As the Mitchell Turns

The Austin City Council took Thursday off last week, leaving us time to report on a few items gathered while the city information police were napping. It seems that both Councilmember Eric Mitchell and the city's public information office "misspoke" when commenting on the potential conflict of interest that resulted when Mitchell's company was listed as a subcontractor for a bid on a city project. You may remember this scene from last month. At a work session on August 9, The Barr Company, hoping to take over a $700,000 contract to renovate the John Henry Faulk Central Library, listed Wormley, Mitchell, & Associates as their project-specific insurance provider, slated to receive $2,000 of the contract. The listing allowed The Barr Company to receive extra bidding points, since Mitchell's insurance firm is listed with the city as a minority-owned business. The company narrowly lost out on the contract; Mitchell refused to vote. His "other half," Ronney Reynolds, as well as Brigid Shea, abstained from the vote. Max Nofziger did not attend the work session.

Even though the item's failure freed Mitchell from a potential conflict of interest, that didn't stop him or Michele Middlebrook-Gonzalez, head of the city's Public Information Department, from painting a picture that contradicted written communication between Mitchell's office and The Barr Company.

Fiction: At the work session, Mitchell said his company had been wrongfully listed since insurance providers are not considered subcontractors.

Fact: A bid packet detailing the types of disadvantaged firms that could be used as subcontractors on the library project lists insurance and bonding companies. The same packet includes a directory of hundreds of potential subcontractors holding disadvantaged business status with the city. The very first firm listed? Wormley, Mitchell & Associates. This, despite the fact that the remainder of the directory is in alphabetical order.

Fiction: In an August 10 Statesman article by Chuck Lindell, Middlebrook-Gonzalez spoke for Mitchell, who was unavailable for comment, that "[Mitchell's] staff didn't realize this was a city project."

Fact: In a request for insurance dated April 28 of this year, The Barr Company describes the project, clearly naming its owner as the City of Austin. And in memos faxed from Mitchell's company on August 8, a $2,000 written quote is provided for "the John Henry Faulk Library renovation job."

Moreover, in a transmittal to The Barr Company owner, Mari Barr, six days before he voted on the bid, Mitchell himself discussed the type of insurance that would be provided for the "library project." In the fax, signed by Mitchell, he also recounted conversations with Barr about what types of insurance should be provided for the specific project.

Which brings us to another contradiction: City Manager Jesus Garza, referring in June to an actual city contract that does list Mitchell's company as a subcontractor, said that Mitchell was not in the wrong since he was providing the contractor with overall, not "project-specific" insurance. Considering the inter-office memos mentioned above, the insurance provided was indeed project-specific.

Nonetheless, Garza promised a change in the rules that would solve the problem: Eliminate all insurance companies from potential subcontractor status. But packets for many different bids, some distributed as late as October 16, still list insurance companies as potential subcontractors. They also still list Wormley, Mitchell, & Associates ahead of all other insurance subcontractors.

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Speaking of Mitchell, the councilmember has recently been sued by the National Council of Contractors' Association (NCCA). The suit alleges that Mitchell and a former NCCA employee illegally used the company's "confidential and proprietary information and its trademarks, trade secrets, and trade names" to secure business for Mitchell's bonding and insurance firm. If true, the suit offers a stunning insight into both Mitchell's character and business affairs over the past two years.

Filed September 12 at the Travis County district court, the suit also names as a defendant one Joseph C. Newton, a business partner with Mitchell, as well as Mitchell's insurance firm, Wormley, Mitchell & Associates and its predecessor firm, Anderson, Wormley, Mitchell & Hunt. Details from the suit were first reported by Daryl Janes in the September 22-28 issue of the Austin Business Journal.

According to the pleadings, the NCCA is a Houston-based non-profit that offers bonding and technical assistance to historically disadvantaged businesses bidding on public contracts. According to the suit, the non-profit has perfected "certain approaches and expertise" which it considers confidential, and has "obtained licensing rights to certain copyrighted terms."

Beginning in December, 1993, reads the suit, both Newton and Mitchell had access to the company's confidential information. Mitchell, on December 17 of that year, had contractually agreed to perform "management of public affairs and marketing duties of the [NCCA's] Austin operations." At that time, Mitchell was the president of Anderson, Wormley, Mitchell & Hunt, and not yet a councilmember.

Sixteen days earlier, Newton had signed a similar contract to manage the day-to-day operations of NCCA's Austin branch, which had already been providing services to the city's Office of Small and Minority Business Resources for nearly a year.

Both contracts obligated the defendants to neither use nor disclose NCCA's confidential information for purposes that did not involve the non-profit. Both contracts also restricted the defendants from competition with NCCA.

But in the summer of 1994, the suit alleges, Newton and Mitchell, "having had access to all Plaintiff's files and records, conspired together to form an entity and began to compete with the NCCA." According to an employee at the non-profit, Mitchell had terminated his NCCA contract shortly before taking office in June, 1994. The suit also alleges that Newton, who was still employed there, "knowingly and willfully aided by Eric Mitchell, made trips to Memphis, Tennessee," to solicit a city contract to provide bonding and technical assistance to disadvantaged companies. Mitchell "conspired with and induced Defendant Newton to violate his contractual responsibility." The defendants knew that NCCA had previously submitted a similar bid, according to the lawsuit.

And in December, 1994, Mitchell and Newton submitted another competing bid, this time to the City of New Orleans. That bid, reads the suit, contained "much material that was stolen and quoted verbatim."

Moreover, reads the suit, in the New Orleans bid, Newton and Mitchell attempted to take credit for NCCA's contract with the City of Austin, which ended in the spring of 1995. The lawsuit quotes the bid as saying that Wormley, Mitchell & Associates "launched this successful model in Austin, Texas, and has enjoyed tremendous success in providing a valuable service, not only to the City of Austin, but to the entire community, both public and private sector."

The lawsuit alleges that Mitchell and Newton tried to "`palm themselves off' as NCCA in an effort to confuse the City of New Orleans."

According to Mitchell's council office, he is on vacation and won't return until November 8. Neither Newton nor officials from Wormley, Mitchell & Associates returned calls. The NCCA's attorney, Milton Bankston of Maroney, Crowley, Bankston, Richardson & Hull, also would not comment on the case. Mitchell's executive aide, Donnetta McCall, said on October 26 that, "I don't know anything about [the lawsuit] that I could say. It doesn't have anything to do with the city council."

A court date has not been set.

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This week in council: A Shea item to direct the city manager to participate in a comprehensive financial management of city operations is coming up. The Rainey Street zoning case, involving several residents, one lobbyist, and one residential lot, will also return.