SPECIAL REPORT: Township Didn't Follow Law in Awarding Contracts to Energy Consultant
Gloucester Township didn’t include the required spending cap with the contracts awarded to Blue Sky Power LLC and other professionals, making the agreements open-ended.
The township failed to comply with the state’s Local Public Contracts Law in awarding three lucrative agreements to a politically connected energy consulting firm, an investigation by Gloucester Township Patch has found.
This means that the contracts have essentially been open-ended, with no limit on the total amount the firm, Blue Sky Power LLC, can charge the township for its work.
Municipalities are required by state law to prepare documents known as certifications of funds when entering into contracts with private vendors. The certifications must indicate how much money is available for the contract within the local budget. Those figures serve as a cap, according to Lisa Ryan, a spokeswoman for the state Department of Community Affairs (DCA), and can only be exceeded by resolutions approved by towns' governing bodies.
The DCA’s Division of Local Government Services oversees municipal governments in New Jersey.
While the township does prepare certifications of available funds for its professional-services agreements, they do not include a not-to-exceed amount, or cap, in the certification documents prepared for those contracts, Business Administrator Tom Cardis said during a recent interview.
"To my knowledge, we have not established a cap on any of these," he said.
In Blue Sky's case, the Camden-based company has been awarded annual consulting contracts in 2010, 2011 and 2012.
Blue Sky Power’s CEO, Benjamin S. Parvey II, did not respond to a request for comment Friday.
A municipal-government spending expert said the township could be overextending itself by failing to include a cap on professional-services agreements.
The purpose of a certification of funds “is that the money for that contract is set aside so it can’t be used for something else,” said Fran Shames, executive director of the Governmental Purchasing Association of New Jersey. “If there’s no amount in it, what do they set aside?”
Township officials would be hard-pressed to determine prior to the annual Jan. 2 reorganization meetings, when professional services contracts are awarded, just how much work its energy consultant, engineers or attorneys will be doing over the course of the year, Cardis said.
"For example, all of the engineers—I don't have a capital program put together yet. I'm still working on that (when contracts are awarded)," he said. "How could you possibly know in advance?"
Also, the amount of work performed by vendors is often determined by outside forces, such as mid-budget year grant awards that allow towns to do more than they may have expected as the spending plan was prepared.
The business administrator indicated he could have the township's chief financial officer, Christie Ehret, attach an arbitrary figure to each certification of available funds, but questioned the value in doing so, especially when there are other checks and balances built into the process—specifically, the annual budget approved by Council, he said.
Cardis noted, for example, that Gloucester Township's 2012 budget includes $35,000 for labor counsel. In order to exceed the $35,000 in that line item for labor attorneys, Council would have to approve a resolution to shift money to cover the unanticipated expenses.
"If that doesn't meet the DCA's approval, then, you know, we'll have to try to see if we can do something to establish a cap," Cardis said. "Again, on certain appropriations, I don't know how you would do that. ...I'd be curious to know how many municipalities do a certificate of availability of funds with a cap for all of their professional services. I would say you're going to find that very few of them are doing it."
Shames, the executive director of the governmental purchasing group, disagreed with Cardis’ assertion that most municipalities don’t include caps with certifications of funds.
“It wouldn’t be valid in my book,” she said of his argument. “That’s not true, to my knowledge.”
An issue for the auditor
A previous Gloucester Township Patch investigation found that the township paid a total of nearly $450,000 to Blue Sky Power between early 2010 and the end of 2011 for energy consulting work, including the creation of an energy master plan—a blueprint for future improvements—for the township. Several of the bills the company submitted to the township lacked enough detail to determine exactly what work the company performed, yet the Democrat-controlled administration paid them anyway. Blue Sky has contributed heavily to local Democratic campaigns over the past two years, according to campaign-finance reports.
Parvey, an attorney, has served as president of the Haddonfield Democratic Club and is co-chairman of the borough’s Democratic Municipal Committee.
In an earlier interview, Mayor David Mayer, a Democrat and former state Assemblyman, defended Blue Sky’s appointment, saying his administration wanted to focus on “renewable energy and saving taxpayers money.”
Mayer and Cardis said previously that they stay on top of Blue Sky's work for the township through regular meetings and phone calls with Parvey and other company staff.
After Patch published its investigation in March, Council Vice President Orlando Mercado asked Cardis during a public meeting to require that all vendors doing business with township submit detailed invoices.
Asked if the DCA is looking into the issues surrounding Blue Sky’s contracts, Ryan, the agency’s spokeswoman, responded vial email: “Our division of Local Government Services is not investigating the situation in Gloucester Township. Municipalities undergo annual audits of accounting records and transactions. And audit findings are the subject of corrective action plans so they do not happen again. With that said, if the Division were to receive a complaint, it may review the matter if time and resources allow.”