Horry County Schools staff wasn’t ‘allowed’ to review final school contracts, spokesperson says

CONWAY, SC (WBTW) – Horry County’s school board chairman, Joe Defeo, claimed in March he didn’t read $220 million worth of contracts for five new schools before he signed them. He deflected questions about an unusual term in the contracts, which he suggested he didn’t know about.

But this month, Teal Britton, the school district’s spokesperson, said district staff “wasn’t allowed” to review the final versions of the contracts before they were signed.

The spokesperson’s revelation, which the school board chairman disputes, raised a new question about the school contracts: who reviewed and approved the final terms of the contracts?

Her comment also led to Defeo changing his story: he not only knew about the unusual term of the contract that allowed the school builder to extend the construction schedule by months, but he also approved it without consulting district staff or the full school board.

“Without reservation”
“There was no love lost” between Joe Defeo and district staff, according to Louis Batson, a consultant who reviewed the school plans before First Floor Energy Positive won the job. Defeo would call him and “rail on” employees and say they “didn’t know what they were talking about,” Batson told News13 in March 2017. He described the conversations as “unprofessional.”

Defeo disputes Batson’s claims and also questions his professional credibility.

Board members ignored Batson’s advice in early November 2015 when they gave all five schools to First Floor, which submitted the most expensive proposal. Among the justifications for the board’s choice, board member Ray Winters said First Floor would accept the district’s contract “without reservation.” First Floor also promised to finish the schools by May 1 and said it was the only company that could.

But by mid-November, the contracts still weren’t signed. District staff and Robbie Ferris couldn’t agree on when the schools would be completed. First Floor built its schedule with the assumption contracts would be finished by mid-October 2015, and work would start soon after.

Ferris wrote in an email to Keith Powell, an attorney working on behalf of the district, that the May 1 completion date wasn’t reasonable. He pointed to, among other things, the school district not signing permit applications when he requested.

Ferris offered to meet the deadline if the school district paid more money for a project that was already tens of millions of dollars over the initial budget. “I assume this would be very distasteful to the board,” he acknowledged. “To accelerate the schedule our [subcontractors] will have to work nights and weekends or supplement their staff, which is costly.”

Powell, who was also involved in the negotiations, forwarded Ferris’ email to district staff. The May 1 deadline “is going to be a problem,” he wrote.

“[Horry County Schools] should not be responsible for [First Floor Energy Positive] miscalculating the time our procurement process requires,” replied Mark Wolfe, the district’s executive director of facilities. “The May 2017 deadline was emphatically stated by the Board on several occasions. Staff cannot change that so it appears to me to be a Board matter.”

On the next day, district staff shared recommendations for the contracts with Powell, the attorney working on behalf of the district, according to district spokesperson Teal Britton. “However, after that was provided, district staff didn’t have an opportunity to see the completed contract before it was signed.” Staff had always reviewed final contracts until this project.

Britton declined to say what the staff recommendations were or whether they were included in the contract. Defeo said he didn’t know what the recommendations were.

“I didn’t do their contract. I don’t know.”
When asked whether the contract was pulled from district staff because negotiations had apparently stalled, Defeo replied “I know of no point in time that [attorney Keith Powell] pulled anything from staff.” There was a disagreement about the completion date, he said. “We had to get this either resolved or we would’ve ended up going back to the drawing board for the most part and starting this process over.”

According to Defeo, Powell recommended a compromise to him. First Floor would be allowed to extend the construction deadline for every day with more than a tenth of an inch of rain beyond two days per month. Horry County’s previous contracts required contractors to prove the weather prevented work before they’d be granted an extension.

Defeo says he approved the compromise since negotiation delays prevented construction. He spoke with a few board members about it, but not all of them, he says. He claimed he didn’t remember which board members he consulted. “That is the only change in the contract that I know of that board members wouldn’t have had access to read before.”

He didn’t speak with district staff about the contract term. It was never discussed at a public board meeting, allowing Defeo and the board to avoid publicly acknowledging their over-budget school construction project wouldn’t be finished by their own May 1 deadline.

News13 questioned Defeo about the weather language of the contract in March and April this year. He responded “I didn’t do their contract. I don’t know.” In another instance, he said “I haven’t read the contract.”

But then, the district’s own spokesperson said staff didn’t have an opportunity to read the final version of the contracts before they were signed. Defeo responded with an emailed statement, which started with a claim that the district’s spokesperson was “misinformed if she said no one was ‘allowed’ to see the contract.” He said staff could’ve seen the contracts if they asked him or the attorneys.

He continued, “Lawyers from the law firm… Specifically Keith Powell and Ken Childs discussed the contract in detail with me. Each document was (about) 47 pages. My point was not to read it… I needed to understand it. That is what we pay the attorney’s [sic] for, so the contract was explained to me… in detail,” he wrote.

When asked why he previously claimed he didn’t know about the only portion of the contract he independently approved, without involvement of the full school board or district staff, Defeo began to suggest he didn’t remember it. Then, he said “You know, why I answered the way I did? Whatever. If that’s what I said, you know, go with it. You know what I’m saying?”

Unprecedented
Until this project, district staff had always signed contracts for new schools. That changed on Monday, November 23, 2015.

Defeo called Keith Powell to the podium at a board meeting. “It’s time to approve the contracts, which I brought with me tonight,” Powell said. “It basically consisted of, um, the contents of which were all published as requirements of the [request for proposals], filled in with the awards that you all selected.” No one acknowledged the compromise language included in the contract, which would extend the construction schedule by months.

“I’d like to get the board to approve them and authorize the chair to execute them,” Powell said.

Defeo, looking in the direction of board member David Cox, said “do we have a recommendation for a motion, discussion?” No one answered. After eight seconds of silence, Defeo asked again, “recommended motion from Keith Powell that somebody has?” No one answered.

Minutes from the meeting say Cox made a motion, but in fact, Defeo read it. “Therefore, I move that the board chair is authorized to sign these five contracts immediately,” Defeo said. After finishing the motion, Defeo said, “David made the motion and I believe Janice [Morreale] seconded.”

Board members David Cox, Jeffrey Garland, Janet Graham, Holly Heniford, Kay Loftus, Janice Morreale, Sherrie Todd, and Ray Winters voted in favor of Defeo signing the contract.

A process with an unprecedented beginning – Joe Defeo allowing a sales pitch by Robbie Ferris during a school board meeting – had an unprecedented ending with Defeo’s signature.

The effects
Two of the schools won’t be ready for the new school year due to issues beyond the builder’s control, according to Defeo. He blames land problems for delays at the new Socastee Middle School. As for Myrtle Beach Middle School, he says the district’s facilities department took months to turn over the land to the builder.

For the remaining three schools — St. James Intermediate, Ten Oaks Middle, and Socastee Elementary — budget records show construction delays, mostly attributed to weather, will cost taxpayers $300,000. The money will pay for staff overtime as the district moves into the new schools.

““If we’d have had a wider period of time then we probably wouldn’t need the money for overtime,” the district’s chief financial officer John Gardner said. “But since there’s a tight time constraint then they are going to need those additional funds to accomplish their tasks.”

The district asked for the money before the builder announced more weather delays in June. He expected to be finished by mid-July instead of May 1, which the contract language allowed. The schools still have to pass final inspections.

If you have a tip or document related to Horry County’s construction of five new schools, email rwebb@wbtw.com.