The public works giant Operations Management International Inc. is suing Richmond Hill for $2 million, alleging the city breached its contract when deciding to end its relationship with OMI in the middle of a five-year agreement.
The company also claims the city violated public bidding laws and Georgia’s Open Meetings Act.
OMI, which has run public works in Richmond Hill since 2000, also sought a restraining order to keep the city from ending its contract with OMI on Dec.31, but that effort apparently failed.
Richmond Hill Mayor Harold Fowler said Friday the city has done nothing wrong.
“What we did was legal,” he said. “We’ll let it play out in the courts.”
He referred other questions to Richmond Hill city attorney Ray Smith, who could not be reached by press time.
Documents filed Dec. 4 in Bryan County Superior Court show OMI claims the city’s decision will cost the public works operator more than $2 million and that it will have to soon relocate or terminate the 24 members of its Richmond Hill workforce.
OMI said in the lawsuit the city’s decision has harmed its reputation. It also called the city “stubbornly litigious.”
End of the relationship
The allegations stem from the city’s Oct. 15 vote to switch from OMI to Braddy Enterprises Public Works Division LLC on an interim basis.
It was said to be part of a plan to eventually bring the city’s utilities management back “in house” as it builds a new $24 million wastewater treatment plant.
In October, City Manager Chris Lovell said the switch would save taxpayers more than $300,000 in 2014, a figure based on paying Braddy Enterprises about $2.6 million annually and a contract with OMI of $3 million.
The company disputed the contract amount at the city’s Nov. 19 council meeting when Gary Wood, a regional vice president, addressed the council and said OMI’s current agreement with the city was worth $2.74 million in 2013, not the reported $3 million.
He then offered to reduce it to $2.6 million in 2014.
After Wood spoke, Fowler said he and Lovell met three times with OMI managers and twice asked them if “this was the best rate the city could get for the contract,” and was told it was.
Fowler told Wood he thought that effort was an attempt to negotiate.
Woods said local managers didn’t have the authority to negotiate rates “without due process,” and apologized for the misunderstanding, but Fowler thanked him for his comments and moved ahead with the meeting.
OMI, which runs utilities in more than 200 communities in the U.S., claims the city’s actions come just two years into a five-year agreement negotiated in November 2011 between it and Richmond Hill.
It also claims its $2.6 million offer is less than the $2.611 contract with Braddy Enterprises.
Open Meetings violation
The lawsuit states OMI project manager Rick Lauver told Lovell during a budget meeting for department heads that he couldn’t provide its proposed budget for 2014 because “OMI was still evaluating the impact of an anticipated expansion in the scope of its services — including responsibility for three new wastewater lift stations, one new potable water well and a new public works facility.”
Instead, the lawsuit said, OMI representatives met with Lovell and Fowler on Sept. 26 and proposed a 3.5 percent increase over 2013 to take into account increased costs. It would be less than a base fee formula in the contract and would amount to $2.84 million.
Those negotiations went unfinished, the suit said, and Lovell reportedly told OMI representatives “he knew how to reach them and would get back to them.”
That didn’t happen, OMI claims.
The company alleges it heard nothing else until it received an Oct. 17 letter from city attorney Ray Smith informing of the council’s vote not to renew its agreement — a move that OMI officials claim caught them by surprise and was timed to take place at the Oct. 15 meeting because Lauver would be on vacation.
“Thus, the city knew it was likely that OMI would not be represented,” the suit said, while also claiming violations of the state’s open meetings law because there was nothing on the city’s published agenda regarding management of the city’s utilities on the agenda prior to the meeting.
OMI claims Richmond Hill amended its agenda either just before or just after the Oct. 15 meeting to include discussion of the matter.
In addition, the suit claims OMI said it learned through an Open Records Act request that Lovell told the council that Fowler and Smith had been negotiating with Braddy Enterprises for two to three months prior to the Oct. 15 vote.
Broken public bidding laws
In its lawsuit, OMI claims Richmond Hill secretly negotiated with Braddy Enterprises for months before entering into its contract and “did not invite OMI or any other firm to bid on the project,” which it claims violates the state’s laws on public bidding.
But in a Nov. 22 letter to David Burkhoff, an attorney for OMI, Smith said the city also didn’t accept bids before entering its five-year contract with OMI and “if your interpretation of the code section is correct, it would appear that a public bidding process was necessary prior to entering into the contract with your client. Again, this was not done.”
Smith also wrote “most of the negotiations (with OMI) had to do with the clause in the contract that its renewal is subject to the appropriation process each year.”
OMI was founded in 1980 and is headquartered in Colorado. It is a subsidiary of CH2M Hill, one of the largest construction companies in the world.
According to Forbes, the company had sales of $6.16 billion in 2012.