CEO, Staff Misled Water District Board about RMC Contracts

Santa Clara Valley Water District CEO Beau Goldie and top-level staff have repeatedly misled the board of directors and public regarding contracts with consultant RMC Water and Environment, according to internal emails.

Earlier this week, San Jose Inside reviewed hundreds of documents district staff compiled for an Oct. 27 board meeting. At that meeting, Goldie and top district executives told the board that procedures were followed, no laws were broken and all invoices to the consultant checked out. This despite its own staff’s flagging of a half-million dollars in improper payments to RMC and possible conflicts of interest.

Goldie went on to call RMC’s work on the Lower Silver Creek (LSC) watershed, which began in 2009 and is located in East San Jose, a “success.”

In a follow-up video interview with San Jose Inside on Oct. 29, Goldie said he was not sure who amended contracts with RMC on three separate occasions, but he reiterated his contention that transparent processes were followed in the disbursement of taxpayer dollars.

“On this particular contract there was a question in terms of the authorization that was allowed,” Goldie said. “Legal staff and project staff looked at that project and the authorities were appropriate per the interpretation of that contract. So, what I’m saying is all the transfers that were made and the authorization were followed.”

The emails show that, contrary to Goldie’s statement, just the opposite occurred.

All three amendments to RMC’s original deal for Lower Silver Creek violated board rules, the district’s own attorneys determined.

In a Sept. 10, 2014 email sent by Leslie Orta, the district’s senior counsel tells chief operating officer Norma Camacho and CEO Goldie’s top assistant, Meenakshi Ganjoo, that Goldie violated board policy on multiple occasions by amending RMC contracts without board approval.

Orta wrote in the email: “Regarding the LSC program management agreement with RMC, On April 28, 2009 the board approved the sole source transaction and delegated authority to the CEO to approve the agreement (along with several others), but the board did not delegate authority to amend the agreement, nor any of the other sole-source agreements approved in that same board action discussed in the same memo. The agreement was amended subsequently, so in violation of board policy.”

Leslie-Orta-Email-2

 

In another email sent a day later, Orta tells COO Camacho: “The third contract non-compliant consultant agreement was with RMC to provide program management services for Lower Silver Creek construction project. Although the board delegated authority to the CEO to approve the sole source agreement (per board action on April 28, 2009), there was no delegation to approve subsequent amendments to the Agreement. During the course of the project, two amendments were approved by the CEO, revising the scope of services and increasing the maximum compensation limit of the Agreement. (Norma- can you provide me info on what we are doing to rectify this issue?)”

Leslie-Orta-Email-1

The district has refused to comment on these emails as well as release the documents San Jose Inside reviewed earlier this week. In the Oct. 27 board meeting, neither of these two emails were ever mentioned by Goldie, Camacho or Orta.

When informed of the senior counsel’s emails noting the CEO’s violations of district policy, board chair Gary Kremen said he now intends to launch a full-scale investigation.

“I am deeply concerned by these allegations,” Kremen said. “I plan to lead the board to investigate all single-source contracts entered into the last 10 years.”

The board has already voted to refer RMC’s work to the audit committee.

Board member Dick Santos said he does not recall his colleagues ever being informed of Orta’s emails, or the CEO’s inappropriate actions in amending RMC contracts without board approval.

“There is no doubt in my mind that the CEO has exceeded his authority,” Santos said.

The district communications department and records division has gone into lockdown, failing to provide any answers or documents since San Jose Inside discovered Orta’s emails. However, during its review, San Jose Inside photographed documents that show that the executives presented an inaccurate account of events to the board of directors last month.

In the original contract, the Lower Silver Creek agreement with RMC specifies that the consultant cannot shift money for future tasks to current work. (Item No. 3 below, outlined in red.)

No transfers of future to current

However, district staff admitted to the board that money was frequently moved from later tasks to earlier work.

In one email exchange between district staff and RMC employee Steve Bui, $180,000 in future work was shifted to tasks already underway. The approval was extraordinarily casual, coming in email exchanges a few sentences or less.

Goldie has repeatedly hedged answers to the board and in interviews, saying he wasn’t sure who signed off on amendments with RMC. He has said that he trusts staff did the right thing. But the first two amendments to RMC’s agreement bear the CEO’s own signature.

Amendment No. 1

Amendment 1 SignatureAmendment No. 2

Amendment 2 Signature

 

In the third amendment to RMC’s deal, COO Camacho signed off in Goldie’s place.

Amendment No. 3

Amendment 3 Singature Norma Camacho

Goldie has been described by district staff as a “micromanager” who is keen on knowing all the details of agreements. He admitted as much in an interview.

“You mention I’m a detail person, yeah,” Goldie said. “I also verify things.”

And yet, Goldie apparently failed to verify—or perhaps intentionally ignored—board policy requirements in signing for the district without the consent of its elected overseers. (The board referred RMC’s contract to the audit committee on a 6-0 vote, with director Dennis Kennedy absent. This week he resigned his position due to health reasons.)

It’s unlikely that Goldie’s professed lack of knowledge about the identity of amendment signers was accidental, given the amount of preparation for the public meeting. District sources say the CEO and top-level staff met every other day, for weeks, to discuss RMC business ahead of the Oct. 27 report.

Complicating matters is the consultant’s close connections to the district. One of Goldie’s top administrators, Melanie Richardson, is married to an RMC owner, Tom Richardson. Goldie and district staff have argued there were no conflicts of interest in her role with the district. However, the district refuses to release the “firewall” agreement it created, citing attorney-client privilege.

This spring, Goldie pressed the board for permission to sign single-source agreements to plan and design an $800 million groundwater recycling plant. He cited the drought as a reason to bypass the standard consultant qualification process. RMC was tabbed for the biggest chunk of the work, initially projected at $4 million. District sources say RMC’s early involvement gives it an advantage over competitors in landing future agreements.

After facing media and board scrutiny, the district capped RMC’s payout at $1.28 million—unless the CEO receives board permission for more.

Josh Koehn is the managing editor for San Jose Inside and Metro Silicon Valley. Email tips to [email protected] or follow him on Twitter at @Josh_Koehn.

14 Comments

  1. Josh Thanks for the report I think you meant tapped instead of tabbed in the second to last paragraph. Have a nice day.

  2. I am getting the feeling that SJI is in the ever pursuit of the next Piniata from Xavier Campos, George Shirakawa and now Beau Goldie. You keep hitting until you get a crack and spill your candy. I guess Halloween candy was not enough for you.

    • Isn’t that exactly what good investigative reports do? If all these folks (and lets not forget Shirakawa became a convicted felon on those reports and Campos shamefully took the “I plead the 5th” defense to avoid prosecution) they should be exposed!!!! That is taxpayer money they are misappropriating and playing fast and loose with. Thank you Josh and SJI for being the watchdog for corruption in our county & city.

  3. Good job reasoning through page after page of mind numbing contracts and lawyerspeak. The one thing I’m paying close attention to is.

    However, the district refuses to release the “firewall” agreement it created, citing attorney-client privilege.

    Isn’t the district a public entity Josh? I mean, they’re supposed to let the public view this kind of stuff right?

    • > “firewall’ agreement? Between SCVWD employees?

      What kind of collaborative, cooperative institution pays employees to not talk to each other and not work together?

      I think I can do that kind of work. I think I would be good at it.

      How much does it pay and where do I sign up?

      • What gets me is the amount of time I see them posting to their respective twitter/facebook/instagram/myspace/blogger etc. At least 10% of their time is spent doing that.

        Funny JMO gets on me for posting here so much, I feel I fit in with them.

        • Cousin Cortese: I don’t get on you for posting too much. I get on you for posting so much while you are on company time. Apparently the distinction is still lost on you.

  4. This comment seriously needs a TL;DR.

    As far as I can tell it’s about spending on a board room video system that the IT department had to jump through hoops to install as a “High Priority” item. After the IT department accomplished said, rushed task implementing said system to perfection, the board never even bothered to power it on. Anondaisy is angry that they had to jump through these hoops for the board for something that was supposedly so important, and never used.

    Welcome to the world of IT anon.

    Let me give you my own story (albeit shorter) I worked for a company who’s software required 40 man hours to install. I automated the install. My boss was angry I wasted time on something that would, “discredit the complexity of the product and reduce the number of billable hours”

    • > Welcome to the world of IT anon.

      Not so much the world of IT. It’s the world of bureaucracy.

      And “sole source” non-competitive procurement just makes the process scandalously abusive.

      Obama’s cancellation of the Keystone XL pipeline after seven years of bureaucratic “pretend” reviews was likewise obscenely wasteful and corrupt.

      Obama knew from the moment he took office that his constituency (“environmentalist wackos”) wanted it cancelled, and he knew he was going to do it.

      And, put the California High Speed dodo bird in the same category of abusive deception. It’s now clear that the real cost is NOT $68 billion, but double, triple, or ten times that. No one knows.

      But for politicians like Jerry Brown and special interests like Richard Trumpa to pretend that taxpayers are going to get any benefit from the billions of dollars of debt piled on to future generations is despicable.

      Jerry Brown and Richard Trumpa are not going to heaven.

    • Sorry Robert not a writer but a tech, just have to keep hammering and supplying data until the taxpayer/DA get its, yes confusing, but read the links, you will find already about 3.2 million was spent on present day BR, only to have corrupt management let it fail, yes i and others made garbage into a high class system, with tons of bells and whistles(top notch wireless, video conferencing with isdn, ip, and a control system that had equipment online and remote controlled, 6 cameras, digital processing and routing to any room on/off campus, dv cameras/editing enough auxiliary sound and video equipment to do any type of event and remote board meetings, system was online or via browsers/api, and so much more), only problem was management never told the board what they had or how to work things, kamenjati even stopped maintenance and repair so system could look to the board as if new was needed. if you watch the meetings(start 2012-2015) they have had on BR, staff again lies about what’s there, what has been spent, and various other false claims( just like rmc and other issue’s) the audit 2012 explains how they operate, now they want to take it all toss it out and claim they want to build new due to age etc, for under 750k, ones there claims of 98% is wrong and the cost will rise to around 2 million as they don’t count many others charges. so just trying to hammer it in the waste, and so much equipment that just sits now, as the managers have no concept on how to tell campus about what we do, instead tells end user to just go out and buy your own equipment. so understand no one cares about what there is it will never get used, but they want more now, that is what must stop.

      • I’ve worked with a lot of these technologies over the years. Not even in 2001 dollars was that an appropriate amount for a video conference system with all the bells and whistles (I mean,, you can build something that costs that much with Studio grade cameras and what not, but not needed)

        I too am a tech, and I find tech issues in politics and public service is nothing more than a gaping black hole to a lot of voters. Not a lot of people spend as much of their free time learning… or relearning this craft year after year. The parameters for say, a journalist never changes, but in our line of work it changes constantly, new technologies and buzzwords are often carried to the ears of management through the ether of gossip with no real concern for the costs implementing them.

        Basically what I’m saying is, nobody is going to care about IT costs. Maybe it’s time our local politicians start making a budgeting board for its IT costs, but without popular support nobody is going to even bother.

  5. thank you, that’s what i have been trying to say, (point 3 mill is what they spent on the system before i came i fixed most things with another 200k,)and they want to spend another, the 1st board room was so much they built it and forgot to put IT in and to pretty much ripped it apart to get network and av in, pretty sure the whole golden palace went to grand jury around 2000, i was hired to fix all the mistakes, and they still want another system, and as you say nobody but a few techs care about the cost. the water district did start it ad hoc committee staffed by directors and given or feeding the same old lies,
    Its not energy star compliant(hello they are pulling at straws on that one)
    Needs to be hd, when the problem is end user bandwidth.
    AMX cannot handle voting ( when staff so a demo on amx voting)
    and pretty much everything they say the system cannot do it can or can do with under 75k in modifications
    this post has the biased staff report and my rebuttal and others rebuttal.

    .https://pgoeltz.wordpress.com/2015/06/23/scvwd-boardroom-lies-when-they-just-need-to-use-whats-there-av-upgrade/
    JOE HANDOUT LETTER TO DIRECTOR JUDGE, WHICH WAS SAME LETTER TO CAO OMS.
    https://pgoeltz.files.wordpress.com/2014/10/joe-handout.pdf

    DiversityAudit2012 https://pgoeltz.files.wordpress.com/2014/10/diversityaudit20121.pdf

    scvwd ray 10 28 2014PDF HANDOUT BOARD MEETING 10 28
    https://pgoeltz.files.wordpress.com/2014/11/scvwd-ray-10-28-2014.pdf RAYS HANDOUT

    SCVWD PGOELTZ 10 28 2014 HANDOUT BOARD MEETING 10 28
    https://pgoeltz.files.wordpress.com/2014/11/scvwd-pgoeltz-10-28-2014.pdf
    PAULS HAND OUT

    THE PROBLEM IS STAFF HAS NEVER TOLD THE BOARD HOW TO USE EQUIPMENT, NEVER TOLD THEM WHAT THERE IS. YOU THINK RMC IS A FRAUD THE IT DEPT IS JUST AS BIG OF A FRAUD AND WASTING TAX DOLLARS BY THE MINUTE. AND THIS ALONG WITH MISTREATMENT OF STAFF, ETHICS VIOLATIONS, LIES, FRAUD THE LIST GOES ON AND ON.
    PG

  6. At best this is incompetence and ignorance, with a full measure of arrogance; at worst it sounds like graft and corruption at the expense of rate-payers!
    What do these people do that actually benefits the public?

  7. Can we fire these guys now while we can before they become another PG&E where we can’t? Amazing what folks can do in this city without getting indicted.