City balks at EG&G?s $52K bill, offers $10K
McMinnville?s Finance Committee has voted to offer EG&G $10,000 instead of the $52,860 the company requested weeks ago.
This decision came even after members indicated they believe the amount is probably non-negotiable, as all EG&G?s fees have been.
After receiving notice that the city of McMinnville would not be using EG&G?s services for phase II of the downtown economic revitalization project, EG&G president John Grossmann sent a letter to elected officials. Attached to the letter were two invoices requesting payments.
The first invoice requested $39,000. According to Grossmann, the $975,000 Transportation Enhancement Grant for phase II was received by the city due to the efforts of EG&G and the fee for the grant application is 4 percent, or $39,000.
After seeking the advice of legal council, city attorney Susan Marttala agreed with EG&G that the city may owe something but not the entire amount requested.
This legal decision was made based on the fact there is nothing in writing stating the amount to be paid and discussions with other grant-writing companies that led her to believe the amount was excessive.
Legal council would not divulge which companies were contacted. However, all the companies stated that 4 percent was the standard amount but only if the amount of the grant was lower than $750,000. As the amount of the grant increases, the fee reduces.
After being asked by members of the Finance Committee, Mayor Royce Davenport also called a grant writing company and he was told almost the same. That company, name also withheld, stated their highest fee was $10,000.
Given the information received, committee member Bobby Kirby moved that EG&G be offered $10,000 in compensation for the work they did in obtaining the grant. This amount was less than half because EG&G will not be the company administrating the grant which is the larger portion of work. The vote passed 2-1 with Patti Nunley voting against it.
The second invoice requested $13,860. In the letter, this request was made because EG&G developed the preliminary construction costs for the project including schedules and made presentations to both the public and private sectors at the request of the city.
EG&G?s stance is that they did this work and if they had received the contract, they would have absorbed as part of the proposed fee structure for phase two. Because the city is not going to use EG&G, they want to be paid for 115.50 hours of work at a rate of $120 an hour.
According to the two business people on the committee, Aldermen Donald Hillis and Kirby, this process was what all businesses do when they are presenting a proposal bidding for a project. If the project isn?t given after the proposal, the time spent preparing it is just wasted time and businesses don?t get reimbursed for time spent on proposals that aren?t successful.
?If I could be compensated for bidding I wouldn?t want any work,? said Kirby. ?I would just make proposals all the time. I would be in the business of making proposals. Making proposals is just part of the game.?
Kirby made the motion that the city refuse to pay the requested amount. The vote passed 2-0 with Nunley abstaining.
Nunley suggested that maybe a better course of action would be to have Davenport call EG&G and discuss with them what we are willing to pay and negotiate the amount.
?He was doing what he did in good faith,? said Nunley. ?Therefore I think just to have our attorney call them and say, ?Here this is what we are going to give? is not very good business. I think the mayor should call him up and discuss this with him and then come back. At that point in time we should discuss what action should be taken.?
To that, Kirby stated, ?I don?t have a problem with that at all. I don?t care to do it but I don?t think it will do any good. Their prices aren?t negotiable. I?ve crossed that bridge before.?
Now that the decision has been made to offer EG&G $10,000 on the first request and nothing on the second, elected officials will have to wait to hear their response.