Black fascist corporate agents David Bing, Kevyn Orr and their white overseer Rick Snyder. The banks are enslaving Detroit to seize public assets and pension funds to gamble away on Wall Street., a photo by Pan-African News Wire File Photos on Flickr.
Detroit spending millions on consultants in turnaround effort
By Joe Guillen Detroit Free Press Staff Writer Filed Under Local News City of Detroit
May. 01
freep.com
Detroit has agreed to spend nearly $14 million since December to contract nine firms to provide a range of financial and legal services to help the city overcome its staggering deficit and costly long-term liabilities.
More than $3 million of that came in hiring emergency manager Kevyn Orr’s former law firm last month.
While Detroit’s turnaround team continues to expand, City Council members are questioning the costs and wondering exactly who is in charge of the consultants.
“My concern was that we’ve brought in all these consultants, and I don’t know that it’s entirely clear to anybody exactly what they’re all doing and who’s monitoring them,” Councilman Kenneth Cockrel Jr. said during Mayor Dave Bing’s budget presentation on April 12.
Council President Pro Tem Gary Brown said the lack of proper oversight could be costly.
“Who is bringing synergy to all the contractors and, more importantly, who’s overseeing the work product to make sure we’re getting value?” Brown asked in an April 19 interview.“Somebody has to be making sure the work product is getting us value for those dollars.”
Brown predicted the consultants’ fees would increase. A Bing administration official echoed that sentiment.
Already, a $200,000 contract amendment for additional work is being prepared for Ernst and Young, which was hired as a financial adviser, said William (Kriss) Andrews, whose position as program management director was created under the consent agreement. Andrews works with the consulting firms.
Andrews said other consultants’ contracts could be amended, as well.
“I do think, across time, we’re going to find other dimensions to these problems that we’re going to need help with,” Andrews said. “It wouldn’t surprise me if we use these firms in broader capacities than we are presently and that that results in some added costs down the road.”
Bing has assured the council that his office will begin compiling monthly progress reports of the consultants’ work. But Bing no longer is in charge of Detroit.
Orr, the emergency manager, arrived last month and was given the powers of both the mayor and the City Council under Public Act 436. Orr said that also means he’s in charge of the consultants.
“Yeah, there are a lot of consultants, but there’s a lot of work to be done in this city,” he said in an interview April 23.
The various consultants bring a fresh perspective to city operations that have been ingrained over decades, Orr said.
“The way the city has been doing things isn’t working. It’s got us on the precipice of a free-fall crisis,” Orr said. “So we need people who do this kind of work, consultants who can help us get out of here.”
Snyder defends firms' use
The city has been in a financial crisis for years, even before one was officially declared in late 2011.
By April of last year, the city was functioning under a consent agreement, which cracked the door to allow outside consultants — mostly lawyers — to come in and advise.
The city began hiring the restructuring firms in December, as its financial crisis reached a boiling point. It needed the state’s help to issue bonds for money to meet payroll and pay other bills. The state agreed to issue the bonds but would only hand over $30 million in proceeds if the city hired a restructuring team.
The state has agreed to reimburse the city for half of the fees associated with most of the contracts, including the $3.35-million deal council approved April 16 to hire Orr’s former employer, the Jones Day law firm.
The mayor’s office has compiled a spreadsheet of its monthly bills for six of the nine consulting firms. It shows the state pays 43% of the monthly fees of $1.44 million.
Gov. Rick Snyder, whose declaration of a financial emergency in Detroit led to Orr’s appointment, said he has been pleased so far with restructuring efforts undertaken by the city and the consultants it has hired.
“I think they’re making progress,” he said April 19, after speaking at an Eight Mile Boulevard Association luncheon at the Renaissance Center. “We’re very early in that process, but I think things are moving ahead. I think there’s a good relationship going with the mayor, the City Council and Kevyn Orr, and we need as many people on deck, all working together to solve these difficult problems.”
Overlapping jobs a concern
But critics on the City Council are skeptical. Cockrel, a 15-year veteran of the council and chairman of the budget committee, said that on the surface, some of the consultants’ work appears to overlap.
Contracts for a three-firm team that make up a large chuck of the nearly $14 million price tag show some similar tasks to be completed, such as conducting a financial review and analyzing the city’s long-term liabilities. But each firm has been given a designated role.
Miller Buckfire of New York ($1.8 million), Conway MacKenzie of Birmingham ($4.2 million) and Ernst and Young ($1.2 million, in addition to a previous contract for $6.6 million) were chosen based on a combination of factors, including experience and cost, from eight firms that pitched their restructuring services to the city.
Miller Buckfire has been labeled the city’s investment banker; Conway MacKenzie is the operational restructuring adviser, reviewing each city department for cost-saving opportunities; and Ernst and Young is the financial restructuring adviser, developing a long-term financial plan for the city. An official with Conway MacKenzie directed questions about the firm’s scope of services to the mayor’s office or Orr’s office. A spokesman for Ernst and Young said the company generally does not discuss client engagements.
Andrews, who works with the consultants out of the mayor’s office, said he’s comfortable there isn’t any duplication of work. The consultantsoften give updates to the financial advisory board, which also was created under the consent agreement.
“I think it’s good for (the) City Council and the mayor’s office to be concerned about possible duplication so that we make sure it doesn’t happen,” he said.
Other firms working on Detroit’s restructuring include Milliman, Plante Moran, Kessler and Associates and Aon Hewitt.
Brown, the councilman, said he is hopeful any contract extension would be brought to the council so additional fees for consultants can be vetted publicly.
Orr, who has the final say on all of Detroit’s financial matters, pledged to keep the council informed.
“The council has a role in communicating to their constituencies,” he said. “There’s an important role that there be some sunlight, some accountability on both ends. I’m accountable to a degree to the people of Detroit, via the council.”
Staff writer Matt Helms contributed to this report.
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