This story was reported for San Diego News Network on October 15, 2009.
San Diego City Chief Operating Officer Jay Goldstone released a memo Thursday in response to my story published Monday (“SDNN inquiry prompts investigation into city’s finances.”)
I’m working on a complete story for Friday.
As I originally reported, Councilmembers Donna Frye and Todd Gloria asked Mayor Jerry Sanders and Goldstone in a memo to explain why payroll records from March 2007 to February 2008 appear to “show that Grant Thornton performed services for $555,477, much in excess of what was presented to Council, and without Council approval…. Simply put, it appears the City has spent over $250,000 on this contract without City Council approval.”
According to Frye and Gloria’s memo: “On July 22, 2008, the City Council approved a MOU with Grant Thornton that limited its contract with the City to $250,000 in FY2009, and in addition, $250,000 for the remainder of the term of the agreement.”
In a blistering response to the councilmembers’ concerns, Goldstone responded Thursday:
Here are the facts:
1. A contract action transpired within the authority of the Mayor.
2. When that action was approaching the limit in which Council approval was required, City staff presented this action to the Council for approval as required.
3. No work beyond the Mayor’s contract authority was ordered until approved by Council and a new Purchase Order issued.
4. No invoices were pending approval at the time of Council authorization.
5. City staff dutifully monitored and administered the tasks under this contract and ensured complete compliance within the allotted budget and schedule.
6. Payroll records were presented to support a cost increase in accordance with the Consumer Price Index provision of the contract; they do not reflect actual contract payments.
7. Pricing Agreements establish the cost of services. They do not obligate City funds as stated plainly on the faces of the document.
8. Total expenditure under the Mayor’s authority were $249,137.50
9. Total expenditures under this contract were $396,030.93, over three fiscal years.
Goldstone also offered a timeline of “significant contract milestones” concerning this project. (See Goldstone’s full memorandum here)
I will report tomorrow on Goldstone’s memo, with statements from Frye and Gloria (who was unavailable Thursday). In the meantime, I’d like to clear two things up.
In the memo, Goldstone said the councilmembers “jumped to the erroneous conclusion (that the City violated Council policy with respect to the Grant Thornton contract) resulting from inept reporting by Hoa Quach of the San Diego News Network.” Goldstone went on to write: “This reporter never sought clarification for her baseless assumptions before bringing them to you. … To this end, I would ask that both of you work with your contact at SDNN to help her understand the importance of retracting the misinformation she has disseminated to her readers. In addition, because Council Member Frye posted your joint memorandum of October 12, 2009 on her City website, I ask that she also post this response in order to retract the false accusations she has disseminated to her constituents.”
First, I made no baseless assumptions; my initial report focused on the memo issued by Frye and Gloria, which, as Goldstone notes, was published on Frye’s Web site – therefore, easily accessible to the public. I did not “bring” any assumption to the councilmembers. In fact, in a follow up call regarding Goldstone’s memo Thursday, Frye issued this statement, via email, through a spokesperson: “SDNN was not the source of the documents.”
Also, I did seek clarification Monday from the mayor’s spokesperson, Rachel Laing. I called and emailed Laing Monday afternoon, and asked for the mayor’s response to Frye and Gloria’s memo by the end of the business day. I e-mailed Laing a copy of the memo at 3:08 p.m. Laing called at approximately 5 p.m. Monday to ask whether the story had been published. I said no, and told her I would wait until 6 p.m. for a statement from the mayor. I told her I would publish the story if I did not have the response by 6 p.m. At 5:39 p.m., Laing responded via email, and wrote, “Unfortunately, we got this memo late today and were unable to complete our analysis of the allegations.”
So that’s that.
Look for the follow up on Goldstone’s memo tomorrow. We have filed two Public Records Act requests: the first, for e-mail correspondence between a person in the city’s business office and Grant Thornton’s office, and invoices or purchase orders with regard to Grant Thornton’s contract with the city; and the second, for e-mails, memos, and other correspondence related to the preparation of the FY 2010-11 Five Year Forecast between the CFO, COO and Deputy Chief for Legislative and Community Affairs.
Hoa Quach is the SDNN political editor.