you have had a tough year. We thank you for putting yourself for-
ward, We know it is a labor of love, it is not financi: remunera-
tive. But I appreciate your testimony today. I think a lot of it was
right on in terms of putting this in perspective. But we also have
a duty and responsibility to oversee all aspects of this, ask ques-
tions.

One of the problems we have had in Congress is that for years
that wasn’t done, and they took the city at its word and let it go,
and that is why we ended up with the roofs and the kind of repair
it was and an infrastructure that was crumbling, because we had
city leaders not always candid with Members of Congress and
Members of Co: ss that did not always want to ask tough ques-
tions and get below that. So we could never get to the funding and
structural issues.

You know, hopefully this is a period of where we can talk can-
didly, not in a critical nature, but one of trying to work together
and move ahead, and that is the goal of this.

I think we have seen today what some of the issues we could
have done better on are, but also some of the good work that was
done, some of the groundwork that has been laid for the future of
the city, and some of the contributions you have made in that re-

Iam a Boing to yield to Ms. Norton for some questions.

Ms. Norton. Thank you, Mr. Chairman.

Mr. Williams, could I ask you the status of the new financial
management system. How close are we to getting one? It was a
major fight up here that we had to wage in order to get you to the
point where you could get one.

Mr. ANTHONY WILLIAMS. Right. And I thank you, Congress-
woman, for that help. We are still planning on introducing our pi-
lots on Febru: 1st, and that would be at the Department of Pub-
lic Works, the D.C. Public Schools, parts of Human Services, and
my operation. In other words, key oversight and key service deliv-
ery components of the District on board as of February Ist.

The remaining agencies would be brought on over the summer,
and before and after each of these introductions, there is what is


90

Ms. Norton. What led to the delay, if the board, which has,
which is all powerful here, made it clear that the letter should be
signed, how come it was just signed yesterday, the day before this

aring?

Mr. FeimMer. The letter, the CEO is the one who will answer
the question precisely as to why he behaved the way he did. I am
telling you, the question was, did we discuss this question with the
schools. The answer is yes. Not just yesterday but immediately
when we learned about it. And——

Ms. Norton. And they refused to do what you said to do?

Mr. BRIMMER. The counsel we gave—well, first, we pointed out
that such representation letters are a traditional requirement of or-
dinary auditing practices. They knew that. We emphasized it
again. We even encouraged them to work hard to see that they
could get a representation letter that they could sign.

The basic point is that the school authorities disagreed with the
content of the draft letter. And that they had to work out.

Ms. Norton. Did you disagree with the content of the draft let-
ter?

Mr. BRIMMER. I had no opinion, no comment on the content.
After all, this was representation as to what the school authorities
told the auditors. I had no idea what that was.

Ms. Norton. Who is in charge here? If the auditors can’t get co-
operation from the people that you have ordered to be audited, who
are they supposed to go to to get that cooperation?

Mr. BRIMMER. We cannot afford, even—first, I wouldn’t want to
try to force the management. After all, it is a management rep-
resentation. The letter says what purported, what m: ement
said to the auditors, what information management provided to the
auditors. This is a matter which the management has to agree as
to what it did or did not provide. The key point is we did discuss
with the school officials and pointed out the desirability and the ne-
cessity to have a representation letter. But, Ms. Norton, i
there is no way for us to force management, and I wouldn’t try, to
sign a stipulation of representation with which they disagree.

Ms. NorTON. Well, Dr. Brimmer, I have to tell you, given the au-
thority Congress has given you, you can force elected officials not
only to do anything you want them to do and you can force elected
officials and have forced them to do things they did not want to do,
and you can force out whole elected bodies. So it is very hard for
us to accept the notion that you shouldn’t in fact be able to compel
one of your employees to cooperate with an auditor you have hired.

Mr. Cotton, did you seek to mediate this matter with anybody in
the Control Board rather than let it go to print with a necessary
document unavailable and unsigned?

Mr. Corron. Let me first explain, if I can, the purpose of a man-
agement representation letter. We provide these letters to manage-
ment at the end of the audit so that there is not a misunderstand-
ing as to what we think we have been told during the audit. When
I gave the letters to the CFO at DCPS, who was our point of con-
tact, I indicated to him at that time that if there was any question
about the letters I would be glad to discuss it. I found out about
a week later, when I went back to find out where the letters were,
that he did not understand the letters. He told me that he thought


172

Mr. Ron Hamm,
Page 3

Government Auditing Standards is the publication that guides and governs all of GAO's work. 1 simply
do not understand Mr. Stephenson's scemingly contrary assertion.

We informed DCPS staff that we were drafting and would request management representation letters

during a progress meeting on Dec Ist ( by 5 DCPS senior staff 5. nctuding Mr.
‘Stephenson; and again during a progress meeting on December Sth (again, attended by 5 DCPS senior
staff members, including Mr. Stephenson). Our writen progress reports (provided to all in attendance
‘at each progress meeting) also our plans regarding ma repre leners. No
questions were raised about the purpose or propriety of the letters by any DCPS personnel.

1 gave the draft Jeners to Mr. Stephenson on December 12th. A cover memo to Mr. Stephenson
offered to answer any questions regarding the leters. Mr. Stephenson's administrative assistant printed
the leters onto appropriate DCPS letterhead that day and asked me to proofread them. 1 proofread
them and returned them to het that day. followed up on the letters with Mr. Stephenson on December
17th. “He informed me that the DCPS general counsel had advised that the letters should not be signed.
1 again offered to meet with DCPS personnel to clarify the purpose of the letters. No DCPS personnel
contacted me again about the leters until January 12th, after the final report had been issued by us and
released by the Authority.

Either General Becton or Mr. MacLaury referred to our requested letters as “cookie-cutter” leters that
were almost identical in all 6 cases. The impression given was that this was inappropriate. This
conveys a misleading impression about the nature and purpose of management representations. When
management representation leters are requested they are required to contain all “matters that are
considered either individually ot collectively material."" The careful language of each letter did not
assert thatthe requested signer had made all of these representations to us. Each letter contained all
material representations made to us “explicitly or implicidy? during the audit about which the
requested signer had or may have had knowledge. Our expectation was thatthe requested signer would
follow up to find out, for example, what information we had been given regarding the indictment of
two former DCPS officials and provide us with any additional information of which the

signer was aware, and so forth. As [told Mr. Stephenson on December 17th and as I stated on Friday.
a key phrase in each of the letters is to the best of my knowledge and belief.

DCPS's refusal to sign these leters troubles me greatly, because in the context of other evidence
‘obtained during the audit, | am forced to consider the possibility that information may have been
<eliberately withheld from us.

Regarding General Becton’s assertion that we inappropriately did aot meet with him sooner
during the audit:

General Becton asserted angrily that we did not seek him out earlier during the audit and also said or
implied that he wanted to talk to us during the audit but that we declined to meet with him.

* Statement on Avditing Standards Number 85, Management Repreretions, paragraph 8.
* Sasement on Autting Standards Number 85, Managemen Reprerenaions, paragraph 2


44

b Ms. FiLarDo. There was already design work. It was not a design
uild.

Mr. Lawson. And I would agree with that.

Mr. Davis. Mr. Miller, do you have any comment on that?

Mr. MILLER. I would just like to elaborate quickly on the factors
that contribute to the cost, other than the shortened timeframes.
Labor availability is another impact from the shortened timeframe.

Mr. Davis. That is the point in the procurement cycle you are
bidding this, and if you bid it in the middle of a work construction
cycle like the summer, where bids are already out, you have to go
find the workers in addition to the overtime, and that makes it
even more difficult.

Mr. MILLER. You may need to reach further away from wor
home jurisdiction. The design-build method of putting
Projects together, plus the bonding requirements, plus some of the
ways in which they were packaged may have necessitated using
general contractors rather than roofing specialty contractors. I
don’t think there was any other option, but that probably drove a
small premium cost in terms of those t being typically larger firms
with somewhat larger overhead.

Material availability became a problem in terms of reaching far
away from this jurisdiction in order to get materials for the pro-
gram. Unforeseen conditions was another issue. The building stock
is simply not what it is in Prince George’s or Fairfax or Montgom-
ery County, where there are lots of schools built in the 1960’s and
1970's; with fairly modern, straightforward, simple roofs.

These are old buildings with lots of hidden and unforeseen condi-
tions. The roofs are quite a bit older, and the hidden damage was
more severe. There is significant nonroof work as a result, and I
think that has to be looked at very carefully when looking at any
kind of cost figures because nonroof costs are easily wrapped in,
and consequently overlooked.

Mr. Davis. What about insurance, theft, those kinds of things?

Mr. MILLER. There is a security issue certainly. Our personnel
were subjected to some criminal incidents. I know some of the con-
tractors were as well. And I think contractors can see that, feel
that, and build it into their costs.

Mr. Davis. Were you acquainted with the windows issue that
was raised?

I can understand why the roof situation would be more expensive
than maybe some of the other jurisdictions. I can understand those
factors. I think you have done a good job in representing it. Were
you acquainted with the windows issue, why that would be so sig-
nificantly more expensive?

Mr. MILLER. DMJM has been working with D.C. schools in the
past few months to finalize those window packages and make them
ready for procurement. I don’t have firsthand knowledge at this
moment about the budgeted costs, but I can certainly research that
and get back to the committee, if that’s of interest.

Mr. Davis. When you get that, we would like to see that. If you
can get that over to us, that would be helpful, because I think you
raise a good point in comparison. We need to at least understand
if the numbers don’t jive with what has happened previously in the
city or in suburban jurisdictions.


85

place honest personnel in compromised positions where their ac-
tions and decisions become suspect.”

Isn’t that one of the major purposes of procurement rules and
Processes, to protect the employees as well as the public interest?

if you could give us a brief description of why procurement rules
have evolved the way they have. I know you are a writer and a lec-
turer and a writer on procurement policy for the AICPA.

Mr. Corton. There are two reasons for a sound system of inter-
nal controls in any environment. One is to protect assets from mis-
appropriation and the other is to protect honest employees from
unwarranted suspicion of their actions and decisions, and it is that
latter reason for controls that we sometimes overlook. In a procure-
ment environment, the need for controls is even greater because by
definition you are spending large amounts of money and any time
you have a situation where there is large amounts of money being

nt, it attracts people that may have less than honest motives.
ey may be, if given the opportunity, may be inclined to mis-
appropriate those assets.
ir, Davis. Thank you. Dr. Brimmer, when the Control Board de-
clared an emergency in the District’s public schools on November
15, 1996, what was the expectation and what guidance was given
to General Becton as to facility repairs and procedures to be fol-
lowed in order to achieve stabilization and safety of the school fa-
cilities and eliminating the fire code violations?

Mr. BRIMMER. First, Mr. Chairman, when we issued that order,
we included in it, in paragraph 14 of the order, a statement which
said, we expected the board of trustees to adopt standards, proce-
dures. We also told them that they could use the city, the old
school board standards in the interim. But we clearly indicated
that our expectation was that they would adopt rules and proce-
dures and guidelines themselves. We even sent to the schools a
copy of our own procurement regulations. We also recruited some
pre bono legal assistance to help them work out their regulations.

in checking back, it appears as though the schools did not adopt,

the board of trustees did not adopt a separate set of regulations.
I have been told by the schools that in the meantime, in the ab-
sence of a new set of regulations, de facto they had been using the
May elements of the regulations which the elected school bo: had
in place. That is my understanding.

Mr. Davis. Thank you. The Control Board allowed the CEO to
enter into such contracts as he or she considers appropriate. What
was the intention or the expectation as it relates to procurement
procedures, regulation and process? Was there discussion with
General Becton or the emergency board of trustees relative to the
statutory requirements to follow Federal procurement procedures
for capital projects unless alternative procedures were specifically
adopted?

Mr. BRIMMER. We fully expected them to follow the procedures.
First, we expected the trustees to adopt procedures. And we even
suggested the form they might take and guidelines they might take
and of course then it was expected that in making procurements
and contracts the CEO would follow those guidelines.

Mr. Davis. Why did the Control Board agree to after-the-fact re-
view of the contracts for the repair program? What was your un-


62

Mr. Chairman and Members of the Subcommittee:

Good morning. My name is Andrew F. Brimmer, and | am Chairman of
the District of Columbia Financial Responsibility and Management Assistance
Authority (Authority). | appreciate the opportunity to appear before the
Subcommittee today to discuss several important issues relating to our Public

Schools.

Introduction

The Authority takes seriously its responsibility under Public Law 104-8 to
improve the lives and educational futures of the children in the District of
Columbia. The Authority, after intensive study during the summer and fall of
1996 of the condition of the public schools and the dwindling opportunities for
our children’s effective education, took action that we believed would improve the
condition of schools and the opportunities for quality education. On November
15, 1996, the Authority established the Emergency Transitional Education Board
of Trustees and the position of Chief Executive Officer-Superintendent and
charged them with implementing far-reaching changes to improve the school

system.

One of the most troublesome areas that the Authority found in its review
of the Public Schools was the condition of Schools’ facilities. It became quickly

evident that the ability of our children to learn effectively was undermined by an


86

derstanding and expectation as to the process that would be fol-
lowed?

Mr. BRIMMER. First——

Mr. Davis. Would you have taken additional or different steps if
you were aware that the prequalification process had failed?

Mr. BRIMMER. We had worked out with GAO in late 1996 some
guidelines for providing for prequalification on the projects they
were doing. So that is one set of circumstances. With respect to the
emergency activities during the summer, there was an understand-
ing and in fact there is a letter, written correspondence, between
the executive director of the Control Board and the COO of the
schools in which it was spelled out that we were giving, agreeing
toa Post-signing review in order to speed the procurement process.
But we also said that we expected the guidelines to be followed and
that it would be monitored. They were not given—they were given
relief to save time but they were not relieved of the responsibilit;
to follow careful guidelines. That is in a letter in writing in mid.
July 1997.

Mr. Davis. Two other questions, then I will pass it over to Ms.
Norton. Are you aware of any disagreements between the public
schools, GSA and the authority over control of the funds that
caused problems and delays for GSA and ultimately GSA couldn’t
do some work that the schools wanted to do?

Mr. BRIMMER. There was a divergence of views. In the early
days, GSA did take responsibility to help the schools’ planning and
so on. At one point, and this is at the time when there was $11.5
million available, GSA requested that the funds be transferred
from the authority to GSA. This means that GSA would become the
paying agent and the manager of the funds. That——

Mr. Davis. That is the carryover money?

Mr. BRIMMER. Yes. And our view was that that was not nec-
essary. First of all, the Congress has mandated the Authority to re-
ceive and manage the funds. Second, we did not see any oper-
ational need for the GSA to have control of the funds. When they
presented their need for funds, they were properly transferred. In

te 1996 or early 1997, I believe some $6 million or so, maybe ac-
cumulating to $8 million, was passed over to GSA.

Mr. Davis. In fact, by keeping them in your accounts, you are
earning interest on them and it helps pay or what you are doing.
If you give it over to GSA you lose the interest. Isn’t that the fact
of the matter?

Mr. BRIMMER. That is true; not only with these funds, that is
true of all funds.

Mr. Davis. You said that the Connie Lee money was at the Con-
trol Board in February and yet the funds weren’t listed as available
until April 14th. Can you tell me what the money was doing over
there at that time? In between, did everybody know it was avail-
able? Was it being used? This was the first time I heard, February,
that the money was available.

Mr. BRIMMER. Mr. Chairman, not only did we inform the CFO,
we even put out a press release and the First Lady, everybody. The
funds were available. They were known to be available, and the
same procedures were to be followed.

Mr. Davis. Did you send a press release to the schools?


121

Mr. Chanrman and members of this subcommittee, you were right to convene these hearings. An
atmosphere of suspicion and mistrust has been created over the past few months. In recent weeks,
that atmosphere has been exacerbated by an audit that applied the wrong standards. made
erroneous legal judgments that the auditors were not qualified to make, and suggested in an
inflammatory way that conditions in our capital program were “conducive to fraud, waste, and
abuse” — although none had actually been found.

Before my colleagues tell the facts of the case, I would like to say a few words about the legal and
policy framework in which the caprtal program took place, and about the oversight role of the
Emergency Board of Trustees.

Legal Framework. In its Order of November, 1996, the Authority said that the “provisions of the
District of Columbia Code and Municipal Regulations governing procurement shall not apply to
the Board of Trustees or the CEO-Superintendent.” It directed the Emergency Board to adopt
“such policies, procedures, rules and regulations with regard to procurement as will carry out this
Order.” It explicitly went on to say that the Emergency Board could incorporate such rules and
regulations of the Board of Education “as it considers necessary or appropriate to enable it to carry
‘out its activities...”

Given this clause, and given the impossibility of rewriting in our first year the entire body of
“Board rules,” as the DC municipal regulations on public schools are called, the Trustees explicitly
decided to let stand the Board of Education's rules and regulations in all areas except where the
Trustees decided to make changes. The auditors might have understood this crucial point if they'd
simply asked me or my staff; they did not

Both Chapter 5 of the Board rules and the DC Public Schools Procurement Procedures Manual
provide for emergency situations. The Board rules set a standard of “compelling urgency” for
waiving conventional rules. The DCPS procurement manual specifically provides that an
emergency procurement situation can be authorized by the Superintendent.

Does anyone question that this summer's situation — officially labeled a crisis by the Authority,
‘overseen by an emergency board, with conditions directly threatening the physical well-being of
thousands of students ~ fit the criteria for emergency procedures? {f there were any doubt, it
evaporated on July 11, when the DC Superior Court ordered cessation of construction work on any
occupied building, throwing into chaos the system's plans for orderly replacement of roofs and
boilers. At this point, what we had was an emergency within an emergency.

Organizational Background. It is essential to understand something of the environment in which
the summer roof campaign took place. That program alone would have been a monumental task.
But before it could get underway, Gen. Williams had already faced several major challenges in his
intial weeks as the system's Chief Operations Officer (COO)

+ As mandated in the DC School Reform Act, he developed the school system’s first
comprehensive long-range facilities plan, which was reviewed by the Trustees, approved by the
Authority, and sent to the DC Council for its consideration in February.'

The Council did not act on this plan. nor did it enact its own. Accordingly, the DCPS plan was sent
forward to Congress and remains in force. The COO is beginning a community-based. citywide review of
the plan. which will again be submitted for Council consideration.


124

‘Whether we continue to oversee the schools, or the Control Board takes on the responsibility
directly, I hope that Congress will support - with funds and with your good offices - the long and
demanding task ahead.


31

deployed several teams working evenings and weekends to accom-
plish this task.

D.C. Public Schools planned to use these scopes of work as part
of a request for proposals package to procure a design-build con-
tract via competitive bidding. Design-build contracts utilize a single
entity to provide both design and construction services, and can be
employed to shorten the overall duration of a construction project.
The scopes we prepared, therefore, were not a complete design, but
described the design intent and formed the technical component of
the request for proposal package.

DMJM sought to define two key issues for each roof’s scope: One,
the location and extent of the required work; and, two, the quality
level of the installed products. In developing the scopes, we visually
surveyed each roof, reviewing and photographing existing condi-
tions. For each school we prepared a diagrammatic roof plan and
narrative of the required work, a technical specification establish-
ing quality standards for each component and a cost estimate.

Just as we were completing these first 15, D.C. Public Schools re-
quested DMJM to prepare an additional 33 scopes. We again pro-
vided the services within a 3-week timeframe. The challenge for
the remainder of the summer was now clear, replacing approxi-
mately 50 roofs in less than 2 months.

D.C. Public Schools asked DMJM to assist them in monitoring
the construction to verify that construction was in accordance with
the requirements of the design-build contract. We staffed the
project with over 30 people to accomplish the work, many of whom
worked 7 days a week routinely for 2 months. Night work was also
common, particularly because contractors needed cooler tempera-
tures to effectively remove old roofing membranes.

While D.C. Public Schools administered the contractual aspect,
such as directing the contractor and negotiating change orders,
DMJM augmented the D.C. Public Schools field staff by reviewing
proposed design details, providing daily reports on each roof and
monitoring progress.

During the summer, we were also asked by GSA to provide tradi-
tional construction management services on three additional D.C.
schools. Unlike the tasks performed for D.C. Public Schools, DMJM
provided a more traditional range of management services on these
schools, including review of the construction progress with the con-
tractor, issuing field directives and making recommendations on
contractual issues.

We believe our contribution in 1997 has helped to make a dif-
ficult crisis-laden situation better than it otherwise might have
been. Now that emergencies have subsided somewhat, much impor-
tant work remains for D.C. Public Schools to undertake. We look
forward to any future contributions we can make toward bringing
D.C. Public Schools’ facilities up to first-class condition.

With that, I would be happy to answer any questions the com-
mittee may have.

Mr. Davis. Thank you very much.

{The prepared statement of Mr. Miller follows:]


156

Ms. Norton. I will not have you characterize that I said they
should not receive their pensions. For the record, they should re-
ceive every bit of pension, and I am entitled to know what they are.

Mr. Davis. Let me ask a question. There is a—Ms. Norton, I
have got to say, I have indulged as many questions as you wanted,
and you are entitled to your opinion, I am entitled to mine, and we
do not agree on this.

City Paper had a column by Loose Lips on, “D.C. Schools Pamper
Promise Keepers.” General Williams, | am sure you are aware of
that column, and a number of facts were put forward in that. Do
you have any reaction to that?

General CHARLES WILLIAMS. Yes, Chairman Davis.

pet. Davis. I will give you an opportunity on the record to clear
that up.

General CHARLES WILLIAMS. Yes, thank you very much. This is
a very disturbing article.

The Promise pers organization, an organization I had not
even known before, one of the executives contacted me in early
June and recognized the plight we were in here with our facilities,
indicated that they were scheduled to come into the District of Co-
lumbia for one of their annual rallies, and said they had some men
of the o1 ization who felt and were moved to try to come out and
help, and asked me if they could help. I thought it was a gracious
thing to do. And so 1,500 of his people assembled at RFK Stadium,
and we provided transportation to 44 schools, and they went out
and picked up our trash, cut our grass, and did some painting I
would point out, some schools received a tree line, grass line, cut-
back for the first time.

Mr. Davis. I don’t disagree with you.

General CHARLES WILLIAMS. Let me just speak to this. The net
net of this is, we gave them a sandwich, some chips, and a Coke,
and transported them to our sites to pick up our trash and to paint
our buildings. That netted to about $60,000 in the total for the two
events, with 3,400 people, and we received about $600,000 of in-
kind effort.

Mr. Davis. But point in fact, the fleet was not rented for this
purpose; is that correct?

General CHARLES WILLIAMS. Correct. The fleet—Chairman
Davis, we were getting ready to with our summer capital pro-
gram. This was training and a rehearsal for our new Project man-
agement staff, so it was a coincidental arrangement. We have no
vehicles for our people to move around in, and this was a part of
the normal piece of management and the support and it just so
happened that our project managers had to supervise that day.

neral BECTON. The word “Shakedown,” I would rephrase that.

Mr. Davis. One of the difficulties we have up here is, when we
are not communicated with, we are reacting to the stories back and
forth. Ms. Norton represents the city very ably, and she is skirting
back on some of these bonus issues. I understand that, and you
have to recognize, we have to keep in communication; we are all
wanting the same thing. We have disagreements up here, as you
have just seen, but we end up at the end of the day working to-
gether in the same direction in focusing on that, and we need to
do that with everyone here, and the congressional committee, too.


fallen far short of the mark. Not only has this Subcommittee been left
out of the loop, but it appears to me that important information has been
deliberately withheld. It is my sincere hope-- no, stronger than that-- it is
my expectation that meaningful communication with Congress will
cease to be a problem.

I remain optimistic that together we can continue to build on the
progress that has been made.


139

The DCPS contracting officer issued several requests for qualifications to firms and joint
ventures interested in DCPS work. These responses were evaluated according to criteria
established in the RFQ, and the firms were pre-qualified. Additionally, contractors who were
on the manufacturer's list of certified installers, had previously done satisfactory work for
DCPS, and who were on the GSA list of approved contractors were also considered to be
pre-qualified. All of our contractors were bonded, as required..

The DCPS contracting officer issued requests for proposals for individual or groups of
projects based on the scopes of work developed above. The formats used were based on
industry standard documents from previous DCPS or other agency procurements. All roof
contracts except for two were competitively bid; these were the only sole source awards
during this accelerated process.

The audit questions the management oversight and quality of work. A DCPS Project
‘Manager was assigned to each project early in the development process. The project
manager oversaw all routine aspects of the project, and received guidance from appropriate
levels of management when required. The project manager was augmented with a full time
representative from DMJM to further ensure that the project was being executed properly and
that the quality of the work was acceptable. The project manager and the consultants issued
daily reports during the construction period. I also made daily site visits and reviewed each
project. Finally, I made weekly reports on our progress to the Court. The Fire Department
made weekly inspections on the progress, quality of the work, and safety of the job site. This
was also reported to the Court.

For the first time in the history of DCPS, each new roof has a 20-year manufacturer’s
warranty and a 2-year workmanship warranty from the contractor. As part of the
workmanship warranty, the contractors are responsible for the first two years of maintenance.
If there are any problems, we have our warranties in place. The 20-year warranty calls for
the manufacturer to visit the site and inspect the completed work prior to the issuance of the
warranty. We also have a Quality Assurance team that makes a complete inspection and
report, upon completion of the work, before final payment is made.

Did the work cost more than in the surrounding jurisdictions? ‘The answer is yes. We
worked under very difficult circumstances in D.C. The insurance costs are higher, we are
subject to the Davis-Bacon wage requirements, most of our buildings require the use of
cranes to access the roof, and the projects themselves were complicated by the need to make
extensive repairs to the upper portions of the buildings. The DC government's history of
paying contractors is deplorable, and contractors know this. I had to personally persuade
major, quality roofing companies to come to D.C. This was not an easy task, As I have
stated, the Court’s impact on the process also must be factored into the discussion.

Where are we now? A long-range facilities master plan is in place, over 1600 fire code
violations have been abated, and we have installed 61 new roofs, made major repairs on 5
additional roofs, completed several major structural repairs at Bancroft, Ellington and School
Without Walls, installed 6 boilers and 4 other under installation, replaced 2 HVAC systems
and completed a major room conversion at Langdon Elementary.


147

If you have underspending in an agency, that is because you
have congestion in a system. Only a program manager can bring
you to that optimal level of spending; the financial person can’t do
that.

And so I think those are our two challenges now. I know I didn’t
directly answer your question. I will put it this way: I think it is
a challenge and something we have to work on.

Ms. Norton. I would like some indication from you, given the
changes Congress has made and who runs the District, how your
authority is exercised. Now when the Mayor and the City Council
and their agents ran the District, your oversight to see that cost
controls were in place and all the rest of it seemed natural.

Well, the Mayor is not running the city now, and his agents are
not running the city now. And yet we often hear—we in the Con-
gress hear words from the Control Board and others that makes us
wonder who, in fact, is exercising spending controls.

For example, when we hear that there is an IG who can come
in to investigate, among other things, the already being inves-
tigated police department, and he can have whatever money he
needs, and that General Becton will have whatever money he
needs to get the schools open, and the rest of it, we are left to won-
der how that could possibly be the case.

And so I have to ask you, what controls do you exercise over
those who now run the city to make sure that cost overruns do not
occur? And are you privy to their financial operations, such that
you can assure the Congress that overspending will no more occur
now than we expected it to occur when the Mayor and his agents
were running the city?

Are you prepared to say to us, for example, that the management
plans that require extra money, not in the budget, that has been
approved by the—the appropriation has been approved by the Con-
gress—will, in fact, not resolve in overspending anywhere and that
there are controls in place and that you are free to stop overspend-
ing from occurring, even if that overspending has not been directed
by the Mayor but by others?

Mr. ANTHONY WILLIAMS. Well, Madam Chair, I think we have
demonstrated our capacity, certainly in, I guess you would say, the
previous regime, to exercise spending control, and in the new envi-
ronment, under which we have a management reform program, I
continue to believe that while I report to the Authority, I also have
a reporting relationship to the Mayor and to the Council and to the
Congress, and that I ultimately have to account for discharge of my
responsibilities under the Control Act. There are 12, or 13 or 14
areas of responsibilities I am supposed to discharge, and I have to
discharge those responsibilities whatever the environment.

I think the change is that while the emphasis in the last 2 years
has been on spending control, the emphasis, I think, now needs to
be discharging first to the agency CFO’s, like Ed Stephenson, their
authority or responsibility—they need to be full-fledged CFO’s in
their departments—and working with that agency CFO and the
program head of the agency so he or she understands financial
management responsibilities, so that we can optimize the flow of
funds.


153

Mr. STEPHENSON. I am just referring to people who were Federal
employees, who never worked for the District government in their
career as a Federal employee.

Ms. Norton. Can get it in full.

Mr. STEPHENSON. There was a change in 1994, as I understand
it. In fact, it provides an excellent recruiting incentive for us in
terms of procurement needs, et cetera.

Ms. NorTON. I understand. You can see how a signing bonus,
when, however, you are getting $120,000, and another $70 or
$80,000 will strike the average rson—you are sitting in a city
where the workers are way behind in receiving increases, where we
had to fight to get the lowest paid workers. All of that has to be
taken into consideration if you want to have any credibility. And
I will tell you, a few thousand dollars here or there that are not
part of compensation is worth a lot of credibility often.

General BECTON. You raised a question about my salary. I do not
have and did not receive a signing bonus.

Ms. Norton. I understand that.

General BECTON. I thought——

Ms. Norton. Sir, I understand that, and Dr. Brimmer was clear
on the criteria he was using.

Mr. Davis. Let the chair just say, I think whatever their military
pensions are are really outside the bounds of discussion.

General BECTON. Thank you.

General CHARLES WILLIAMS. Thank rou.

Mr. Davis. In terms of the signing bonuses for the city, we have
to maintain the sensitivity and understanding——

Ms. Norton. Reclaiming my time.

Mr. Davis. Well, your time been, frankly, up——

Ms. Norton. You took as much time as you wanted to, Mr.
Chairman, and I am not going to be cutoff. I am reclaiming my
time.

Mr. Davis. Well, I am the chair of the subcommittee. I will give
you a couple minutes to summarize. But we have been going on
now and the subcommittee has been sitting here for some time.

Ms. Norton. Are you keeping me from reclaiming my time?

Mr. Davis. You are way over time, and the chair indulged
you.

Ms. NorTON. The chair was over time as well.

Mr. Davis. No, that is not correct.

Ms. Norton. Mr. Chairman, you said—just a moment. A point
of special privilege. You may represent members of the armed serv-
ices, and you want to say that you think pensions from the armed
services are off limits. I represent the residents of the District of
Columbia, and it is not off limits, and I resent being told that any
question I ask in this committee is off limits. It is not off limits for
me to try to bring up how much total compensation somebody who
was on our payroll has, and I will not be called out of order or be
told that a question I have asked with respect to taxpayers’ funds
in this city is out of order.

Now I accept, and talk to you, General Becton—I accept the
tradeoff you had when it came to patching, on the one hand, and
doing whole roofs, on the other. I also accept the notion that that
would have meant some waste because you would have been


46

Mr. Davis. That is my understanding.

Also, on September 23rd—this is my last question for the panel.
Then I will yield to Ms. Norton.

On September 23, 1997, you forwarded a letter to General Wil-
liams offering favorable comments relative to the public school re-
pair effort in 1997. Based on what you know-now, do you continue
to have the same opinion about the school system’s school repair
program, and would you share with the subcommittee your candid
assessment of the challenge, the process, and the outcome?

Mr. Lawson. Yes. Yes, Mr. Chairman, I still feel the same way
that I did in that letter. Just very simply, I thought it was extraor-
dinary that they were able to not just mobilize but to take on a
task of over 40 roof projects and get them done in literally a 60-
day turnaround time. That’s the bottom line.

Mr. Davis. And with good quality.

Mr. LAWSON. With good quality, that I’m aware of. We weren’t
directly involved in the inspection of them, but from what I under-
stand, the quality is certainly good quality.

That’s what it boiled down to. And it relates back to my earlier
point that I feel we couldn’t get it done in that turnaround time,
and, frankly, I was skeptical as to whether they could do it them-
selves, and they did. So I thought it was worthwhile to let them
know that.

Mr. Davis. I think, given the fact that you go into a school,
thinking you have a new roof but it is not a new roof at all, that
you would rather be up here talking about, did we spend few more
dollars than we needed to than we didn’t pet the job done and we
may need to revisit this thing, which has all kinds of other implica-
tions.

Although you testified that every job was done well, we have
warranties in place that should protect the city and evidently that
was not done in the past, Mr. Miller, at least in the case of the one
school you cited where, if it was done, we could not find any record
of any warranties being in place.

Mr. MILLER. We could not find the records.

Mr. Davis. I appreciate your pat ing this in perspective for us,
and I now yield to my colleague, Ms. Norton.

Ms. Norton. Thank you, Mr. Chairman.

Of course, if the proposition is stated whether or not 40 roofs
could be accomplished in 60 days, the answer is ordained. I think
everybody gives considerable credit to the school system for doing
that.

I was extremely perturbed at the judge, who I thought continued
to get plaudits and. in my judgment, didn’t act like a judge, who
should try to get these people to the table and get this things
worked out. ile the school system was trying its best to get in
there, I think the legal system worked to our detriment. It was an
unintended effect, and it was an outrageous effect, because every-
body knew that something had to be done quickly, and judges rou-
tinely bring in parties when there are matters at stake that were
not nearly as urgent as this.

So I think people gave the school system credit for trying to go
ahead under those circumstance. So if that is all we are talking
about, is how fast can somebody do 40 roofs in 60 days, then, of


also have been utilized for the duration of the repair job. I have not seen
evidence that any of these options were pursued.

Perhaps most troubling of all is the Audit’s statement that the
school officials were “non co-operative.” I don’t understand how this
could be possible in view of the fact that the actions were being taken by
authority of the Control Board itself, and that the Control Board was
doing the audit by virtue of the power vested in it by Congress. During
this hearing I hope that the Control Board will advise the Subcommittee
how they view this situation and what they intend to do about it.

In addition to issues involving the repair program, I am also
concerned about the Facilities Master Plan. Many of my concerns about
this issue and others will be addressed in the form of questions to the
witnesses who will be testifying under oath today. Suffice to say that I
hope we will have a status report on the Master Plan, and what the next
steps may be. As the Master Plan was based on an unaudited school
census, I am curious as to whether or not the Master Plan is deemed to
be final, and to what extent Congress should rely on its findings as we
make fiscal decisions.

Ihave already communicated my grave misgivings about the
“signing bonuses”. While the money to cover the taxes on the bonuses
has been rescinded, and referred to as a “mistake”, I remain shocked by
the entire incident.

What has been most disapointing is that this Subcommittee has not
been kept sufficiently informed by those who should have needed no
encouragement whatsoever to keep us advised. On my part, I have made
many sincere efforts to communicate my own views to the Control
Board and to the school system. I have urged repeatedly that true
communication on real issues be forthcoming. But the response has

3


40

Mr. Davis. Let me get to the questions.

Ms. Filardo, let me ask a couple questions. Do you feel that the
commitment of resources by the various governing authorities
which have jurisdiction regarding the District of Columbia Public
Schools, is adequate to ensure an effective capital group and pro-
grams?

Ms. FILARDO. There is some discussion about what is the number
for a capital program, and the alternative plan that we developed,
we had it at close to a billion. Certainly we don’t now have on the
horizon the kind of revenue that we need to support that program.

In addition, because of the up-and-down nature of funding for
capital—that is OK, they don’t listen. Because of the up-and-down
nature of the funding for capital projects, it has really been a prob-
lem. We haven’t seen the amounts of money and we haven't seen
the stability that we need.

Mr. Davis. Do you have any real actual evidence that the public
schools paid too much for the 1997 facility repair program, particu-
larly in view of the extraordinary conditions under which the pro-
gram was both developed and implemented, and considering the re-
quirement to remediate fire code violations?

Ms. FILARDO. It is hard to know how much emergency justifies
how much expenditure. I think that there are some real problems
with the fact that roofs were replaced that didn’t need to be re-
placed. We have heard that from contractors who replaced roofs, as
well as seeing that from the capital expenditures from fiscal year
1987 to 1990 and 1990 to 1995.

Mr. Davis. We are going to ask General Williams about that. Do
you have any site survey engineering or any architectural evidence
that any of the roofs replaced as part of the facilities repair pro-
gram in 1997, or any other repair, were not necessary, or were du-
plicative?

Ms. FILARDO. Again, based on the report, and it is all D.C. Public
School data on roofs that have been entirely replaced in 1987,
1988, 1989, and in fact this information is available through their
long-range capital plan, their appendices, you can identify those.

r. Davis. Let me ask Mr. Miller a couple questions. In your
judgment, what was the impact, if any, that the activities related
to the court and Judge Christian have on the scope, the time lines,
the cost and delivery of the projects?

Mr. MILLER. I am not sure that I can address the impact from
Judge Christian, but I can certainly address the impact of the
emergency environment under which the program was carried out.
I believe that it certainly resulted in some premium costs. I believe
there are two categories of premium costs.

Mr. Davis. Well, let me ask you this. The judge’s decision that
you could not open the schools until you got these replaced put an
added pressure, did it not, in terms of getting things done in a
much quicker period of time than you might ordinarily have done
if the kids could have stayed in school? Wouldn’t that have in-
creased the cost in perhaps a significant manner?

Mr. MILLER. Yes, the construction period and the design period
and I gather the procurement period were all shortened consider-
ably.


120

Statement of Bruce K. MacLaury
Chairman
Emergency Transitional Education Board of Trustees

DC Public Schools

Before the
Subcommittee on the District of Columbia
Committee on Government Reform
U.S. House of Representatives
January 23, 1998

Mr. Chairman and members of the Subcommittee:

When the DC Financial Responsibility and Management Assistance Authority issued its order of
November 15, 1996, it declared that “a state of crisis presently exists in the District of Columbia
public school system.” That crisis had many faces, but none so vivid as the decrepit and dangerous
condition of DC school buildings. in creating the body I have chaired for the past 14 months, the
Authority called it an “emergency” board, for good reason.

Against this background, and with all due respect, I must say that there is something surreal about
today’s hearing.

The men at my side, Julius Becton and Chuck Williams, have successfully met one of the toughest
challenges ever to face this school system: rescuing thousands of children from unsafe, unheated,
unreliable buildings, doing it in record time, and bringing in the project for just about what they
said it would cost. For Gen. Williams the job included testifying in more than 40 court hearings.

They did in one summer more than their predecessors had accomplished in decades of
procrastination. They ended the misguided practice of patching leaky roofs —a practice that had
wasted millions in taxpayer dollars and resulted in thousands of fire code violations ~ and have
given us a school system virtually free of violations, and 61 buildings with new, warrantesd roofs
keeping kids safe and warm.

Now. instead of celebrating this feat, we're debating whether the paperwork was properly filed.

Make no mistake: We must have accountability and probity in the spending of public dollars. But
in the current instance, we seem to have lost a sense of proportion. We have let a superb
accomplishment be drowned out by the carping of those who sat on their hands while the system
decayed. It is ironic, to say the least, that some of those wha appear to be so incensed about
possible waste in roof replacements last summer are the very same people who supported Parents
United in continuing its lawsuit long after all fire code violations were abated. That suit disrupted
construction plans, required premium-priced contracts for speeded-up work, and forced us to spend
several million additional dollars in overtime and transportation costs.


19

seluctant 10 bid except at higher and higher premiums. The lack of clear decision making and
‘management procedures creates conditions susceptible to corruption. Whether or not illegal
activities actually occur, it undermines the public confidence and support for the capital
program

Finally,

3° The cost of the FY 1997 roofing program was more than the District could afford

* ‘The $7.2 million premium widely reported from the Cotton Audit is understated. The GAO is

doing a fiscal audit that will address this directly. However, | estimate the cost overage of

the summer roofing program at a figure closer to $15 million

* DCPS determined to replace—not repair roofs, even though their window for timely
completion was inadequate, They spent $8 9 million replacing roofs on 13 schools zhat had
had roof replacements within the last 9 years, according to DCPS records.

* DCPS paid, on average, $19 per SF, (before all change orders are in) to replace built up
roofing, Prince George's County pays on average between $6-58 per square foot for roof
replacement on their old schools. This difference represents an excess cost 1o the emergency
roof replacement of $6 to $7 million on only 17 of the roofs replaced this summer

For FY 1998, there is reason to think that the approach used for the 1997 roofing program
will be repeated, unless there is a significant intervention

The DCPS is estimating that it will spend $18 million to replace windows at 22 schools, an
average cost of $800,000 per school. During FY 1991-FY1995 when DCPS replaced
windows in 15 schools the average cost for design and construction was $339,995. Included
within these 15 schools were Cardozo and Wilson Senior High School 2 of the largest
schools in the system, Even when you adjust for inflation, the DCPS is estimating window
replacements at a rate 100% higher than historic DCPS costs.

© ‘The same is true for their FY 1998 estimates for builer replacements. The average vost of
boiler replacement in 15 schools completed between FY1991 and FY1995 was $145,153

DCPS is estimating a cost to the public of an average of $650,000 for boiler replacement for
FY 1998

‘* There may be explanations for these highly inflated estimates, but with no oversight of the
capital program, no explanations have been asked of DCPS

The District of Columbia can not afford to conduct local government like disaster relief or a
military emergency. We need to use processes and procedures which are subject to public

rutiny and oversight. The schools are public buildings and the dollars are public dollars. ‘The
tesourees to je the deferred maintenance and to modernize our schools are extremely
scarce and are still grossly inadequate to the task. The millions lost through mismanagement can
never be converted into the healthy, safe, and educational appropriate environments that should
be standard in every school in the District, We can do better.



14

Mr. Davis. I will now call our first panel to testify. The panel
consists of Mary Filardo, the director of the 21st Century School
Fund; Mr. William R. Lawson, the Assistant Regional Adminis-
trator in the General Services Administration; and Mr. Jonathan
Miller, Daniel, Mann, Johnson & Mendenhall, who was directly in-
volved in the 1997 repair program.

As you know, it is the policy of the committee that all witnesses
be sworn before they testify, so if you would rise with me and raise
your right hands.

{Witnesses sworn.]

Mr. Davis. I would ask unanimous consent that any written
statements be made part of the permanent record, so if you have
a long written statement that will all be in the permanent record.

We have read all the statements here, so if you could limit your
oral comments to 5 minutes. I have a light here. When the light
turns orange or yellow, you have 1 minute, and when it is red, the
time is up so try to summarize at that point and then we can get
right to the questions.

Let me start with you, Ms. Filardo.

STATEMENTS OF MARY FILARDO, DIRECTOR, 21ST CENTURY
SCHOOL FUND; WILLIAM R. LAWSON, FAIA, ASSISTANT RE-
GIONAL ADMINISTRATOR, PUBLIC BUILDINGS SERVICE,
GENERAL SERVICES ADMINISTRATION; AND JONATHAN MIL-
LER, PROJECT MANAGER, DANIEL, MANN, JOHNSON &
MENDENHALL ARCHITECTS

Ms. FILARDO. Thank you. Good morning. I appreciate the oppor-
tunity to testify this morning.

I am Mary Filardo, the founding director of the 21st Century
School Fund. The 21st Century School Fund is a small nonprofit
organization supported by the Ford Foundation, Annie Casey Foun-
dation, Freddie Mac, and Meyer Foundation.

It is our mission to build the public will and capacity to modern-
ize schools. Our main focus has been the District, but we also are
responsible for working with particularly urban districts in other
parts of the country.

I have a master’s degree in public policy, My specialty is public
finance. I am a Truman Scholar from the District of Columbia and
have spent 20 years prior to this work working in managing real
estate and renovation in the private sector, all that time working
on educational reform activities associated with D.C. public schools.
Also in our office is Sarah Woodhead, who is an architect with
many. ears’ experience in school construction.

ile my remarks today about the D.C. public school capital con-
struction program are critical, I believe the District can develop
and learn to manage a high quality, cost-effective capital construc-
tion program. What I would like to do is to summarize my longer
remarks with four points.

One, I would like to make clear what we have found, that we
think the cost of stabilization is highly underestimated and that
the poor management associated with the summer stabilization
program will continue into fiscal year 1998 if there is not signifi-
cant intervention.


3

sponse has fallen far short of the mark. Not only has this sub-
committee been left out of the loop, but it appears to me that im-
portant information has been deliberately withheld. It is my sin-
cere hope, no, stronger than that, it is my expectation, that mean-
ingful communication with Congress will cease to be a problem. I
remain optimistic that together we can work to continue to build
on the progress that has been made.

I yield to Delegate Norton, the ranking member of the sub-
committee, for an opening statement.

[The prepared statement of Hon. Thomas M. Davis follows:]


132

Mr. Davis. Thank you very much.

Mr. Williams.

General CHARLES WILLIAMS. Chairman Davis and Ms. Norton,
good afternoon. I appreciate very much the opportunity to address
you. My presentation or statement will be a combination of some
visuals and also some words of my own.

I would just like to draw your attention first of all to the chart
that was up when Mr. Miller was making his presentation. The
main purpose of that chart was to try to depict how complicated
our structures here in the District of Columbia are.

I should point out that we inherited, and we must say this be-
cause it is a fact, a $2 million infrastructure problem, not making
any excuse for it. We knew it was here when we got here, and we
assumed employment with that knowledge. More assessments and
analysis do not make it go away because it is there, and the build-
ings are over 65 years old. We were facing an emergency in Janu-
ary when we arrived in respect to our facilities, and I must say,
in spite of the major effort that we were able to do on roof recover-
ies this summer, we still have some portion of our facilities in an
emergency state today.

In respect to process, as most of you know, I spent almost 30

ears in the Army Corps of Engineers. I understand the FAR. I

ave used the FAR. I have managed one of the Corps’ largest
projects, $517 million in value. I am very, very concerned about the
understanding of what the procurement process was during the fis-
cal year 1997 effort.

What we did, we did it the best we could do under the cir-
cumstances, it was not perfect. While the documentation was not
as it should have been. The integrity of the process and the ele-
ments of protecting the public’s interest were in place. Every con-
tractor who worked for us was qualified. There was competition.
We have double warranties on each of our roofs and we had proper
oversight over the job.

Moving next to the first chart, this first chart talks about the dif-
ference, the difference between what we are doing and what some-
one would make a comparison to elsewhere. There is only one Dis-
trict of Columbia when it comes down to facilities for schools. I can
say this with some degree of credibility, having worked in the
school construct and maintenance in New York City. This was not
an ordinary, ongoing maintenance reroofing program that you
would have in Fairfax County and et cetera.

Mr. Davis. You couldn’t have done that if you wanted to, once
the court intervened?

General CHARLES WILLIAMS. That is correct. So we were dealing
with an emergency stabilization and repair program. This next
chart will lay out the court actions. It caused major disruptions in
our plan. It added schools to the program, which caused us, in the
middle of this crisis, to alter the program. And this, Mr. Chairman
and the Delegate, is what created this over-the-weekend type of
procurement. We had no choice. We had 24 hours to get in the
schools and start to work.

Extensive paperwork. We know paperwork is important, but our
staff was supporting me 2 days a week going into the courts. We
had excruciating paperwork.


110

Attachment 1

TABLE 2: STEP-BY-STEP DESCRIPTION OF PROCEDURES FOR

REQUESTING CAPITAL FUNDS
Step 24
Step 1. “Agency enters financial information ino FMS system
Step 2. ‘Agency completes hardcopy batch report and transmits it to (OBP) for
override/approval
Step 3. OBP reviews document for consistency with budget authority, planned spending,
financing availability, reprogramming regulations
Step 4. ‘OBP approves the FMS batch document and enters the batch override codes
Step 5. Funding is avaiable in FMS for the agent as son as the overide codes entered (emphasis
ded)
Step 6. "Agency can view approved documenta FMS
Step 7. ‘OBP maintains an average turm-around-time on batch overrides of 3-5 days,
_ assuming that the documents submitted do not contain errors



69

procurement system's failure. The audit included recommendations for
corrective action in several areas. Chief among those recommendations is a
reform of the Schools’ procurement procedures. The Authority fully supports
total reform in this important area—consistent with our initial directives on
procurement. As a result, the Schools are in the process of instituting important
policy and procedure-related reforms to ensure the continued integrity of
procurement activities necessary to repair and make safe the District's aging

schoo! buildings and other education facilities.

Moreover, the Authority has directed that several city-wide functions
(including procurement) report on a centralized basis. Accordingly, the Schools
are in the process of restructuring procurement operations. The Schools, along
with other agencies such as Police and the Fire Department, which have
specialized procurement needs, are in the process of working out guidelines with
the Chief Management Officer with respect to their daily procurement operations.
and procedures. Those guidelines will be approved by the Authority before they
are put into use. These changes will allow the District to reduce costs and to
eliminate red tape and redundancy. They will also ensure system-wide integrity

of the procurement process.

The Authority and the Public Schools are dedicated to ensuring that
procurement of goods and services are effectively and responsibly managed.

Quick responses to these audit findings will be the best assurance to the citizens


24

© “Capital funds have historically been poorly managed.”

‘The chart below illustrates the poor planning and the sporadic expenditure of capital
funds by DCPS past administrations. The chart illustrates that DCPS will spend more
money in 1997 and 1998 ($129.8 million) in capital improvements than it did in the
previous 7 years combined ($129.7 million)

DCPS Capital Spending 1989-1998
(in Millions)

woo
wee
: sae
twos ne aay
m2
a7
*
a es

Im order to address the problems caused by mismanagement in the past, as well a5 to
prevent similar situations from arising in the future, the Becton Administration prepared
the Capital Improvement Projects Budget with a detailed, school-by-school list of capital
improvement dollars for the next three years.

A sound plan and reliable team have encouraged Congress, the DC Financial Authority
and other funders to provide record amounts of resources to DCPS. DCPS will continue
to seek additional funds to address our capital needs from all available sources

© “The District may have too many schools.”

‘The Becton Administration recognizes that there is a direct link between DCPS
problems of dilapidated facilities and its problem of excess capacity. By closing the most

dilapidated properties, DCPS could effectively concentrate capital and operating dollars
ona smaller number of schools.

“Haring Toward on iy System A Report on the Firat Years Cora to Rejorm OC 4 Fable Sonar)


143

Mr. Davis. But it would have made a difference had you had that
money up front? It would have made a huge difference in your
planning on this, moving ahead and getting schools opened earlier?

Mr. STEPHENSON. The $20 million, we already—there already
was some $12 or $15 million available at that point in time, so—
that was unobligated. The moneys in April, I am not sure exactly
what the reasons for that were. I was not there at that time. But—
so, yes, it would have made a difference if we had had it. We could
have hired capital staff sooner. Frankly, there is an overemphasis
on funding here. That is not the primary reason why it took a
while to get these projects up and running.

Mr. Davis. In one sense, no, but in another sense, there was a
lot of blame up here, because money wasn’t forthcoming from Cap-
itol Hill. We didn’t see it coming, so it was a factor in terms of your
ability to move ahead and get contractors, but not necessarily the
only factor. Tony.

Mr. ANTHONY WILLIAMS. I would just say, Mr. Chairman, I think
a yeoman’s job was done, and I applaud General Williams and Gen-
eral Becton, no exception there. But I do think one of the things
we have to look at is not only the availability of funding but the
flow of funding.

If you look at the FMS records, it is clear that even if you accept
these two obstructions here, it is clear that if you had evened out
the flow of funding, you may have bought a little more time. So we
are all accepting responsibility here. I think that is a responsibility
that ought to be accepted.

Mr. Davis. I agree, and I think it is refreshing for you to come
up and say that, and, hopefully we won’t be through that chapter
again. But we learned from this, and there are some very good
things that happened. General Williams, you made good comments.

We are not going to have to revisit this issue a year from now,
2 years from now, or 5 years. We have warranties, and you can’t
underestimate what that means. As I said earlier today, I would
rather be arguing about a few dollars here or there that we might
have gone over what we might have spent as opposed to arguing
the job didn’t get through and that we are going to have to come
back and patch it up again a year or 2 from now. So in terms of
that, let’s give credit where credit is due.

Still, we have a responsibility to oversee what happened, the de-
cisions made. I would have, frankly, preferred that we be more of
a partner to you in this, that we have better communications up
and down; when questions and audits hit, we can react with some
knowledge, as opposed to reading excerpts in the newspaper or
something read to us over the phone; it puts us in a very awkward
situation.

General Becton, it has been widely reported the Teamsters Union
has voted to go on strike in February if they don’t receive a raise
that has been delayed for 6 years. I know you have been trying to
avert that situation, which will probably cause you to close the
schools, perhaps. Can you tell the parents and taxpayers of the
District what the status of that threatened strike is right now?

General BECTON. I can, Mr. Chairman.

Yesterday we met with Mr. Feaster and eight of his senior mem-
bers of the union. We are working out the details now, and we will


10

to live with. I certainly want to make my own position unequivo-
cally clear, that I will strongly oppose any effort by the Control
Board or anyone else to come to Congress for a legislative solution.
No one ever promised that running the District, representing the
District, or fixing our public schools would be a rose garden. How-
ever, rebuilding this city and its schools is more than doable if we
all work together, consult before we leap, and are methodical in our
approach.

Again, I want to thank the chairman, and I very much welcome
today’s witnesses.

Mr. Davis. Ms. Norton, thank you very much.
1 ithe prepared statement of Hon. Eleanor Holmes Norton fol-
lows:


141

Mr. Davis. Thank you very much. General Williams, thank you
very much.

Let me just start the questioning. Are we going to be opening the
schools in time this September?

General BEcTON. If I don’t have a court tell me how to do my
business, yes.

Mr. Davis. That is probably the most important symbol to people
who view this from the outside and don’t follow the intricacies
every day of success in this system.

General BECTON. I can still remember a lecture I got on that sub-
ject.

Mr. Davis. No lecture. Obviously, I think one of the important
things we have talked about is to keep us informed. No surprises.
So we have worked with you, and I think one of the difficulties
here is you have to act so quickly or react so quickly to everything
going on, and make the tough decisions. You are out there making
them alone, and I think there would be a lot of support if we could
share that. knowledge back and forth. Right here among all of you,
if we had had better communications, we might have gotten that
money out. I’m sure the Connie Lee money and bond money could
have come out faster, and we could have saved 3 to 6 weeks in the
process, and that could have saved money. It could have gotten
things going on time.

For the life of me, I still don’t understand from the testimony
today what happened, so I am going to start my questioning with
the Connie Lee money and bond funding. Where did this money sit
and why didn’t it get to the school boards?

Tony, what is your perspective on that? You understand the con-
cern, you heard it raised. Everybody is pointing back and forth,
they said that they didn’t ask for them, they didn’t inform them
but they knew it, they were there when the check was presented.
We count on all of you to coordinate and work on this together. It
should have been available, it seems to me. Go ahead.

Mr. ANTHONY WILLIAMS. Yes, Mr. Chairman, I agree. Rather
than “he said, she said,” the lesson here is there needs to be one
point of coordination, and that one point of coordination needs to
understand what their flow of funds is from the outset. It may not
be your full funding at the outset, but at least understand what
that flow is.

There were two points of congestion in the system. One point of
congestion was on the receipt of the Connie Lee proceeds on Feb-
ruary 23, and the actual loan of those proceeds on April 14. All ex-
ternal funds to the District government—net of taxes—flows
through the Financial Authority.

Now, in order to receive those funds from the Financial Author-
ity, certain requirements have to be met, and apparently between
February and April these requirements were not being met. In
terms of one point of contact with everyone sharing responsibility,
I think the requirements needed to be modified and amended,
given the urgency of the situation. And on the part of those prepar-
ing the documentation for review by the Authority, clearly there
needed to be some better work in terms of sufficiency. So rather
than pointing fingers, I think there is this joint load sharing there.


29

Ultimately, GSA contracted for and supervised the work for 9 roof
replacements, 6 boiler replacements, 4 boiler replacement designs, one
gymnasium renovation that included a roof replacement as well, and two
structural repair projects. We completed this work using our existing
Federal contracts that were already in place and had been awarded in
accordance with the competitive procurement process. The use of existing
contracts enabled us to expedite the process. By using these contracts, we
were assured reasonable and competitive prices. The projects were also
completed within agreed upon deadlines. We are pleased that we were able
to contribute to the timely completion of needed building repairs to the

schools of the District of Columbia.

Thank you Mr. Chairman. I will be happy to respond to any questions the

Committee may have.


166

CONCERNED BUILDING CONTRACTORS’ ASSOCIATION
105.40 AssemBLy Drive
FAIRFAX, VIRGINIA 22030
(703) 827-9200

February 5, 1998

Dr. Andrew Brimmer

Chairman

D.C. Financial Responsibility

& Management Assistance Authority
One Thomas Circle

Suit 900

Washington, D.C. 20005

Dear Dr. Brimmer:

We are concemed by recent media and public accounts about the D.C. Public Schools’ (DCPS)
roofing repair contracting. We feel these accounts inaccurately depict events leading to the
‘emergency contracting situation last summer. In addition, the descriptions cast dispersions on
‘our industry and we take issue with that. The fact is that building contractors repaired more than
60 DCPS roofs with unparalleled quality, in a record six weeks at a reasonable price. This was
accomplished despite unprecedented time pressures and supply and labor shortages.

The complexities typically encountered in renovating older school buildings, like those in the
District, are considerable. Extensive repait was required to more than 60 schools to eliminate
fire code violations. Engineering core samples revealed structural degeneration -- rotting joists
and decayed subroofs. The extent of the deterioration caused project scopes to expand from roof
repair to actual structural rebuild. GSA contractor, DMJM, states in its Stewardship Report,
“Substantial flashing, replacement, repointing of masonry, overall stabilization of adjacent
parapets contributed to a program that grew in size...”

We applaud General Charles E. Williams for making the many tough decisions needed to repair
D.C. Public Schools. With time constraints imposed by the oversight judge and the threat of
daily fines, Mr. Williams moved quickly to secure competitive bids and competent contractors
in an attempt to avoid delaying the opening of school. Under his leadership, some of the most
respected building contractors on the East coast provided the D.C. Public Schools with the best
quality roofing and reconstruction services available.

It should be noted that many building contractors were reluctant to do business with the
because of the city’s tenuous financial condition. It was our faith in General Williams’
impeccable reputation that instilled trust and prompted contractors to participate. Moreover,



98

lowup going on, Mr. Cotton, from either you or Dr. Brimmer, and
should that not be followed through on?

Mr. BRIMMER. First, Mr. Chairman, as I indicated, we have
asked the Inspector General to review the report and to do any in-
quiry and recommend whatever he finds.

Mr. Davis. I think that is it. That seems a prudent course, Mr.
Cotton?

Mr. Corton. Yes, sir, I think it is prudent.

Mr. Davis. The last couple of questions. Is it your finding, Mr.
Cotton, that no single well-laid out or recognizable process was fol-
lowed in designing and contracting out for the repair program?

Mr. Cotton. Yes, sir, that is our finding.

Mr. Davis. Did you make an assessment of the number or value
that was seen to change orders or contract amendments for individ-
ual projects?

Mr. Cotton. Yes, sir, we did.

Mr. Davis. Can you specify?

Mr. Cotton. When we began the audit the information provided
to us indicated that there had been no change orders. When we re-
viewed the contract files, we identified approximately $1.9 million
in change orders on 14 contracts.

We also found a file at the capital projects office that contained
change order requests totaling $916,000 on 10 contracts, but those
change order requests were not evidenced in the DCPS contract
files, so we don’t know whether those were ever processed. And our
understanding is from information provided by the chief of capital
projects certain change orders at the time we completed our work
in December were still being negotiated.

Mr. Davis. So did your audit include the projects that were not
planned as part of the program, but were required by the judicial
rulings in closing schools?

Mr. Corton. I am sorry?

Mr. Davis. Did your audit include the projects that were not
planned as part of the program, but were later required by judicial
rulings when the schools were closed, or not opened?

Mr. Corron. I am sorry, I don’t understand the question.

Mr. Davis. OK. The audit that you did, did this include projects
not just that were part of the plan program, but also ones that
came into being because of the judicial rulings?

Mr. Corron. Yes.

Mr. Davis. OK. That is all I am asking.

Did you know or can you determine from your papers if the
project that you found to have had its cost estimate prepared after
the contract had been signed was one of the court ordered projects
or one of the plan projects?

Mr. CorTTon. It was one of the later ones.

Mr. Davis. Court-ordered projects. Would it be normal to have an
estimate prepared for a project that was not planned and has to
be contracted within 24 to 48 hours?

Mr. Corton. I would think that would be appropriate, yes.

Mr. Davis. Thank you very much. Dr. Brimmer, thank you. Mr.
Cotton, thank you, very much. Sorry it has taken so long.

Mr. BRIMMER. Thank you, Mr. Chairman.


140

In short, our children are in safer, drier, and warmer facilities. Without accelerated
procurement procedures and a dedicated staff, this would not have been possible. Alll of this
work was accomplished with no evidence of fraud. Quality products are in place.

We weren’t perfect. We leamed some lessons and we know we can improve the process.
Mr. Chairman, we took on the challenge and we performed the job. I am proud of what we

have accomplished and I am especially proud of my staff members, who worked so hard for
the children. 1 will be happy to answer any questions.


91

that it would be inappropriate for him to provide a blanket state-
ment, for example, that he had showed me everything I wanted to
see. I pointed out to him that a very operative phrase in that letter
is “to the best of my knowledge and belief.” And that is all we are
asking those people to affirm in writing is that to the best of their
knowledge and belief we have seen everything that is important
and material to the audit.

When we did not get those letters, we were under a timeframe
that we thought was important. We put the draft report in place.
Sometimes when this happens to an auditor, if you put the quali-
fication in the draft report and the text of the unprovided manage-
ment representations, that in and of itself is enough to get manage-
ment to understand the need to provide the letters. I met with
John Hill the Thursday before our report was released in final
form, and he was attempting at that time to get management at
DCPS to provide the letters. I got a telephone call from the CFO
at DCPS’s administrative assistant about a half hour after the re-
port was released to the public. She at that time told me she was
looking for the letters and couldn’t find them and that she indi-
cated that they had decided at that time to sign them. By then it
was too late. The report had been distributed to the media.

Ms. Norton. Well, I have already indicated that I think this
matter could have been dealt with and Congress expects that there
will not be a repeat of this matter. All you have to do is get folks
together in the same room. I think you can figure this one out.

ir. Cotton, do you believe that there are significant amounts of
time and money that might have been saved had the school system
relied more on the GSA to carry out some of the work with the
roofs and boilers?

Mr. CoTTon. Well, Delegate Norton, I am afraid I do not have
a definitive answer for you there. I listened to what Mr. Lawson
said and he indicated that they could have helped some but he
didn’t think that GSA could have done the job that DCPS did. We
spoke with some of——

Ms. Norton. In a 60-day period? I mean, do not answer the
question the way he stated it. I am talking about at the time the
money became available and they had 40 roofs to do and not 60
days but a somewhat longer period of time, in your judgment,
would they have been better off if they had delegated some of that
work to the GSA to do in the way they had done the 10 roofs that
were in fact done in a timely fashion?

Mr. Corton. That is certainly something that occurred to us. We
discussed that with GSA. Some of the GSA people told us that they
would have done more had they been asked.

Ms. Norton. Dr. Brimmer, Congress shares a very big part of
the blame, in my judgment, for this roof mess. The Control Board,
I think, correctly realized it would need more money. The Congress
had spent a lot of time talking about schools, indicating that
schools were the most important thing in the district and even say-
ing it wanted to help on schools. And it seems to me you did the
correct thing to come and say, when the cost of repairs was $86
million and you had $50 million, to say, would you mind putting
up or shutting up. And to their credit there were Members who
were willing to come forward, and I think Senator Faircloth de-


nN

ELEANOR HOLMES NORTON GOVERNMENT REFORM AND,
nme on ERSIGHT
commrrres on suncomurtes
SPORTATION AND sor oom A,

{MPRASTRUCTURE ‘stn or coun
sunconmrres . wn senvice
sumrace arora Congress of the Anited States coon
ati eri House of Representatives commun sro

Washington, B.C. 20515

STATEMENT OF CONGRESSWOMAN ELEANOR HOLMES NORTON AT
A D.C. SUBCOMMITTEE OVERSIGHT HEARING ON
DISTRICT OF COLUMBIA PUBLIC SCHOOL 1997 REPAIR PROGRAM AND
FACILITIES MASTER PLAN

January 23, 1998

1 want to thank Chairman Tom Davis for calling this hearing on the D.C. public schools *
as part of this subcommittee's oversight responsibility and abiding concern about the District's
children and their education. The achievement of excellence in education is not only a priority
for District residents. Improvement in education is used by Members of Congress as a
bellwether issue for whether the city itself is improving, and appropriately so. The future of this
‘generation of school children is tied to the future ofthe city itself,

Today, the two overriding goals for the D.C. public schools are a delicate balance
between steady and rapid improvement on the one hand and stability and predictability on the
other. These sometimes competing goals are both necessary if learning is to occur, performance
of the children and the system is to improve, and the confidence of parents and residents is to be
restored.

‘A combination of extemal events and intemal problems have militated against stability
and predictability. We can appreciate that General Becton and General Williams put a priority
on fixing as many roofs as possible, because leaky roofs had been a major cause of school
closings before the two new administrators came. The decrepit D.C. government financial
‘management system and the chaos caused by congressional rejection of the city’s supplemental
funding request may have hurt the roof repair effort. So did the extraordinary rigidity of the
judge in the Parents United case who failed to use her good offices to facilitate a settlement.
However, the failure to get the roofs finished in time would have been more easily accepted by
the general public if the leadership had been more flexible in devising a back-up strategy.
Instead, like generals on a battlefield, they marched against the enemy -- leaky roofs — ignoring
the fact that it was school closings that had precipitated the memorable and acute crisis that
ultimately brought new leadership to the school system in the first place. There were many
options, including reworking the schedule for replacing roofs, especially since so many roofs
remained to be done. Here is where consultation with those with deeper knowledge of the
community, especially the elected school board, members of the City Council, the Mayor and
parents, would have been useful



97

of incentive compensation, when that bonus is earned on the basis
of criteria for performance established in advance. Finally, I believe
that entry compensation has to meet the marketplace, and if a
signing bonus is an element of helping to meet the marketplace
then I think it should be used.

Ms. Norton. Thank you, Dr. Brimmer. Now, I take it from what
you have said that you think what is appropriate is incentive com-
pensation tied to explicit criteria established and announced in ad-
vance and awarded only after an evaluation to see whether or not
the candidate has met the explicit criteria?

Mr. BRIMMER. That is right.

Ms. Norton. Thank you very much.

Mr. Davis. Thank you. Let me just try to sum up the end and
get to the final questions.

I have a letter of September 8, 1997. I know Mr. Lee from your
staff has it, Dr. Brimmer. It is a letter to Mr. Tony Williams from
Ed Stephenson, Chief Financial Officer. We are going to hear from
each of them on the next panel. But one of the sentences, says,
“During several conversations in June I was told that because the
Mayor wanted to reallocate the bond proceeds,” and this is a Sep-
tember 8, 1997, letter, “because the Mayor wanted to reallocate the
bond proceeds, the funds from the 1997 capital bonds would not be
released until the allocation was finalized.

Does that ring a bell with you? We have been trying to figure out
what happened to that 3- 6-week period between when the bond
proceeds were available and when they were actually released to
the school system.

Do you have any recollection there that you held back releasing
the proceeds from the capital bond proceeds because the Mayor
wanted to reallocate?

Mr. BRIMMER. No. This is the letter from which I was reading
earlier today. No, we had nothing to do with that.

Mr. Davis. So, from your perspective, you were not involved? You
were not in on that?

Mr. BRIMMER. No.

Mr. Davis. Just a couple of other questions.

Mr. Cotton, at the conclusion of the audit, was there any evi-
dence that public funds had been misappropriated or that any ille-
gal activity had taken place?

Mr. Cotton. I think you need to distinguish between direct evi-
dence and circumstantial evidence. I believe we saw circumstantial
evidence that opportunities existed for misappropriation of assets.
We did not identify within the scope of our audit any direct evi-

lence.

In terms of illegal activities, our conclusion is that DCPS was not
in compliance with Public Law 104-208 that required them to fol-
low Federal procurement policies until such time as they adopted
their own procurement policies. We also noted an instance with re-
spect to a particular contract where the Davis-Bacon Act was not
complied with, and DCPS entered into a separate agreement to as-
sist that contractor if a Davis-Bacon claim arose. We think that
agreement needs to be scrutinized.

Mr. Davis. Thank you. Let me ask this, should we followup on
the opportunities for misappropriation of funds? Is there any fol-


102

Chairman Davis, members of the Committee, I am Anthony Williams, Chief Financial
Officer of the District of Columbia. I have been asked to testify before the Committee
today to discuss the issues surrounding the recent audit of the District of Columbia Public
Schools (DCPS) by Cotton and Company as it relates to the repair of the schools; discuss
the role of the Office of the Chief Financial Officer regarding the funding of capital
projects for the DCPS; and to clarify for the Committee when funds were available for
capital spending on school repairs. Additionally, I will be glad to answer any questions

the Committee may have. I will keep my remarks brief.

The Cotton & Company Audit

While the audit conducted by Cotton and Company examined the procurement and
contract management systems the schools used for repairs during the summer of 1997, I
would be glad to briefly comment on these items. In short, the audit concluded the

following:

* DCPS did not have an effective procurement process in place;
the procurement of repair services did not meet the minimum statutory or regulatory

requirements;


118

It is essential to understand the environment in which the sum-
mer roof campaign took place. There has already been a lot of testi-
mony on that, so I am just going to describe what General Williams
had to cope with while he was worrying about roofs. There was the
long-range facilities plan, of which there was none before he ar-
rived. He also had to help the trustees in the closing of 11 unsafe
schools. There were 10,000 outstanding work orders from schools
that he found on his desk when he arrived, and roughly three-quar-
ters of those have now been fixed. There were 1,600 fire code viola-
tions, and to my knowledge, there are none outstanding today. And
I hardly need mention once again that even before Judge Chris-
tian’s July 11 order stopping construction in occupied buildings,
General Williams was operating under court order with respect to
any of the repairs that he made.

All of this took place as he was replacing staff, some of whom
could not be brought on board until the capital funds were avail-
able to support their work. It is worth recounting in some detail,
because the emergency was not an abstraction. A finite number of
people were working at an extraordinary pace with, in my view, a
remarkable degree of success.

Implementation of this expedited process was generally left by
the trustees to General Becton and his COO, General Williams.
But, the emergency board met weekly with General Becton, and
was briefed by General Williams about his struggle to get the job
done under, frankly, unimaginable conditions. During these meet-
ings, General Williams told us again, that the cost of roof replace-
ments under the conditions in which we were trying to operate
could easily run 30 percent above the costs—the key point—in
other jurisdictions and under normal conditions. That is not waste.
That is a premium for doing the job under the circumstances we

We understood this and we encouraged General Williams to do
the best that he could under these nearly impossible circumstances.
We asked ourselves the same question the Congress and the public
should be asking: “Is it worth spending a few more dollars now to
save money in the longer run, rather than patching roofs or post-
poning repairs that were essential to be done?”

This town is full of Monday morning quarterbacks. Some of them
now contend we should not have done so much with the roofs, we
should not have done so many roofs, we should have started them
earlier, or we should have stopped the program dead in its tracks
when Judge Christian forbade us to work in occupied buildings.

Frankly, this was one of the easiest decisions that I have had to
make in my career. I can assure you, and General Becton will
speak for himself, he was as pained as anyone could be having to
postpone the opening of schools by 3 weeks, given his pledge that
the schools were going to be open. We understood that. We stood
behind that pledge.

We felt that it was a compelling circumstance that caused us to
take that decision. Roofs left unreplaced—and this is a comment
that I am sorry that Delegate Norton is not here to hear—or just
patched would have led to continued fire code violations and un-
scheduled school closings throughout the school year.


65

The audit concluded (1) that Schools did not have an effective
procurement system in place, and (2) that the system did not meet statutory and

regulatory needs of the Schools.

The Authority is concerned about the serious nature and scope of the
audit findings. | want to emphasize that we take these audit findings very
seriously. As a result, the board members met with Cotton and Company to
review their findings and we have asked the Inspector General of the District of
Columbia to review the audit findings and make any further recommendations as
necessary for correction and improvement to the Schools’ procurement

operations.

Repair Program

Mr. Chairman, | wish to turn now to the context in which the School's
Capital program was implemented last summer. It is important that the
Subcommittee understand the conditions which prevailed at the time the repair
work, was undertaken. Most of the flaws in the process identified the hectic

environment in which the work took place.

In fiscal 1997, the Schools had approximately $50 million of committed
funding for its emergency repair program, at a time when the facility repair
needs were estimated to cost $86 million. This left the Schools some $36.8

million short for critical programs necessary to ensure the elimination of fire code


71

Mr. Davis. Mr. Cotton.

Mr. Cotton. Chairman Davis, Delegate Norton, I’m pleased to be
here today to discuss the results of our performance audit of the
fiscal 1997 capital improvement program procurement process. As
Dr. Brimmer indicated, we did that audit at the request of the Con-
trol Board.

Your invitation to me identified 12 specific areas of interest and
concern to the subcommittee. I prepared written testimony that ad-
dresses those areas of your inquiry that were within the scope of
our audit. Most of those prepared remarks were extracted from our
audit report. Therefore, with your permission, I would like to sub-
mit those written responses for your record rather than reading
them.

Mr. Davis. Without objection, so ordered, yes.

Mr. Corton. And I will do my best to respond to any specific
questions you have.

[The prepared statement of Mr. Cotton follows:]


16

The suggestions I have, unfortunately, are not magic and you
have heard them before. We have been saying them for quite a
while, but there is still the work that needs to be done: We need
a shared vision for an equitable system of good quality education
and appropriate schools. We need a master plan that is based on
accurate information and officially adopted standards, and ground-
ed in educational pro; is and practices and embedded through
communities and neighborhoods. We need the capital plan, which
falls out of the master plan and establishes priority projects within
the context of the budget and political realities of specific commu-
nities, the schools, and the District’s priorities. We need an oper-
ational infrastructure that can manage the information, the plan-
ning, and the implementation of a capital program. We need orga-
nizational structure. We need administrative guidelines, proce-
dures, procurement regulations. These are all the boring pieces to
good government, but unless we have an administration that really
understands that they have to invent these, that they are not there
to be used, we will continue to repeat the mistakes of this year and
of previous years. We need oversight of operations. And finally, we
need stable funding, and I think that this can’t be underestimated.
Without stable funding we will not be able to undertake a more ef-
ficient and comprehensive approach to school modernization. It will
not be possible to manage the program well.

‘Typically there has been an up and down pattern of funding. You
go from feast to famine and it further perpetuates the notion that
you have to get in there and do it all right away because next year
maybe the money won't be there. This is an enormous problem and
I think we cannot underestimate its role in this year’s fiasco. With
a stable funding base, we should be able to expand that program
as the District expands its capacity to adequately manage its cap-
ital program. you.

Mr. Davis. Thank you very much. We will have some questions,
with the issues you have raised, but I will give the school system
ample time to respond to those.

Ms. FILARDO. Yes.

[The prepared statement of Ms. Filardo follows:]


160

DC Public Schools planned to use these Scopes of Work as a part of a Request for Proposal
(RFP) package, to procure a design-build contract, via competitive bidding. Design-build contracts
utilize a single entity to provide both design and construction services and can be employed to
shorten the overall duration of a construction project. The Scopes, therefore, were not a complete
design, but described the design intent, and formed the technical component of the RFP. DMJM
sought to define two key items for each roof Scope:

1. the location and extent of the required work; and

2. the quality level of the installed products.

In developing the Scopes, DMJM visually surveyed each roof, reviewing and photographing existing
conditions. For each school, we prepared a diagrammatic roof plan, a narrative of the required work,
a technical specification establishing quality standards for each component, and a cost estimate.

Just as we were completing the first 15 Scopes, DC Public Schools requested DMJM to
prepare an additional 33 Scopes. We again provided these services within a three week time frame.
The challenge for the remainder of the summer was now clear - replacing approximately 50 roofs
in less than two months.

DC Public Schools asked DMJM to assist them in monitoring the construction, to verify that
construction was in accordance with the requirements of the design-build contract. We staffed the
project with over 30 people to accomplish the work, many of whom worked 7 days per week
routinely for the next two months. Night work was also common, particularly because contractors
needed cooler temperatures to effectively remove old roofing membranes. While DC Public Schools

administered the contractual aspects, such as directing the Contractor and negotiating Change


99

Mr. Davis. Now we move to our last panel. Some issues were
raised on this that we can pursue.

Tony Williams, the CFO for the District, Ed Stephenson, the
CFO for the public schools, Bruce MacLaury, the chairman for the
Board of Emergency Trustees, and General Julius Becton for the
D.C. Public Schools, and General Charles Williams, the Chief Oper-
ating Officer for the D.C. Public Schools.

Tony, I know your father is ill, and I know you have returned
from California for this hearing. Best wishes, and our prayers are
with you. Thank you for your presence.

{Witnesses sworn.]

Mr. Davis. I ask unanimous consent that the written statements
be made part of the permanent record. As you can see from some
of the earlier testimony, we are familiar with your written state-
ments, so be as brief as you can so we will get right into the ques-
tions. If there is anything you particularly want to emphasize in
your testimony or something you want to clarify, that is fine. At
the conclusion, if there is something you would like to add to
maybe redirect the questions or something, I want to give you the
opportunity to do that.

t me start, Tony, with you. Please don’t feel you have to take
the 5 minutes, because we want to get to the questions as quickly
as possible. Thank you.

STATEMENTS OF ANTHONY WILLIAMS, CHIEF FINANCIAL OF-
FICER, GOVERNMENT OF THE DISTRICT OF COLUMBIA; ED
STEPHENSON, CHIEF FINANCIAL OFFICER, DISTRICT OF CO-
LUMBIA PUBLIC SCHOOLS; DR. BRUCE MacLAURY, CHAIR-
MAN, DISTRICT OF COLUMBIA PUBLIC SCHOOL EMERGENCY
TRUSTEE BOARD; GEN. JULIUS BECTON (USA, RET.), CHIEF
EXECUTIVE OFFICER, DISTRICT OF COLUMBIA PUBLIC
SCHOOLS; AND GEN. CHARLES E. WILLIAMS (USA, RET.),
CHIEF OPERATING OFFICER, DISTRICT OF COLUMBIA PUB-
LIC SCHOOLS

Mr. WILLIAMS. Mr. Chairman and Congresswoman Norton, thank
you for the opportunity to be here and appear before you and tes-
tify on the matter of the school roof repairs. As you noted, our writ-
ten remarks have been submitted for the record. I have only a few
brief comments by way of introduction.

From my standpoint as CFO for the District, I think that—well,
I would generally endorse and strongly support the thrust of what
I think the questions of the chairman and Congressman Norton
are, and those I think revolve around the need for better planning
and organization, and the facts of the school repairs are very goo
evidence of both, in some ways.

The lessons that I take from this are on a number of different
things. No. 1, there is a desperate need for our office to provide,
to the maximum extent possible, to the agencies all the authority
and responsibility that they need in terms of resources to do their
job. One of the things that I think this committee will find when
the results of the 1997 audit are released is that there has been
across the board in a number of different areas underspending by
our agencies. I think this underspending by our different agencies
is a result of a number of different points of contact and authority


21



50

Mr. Lawson. I just don’t know enough about the school inventory
or the alternatives—real estate alternatives available to the school
system to give you an intelligent answer to that question.

Ms. NorTON. I can see that.

Actually, Mr. Lawson, you have done a great deal. You are a
good friend of the District and of mine, and you have done a great

leal to help the District.

I ought to say for the record that from the very beginning, when
London Bridge was falling down worst of all, I called in Mr.
Lawson and asked for his help, and he has been abidingly helpful
throughout, and throughout facing barrier after barrier, when he
could have said, well, Congresswoman, I have tried, but he just
kept on going.

o I am pulling his leg a little bit, and I think he is helping his
friends a little bit.

But you have to understand——

Mr. Lawson. I understand.

Ms. NorTON [continuing]. That the school system was making
some progress and the closing of the schools was tragic in the sense
that it tended to, for many parents, just wipe off all the good things
that had occurred.

And the reason I go to some lengths to ask these questions is if,
in fact, the way we deal with problems we have had in the past
is, hey, I would do the same thing again, that really does bother
me, because it means we do not learn from the inevitable mistakes
we all make and then try to figure out a way so that the next time
we will do it better. But if we say, hey, under all circumstances I
would have done it this way, it says to me, if this comes up again,
that that is what we can look forward to. That would be trouble-
some to me.

Was GSA asked to assist with more than the 10 buildings you
did, either with roof or below work?

Mr. LAWSON. Well, we were involved in the planning or the
prioritization of planning for the follow-on work; and, yes, we were
asked to give a proposal or a plan to get some of the follow-on work

lone.

Ms. NorTON. Would you have helped during the 60-day >Perigd?

Mr. Lawson. During the crisis? No. It boiled down to fact
that we indicated to the schools that we could not accomplish the
work in the timeframe that they —

Ms. NorTON. Well, neither did they. I am trying to find out
whether or not GSA was helpful or could have been helpful with
the 40 roofs that were outstanding and caused the schools to close.

Mr. LAWSON. We helped with doing the work that Mr. Miller out-
lined in scope development, the planning. That was——

Ms. Norton. For the 40 roofs?

Mr. Lawson. Yes. So that was a part of our effort. And we had
certainly full intent or offered to help in doing the actual work.
Just our schedules for doing the work couldn’t meet the mandates
that the school was under, and they had made management deci-
sions to do it on their own.

Ms. NorTON. You indicated earlier in your testimony that, as
they moved on, you thought they were fully capable of taking on
more and more of the work and of going ahead and doing it them-


95

used in this area where we have some basis of comparison. You
have been able to recruit some people to come and do work for the
District government in one fashion or another for no pay. But the
reason I think that is so is that when a government or an agency
is literally down on its knees, if the principals market the oppor-
tunity correctly, I think that you won’t need signing bonuses for
this reason.

An administrator that comes into a place that is as decrepit as
this place and shows that she can take care of business will be
made for a lifetime. Many people yearn for the opportunity to come
to work, one, with a system that is completely broken, so they can
show their stuff; and two, in the capital of the United States, I
really must say to you that I do not believe that, except in very
special circumstances, for example, if the one person that you thi
can do the job might go someplace else—and then I wouldn’t even
call it a signing bonus, in order to get the person you may have
some increase in pay because that is what the marketplace says
they may have to have. But I really do not believe that it is dif-
ficult to get people to come to work here in the capital of the
United States. I really don’t believe it.

I hear professionals all over the District who say, is there some
way I can help? I just believe that for the same reason that you
wanted to be the chairman of the Control Board, that there are
people all over the country that would say, wow, if I could do that
in the capital of the United States, I would really be doing some-
thing. That is not Philadelphia, that is not Podunk, that is the cap-
ital of the United States. The whole world will know that I have

lone it.

I believe that if in fact the board, including the board of trustees,
knows how to market the challenge here and the place, the center
of the universe, that they know how to do that, they will have peo-
ple at their doors, not the other way around.

So I believe a bad precedent has been set saying that in order
to come here, we are going to give you some extra money. You
ought to pay us to come here, because since the system is broken,
you have a free hand now in rebuilding the system. It is a wonder-
ful opportunity for an administrator with any imagination and any
guts and any fire in his belly. Most administrators are ships sailing
through the night, if only because the system isn’t broken, so no-
body is going to know whether they were there or not. This system
is worse than broken, and I have to say to you that I believe that
in almost all instances the people with the right stuff won't need
a signing bonus. They will simply need to be able to do their work
in the capital of the United States.

So I believe that you will never convince the people who work for
this government—the average employees have had no raise since
1994. The lowest paid employees of the school system had to
threaten to strike to get what an arbitrator said is due them. Resi-
dents are paying the highest taxes and getting the worst service.
You will never convince them that the only way you can get com-
petent people to come and work here is to give them a whole lot
more money than would otherwise be necessary.

So I urge you to get rid of the notion of signing bonuses, and to
use them only in circumstances in which you are willing to docu-


33

DMIM's relationship with the DC Public Schools project actually grew out of an existing
relationship with the General Services Administration (GSA). DMJM was awarded an indefinite
delivery contract from the GSA in 1994, having competed in a qualifications-based selection. That
contract enabled authorization of Task Orders, utilizing pre-negotiated hourly rates. When DC
Public Schools first requested assistance from GSA, we were among several firms under contract
to GSA, all of whom were made available to DC Public Schools. DMJM participated in several
arly tasks which were ultimately for the benefit of DC Public Schools, but which were carried out
under GSA direction and guidance. In early summer 1997, GSA delegated tasking authority directly
to DC Public Schools, enabling DC Public Schools to utilize the GSA contract. As the tasks became
more challenging, with shorter and shorter time frames, some firms were unable or unwilling to
respond to DC Public Schools's emergency needs. DMJM tried to remain responsive to the needs
of DC Public Schools throughout the remainder of the 1997 year.

We actually provided a number of different services for DC Public Schools during 1997. Our
first involvement with the roof replacement program was two tasks performed directly for GSA,
involving design of new roofs and related work for two schools. We also provided services during
construction for these schools throughout the summer, including review of shop drawings, and
periodic field observation.

In June, DC Public Schools authorized DMJM, through the GSA contract, to provide Scopes
of Work for roof replacements at 15 schools. DC Public Schools required these scopes within three
weeks, in order to allow sufficient time for procurement and construction. DMJM deployed several

teams, working evenings and weekends to accomplish the task.


168

50 YEARS

February 10, 1998

The Honorable Tom Davis, Chairman
Subcommittee on the District of Columbia
US House of Representatives

B-349A Rayburn House Office Building
Washington, DC 20515

Re: — Oversight Hearing on the District of Columbia Public School 1997 Repair Program and
Facilities Master Plan
Submission of additional written testimony

Dear Chairman Davis:

Thank you for this opportunity to submit additional written testimony in connection with the DC
Public Schools renovation program.

The attached matrix provides a summary of estimated construction cost for window replacements
planned by DC Public Schools for FY 1998. These construction estimates are based on review of
construction documents, prepared by other firms, coupled with field visits to ascertain it idual
site conditions. These estimates should therefore provide a more reliable picture of anticipated
costs than the planning numbers described during the hearing.

We are available to answer any questions you may have on the enclosed materials.
Sincerely,

DANIEL, MANN, JOHNSON, & MENDENHALL

ob Hoth

Jonathan Miller, AIA
Associate Vice President

1528 wis Hour, Sure Han, ArLinczoN, Vinca 22309
“Soa ma? 2800" Fa 508) WS


133

Weekly reviews by the court. There has been some mention
about oversight. The project had tremendous oversight. In fact, the
judge reviewed it weekly, and had the inspectors to go out and ver-
ify that a piece of membrane was actually in place.

staff focus on court preparation. The contractors became very
nervous, and I must point this out, it was very, very difficult to
keep the contractors in place and intensified an ongoing emergency
situation.

This next line speaks to the complexity of the job. The upper
building stabilization of our buildings was a major piece of work.
It was not just replacing a roof.

Now, I admit, we replaced some roofs that were less than their
useful life. I cannot connect to the 8 years that has been previously
testified to, but there were some roofs that were 10 years old. We
replaced those roofs because the buildings were leaking. Our job
was to stop the leaks. Water was trapped inside, and for whatever
reason, the job previously either had Been done wrong or it had not
been properly maintained so we replaced it, because the idea was
to ensure that the building would not leak.

Roof accessibility. Anywhere in the District of Columbia, you pay
a premium for that. It is not like Hayfield High School in Fairfax
County, where you can climb on the roof with a ladder. You need
a a crane to access any of our roofs here in the District. You pay for
that.

Compressed schedule. There was an unbelievable schedule. I
have never in my professional life had a schedule this tight.

Multiple roof types. There were 8 of these roof types. There was
slate, there was tile, there was flat, there was metal, and there was
shingle. In many cases, they were on the same roof.

The availability of materials, particularly when you start speak-
ing of slate. It is only a few areas and manufacturers within our
proximity that had such supplies.

The labor pool adequacy during the summer is very key. And the
D.C. work environment. I don’t want to overemphasize this point,
but you pay a premium for just working in the District, because of
insurance. We had our consultants, a couple, robbed at gunpoint.
We had several contractors, their material was stolen at least
twice. We pay for that. So this is what created the premium, and
as we were speaking to the auditors, I was simply saying that this
is what we pay for, just simply working in the District.

Next chart. Now I know you cannot see this, but I just want to
point out, and trust me right now and you can come down and look
at it later, this is on Stuart Hobson Middle School. We have a tape
measure here to indicate that there is 6 inches of water standing
on the roof before we started to work. What is around there is a
parapet wall, and it is that type of material, that type of structure,
that we had to repair. If I would have replaced the roof without
correcting that masonry, then you have not done anything. You
have put a roof on but it is going to continue to leak. So what we
set about doing is not only Puiting the flat roof on, but also restor-
ing all of the associated and collateral upper building that was nec-
essary.

This is damaged flashing here, again not necessarily roof mem-
brane. This shows how the masonry has deteriorated between the


17

‘Testimony Before the United States House of Representatives
Committee on Government Reform and Oversight
Mary Filardo, 21* Century School Fund
JANUARY 23, 1998

{am the founding director of the 21st Century School Fund. The 21" Century Schoot Fund 1s a
small non-profit organization The mission of the 21" Century School Fund is to build the public
will and capacity to modernize public schools The goals of the Fund concerning schoo!
modernization are first, to ensure that the facilities support educational programs, not just house
children; second, that facilities stabilize and enhance neighborhoods and communities: and third
to develop alternative ways to finance schvcl construction through public/private partnerships
The fund is also responsible for providing information and assistance (o other urban schoo!
districts an facilities master and capital planning.

{have a masters degree in public policy, specializing in public finance 1 am a Truman Scholar
tram the District of Columbia and spent 20 years managing real estate and renovation in the
Private sector while active in education reform activities associated with DCPS

The other full time staff member of the 21" Century School Fund is Sarah Woodhead. She is a
registered architect with over 15 years of experience working in design and planning, two years
as senior project manager and planner at DCPS and more recently three years as architect at the
Schoo! Facilities Branch at the Maryland Department of Education We arc both residents of the
District of Columbia and have children in the District of Columbia Public Schools, We have
been assisted in our work by a dedicated team of pro bono legal, finance, real estate, construction
and information system professionals,

The 21” Century School Fund served as staff to the 1995 Task Force on Education Infrastructure
for the 21" Century which prepared the Preliminary Facilities Master Plan 2005. In 1997 we
prepared an Alternative Educational Facilities Master Plan 2007. We are supported by the Ford
Foundation, Annie E, Casey Foundation, Meyer Foundation and the Freddie Mac Foundation

While my remarks about DCPS today are critical, | raise them because ! believe the District of
Columbia School System cam learn to manage a high quality, cost effective capital construction
program. [ also believe that it is essential that the District's residents insist on yood the
government that a well managed school construction program represents. Unless the wider
public demands accountability, cost effectiveness and quality programs, services and systems
from our public institutions, no amount of imported leadership, emergency authority or
management consultants will be able to implement or sustain the changes required to bring these
reforms about

The District school system does not yet have the capacity to adequately manage a capital
construction program. In fact. we have observed the same fundamentally flawed information
planning and management functions under this new administration that the Control Board wes,
supposed to remedy through its firing of Franklin Smith, demoting of the Board of Education and
bringing in a new management team and Board of Trustees


61

agement officer. Included in that centralized reporting and over-
sight is procurement.

Now, the schools are in the process of revamping their procure-
ment, including procurement for construction services, to conform
with the guidelines that are being developed for oversight on a city-
wide basis. The schools, of course, have specialized needs, police
have specialized needs, and fire have specialized needs, so their
concerns and requirements will be blended with the general guide-
lines I have just described.

In the meantime, the responsibility for contracting procurement
in the schools has been shifted from the director of school facilities
to the chief financial officer. That occurred as of October 1. The
chief financial officer, in turn, has adopted procedures, he’s still de-
veloping them, whereby there will be a closer blending of procure-
ment and of financial management.

The director of school facilities has also modified his procedures.
For example, one of the questions which arose during the last year
was the extent to which the construction program was coordinated
with and guided by the academic requirements. There apparently,
at certain points, was a divergence of those interests and concerns.
That has been changed. The CEO has directed that the academic
requirements be one of the priority considerations for any construc-
tion planning and implementation. In carrying that out, the direc-
tor of the facilities operation now includes representatives of the
academic side in those deliberations from the very beginning.

I am convinced that with the change in oversight, the adoption
of new procedures, and the centralization of oversight, that the
problems that arose, problems of process and control that arose
during this summer emergency construction period will be not like-
ly to happen again.

Mr. Chairman, I will be delighted to respond to your questions,
but my overall view is that, to summarize, the emergency oper-
ations in the summer of 1997 achieved substantial results, but the
controls, the procedures were flawed, and the audits found those
and documented those. We have taken steps, the schools have
taken steps to see that that does not happen again.

I have tried to stress that the future is what we ought to really
look at, and we’re convinced that the future management will be
greatly improved. Thank you, Mr. Chairman.

Mr. Davis. Thank you. We would like to be partners with you in
that up here.

{The prepared statement of Mr. Brimmer follows:]


130

THRESHOLD QUESTIONS

From my perspective, a few simple threshold questions should be asked by anyone seeking to
fairly evaluate the summer capital program. With your permission, I would like to briefly outline
those questions, answer them, and let the Subcommittee, and the public, draw its own
conclusions.

What was our priority objective? Our priority objective, as stated above, was to stabilize the
facilities and get the schools open. Did we accomplish that objective? Yes.

What would have happened if we had failed to accomplish this objective? Had we failed to
accomplish this goal, over 60 roofs might still be leaking, the Parents United suit would likely
still be ongoing, the Court would still be closing schools on a daily or weekly basis, and students
would still be shuttling to temporary sites, where opportunities for substantive learning were
greatly diminished. In short, the system would have remained in a state of crisis.

‘What laws were broken? None. What evidence of fraud or abuse was found? None.

How much money was “wasted”? None. DCPS asserted, from the beginning, that the emergency
nature of the project, with its high volume and compressed time line, combined with the fact that
it was to be conducted in the District of Columbia, which had a highly unfavorable reputation
with contractors, would result in higher costs than might otherwise be incurred for a similar
effort, under different conditions, in a different jurisdiction.

Far from attempting to hide this reality, DCPS stated it repeatedly during the summer and fall.
In fact, it was DCPS’ own estimate that the unique conditions under which we were working
could increase the total cost of the program by 30%.

Based on the answers to these threshold questions, | would respectfully assert that the summer
capital program met its objective, and that the public trust and the public’s investment were
protected

I know that General Williams and Mr. Stephenson are planning to provide more detailed
responses to the audit in their comments, so I will leave you with one final statement. I urge you
to consider the information you receive today in the proper context. Fourteen months ago, the
Financial Authority issued an order removing the superintendent and elected Board of Education
from direct oversight of the District's public schools and creating an Emergency Transitional
Education Board of Trustees for that purpose.


114

projects that were managed by the General Services Administration (GSA). The
Control Board and DCPS worked directly with GSA to enter into these contracts.

«In March 1997, the Control Board announced receipt of $18.2 million in funds from
Connie Lee proceeds. On April 11, 1997, DCPS entered this fund amount into the
FMS.

« In June 1997, $20 million in funds from the fiscal year 1997 capital borrowing were
realized. DCPS was notified of these funds in late June and on July 14, 1997 they
were entered into FMS and became available on July 22.

In September 1997, the Control Board received $36.5 million in Sallie Mae proceeds
and DCPS entered these fund amounts into FMS.

DCPS expended approximately $42 million in capital funds in fiscal year 1997. The
exact amount will be identified in DCPS’ fiscal year 1997 financial statements, which
will be released on February 1, 1998. Details on capital funds availability and obligations
are provided in a table attached to my written statement, Capital funds balances during
the fiscal year are depicted in the figure below.

DCPS Capital Fund Balance

in Fiscal Year 1997
$45.0

sooo | |
$35.0 i
$30.0
$25.0
szoo ff |__|
$15.0
$10.0

+
i
$5.0 =

od

millions of dollars.

Oct-98
Nov-96
Dec-96
Jen-o7
Feb-o7
Mar-67
Apa?
May07
Juno7
dul
Aug-07
Sep-07

As I noted earlier, my primary responsibility with regard to the DCPS capital program
was ensuring effective financial management of the funds. As I described above, my
office ensured funds were encumbered as RFPs were issued and obligated when contracts
were approved. Obligations cannot be incurred in the FMS without adequate funds.
Expenditures were recorded in FMS as invoices were paid.


116

76 AS]

L661 189A [eosEy Uy ANIGETeAy spung [ended SqOd vo HEq

lese'sor'ry_$ looo'ooz'e _$ $ (o00'00e) __s 20} wets jeydeo 20) pervesaiun eve spury 1e4deD)| 6/0616
“Sa UOIUEIS Te SUlOgISSEIO Jo uONEAOUET
lese'eorry $ looo'o0z'ss _$ s loos'zee__$ pue eyokeje7 ie obewep ory 10) si2eN1U09 46/1 16
lesr'tv'ry _$ looo'o0z'se $ looo'oos'se _$ $ ‘SW O11 PopeO) Spun GEN O1NES|26/01/6
lesy'wze'z $ looo'oo'er $ A looney $s WEA@SOOH 18 4004 10) oeAUOD|L6/6Z/8
z0pse5 V8 J00) pue “nojeg|
lesv'zee's _$ |o00'o0'er bys'zoa'ee_$ lose'ie: __$_| 18. qe1 ABo}oyews09 ‘a19007 12 4001 10) s1peAWOD|Z6/6/8
Siem)
lero've0'or _$ Jooo'oo'ey_$ Ise'si9'6e_$ loro'sz | anounn 1oouas ve 0m resmonuis 205 Benoa
“voIBuTg
94NG ve sedes jesryonys g ‘sa eHeSET 2|
uowojeqe soiseqse /s6n 1004 ‘SHS UOSIM Ie|
lse9'01s'01 _$ Jooo‘oo'er_$ ise'ees'ee_$ lers'e0s __$_| vom wary ‘uopBue ye duind yey 10) swesU0D|L6/¥/8
*001 WAAO|o 204 S}OBIIU09 OST]
“pepeet se6u0j ou exam sobeseno|
46 Ad 010 10} oniosey ‘spun, jeyde> snoyroud!
‘Puadsseno 10u pip SuOC JEM pouUeIOp|
$ looo'ow'sr_$ je6z'080'ee _$ |(000'000'9) _s |rrz'zee'a _¢_| 81 eo ssoyonv09 OG Aq Anris uo pasea|.6/1/0
$ looo'oo’er “$ ess'ear'oe $ leos'zes'zb SIOOUDS OF 0 $}001 10) s}DeAUOD|L6/E2/
's loo0'o0z'er_$ looo‘000'0z _s |rae‘oss'et “SW 1 pepeor spuny feuded 16 Ad|LS/2z/L
‘$3 vopBuey oi]
$ joco'cus’ez, yes'oes'es_$ loos’zee__$_|_wesBoics posseiuow Jo uoneo0ye1 J0} 198.8U00|L6/81/
'$ |o00'00r’ez_$. vav'eoz'e$ zon $s ‘yNoU e94|IEFO JO UORBHEISUI 30} BAUOD|L6/OL/L
[zeu'z0s'14 $ |ooo'oo'ez_$ goz'zer'er $ lose'sg ss [$3 180MTM 20) WeAUOD joou|.6//2/5
720K 72584 j0 sepuEWwal]
20} 4248 [eyde0 J0 $1800 peyewinse J0A00 0} dn}
\zZes'roo'lt $ jooo'ooz'6z_$ [ety's60'8t _$ |000'009 = Js oniosoy “yeIs je11de0 oy 0} SuIBEq SOG|LE/EL/Y
‘Vom 9§ @7eB1q0 104 oF SGDO SHS VIG]
‘spun yeydeo snoyeud yuods s0%0 eneu|
lzes'voz'zs_$ |oco'oo'ez_$ leiv'sey'zt $ |o00'000'9 __¢ oui Sd OC Ve PereDIpUI LoneWLO;U UI LECH
‘sjoo/o1d jeyde9 10) SjqeTeAe oUI0DEq|
[zes'voz'gs $ jo00'00z'sz_$ |ooo'ooz'et_$ lasy'ser'ss_$ ue wershs Swi O1U1 paped Spun 287] G1ULOD|Z6/t L/P
ees" '$ Jooo‘oos's4 $ lerw'sev'ty $ fron Ss {8616/85 PUBIONEID 10) EALOD|L6/S1/b
{(s}001 9 S18}109 40} }BUCO OF S49Q
lzes'oz__$ Jo00'00s"s+_$ leor'eze'tt $ looo'00s') _$ leov'ez6's_$¢_| wm pex0m vu40G) envesas 9 sirenuCo WSOl9B/SH/Z
loo0'00s"t1__$ |000'00S's+_$ jo00'00s'ki_$ |- $ t (vs9G 01 aigeHeAB) spuny jeydeD 96 AJI9E/SL/L



‘ASRSSERLE ust coeenrenge reer ae Tere j
SS A
: nngress of the United States

= ee
= Pouse of Representatioes Poa
iso ‘COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT es
a 2187 Raveurn Hoves Ornce Bunn a
=e Wasemoron, 06 20516-6143 Ee

REP. TOM DAVIS ==
CHAIRMAN, D.C. SUBCOMMITTEE
JANUARY 23, 1998
OPENING STATEMENT

Good moming and welcome. This is our first hearing of the year,
and the start of a very busy Session, Our experience in this
Subcommittee over the past 3 years indicates that we will not have a
shortage of subjects to address in 1998. Today we will be addressing the
D.C. Public Schools, with an emphasis on the Repair Program and the
Facilities Master Plan.

In creating the Control Board, Congress stated in the preamble to
the law that “the District of Columbia government fails to provide its
citizens with effective and efficient services in areas such as education.”
The Conference Report spoke of “severe mismanagement of the District
of Columbia Public Schools System” and says that “strong and
immediate action must be taken to reverse this situation.”

It remains the case that nothing is more important to the overall
recovery of the District than to achieve more positive results in helping
students obtain a quality education. While there has been some progress
during the last couple of years, I am concerned that too many significant
issues remain unresolved.

The efforts of local school officials are very much appreciated. In

i


93

when they saw they couldn’t, a new judgment should have been
made. You talk about not until money is in hand. That is a very
important matter that you raise. But again we go back to the $20
million that became available on June 2nd not loaded into the fi-
nancial management system until July 14th, so that there is some
time loss there that seems unnecessary and implies that there is
a communication problem between the school system and the cen-
tral or at least the CFO’s office where the money apparently would
come or their own school CFO. We will have to inquire about
t—

Mr. BRIMMER. All right.

Ms. Norton [continuing]. On the next panel. Dr. Brimmer, could
I ask you—first, let me thank you that when you came the last
time it was just before Christmas, a few weeks before Christmas.
I asked you about the 7-year delay that had accrued in paying the
cafeteria workers, the lowest paid workers in the school system, de-
spite two arbitrator’s awards. And you said that they would get
some of their money at least before the end of the year and appar-
ently there was some money that came forward before the end of
the year. Could you indicate to me what the status is of the rest
of the money that is due these workers?

Mr. BRIMMER. Yes. I would again ask you to put this question
to General Becton because he is the one who is in the midst of
these negotiations right now, but it is my understanding of, first,
the commitment we made is still there. We have said that we rec-
ognize that the award was legitimate, that it was an obligation of
the school system. It is still an obligation and we have asked Gen-
eral Becton to negotiate with the unions and work out a plan be-
cause we have said, and I have said to the general, we could, hope-
fully, the total award could be paid out over a 3-year period rather
than one lump sum. There is no way for us to find in one lump sum
the full amount of the obligation. Hopefully we will spread it out.
I understand negotiations are going along and there is a real possi-
bility that that will happen. We will, as I said earlier, do whatever
reprogramming is necessary once they come to us with a settled
amount that is within the ballpark of what we could do. I under-
stand those negotiations are still going on. I was told as of yester-
day that they were close to reaching a resolution.

Ms. Norton. I am very glad to hear that. Thank you. I am not
sure you are aware, Dr. Brimmer, but in fiscal year 1997, the total
amount of special awards given to District employees who appar-
ently do not get bonuses was in fact given to 76 employees and the
total amount was $101,581.

I seek clarification on the policy concerning bonuses. The reports
earlier had indicated that General Becton received $30,000. These
are signing bonuses, I believe. Dr. Ackerman, $25,000 and Dr.
Brooks, $15,000. When they were asked about these bonuses, Gen-
eral Becton said that they had been approved by the Control Board
and the emergency trustees. Could you clarify on what basis the
Authority would have concluded that bonuses were warranted, bo-
nuses of this magnitude were warranted and what your policy, and
whether you have a policy for District of Columbia employees of
signing bonuses that will be continued in your——


38

Charles E. Williams, MG USA (Ret.)
January 5, 1998
Page Three

In addition to schoo! facilities made safe for students, the emergency repair program generated an
additional benefit that will serve DCPS and the District into the future. DCPS developed and put in
place a process for managing the work even as work progressed, a challenge under normal
circumstances. That DCPS accomplished not only the construction program, but the equally difficult
task of adapting its management structure to address an emergency program, and subsequently
ongoing facilities repairs, deserves note. Consistency of inspections, cooperative and reasoned
assistance from the building code officials, and a single-minded focus on the need to build quality into
the work, all helped to achieve not only the reroofing program, but also the management infrastructure
necessary to address the next construction program.

In this past year in Washington, many noteworthy building programs have come to completion: The
New Terminal at National Airport and the Expansion of Dulles, the MCI Arena, Jack Kent Cooke
Stadium, and the Ronald Reagan Building.Given the schools’ impact on the future of the City’s
residents, children and adults alike, we would count the DC Public Schools among these programs.
Each had a different budget and schedule; each was complex in its own way.

DMIM plays a key role on some of the largest construction programs ongoing in the Washington
metropolitan area. We are proud to have contributed to this program and your success in
accomplishing what few organizations have ever achieved: Emergency repairs delivered well, under
extreme scrutiny and time constraints.

Congratulations.

Sincerely,

DANIEL, MANN, JOHNSON, & MENDENHALL

Associate Vice President /
Director of Operations

cc: Andrew Brimmer, Chairman, DC Financial Responsibility and Management Assistance
Authority
Bruce McLaury, Chairman, DC Public Schools Board of Trustees
General Julius Becton, Chief Executive Officer, DC Public Schools


158

PREPARED TESTIMONY OF JONATHAN MILLER, AIA
Associate Vice President - Daniel, Mann, Johnson & Mendenhall
BEFORE THE UNITED STATES HOUSE OF REPRESENTATIVES
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA
January 23, 1998

Good Moming. My name is Jonathan Miller. I am an Associate Vice President with the
architectural and engineering firm of Daniel, Mann, Johnson, & Mendenhall (DMJM), and am a
registered architect in Washington, DC and Maryland. I am appearing before this panel in my
capacity as the Project Manager for the DC Public Schools project. My 20 years of design and
construction experience in the Washington, DC metropolitan area have allowed me to become well
versed in Federal sector projects, including projects for GSA, Department of the Treasury and the
FBI. I recently served as the Lead Architect for design management for the New Terminal at
National Airport.

DMIM is a 52 year-old, multi-disciplined professional services firm with over 1400
professionals in 20 offices worldwide. We provide architecture, engineering and construction
management services to a range of public and private sector clients, and we have been serving the
metropolitan Washington community for 43 years. We are currently providing program
management services for the Pentagon renovation, Department of Labor Job Corps Centers located
across the nation, National and Dulles Airports, and the Federal Emergency Management Agency
(FEMA). Unlike these projects, we are not providing comprehensive Program Management ot
Construction Management services to DC Public Schools. Rather, as I will explain more fully in

a moment, we provide technical advice and field representation on numerous tasks.


125

Mr. Davis. Thank you very much.

General Becton.

General BECTON. Mr. Davis, thank you for providing us the op-
portunity to testify today about the D.C. Public Schools’ capital im-
provement plan.

As you know, in Washington perceptions often substitute for re-
ality. Too often what people perceive is what they believe. Some
members of the public and some in the Congress have expressed
concerns about the massive capital improvement program under-
taken by us last year. Based on most of the media reports about
the recent audit of that effort by Cotton & Co., I am not surprised
that that is the perception. Today I would like to, in a very few
minutes, talk about reality. ’'m not going to say that we did every-
thing perfectly, we did not, but something seems to be amiss this
afternoon, because we asked for an audit and we joined with the
Control Board for the audit, and by the way, we are paying for the
audit. So it is not something that we were subjected to. We partici-
pated in that request. I know that there is room for improvement.
We learned lessons last summer, and we are using them to make
changes to the way we do procurement and manage our capital
projects. General Williams, our Chief Operating Officer, will talk
about some of those lessons and new systems he has implemented
as a result.

You have heard Ed Stephenson talk about the changes already
made in procurement operations. Having said that, I do want to re-
state what I have said before a number of times. I believe that
under extremely difficult conditions we made substantial progress
in addressing what was clearly a facilities crisis in our schools. And
I don’t want that accomplishment and the hard work of those who
helped to make it happen to be lost.

With this administration, when we were put in place by the D.C.
Control Board about 14 months ago, we inherited a $2 billion infra-
structure problem. You have heard how old our buildings are, ans
the fact that the buildings were crumbling. Over the past year we
made substantial progress. We developed a long-range facilities
master plan, abated more than 1,600 fire code violations, and re-
placed roofs in over a third of our schools. We closed 11 schools and
began selling or leasing excess DCPS properties which in the past
were allowed to stand empty and deteriorating for years. The pro-
ceeds from these disposals will be used for badly needed capital
work in the operating schools.

As you are well aware, these achievements did not come easily.
School closings are never popular. Property disposal can be con-
troversial. The Parents United lawsuit forced us to make facilitates
repairs under extremely difficult conditions. However, this adminis-
tration was put in place to make difficult decisions, to do what is
right for the children and to withstand the pressures from both in-
side and outside the system to preserve the status quo. We made
some mistakes, but I firmly believe that we have made unprece-
dented progress in the restablization of the D.C. Public School In-
frastructure. In fact, the size of our fiscal year 1997 capital im-
provement program dwarfs any effort undertaken in recent mem-
ory and, as a result, our schools are safer, dryer, and warmer, and


100

in the system that cause congestion and obstructing the flow of
funds. Obviously, we saw it in the lack of needed services and prod-
ucts getting to our citizens.

We have since, in fiscal year 1997 and again this year, made an
over-effort to ensure that all of our agencies have their full budget
authority. In fiscal year 1996 we actually apportioned and allocated
funds from a central—on a central basis to the agencies. Beginning
in 1997, it was our objective to ensure that each agency had all the
resources it needed to do its job. Clearly, in my estimation, humble
estimation, that did not happen in this case. I have a number of
different reasons I can detail later.

No. 2, I think that there is demonstrated in this episode the need
to clearly appoint one designated person as responsible for not only
the management of a given process, but the fix-up of a given proc-
ess, and procurement is clearly one of those processes. In procure-
ment you have program management involvement. Obviously you
have to make decisions on what you are going to requisition and
what you are going to actually procure. You have the contracting
officer's involvement, you have the financial officer’s involvement in
terms of the availability of funds and the sign-off on disbursements
before actual payments are made. .

But all of those different players have to, I think, basically
pledge allegiance to one entity, one person whose job it is to reform,
reengineer, and streamline that process, or else I think it is analo-
gous to trying to fight the Gulf war with five different, you know,
silos all trying to get the job done, and it cannot be done, and I
think you end up with the results that we have seen.

I think, finally, I think there is a need—we can talk about in
terms of this episode all the lessons about planning and organiza-
tion and control, and I think they are there. But I think there is
also a need on all of our parts to accept our responsibilities in this
matter, and I put that in the whole area of leadership. I think a
lot of attention has been focused on the Control Board and its in-
volvement in all of this. But in my estimation I think it has been
the role and job of the Control Board to clear the way for a number
of us managers to get the job done, and then it is up to us man-
agers to get the job done, and if we are not getting the job done,
to basically admit where there are problems, where there are les-
sons to be Jearned, and move forward.

I will give you an example. At the beginning of, I guess this was
the last year, I was at a hearing before the Control Board and I
was basically dragged across the carpet for the lack, at that time,
of progress on the financial management system. Basically they
didn’t want to hear any excuses. I didn’t make any excuses. I could
have said that I basically inherited an office with one person, I was
in the midst of a financial emergency, and the last thing I had time
to do was actually start to build a new financial management sys-
tem. I didn’t do that. I basically accepted responsibility. To the ex-
tent all of us can do that rather than getting into this “he said, she
said” routine, I think we are all better off.


41

Mr. Davis. I am not asking for a dollar figure. It just seemed to
me that when the decision came down, you resolved the issue
quicker, but it was going to take more resources out of the system
to try to do it, particularly because you were shuffling kids back
and forth. Also you had to do this in a much faster period of time,
with increased expenses of busing.

Mr. MILLER. ‘There are some perhaps partially hidden costs in
condensing the construction period as well.

Mr. Davis. I bet they are not hidden. I mean, I am not asking
you, but I think you are probably justified that it probably ran in
the millions of dollars.

Mr. MILLER. I am not prepared to quantify it, but it is certainly
significant.

Mr. Davis. OK. Can you give me your professional assessment of
the repair program implemented by the D.C. Public School System.

Mr. MILLER. Yes. I would first say that I consider it, at least in
terms of strictly accomplishing the work in the amount of time
given, a remarkable achievement.

I believe that perhaps in the inspection of cost and schedule
issues, a very important issue may be overlooked or lost in the
fray, which is that of quality. We feel that the D.C. schools’ roofs
which were replaced were replaced with good quality construction.
And the way in which we helped to accomplish that was to provide
a daily presence on each roof to ascertain that the installed work
conformed with the technical requirements of the contract. Warran-
ties, both a 2-year labor and material warranty and a 20-year war-
ranty from_the manufacturer, were required as part of the tech-
nical specifications, and both of those helped to ensure that D.C.
Schools receive a quality product. There was no recovering of roofs
done this summer; there was no Band-aiding or patching. From a
life-cycle cost perspective, the best investment of public funds, we
believe that stripping these roofs down to the substrate and replac-
ing them was merited and provided the best level of quality for
D.C. Schools.

Mr. Davis. So if there is a criticism here, it is not the fact they
got the job done in a timely manner that is remarkable, but there
are quality controls so that these issues are not revisited. In your
judgment, what the school system achieved there was extraor-
dinary; is that fair to say?

Mr. MILLER. Yes.

Mr. Davis. The extent of the repairs that were necessary to
eliminate the fire code violations in the public school system, can
you give us a view of that?

Mr. MILLER. The extent of repairs was—at least on the roofs that
DMJM was involved with—based on our condition surveys. We
really were not party to the specific fire code violations. We didn’t
see them as they were either cited or recorded.

But let me take this opportunity, if I might, to talk about the
condition survey process. it involved a detailed survey, field sur-
vey, and some sampling, both for hazardous materials, such as as-
bestos, and some roof coring.

In response to some concerns that roofs less than 10 years old
were replaced, let me give you two quick anecdotes. On Randle
Highlands Elementary, the roof was 7 years old, according to