Investigation finds violations of district policy, threats from local contractor, in bids for new high school

File photo: Nancy Thrower of the Marion County Public School Board speaks during a groundbreaking ceremony for a new elementary school that will be built at Winding Oaks Farm off Southwest 49th Avenue Road in southwest Ocala, Fla. on Thursday, March 21, 2024. The new school, which is not yet named, is expected to be completed by Ausley Construction in 2025. [Bruce Ackerman/Ocala Gazette] 2024.

Home » Business

Posted May 29, 2024 | By Jennifer Hunt Murty
jennifer@ocalagazette.com

An independent investigation has provided new details of behind-the-scenes maneuvering by a local construction firm, including veiled threats of political retribution against school district leaders, in the jockeying for hundreds of millions of dollars in new school construction contracts.

During a May 14 school board meeting, Marion County School Superintendent Diane Gullet explained that due to threats and other irregularities related to the recent awarding to the Wharton-Smith Inc. Construction Group of a $120 million-plus contract to build a high school, she called for an outside investigation into whether the district’s procurement policies had been violated in the selection process.

Her decision followed allegations by School Board Member Sarah James, who was among the selection committee members who ranked the companies that applied for the contract, that district staff had not handled the scoring in a way that gave preference to local vendors.

James earlier had praised the district’s process for evaluating construction companies when the board awarded contracts, worth $43 million each, to the A.D. Morgan and Ausley Construction to build Elementary Schools W and X. She later, however, expressed displeasure in using the same scoring mechanism for the high school when Ausley Construction did not win that bid.

According to the investigative report by the law firm GrayRobinson, James was the first selection committee member to complete her score sheet for the high school, followed by another committee member Harvey Vandeven, a private developer. Both left their scoresheets and asked to be notified of the final tally on April 23 by the rest of the committee, all of whom were school district employees.

According to interviews and records obtained by Julie Zolty of GrayRobinson, author of the investigative report, during the evening of scoring, Ken Ausley contacted Vandeven to ask how his firm did. Vandeven reportedly told Ausley that he didn’t know the tally scores and that it would likely not be known until later.

The next day, Ausley called James as well as Barbara Dobbins, Senior Executive Director of Operations for MCPS, and other school district employees. Dobbins declined Ausley’s call because of the “cone of silence” related to the district’s procurement policy, but James took the call.

According to school district policy, “the cone of silence prohibits any communication regarding a particular IFB, RFP, or ITN between: a potential vendor, service provider, bidder, lobbyist, or consultant and the staff of the District, including school principals; and a potential vendor, service provider, bidder, lobbyist, or consultant and any one (1) or more of the School Board members or member-elects from the time the bid is advertised until “the Board acts on a written recommendation from the purchasing department or planning and construction department regarding contract award; provided, however, that communications are permitted when the Board receives public comment at the meeting when the recommendation is presented.”

Ausley presumably is familiar with this district policy because his company has done a significant amount of work for the school district and other governments that have similar procurement policies.

The day after the scoring, James voiced concerns to district facilities personnel about the scores being “rigged” against Ausley, a local company, to favor the Sanford, Florida-based Wharton-Smith, which scored the highest. In response to James’ concerns, Gullet set a meeting for April 30 to discuss the matter with key school personnel who oversaw the process as well as with James and Vandeven.

But before the meeting took place, Ausley Construction continued to lobby district officials. According to the investigative report and a district employment memo, Todd Duffy, chief operating officer for Ausley, contacted Shaun Duncan, the school district’s supervisor of technical services. Duncan wrote later that Duffy explored whether Duncan was interested in the job of district supervisor of facilities, which was then held by Robert Knight. Duffy reportedly told Duncan that Ausley could help make it happen due to the firm’s displeasure about the high school contract process.

In the April 30 meeting, James continued to question the integrity of the scoring process, suggesting there was a “perception” problem that led some to believe that three members of the facilities department may have altered the scores after James and Vandeven turned in their scores and left the meeting. James recommended redoing the process for the high school to “fill in some gaps.”

According to the investigative report, school district staff denied any wrongdoing. Vandeven did not support James’ concerns that district staff had handled the bidding wrong and privately apologized to Dobbins “for everything that occurred.” Gullett told James she would seek legal advice and recommended an external investigation into the allegations.

Also on April 30, local attorney Robert Batsel wrote the school district on behalf of his client, Ausley Construction, suggesting the board reject all bids and start over due to “defective and improper application of the evaluation criteria.”

According to the investigative report, the next day, School Board Chair Nancy Thrower’s husband, Fred, received a call from Duffy.

Fred Thrower told the “Gazette” that he knew Duffy from coaching their kids in baseball years ago. “He started the conversation with, ‘I can’t really trust Sarah James, so I’m calling you.” Duffy, Fred Thrower added, said, “He felt Robert [Knight] was out to get him.”

When Fred insisted he had no knowledge of the matter and could not be of help to Duffy, Fred said Duffy replied, “I don’t want Nancy or Gullett to be put in a bad situation.”

“That’s my wife he was threatening, and so I raised my voice in response, ‘Are you threatening my wife?’ which is about the time my wife walked in and heard the rest of the conversation,” recalled Fred, who admitted to launching threats back at Duffy but offered this context: “That is my wife!

“That’s when Todd Duffy put the phone on speaker and Ken [Ausley] took over the conversation saying ‘Todd didn’t mean to threaten anyone,’ but I didn’t even know Ausley was listening in on the conversation until that point. I had never talked to Ausley before,” Fred said.

“Ausley tried to explain that I didn’t understand the process, and that they were concerned if the high school contract bid wasn’t awarded ‘properly’ to a local vendor it would ‘jeopardize the sales tax,’” Fred said.

Fred explained to the “Gazette” how he sees politics working in this town.

“See, I don’t do business in Florida so they can’t do anything to me, and Nancy has already said she’s not running for office again, so this is the only thing they can hold over our heads: school funding,” he said. “That’s how things are done here. People hold power over the heads of others when they need something done. And that’s the only reason he called because he needed help.”

Ausley denied ever having this conversation with Fred when interviewed by the investigator.

Later on April 30, Gullet sent an email to the three construction firms bidding for the high school project informing them that the process would restart and that the district had started forming a new interview committee. When Duncan was tapped to be on the committee, he reportedly asked if he would lose his job if he did not select Ausley. Duncan then shared with the district his conversation with Duffy, and it was agreed that Duncan would not be on the committee.

The next day, after an MCPS Independent Citizen Review Oversight Committee (ICROC) meeting where Ken Ausley serves as chairman, Ausley approached Gullett to ask about the bidding process. She declined to discuss it.

James had nominated Ausley to the ICROC, which oversees how the district spends funds earmarked to “fully restore art, music, library media services; physical education and vocational programs; to meet class-size requirements; to retain certified teachers and paraprofessionals; and enhance school security.”

On May 3, the district scheduled a new committee to reinterview the same three construction companies, using the same scoring system. According to the investigative report, Ausley reached out to find out if the scoring criteria had changed, and district officials explained it remained the same.

James said later that day she was contacted by Kevin Sheilly, CEO of the Ocala/Marion County Chamber & Economic Partnership (CEP), “I received a phone call from Mr. Sheilly that shared he was concerned because there are interviews scheduled for 8:30 a.m. on Monday (May 6). This was the first I had heard about the interviews being rescheduled. He had questions for me regarding the process and scoring system that I was not able to answer,” James recorded in a memo.

The “Gazette” asked Sheilly if his involvement in the procurement dispute about the high school was something that regularly occurred for CEP members. Sheilly acknowledged that the high school contract was an important project, and that the CEP represents the interests of local businesses in Marion County and so generally advocates for policies that give locals preference.

Ken Ausley is on the Executive Board of the CEP, and Ausley Construction has historically remained one of the CEP’s top contributors. According to James’ campaign finance reports, Ken Ausley was one of her first donors.

James also indicated she had become concerned that it was “statistically impossible for a contractor who consistently does work on our continuing contract to be awarded work for a larger job when competing against firms who were not previously awarded work in our district.”

In addition to recently receiving the $43 million contract for Elementary X, Ausley also had renovated North Marion High School’s cafeteria for at least $7 million over the last few years. James expressed concerns that project may have impacted Ausley Construction’s ability to compete with newcomers for district business.

According to statements from school district employees who overheard the telephone exchange, James called Gullett and angrily told her that Gullett was on James’ “shit list” and that James was prepared to “bring down this house of cards.”

After another meeting with Gullett, James and attorneys to discuss how the interview process could proceed, it was decided that the district would cancel rescheduling the interview process with the new committee.

A few days later, on May 6, Gullett wrote Thrower about the need for an outside investigation of the process.

“Since the time of pausing the construction interview process, obtaining legal advisement and restarting the second phase, as legally advised, I, multiple employees of the district from various departments, along with Board members have been the subject of threats and forms of intimidation both internally and externally,” Gullett wrote.

In addition to the threats, Gullett said she was concerned the “Cone of Silence” had potentially been violated.

“Since the construction manager interview process was originally held, in addition to what has been outlined above, there have been allegations of potential violations of the Cone of Silence, conflicts of interest with the members on the committee and a growing fear of workplace harassment and intimidation amongst my staff,” she wrote.

Gullett also noted she had received a letter from Batsel, who is representing Ausley Construction, which essentially raised the same concerns James did, that local vendors were being penalized in the scoring.

In a letter to school board attorney Jeremy Powers, Batsel noted the large amount of money at stake in the contract and requested the district reject all the bids and restart the process.

“The CCC New High School is, for the near future, the largest and most expensive project undertaken by MCPS,’’ he wrote. “The ambiguities affecting how ‘local’ evaluation criteria would be applied were not discernible to proposers until the scoring process unfolded. But it is now abundantly clear that the combination of the restricted application of local preference and the simplistic process for imposing a disadvantage for performing work previously for MCPS was confusing, ambiguous, and posed problems for the committee evaluators.”

Neither Ausley Construction, James nor Batsel has provided any substantiation for their claim that MCPS scoring is stacked against local vendors. However, in a report obtained by the “Gazette” through a records request analyzing such awards, at least 70% of district contracts have gone to Marion County companies over the past 20 years, with outside companies receiving the other 30%.

The investigating attorney wrote in her report that she found allegations against staff, or “bid shopping” in the original high school procurement process unsubstantiated. However, the investigator substantiated the allegation that members of the committee and Ausley Construction violated the “Cone of Silence” in the procurement process.

Noting that committee members might not have understood the policy, the investigator wrote the same could not be said for Ausley Construction.

“Given the company’s extensive experience in public procurements and the express disclaimer on bid announcement, the number of calls to various members of MCPS and the school board member on the procurement committee, despite knowing the cone of silence was in place, is a serious concern that jeopardized the integrity of the process,’’ she wrote. “Based on these findings, I recommend the school board take action as they deem appropriate.”

The investigator also found that James had inappropriately used her influence “to change the scoring process internally at MCPS.” In addition to James berating Gullett, the investigator pointed to the poor performance evaluation Dr. James did of Gullett, indicating it stood remarkably different than the other school district member evaluations.

The investigator also substantiated “inappropriate influence to change of the scoring process internally at MCPS” by James, noting that in addition to “berating” Gullett in an “unprofessional manner,” James seemed to also be retaliating by giving Gullett a bad evaluation.

James’ evaluation accuses Gullett of unprofessional communications and bad internal and external communications for the district. The investigator noted that “none of the other school board members expressed similar concerns in their evaluations or decreased their evaluations of Dr. Gullett from the prior school year to the extent Dr. James did.”

The investigating attorney recommended that a new interview process for the high school be started, with a new committee. Additionally, “I do not recommend any substantive changes to the rubric, scoring criteria, local preference, or weight of equitable distribution for the new interviews for the high school contract.”

The “Gazette” has reached out to talk with James, Ausley, Duffy and Batsel but has not received a response from any of them.

Although district officials have not released an official statement of what actions they deem appropriate at this juncture, school district Chair Thrower lamented this delay would impact plans for when the district could expect the high school finished, “Our need for this school stays the same.”

The district’s “Cone of Silence” policy states: “Any person, whether employed by the District or not, who knowingly violates a provision of this policy shall be prohibited from serving on a District competitive selection committee.

“Violation of this policy by a particular bidder, proposer, respondent, and/or representative may, at the discretion of the district, result in the rejection of said bidder, proposer, respondent, and/or representative’s bid, proposal, or offer and may render any contract award to said bidder, proposer, or respondent voidable.

“In addition to any other penalty provided by law, violation of this policy by a district employee shall subject said employee to disciplinary action up to and including dismissal from service.’’

This story is developing and will be updated as additional information becomes available.