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A perennial complaint against the District of Columbia is that mayors use executive power to award competitive contracts to insiders, then look the other way when problems arise. Such is the case with D.C.’s Sustainable Energy Utility, according to documents obtained through the Freedom of Information Act, interviews with energy industry stakeholders, and government emails.
Last week, Loose Lips reported that Mayor Muriel Bowser’s office intervened in a $100 million SEU contract awarded by the Department of Energy and Environment in 2016. This week, LL has details on what happened and the questionable history of the incumbent contractor, Vermont Energy Investment Corp., that won the award and will continue to serve as the city’s SEU.
At first a local bidder, Public Performance Management, learned it had won the contract. The city’s contracting officer approved the company for preference points that tipped the scales in its favor—only to later deny the points and award the contract to Vermont Energy, which has held the contract since 2011.
Vermont Energy is a nonprofit managed by former Pepco executive Ted Trabue, and it has underperformed over the last five years, records show, by manipulating performance benchmarks with the tacit approval of DOEE officials. LL’s review of the contractor’s billings also shows that it spends a staggering 46 percent of its roughly $20 million annual budget on its own internal expenses to operate the SEU program. It also has billed the city more than $330,000 for travel over the last three years, $47,000 for coffee and catering, and $222,000 for seminars and conferences, a review of invoices shows. The firm retains a lobbyist, who also does community relations, at a cost of $240,000 per year.
The story prompted Ward 3 Councilmember Mary Cheh, who earlier this month, along with her colleagues, approved the five-year $100 million extension for Vermont Energy, to tell Trabue to be ready to address these issues at her committee’s oversight hearing on April 28.
Now, LL has learned that District officials, including current and former DOEE directors and a D.C. councilmember, have long questioned Vermont Energy’s performance.
Industry executives and insiders say strict oversight is overdue. They point to the SEU’s weak performance record, a mismanaged solar program, and the fact that it accounts for one-fifth of the DOEE budget. “This is an extraordinary indictment of [DOEE’s] leadership and management,” says a senior industry executive. “Most companies don’t take DOEE or the SEU seriously. They’re a fucking joke.”
Cheh is expected to release a report soon regarding her investigation into a different contracting controversy that bears some similarity to the SEU matter, with a couple key differences. Both cases suggest politics trumps competition and transparency where lucrative contracts are concerned.
In that matter, a whistleblower has alleged that the Bowser administration directed the firings of city officials who refused to steer Department of General Services contracts to one of its key political donors, local firm Ft. Meyer Construction. (DGS Director Christopher Weaver resigned after refusing to do the firing, WAMU reported.)
In the SEU matter, however, it was the local contractor, PPM, that was the victim of mayoral intervention. And unlike in the DGS matter, DOEE Director Tommy Wells declined to take a stand.
According to emails reviewed by LL, a joint venture led by PPM submitted its Certified Business Enterprise application to D.C.’s Department of Small and Local Business Development on April 11, 2016. Bids, which were due on April 18, are supposed to include the CBE certification. PPM submitted its bid on time, minus the certification. On April 19, Melissa Resil of DSLBD sent an email to PPM’s president Rob Thorne, stating that the deputy mayor’s contracting officer would accept the CBE certification once it was awarded. On April 21, Resil notified the contracting officer, Jacque McDonald, and Thorne, that her office had issued the CBE certification and awarded 12 preference points to the firm.
Aided by those points, Thorne soon learned that PPM had amassed the highest score.
Industry sources say word hit the street that Thorne had won the contract, which required Vermont Energy to begin transition plans. Meanwhile, Trabue let it be widely known that Vermont Energy had lost the contest.
Four months later, in August, however, word seeped out of the deputy mayor’s office that McDonald had changed her position and denied the determinative 12 preference points because Thorne’s CBE certification had not been reviewed and awarded at the precise time of his bid submission on April 18. LL has confirmed that the city administrator’s office actively participated in this decision, just as it did with the troubled DGS contract.
“Word on the street was that Rob [Thorne] had gotten the award,” says an industry insider. “Teddy [Trabue] was going around crying poverty. But then all of a sudden, in the 12th hour, boom, Rob gets a letter from the city saying that he didn’t get it. Someone had pulled a rabbit out of the hat.”
“I’ll never understand how they did that,” says the industry executive. “The only reason anyone can think of is that Ted had an ‘in’ with Beverly Perry,” the executive says, referring to Bowser’s senior adviser, a former Pepco executive who had been Trabue’s colleague. “It sounds like the same shit going on at DGS: post facto contract decisions.”
If the question of “how” Thorne’s company lost the bid is a head-scratcher, the “why” is even more vexing, given Vermont Energy’s performance since 2011.
An internal government memo circulating in the mayor’s office in FY 2012, obtained by LL, conveyed early concerns about Vermont Energy’s administrative costs and performance and concluded: “The SEU has not demonstrated an ability to effectively execute energy efficiency or renewable energy programs—a fact now widely acknowledged in D.C.’s green energy space.”
Calling an FY 2012 annual report “disturbing,” the memo cites dollars wasted on consulting services and states: “Virtually no one in the District’s green energy space believes the SEU is effective … Bottom line: [It] needs much more rigorous oversight, and a change of contractor should be considered.”
Multiple sources also state that Keith Anderson, former interim director of DOEE under then-Mayor Vince Gray, brought similar concerns to his bosses at the Wilson Building in 2013. They say he suggested re-bidding the contract, but was rebuffed by Warren Graves, chief of staff to Gray’s city administrator. In addition, Katrina Forrest, legislative director for At-Large Councilmember David Grosso, wrote in a December 2016 email obtained by LL that Grosso had expressed concerns to Anderson, but wanted to “wait out the contract to see if necessary improvements could be made.”
Also in 2016, after Vemont Energy mismanaged the solar program, Wells met with subcontractors to complain that they had not explained the solar contracts to low-income customers whose interests were not protected, according to industry sources. Wells denies any problems with the solar program.
Sam Brooks, a former director of the energy division at DGS who bid on the five-year contract through a separate company, says the District has the technology it needs to make real progress. “But if we’re going to meet our 2032 climate goals, the next five years have to look a lot different than the last five years,” Brooks says. “Sometimes I just wish [the city] was more willing to admit failure and say, ‘You know what, let’s try a different approach.’”