by Alex de Marban
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.
This article appears in November 3 • 1995 and November 3 • 1995 (Cover).