A technicality in state law could leave the city holding the bag for nearly all of a roughly $400,000 box culvert replacement project on Second Street South.
For the drainage project, completed in October, the city spent some of its American Rescue Plan Act funds, and the Mississippi Department of Environmental Quality had approved the project for a state match that would have paid $212,290. Now, the city only stands to receive $20,125 in state match reimbursement barring legislative action.
Neel-Schaffer designed the project and solicited bids in May 2022. During a city council work session Thursday at City Hall, engineer Zach Foster said the firm was recently informed of a state procurement rule requiring projects of $50,000 or more be posted on the Mississippi Procurement Technical Assistance Program website.
Because it wasn’t, reimbursement for half of the $368,000 construction piece is in jeopardy, Foster said. However, the city obtained quotes separately for the actual culvert, which cost $40,250, so it can still be reimbursed for half of that. There was an 8-week wait for the culvert, he said, and the bid out construction work began in the interim.
“While we were under construction, we applied for the matching grant,” Foster told The Dispatch after the work session. “… The (final ARPA) rules weren’t in place at the time we advertised the project, so we did not know that was a requirement.”
MDEQ plans to ask the legislature to remove that portion of the law in next year’s session, per the department’s attorney, Gary Rickard of Butler Snow, who attended the work session virtually. If it is removed, MDEQ would likely grant reimbursement for the Second Street project retroactively, he said, though final approval would have to come from the U.S. Department of Treasury.
Foster said since MDEQ had approved funding for all eligible projects across the state, the city would not necessarily lose the money entirely.
“You can allocate that toward another (eligible drainage) project, or the city can choose to wait and see what the legislature does,” Foster said at the work session.
The city has obtained approval for $6 million in ARPA-eligible drainage projects, meaning the state will match half those costs.
The requirement to post projects on that specific website was placed in state procurement law as a way to promote access to project bidding for qualified minority- and female-owned companies, Foster said.
While Rickard noted state rules granting that access date back to 1991, the requirement to post to that particular website was buried in a 2009 update to the act among language related to the American Reinvestment and Recovery Act. Its obscurity has led to other public bodies running into ARPA match reimbursement issues after the HORNE Group, MDEQ’s ARPA consultant, discovered the problem.
ARPA requires entities to follow all state and federal procurement laws.
Neel-Schaffer followed all other advertising requirements for the project, North Mississippi Manager Kevin Stafford told The Dispatch, and also posted it to its own “plan house” website. Of the 32 minority- and female-owned businesses qualified to do that type of construction work in Mississippi, 19 are registered with the firm’s plan house site, he said.
City Attorney Jeff Turnage said at the work session the council could have declared the project an emergency at the time it was approved and legally avoided the bidding process — along with the headache that followed — altogether.
“This is one of those cases where, if we would have just declared it an emergency and went ahead without putting it out for bid, we’d get reimbursed,” he said. “As a consequence of our bidding it out, we won’t get reimbursed.”
Speaking with The Dispatch, Foster didn’t seem as sure about that.
“That’s still up for debate,” he said. “They frown on somebody declaring an emergency unless it’s an emergency. My understanding … is if they would have seen there was an 8-week delay between when the box was ordered and when it arrived, and we didn’t put (the project) out to bid, they would have said, ‘Well it wasn’t really (an emergency).’ So we did the right thing.”
Zack Plair is the managing editor for The Dispatch.
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