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On Feb. 26, when Moore County Schools opened construction bids for a new Southern Pines area elementary school to be built off of Morganton Road, district administrators were in for an unpleasant surprise.

Already, the project was almost assured to come in over budget, since the lowest of the five bids was about $2.5 million more than the $27.4 million construction budget for the school.

Over the next week, Moore County Schools Director for Operations John Birath began the economizing process known as “value engineering” with low bidder Clancy and Theys Construction Co. That’s when construction coordinators go back with contractors and see what items can be chipped off to save money.

But then the problems really set in. Its low-bid contractor discovered a math error and pulled its offer the day before it was to be accepted. That left the school system scrambling to go with the second lowest bidder — with a looming deadline of its own to stay in on the Moore County job or bid another job.

Faced with these problems, a collection of over-budget bids and the prospect that scrapping it all and seeking new bids would delay the school’s opening and inflate costs even more, administrators went and sought additional funding for the project from the Moore County Board of Commissioners.

Those discussions — and the decision making around them — have been under intense scrutiny over the last week by a local AM radio talk show host. WEEB 990 AM radio host J.D. Zumwalt had spent large chunks of program time vilifying school administrators on-air, suggesting that they mismanaged the process and deceived the school board and county commissioners.

It is those accusations that prompted the school board recently to have its attorneys review events of the past month regarding the bidding of the new Southern Pines elementary school.

That review examined the original bids and subsequent negotiations between Birath, school attorneys and the two lowest bidders’ representatives after Clancy and Theys discovered that its cost proposal for the school project was a $1.4 million underestimate due to a clerical error.

All of that examination was packaged and released late last Friday and was accompanied by a seven-page statement by school board Chairwoman Helena Wallin-Miller.

The statement provided an extensive recap of the district’s findings and fully backed the actions of school staff and Superintendent Bob Grimesey in working to secure a building contract in light of the board’s goal to open the new Southern Pines school for the 2020-2021 school year.

"While most of these events have been explained in detail in multiple recent public meetings before the Moore County Board of Education and Board of County Commissioners, there have also, regrettably, been false and unsubstantiated claims that the administration of Moore County Schools 'lied' about these events in a March 5 presentation to the County Commissioners," Wallin-Miller says in her statement.

Helena Wallin-Miller

Helena Wallin-Miller, Moore County Board of Education vice-chair

"Additionally, questions have been raised about how and why the Moore County Schools ended up contracting with the second-lowest bidder on this project, the extent to which the Board of Education was involved in that decision, and whether the school system should have made a claim on a bid bond for that project. I also will address these questions in this statement.”

‘A Rather Urgent Change’

On March 4, the school board was scheduled to review the five bids for the new Southern Pines school project. But that discussion was pulled from the agenda at the start of the meeting. At the time, Birath told the board that pending legal concerns surrounding the low bid could invalidate the scheduled presentation.

What he could not say at the time — because the facts were still coming in — was that the contractor, in trying to comply with the "value engineering" request, was reworking its math and discovered a $1.4 million math error in the process.

Robert Hall, CEO of Clancy and Theys’ Charlotte office, withdrew the company’s bid in a brief email sent shortly after 9 a.m. the next day. Within a few hours, Birath and Superintendent Bob Grimesey made an impromptu appearance at the county commissioners’ regular meeting.

Birath told the commissioners that Clancy and Theys had notified them of a significant mathematical error in its bid via phone the day before.

John Birath

John Birath, director of operations for Moore County Schools

“We had a rather urgent change in the bid results to the new Southern Pines elementary school,” Birath said. “You have already planned to sell the bonds for that project on March 12, so we thought it urgent to get this matter before you as fast as possible.”

In that meeting, the commissioners agreed to fund a $2.7 million overrun on the Southern Pines project. But later, they said that the schools should endeavor to keep the total cost of that school, the Aberdeen school under construction off of N.C. 5 and a new Pinehurst elementary school under the $103 million that voters authorized the county to fund via general obligation bonds last May.

On March 18, the schools awarded a $30.3 million contract for the Southern Pines school to Monteith Construction. Monteith was the second-lowest of the five original bidders with a bid of almost $31 million.

Making His Case

The crux of Zumwalt’s argument has been based on the substance of Hall’s March 5 email to the district. Zumwalt received that email earlier this month after filing a public records request. On his radio program, Zumwalt accused Grimesey and Birath of fabricating an error on the bidder’s part to garner sympathy with the commissioners and secure funding for an over-budget project.

The email from Hall, which formally declared Clancy and Theys’ bid “null and void,” made no mention of a miscalculation in the bid. It said only that the company had been told by Thomas Hughes of SfL+a, an architecture firm working for the schools, that its bid was higher than the schools’ budget for the project.

J.D. Zumwalt

J.D. Zumwalt

“You cannot go to the commissioners and make an argument based upon information that you didn’t have. No argument had been made, as far as anyone knows, that there had been a mathematical error,” Zumwalt said in a phone conversation with The Pilot on Tuesday.

He also questioned the schools staff requesting funding from the commissioners without the full knowledge of the entire school board, and in the pressure placed on the commissioners to approve additional funding within an hour of being notified. Grimesey told the commissioners on March 5 that he only had time to call school board chairwoman Helena Wallin-Miller for an endorsement on the way to the meeting.

“What’s obscene to me — and this is pretty important I think — remember that as much as this county may worship him, the superintendent is an employee and he works for the school board,” Zumwalt said. “They knew about this the day prior, they had time to conduct a whole day of business, and they didn’t have a minute to give all of the school board members a call … it’s like they’re running around totally unsupervised.”

In the statement released on behalf of the Moore County Board of Education, Wallin-Miller responded to Zumwalt’s claims and affirmed her faith in Grimesey’s actions on March 5.

“Without time to verify the information received from Clancy and Theys, update their presentation, or explore the district’s legal and practical options, Dr. Grimesey and Mr. Birath notified the Board that they had just been contacted by Clancy and Theys and received unfortunate news related to the Southern Pines Elementary School bids, that their presentation may no longer be valid,” she said.

“With little time and no opportunity to update the full Board at a properly noticed meeting, Dr. Grimesey called me, as Board Chair, to let him know what he was doing. I fully supported, and still fully support, his decision.”

‘Ordinary Business’

Wallin-Miller’s statement detailed the schools’ attempts — what she termed “good faith discussions” — to work with Clancy and Theys to make more economical substitutions in the project specifications and bring down the cost of the school. In it, she also explained the board’s rationale behind awarding a contract to Monteith rather than rebidding the project and deciding against pursuing the five percent bid bond Clancy and Theys could be obligated to pay to the schools after withdrawing its bid.

The statement was accompanied by more than 130 pages of email correspondence between Birath, attorneys for Moore County Schools and Clancy and Theys, and Monteith representatives as well as both companies’ original bids.

In her statement, Wallin-Miller said that the email architect Hughes sent to Clancy and Theys Vice President Robert Hall on Feb. 27 was not a formal rejection of the company’s bid.

“It simply notified the contractor that value engineering negotiations would be needed to try to bring the project under budget,” the statement said. “All of this is ordinary business for construction projects of this nature.”

In the email, Hughes told Hall that the bid was above the project budget. He attached a list of potential cost-cutting measures, including dispensing with 1,500 square feet of collaboration space; eliminating things like canopies over classroom doors, a dish machine and associated plumbing; and substituting more economical light fixtures and sand-based rather than colored mortar on the school’s exterior.

“As apparent low bidder, I ask that you review your bid and let me know that you are comfortable with your numbers and willing to enter into a contract with the Moore County Schools for the project,” the email reads. “As we discussed, we are over the budget target for the project and will need to confer with Clancy and Theys on value engineering items to reduce the overall contract cost.”

On March 1, SfL+a sent Clancy and Theys revised architectural plans reflecting some of those changes. Of the documents Moore County Schools released on Friday, those are the last before Birath said Clancy and Theys called him on March 4 to alert him to the company’s error in formulating its bid.

After Hall emailed Birath to formally withdraw Clancy and Theys’ bid, the schools requested thorough documentation of the error to determine how to legally qualify the withdrawal. State law indicates that bids should be released without penalty if their formulation omitted a “substantial quantity” of supplies, labor or equipment based on a clerical mistake rather than a judgment error.

Keith Satisky, an attorney representing Clancy and Theys, emailed Moore County Schools attorney Rod Malone on March 7 fully articulating the error in the company’s bid.

Satisky’s email said that a mistake in the coding of the Excel spreadsheet used to formulate the bid resulted in a $1.4 million error. A total of six line items were left out of the sum code, and therefore not factored into the total cost. Items omitted include $425,000 for exterior concrete, $505,000 for landscaping and irrigation, $100,000 for lighting and sound in the gym and auditorium area, and a $300,000 contingency.

A correct bid would have amounted to $31.3 million — more than the next lowest bid the schools received for the project.

Clancy and Theys discovered the error during the “value engineering” analysis, when its pre-construction services director pasted the data into a new Excel file and noted a discrepancy between the resulting figure and the company’s bid.

“While C&T deeply regrets this error and the time and trouble it may have caused the school board, the mistake was indeed clerical and unintentional, and C&T would appreciate the board’s consideration in this matter,” Satisky’s email reads.

Divergent Opinions

Zumwalt has also criticized school administrators for forgoing trying to claim the bond Clancy and Theys — as well as Monteith and the other three bidders — posted when submitting their bids. The five percent bond the state requires of bidders for public projects would amount to nearly $1.5 million in the case of Clancy and They’s bid for the Southern Pines project.

In her statement, Wallin-Miller said that school staff did not make that decision unilaterally. She said that the board considered the matter during the closed session of its March 11 meeting reserved for discussion of legal and personnel issues.

“While I will not waive attorney-client privilege by revealing the substance of these discussions, Board members had ample opportunity to discuss the potential arguments and defenses related to bid acceptance, bid withdrawal, contract award, and bid bond issues and gave clear instructions and authority to its superintendent and attorneys with respect to the handling of these matters,” she said.

In disputing the mathematical error, Zumwalt referred to a March 8 email from Malone to Clancy and Theys’ attorney Satisky. In it, Malone requested additional documentation to substantiate the legal basis for withdrawal of Clancy and Theys’ bid and also notes that their formal withdrawal came well outside of the statutory 72-hour window from the bid opening.

“The school system does not believe that the two screenshots from an Excel spreadsheet are ‘objective evidence drawn from inspection of the original work papers, documents, or materials used in the preparation of the bid sought to be withdrawn,’” Malone’s email reads.

“The school system needs clear and convincing documentation from Clancy and Theys that meets the statutory requirements if we are going to find an amicable resolution of this matter.”

Ultimately, Wallin-Miller said, pursuing forfeiture of Clancy and Theys’ bid bond would likely have involved protracted litigation. Moreover, there would be no guarantee of receiving the full bond amount, as the schools were “value engineering” the original bid specifications with no intention of accepting the actual $29.9 million bid.

Zumwalt said on Tuesday that, after reviewing Wallin-Miller’s statement and the full portfolio of documents released on Friday, he stands by his on-air criticism.

Zumwalt said that he has lost faith in Moore County Schools’ administration — after formerly supporting Grimesey in 2015 when the school board fired him after a year of service for reasons that were never divulged.

“There’s nothing personal in this,” he said. “I know a lot of folks may see me as a troublemaker … but I’m not a guy who hates the schools.”

In her statement, Wallin-Miller concluded it by saying that "all of the information presented by our administration to the Board of Education, the County Commissioners, and the public was – to the best of my knowledge and based on a thorough review of these matters with staff and legal counsel – entirely fair and accurate and consistent with our high standards for integrity and transparency."

(5) comments

Thank you JD for speaking up. Things certainly do not add up and I hope they get an outside third party involved. Trust has been lost.

Let’s have a third party review the documents. Someone without any ties to the community. This entire process needs to be reviewed. Trust has been broken and ‘to the best of my knowledge’ doesn’t exactly make me feel comfortable.

Kent Misegades

Kudos to all - to JD Zumwalt for asking questions many are thinking, and to MCS for responding. The fact remains, MCS and the County Commissioners never considered lower-cost alternatives to these very expensive schools, although good examples abound in our state. Ultimately taxpayers will pay the consequences fir bad decisions.

Jim Tomashoff

Kent says, "The fact remains, MCS and the County Commissioners never considered lower-cost alternatives to these very expensive schools..." He always argues this point. And he always fails to provide any of the "...good examples abound in our state." He never provides any substantive details regarding said lower-cost alternatives, NEVER! If he means modular and/or prefab school rooms, and we don't know if these types are what he means, a brief internet search details numerous safety and health concerns raised using such buildings for school rooms. They've been studied several times and found to be wanting. But, in a change from my usual policy, I'll ape Kent's approach and not provide any of the sources I found, and I found many, that made these points in recent careful and scientific studies. Trust me, just like we're all supposed to trust Kent.

Chris Smithson

“I hope that this lengthy explanation will put the rumors and innuendo to rest so that the Board, staff, and general public can turn their full attention to important matters of governance.” Good luck with that. With redistricting the big issue, the parents who are so unsure of themselves and their children are doubling down to stay away from even minimal change.

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