Horry County Schools staffer questioned contract for new schools, emails show

CONWAY, SC (WBTW) – Less than 14 hours after Horry County’s school board approved $220 million worth of contracts for five new schools in 2015, the builder, First Floor Energy Positive, emailed the district and asked to get paid. Robbie Ferris, the company’s CEO, requested approximately $5 million for designing the schools.

Ara Heinz, an Horry County Schools district staffer who handles procurement, appeared to not know what happened after a board meeting on the night before. “I’m assuming we have fully executed contracts?” she wrote to district staff 15 minutes after Ferris’ email.

Heinz found out a few minutes later the contracts had been signed, another email suggests. “Before we proceed…I have a few concerns that are somewhat legal in nature,” Heinz wrote. “I was informed that the board chair [Joe Defeo] signed the contracts last night, and I’d like confirmation that it’s allowable.”

Prior to this 2015 agreement with First Floor, Defeo had never signed a contract for a new school in Horry County. The district’s chief financial officer signed all of the most recent school contracts dating back to 2006, a district spokesperson said, but not this one.

The negotiation

When the board voted to give First Floor all five schools, member Ray Winters justified the decision because, among other things, First Floor would “accept our contract as provided in the [request for proposals] without reservation.”

News13 compared the district’s proposed contract and the final contracts line-by-line and found two key differences.

The final contracts added a provision, which allowed Ferris to ask the district for $5 million for design work on the morning after the contract had been signed.

The final contracts also changed the terms for weather delays. It described “adverse weather days” as days with more than a tenth of an inch of rain. Every “adverse weather day” beyond two days per month would allow First Floor to extend the contract by a day; the builder would be allowed to finish the schools later. The originally proposed contract required more; the builder had to prove the contractors couldn’t work before they’d be allowed an extension due to “adverse weather.”

Defeo acknowledges there were disagreements between district staff and First Floor about the contract terms. Among the debates was the date schools would have to be built, he says, because First Floor wanted more time due to delays and district staff didn’t want to grant an extension.

Defeo, however, says he wasn’t part of the negotiation process. “I asked if I could sit in with those negotiations when I found out they didn’t seem to be progressing as fast as the board would like them to. I was told ‘no.’” Keith Powell, whose firm Childs & Halligan worked on behalf of the district at the time, said he’d handle the problems, Defeo says.

The signature

Defeo says he was asked by Keith Powell to sign the contracts. “I trusted the attorney,” says Defeo. According to a district spokesperson, no staff members were asked to sign it, despite the precedent set by previous contracts.

While Defeo describes the signature as a formality because the board already approved the deal, he acknowledged a signature would prevent any further negotiations. Defeo suggested, as far as he knows, negotiations had been completed. “[Powell] very specifically said if we could get this signed contract approved by the board, which he felt needed to be done because there were some changes to the contract. What they are, I have no idea, okay.”

All but two board members voted to allow Defeo to sign the contract. Defeo didn’t cast a vote.

Ara Heinz questioned whether the signature was legal in an email written the next day. She listed clauses from the district’s procurement code and asked whether it gives the board the right to authorize any procurements. “In my opinion, this could be setting a dangerous precedent for future procurements,” her email said.

She mentioned another clause which gave the board the “power to audit and monitor the implementation of its policies and the requirements of this code.” She asked how the board could audit its own actions. “Shouldn’t there be some separation of duties?” she wrote.

The response

News13 doesn’t know how Heinz’s concerns were resolved despite our request for replies to her emails under the Freedom of Information Act. The attorneys who handled the contracts said the board chairman’s signature was legal, according to a district spokesperson, but she said we couldn’t see the emailed responses because they’re currently under attorney-client privilege.

The refusal to release emails by citing attorney-client privilege raises the question of who is the client; who can decide to release the emails?

Defeo told News13 the client is the school board, but he said attorneys typically decide what information will be released under the Freedom of Information Act (FOIA). “The board has never made a decision on whether something is FOIAable. That’s something done by the attorneys.”

Defeo suggested releases of some information under attorney-client privilege could get the district sued, even though the board is the client. News13 asked who would have grounds to sue. “The attorneys or a client somewhere,” he said. We pointed out the attorneys work for the district. Defeo replied, “If the attorneys believe we released information that should not have been, they would have the right to sue us.”

Defeo says the district is looking into “issues” with FOIAs “and if it’s determined those items are FOIAable, they will be turned over, even up to and including emails.”