1 EXECUTIVE SUMMARY This is a summary of our review of thousands of documents and more than 50 interviews of witnesses, employces, former employees and others related to the inner workings of the Office of the Superintendent in Leon County and School District, We provided the Board a preliminary report on November 10, 2014. Since then, we have continued to review matters within the scope of our representation and have evaluated new information brought to our attention. Those activities are at a resting point and itis now appropriate for us to summarize our work and the events of the past 18 | months. Our work since November 2014 has not revealed any new information showing, criminal or fraudulent activity on the part of the Superintendent, the Board or District employees and the conclusions | contained in our preliminary report remain unchanged in all material respects, Our primary focus was the Department of Construction and Facilities, We were initially tasked by the Leon County School Board (Board) to represent and advise employees during a law enforcement investigation of construction activities within the Leon County School District (District) It became evident that we should promptly undertake a thorough review of the District’s internal construction process, policies, practices and decision-making to best perform the undertaking. The scope broadened to include providing information, advice and recommendations to the Board. Our goals were to review the facts and circumstances that led to the creation of the “notebook,” explore further areas that might suggest criminal activity, make recommendations to the Board to improve efficiency and transparency, and interface with law enforcement personnel! We cxamined a number of issues, many related to the functioning of the Department of Construction and Facilities as discussed in the now well- known “notebook” compiled by anonymous persons in December 2013. Our investigation did not include the allegations made against the Superintendent involving his personal transactions or other outside activities described in the “notebook.” We have had thorough, open and cooperative dialogue with Superintendent Pons and his staff, former staff members and independent witnesses. ‘The law firm of Ausley & McMullen and personnel from the Department of Construction and Facilities, in particular, provided extensive time, assistance and cooperation. Our firm had no authority by which to compel the production or any information from private entities. We will continue to serve as point of contact for law enforcement on the District's behalf as long as necessary.‘The District circumvented state law regarding competitive selection in the assignment of contracts to qualified firms. We identified no evidence that Pons and his staff assigned contracts with criminal or fraudulent intent, The consistent lack of documentation evidencing the motivation for the decisions related to the awarding of contracts is concerning because it allows for speculation about motives, though we did not identify an unlawful causal link between selection or assignment of contracts and campaign contributions, We have had frequent communication with Board and District personnel throughout our review. The Board and Pons have taken actions to address identified areas of concern in our preliminary report, and additional remedial measures are currently in progress. We look forward to working with the District to address all identified areas for improvement. Il. CHRONOLOGY OF KEY EVENTS A. The “Notebook” In December 2013, Pons learned that persons had documented and compiled a collection of alleged concerns. The anonymous collection quickly came to be known as the “notebook.” Ie was very critical of Pons, both professionally and personally.Pons quickly tasked District personnel to cvaluate the allegations in the “notebook.” Pons asked law enforcement officers with the District's Department of Safety and Security to review the content of the “notebook” and interview appropriate District personnel. ‘The District later retained attorney Robert J. Sniffen as special counsel to assist Safety and Security with the review. In addition, the District asked Thomas Howell Ferguson PA. and Law, Redd, Crona & Munroe P.A., outside auditors of the District’s 2013 financial statements, to expand their roles by analyzing particular allegations from the “notebook:” the assignment of construction projects, construction project amounts, the Ghazvini Learning Center gym project and Pons’ real estate transactions. Thomas Howell Ferguson P.A. & Law, Redd, Crona & Munroe P.A. produced a letter containing their findings, which is attached as attached as Exhibit A. Pons (at his own expense) retained attorney Ronald G. Meyer to review the content of the “notebook” pertaining to Pons personally. Meyer focused on: Pons? real estate transactions; his interest in private basketball camps as a possible motivation for the Ghazvini Learning Center gym project; and political contributions to Pons. Meyer’s letter explaining his conclusions is enclosed as Exhibit B. In short, Mr. Meyer found no unlawfal or improper conduct by Pons.| | | | | | | | | Tr appears the “notebook” was directed to 25 individuals across eight state and federal offices, from the Office of the Governor to the Federal Bureau of Investigation (EBI), on February 26, 2014. The “notebook” was anonymously circulated to the government agencies from “Concerned Leon County School Board Employees and Citizens of Leon County, the State of Florida and the United States of America.” The cover page that accompanied the “notebooks” is enclosed as Exhibit C. It reflects a distribution date approximately two months after Pons became aware of the existence of the “notebook,” and approximately one month after the District personnel determined the “notebook” was likely compiled by District employee Rocky Hanna. Hanna acknowledged being responsible for circulation of the “notebook,” and admitted in our interview that he had no knowledge of whether the facts (relevant to our inquiry) were valid. On February 28, 2014, Franklin County SherifPs Officers arrested District employee Paul Byrd for possession of multiple controlled substances.’ Byrd was Assistant Superintendent for Maintenance and Transportation at the time of his arrest, but had served the District for over 20 years, under five superintendents, in leadership positions within the Department of Construction and Facilities. He was a prominent force in > At the time of this report, Byrds case is still pending, 6raising funds on Pons’ behalf. Soon after Byrd’s arrest, District personnel contacted this law firm, predicting (correctly) thar Byrd’s arrest would trigger increased scrutiny by law enforcement of Pons and his administration, This firm was engaged by the Board to represent and advise employees during any investigation by law enforcement into District activities related_ to the contents of the “notebook,” and communicate and coordinate with law enforcement to facilitate the exchange of information. Serving the Board in these ways required a thorough review of the construction processes, policies, practices and decision-making, It became a natural extension of our role to identify shortcomings and recommend improvements. We did not review the Superintendent's personal transactions or other outside activities described in the “notebook.” We reviewed thousands of documents including those related to District personnel, construction projects, professional/technical service agreements, policy decisions, and political campaign records. We conducted more than 50 interviews, both before and after our preliminary report. We have had thorough and open communication with the Superintendent and his staff, former staff members and independent witnesses. We reviewed campaign records and researched applicable laws.We presented an oral preliminary report to the Board on November 10, 2014. Our access to information was limited to internal District personnel and information. We were powerless to compel information from entities and people outside of the District, including Byrd, who resigned after his arrest.® ‘Throughout our interviews, document review and analyses, there has never been a suggestion that the Board or its individual members engaged in inappropriate conduct. B. Law Enforcement In carly March 2014, the District learned that the EBI initiated an investigation of District activities. FBI Agent Zachary Coates led the effort and has been our primary point of law enforcement contact. The Florida Department of Law Enforcement (EDLE) is assisting the FBI, although the EDLE may have additional interests. The District has gone to great expense complying with both agencies’ requests to make certain information * Counsel met Byrd briefly on two brief occasions in the office of his attorney (Donald Pumphrey). We later requested, through his attomey, that Byrd elaborate in writing on decisions about specific construction projects. The information was never provided.available. Law enforcement has been in contact with some District employees over the course of the investigation independent of our involvement. InJune 2014, and again in August 2014, the FBI informally requested information related to District construction contracts between 2005 and 2013. The District provided responsive spreadsheets each time. On October 28, 2014, Agent Coates served a federal subpoena directly on Assistant Superintendent Barbara Wills. The subpoena was given to Dr Willls in her capacity as custodian of records for District documents related to the Department of Construction and Facilities.' It required the production of an immense number of documents, mostly related to 17 specific construction projects since 2007. It also called for “[a]ny and all e- mail communications between John O. Pons and Paul W. Byrd, Jr. for the period of April 1, 2009 through April 30, 2009.” A copy of the subpoena with attachments is enclosed as Exhibit D. Dozens of District employees worked over several days pulling documents, which were moved to The Bloxham Building and housed in several rooms there. ‘The District, not wanting to lose access to original documents, engaged a private company to scan the documents onto drives for electronic production. ‘The cost was * Wills has resigned from the District effective June 30, 2015.| | | | | | | $67,606.20. The production, ultimately 432,040 images, was completed in mid-March 2015. In November 2014, law enforcement served a federal subpoena directly on District analyst Johnny Shepard. The subpoena demanded any and all documents in Shepard’s possession involving District construction projects between 2007 and 2014. A copy of the subpoena is enclosed as Exhibit E. Shepard provided a small set of construction project spreadsheets in electronic form directly to FBI Agent Coates. In January 2015, Leon County State Attorney’s Office investigator Doug Paul arrested Lively Technical Center principal Woody Hildebrandt for four felony theft counts and one misdemeanor theft count.’ The victim of the alleged theft is the District. Mr. Hildebrandt, a former high-level employee of the Department of Construction and Facilities, played a role in the creation of the “notebook” and has communicated numerous times with law enforcement, The state criminal accusations against Hildebrandt are factually unrelated to the content of the “notebook” and therefore unrelated to our review. * Hildebrandt’s criminal case remains pending at the time of this report, as does Hildebrandt’s suit against the Board related to Hildebrandt’s termination. 10On March 12, 2015, FBI Agent Coates and other law enforcement officers served a federal search and seizure warrant on the District at the Department of Technology and Information. The warrant authorized a search of the District's e-mail archiver, which the officers physically removed from the premises, A copy of the warrant is enclosed as Exhibit F, The District later made available to law enforcement the relevant content of a number of servers and backup tapes that had been out of service for some time. ‘The law enforcement investigation remains ongoing, We have been advised it will not be completed in the near future. HL AREAS OF INQUIRY AND FINDINGS A. — The “Notebook” District employee Rocky Hanna advised in an interview that he gathered many of the documents included in the “notebook” himself, and received other documents from Woody Hildebrandt, also a District employee.’ Hanna met with us twice, but did not answer all questions, “ Hildebrandt initially denied providing contents of the “notebook,” or even knowing who was responsible for its creation. During a later interview he stated that he provided spreadsheets ro Hanna related to the cost per square footage of three District construction projects iLHanna stated that he was author of the summaries included with each section of the “notebook.” Besides Hildebrandt, it is unclear if other individuals were involved with Hanna in the creation of the “notebook:” Hanna denied others were involved. We decided against questioning Hanna further after concluding he had no knowledge of anything substantive about the issues below. During interviews of Hildebrand, he expressed concern about the cost of projects but asserted no knowledge of criminal wrongdoing. B. Consultants’ Competitive Negotiation Act Construction contracts with the District are governed by Section 287.055, Florida Statutes, named the Consultants’ Competitive Negotiation Act (CCNA). Pursuant to Section 287.055(2)(g) of the CCNA, construction contracts for professional services may be assigned to firms under a “continuing contract,” but only if the project cost is below $2 million or if the work is of a specified nature. Projects in excess of $2 million, and projects in excess of $325,000 that are not under continuing contracts, are to be competitively selected and competitively negotiated. The public policy underlying the CCNA is designed to make contracting for high-cost professional services merit-based and competitively 12 aePriced. The process of selection and negotiation is intended to play out publicly, and as follows per the CCNA: (i) The District announces, in a uniform and consistent manner, each occasion when professional services are needed. The announcement should include project details and how interested firms should apply. (ii) The District evaluates qualifications and performance data of firms that wish to perform the proposed project, using such factors as — ability of professional personnel; ~ whether the fitm is a certified minority business; ~ past performance; ~ willingness to meet time and budget requirements: — locatior — workloads of firms; and — volume of work previously awarded to the firms. The District must select at least three suitable firms. 131 | | (iii) The District negotiates a fair, competitive and reasonable contract with the firm determined to be best qualified. If the Parties are unable to agree on a satisfactory contract, the District then formally terminates negotiations and moves on to the second best qualified firm, and so on. Icis important to note that the CCNA puts an emphasis on pursuit of an “equitable distribution of contracts among qualified firms.” Section 287.055 (4)(b), Florida Statutes. 1, $2 million threshold Consistent with the State Auditor General’s analysis in March 2012 and January 2015, we agree that the District did not always select construction management entities in accordance with the CCNA. Pons and other high-level administrators intentionally structured projects to come in below the $2 million threshold. For example, in the case of the proposed addition of a gymnasium at Ghazvini Learning Center in 2013, a cost projection was submitted for $1,999,999. In other instances, larger projects were split or phased so that each piece was below §2 million,” 7 The District’ circumvention appears triggered by a misunderstanding of how the CCNA interacts with other provisions of state law. ‘The $2 million threshold: applies to continning contracts only, which the Districr did not use during this time period. The 14| ‘The first implementation of the practice of dividing projects was also one that has raised the most questions, During the first half of 2009, the District was planning a large construction project at Griffin Middle School. ‘The District announced the project per the CCNA, received applications and chose a group of five qualified firms to make presentations to a District selection committee. However, the day of the selection committee meeting, benween the fourth and fifth presentations, Pons communicated to Byrd (then Assistant Superintendent over the Department of Construction and Facilities) that the process was to be immediately halted® Byrd then contacted Danny Albritton, Director of Construction and a selection committee member, and relayed the Superintendent's directive. Byrd instructed Albritton to allow the fifth firm to complete its presentation, and to deliver the committee’s score sheets to Byrd without them being tallied. Albritton gave the score sheets to Byrd. All efforts to locate these score sheets have proven fruitless. District has clarified the application of the CCNA in its newly adopted construction policies. * Pons recalls communicating to Byrd by unsuccessful, e-mail. Efforts to locate the e-mail were 15 | | | | |The Griffin Middle School project later proceeded in three separate phases assigned (not competitively selected and negotiated) to two firms. Bach phase was placed on the Board agenda as a consent item: - $1,998,334 / Culpepper Construction / July 2010 ~ $1,984,808 / Culpepper Construction / October 2010 ~ $1,868,943 / Childers Construction / April 2011 The practice of dividing projects into phases was used liberally between 2010 and 2014. Pons controlled the assignment of projects for this time period. ‘The State Auditor General did a thorough job of detailing all such projects in Table 1 of the January 2015 report. The Auditor General’s report is attached as Exhibit G. 2. Motive ‘The District’s imperfect application of the CCNA is clear; less clear is the motive for it. The “notebook” strongly implies that Pons steered work to construction firms based on personal relationships and campaign contributions. While our review led to concerns, including the consistent lack of documentation explaining the assignment of work, we have notidentified evidence that construction contracts were divided or ‘assigned with criminal or fraudulent intent. As it relates to why the Griffin Middle School project was split into phases, the explanation provided began with the closing of Belle Vue Middle School in February 2009. The closing at Belle Vue diverted students to Griffin. According to Pons and others, the original plans for Griffin included substantial demolition that would have eliminated too many student stations to compensate for the influx of Belle Vue students. Pons directed that the original construction plans be changed to fit the needs of the District. We were not able to locate any documentation that corroborates the reasoning in support of the drastic and last-minute changes.” The District’s explanation for the stoppage of the Griffin selection committee process occurring at the last minute has raised questions. The closing of Belle Vue was approved more than six weeks before the involved firms made presentations. The firms went to the time and expense of preparation and presentation and were not given the courtesy of an explanation or informed of the outcome until the project was later assigned, ° The lack of meaningful records documenting District Icadership’s reasoning in the arca of construction proved to be a prevalent problem throughout our review. 17divided and then awarded to two construction firms. We can only conclude that a lack of communication and poor organizational planning caused the District to initiate major changes at the eleventh hour. We interviewed personnel with the Department of Technology and Information Services about e-mail retention and the missing e-mail from Pons to Byrd. The District began archiving e-mails in May 2010. Since then, 100% of District e-mails have been preserved regardless of deletion. Prior to May 2010, an e-mail would be recoverable unless the recipient deleted it from the “inbox,” and deleted it again from the “deleted” folder, On the sender side, an e-mail would be recoverable unless the sender deleted it from the “sent” folder, and deleted it again from the “deleted” folder. At our request and in our presence, personnel conducted an e-mail search which revealed more than 30 e-mails between Pons and Byrd during the month of April 2009. We reviewed the e-mails; none pertained to the halting of the Griffin selection process. We also requested a search between the assistants for Pons and Byrd, which proved fruitless as well. ‘Mindful of the suggestion of impropriety involving the Griffin Project, we interviewed the selection committee members. We had been made aware of a claim that a particular construction firm would have been selected by the committee had the process been completed. That firm was not later 18assigned any of the Griffin contracts. The committee members were not able to recollect many specifics due to the passage of time. Generally, the members recalled the normal selection process. They listened to the construction firms” presentations, tallied and submitted their individual score sheets and left before the final tally. Other than Mr. Albritton and District employec/committce member Sandra Davis, who collected the score sheets atthe end, the members did not recall being aware the process was halted. Furthermore, there was no apparent consensus about which firm ranked as best qualified. ‘The inability to find the Griffin score sheets or the e-mail from Pons to Byrd has fueled speculation about the motivation for the stoppage. Law enforcement took particular interest in the e-mail. Its absence may have led to the extensive demands on the District from the federal subpoena for documents and the search and seizure warrant for the e-mail archiver. With regard to the other projects that were divided into phases, District leadership provided only general explanations. Pons and others explained that the 2007-09 recession had put local construction firms in peril, and having the ability to spread work across a broad group of local contractors ensured a viable base of firms for the District's future work. ‘This is indeed a noble motive, but one that could have been pursued within 19the confines of the CCNA. As noted above, the CCNA expressly encourages an equitable distribution of contracts among qualified firms. Section 287.055(4)(b), Florida Statutes, District leadership also referenced time constraints as a reason for dividing projects. The time periods during which large projects can be undertaken are finite, often only during summer vacations. Also finite can be the time periods during which funds can be used, depending on the source of the funds. We are critical of this explanation as well, for it reflects poor organizational planning similar to that exhibited during the Griffin Middle School project. C. Political Contributions and Assignment of Contracts We heard during interviews a cacophony of vague allegations and conjecture about an unlawful relationship between political contributions | and the distribution of construction work within the District, Pons has been a successful fund raiser. Of his overall campaign contributions since 2006, our analysis showed that at least 9% originated with construction contractors, or persons who appear to be affiliated with, or related to, construction contractors, That percentage is smaller, 69, when refunds of unspent contributions are considered. ‘There is no clear correlation between| | the amount of contributions and the amount of work assigned to contractors. Our conclusions are based exclusively on internal and publicly available information only. Our preliminary report to the Board contained a breakdown of campaign contributions and work assigned, it is attached as. Exhibit H. Pons and Byrd insisted that when deciding which contractors to assign a given project, they would match “talent to the task.” Past experience, current workload and ability to complete a project on time and on budget were factors used to decide on the best fit. Once again, however, there was very little documentation found recording the decisions behind project assignments. Skepticism has thtived, perhaps where it is not warranted, due to poor record keeping. When a District circumvents the CCNA, it creates an environment whereby the superintendent or others can exert undue influence over the awards of construction contracts. However, no one, including those responsible for the contents of the “notebook,” cited any evidence of a quid pro quo with contractors. Pons and Byrd vigorously denied any such quid pro quo, We have found nothing, based on our internal review and the information available to us, to establish that the assignment of construction contracts was criminal in nature. 21| 1. Ghazvini Learning Center ‘The Ghazvini Learning Center gymnasium project is an example ofa large-scale project showing evidence of poor planning that may have resulted in cost inefficiencies during the relevant time period. Ghazvini Learning Center isan alternative school with physical education classes but no athletic programs. The Ghazvini family donated the land for the school; the family also owns Baycrest Corporation (and other firms that provide construction- related services). In 2012, the District engaged an architectural firm to design a gymnasium with four adjoining basketball courts at Ghazvini Learning Center. Several alterations to the design were made over time in an attempt to bring cost estimates below $2 million (without adequate documentation). In addition, unexpected soil work became necessary to prepare the land for construction. Due to budgetary concerns, the project was halted in the Fall of 2013 after expenditures totaled $310,161.13. A spreadsheet of the expenditures is attached as Exhibit I. The District paid $169,779.27 to Baycrest Corporation for the soil work. We did not find any written justification for the award of the contract to Baycrest over other qualified firms, We likewise did not find any written justification for the size and scope of the project. We have been advised that there are very few four- 22court gymnasiums within the District, and none at schools the size of Ghazvini Learning Center. A less ambitious project from the outset would have saved the District time and money. We find no fault, however, with the effort to build a gymnasium at an institution that is lacking one." We were provided with no direct evidence supporting the contention in the “notebook” that Pons pursued a multi-court gymnasium at Ghazvini Learning Center to use as a location for private basketball camps owned and operated by the Pons family. Nor did we uncover evidence internally that the soil work was assigned to Baycrest Corporation in return for political support or the donation of the land. TV. REMEDIAL MEASURES A. Construction and Facilities Operation The Superintendent, Board and District employees have taken admirable steps to address the concerns we have identified during our review. The Board has initiated rule making to create or revise a number of construction policies to require better documentation and monitoring of the construction process. The eleven new and amended policies, which will go "We have been advised that the District plans to reinitiare a one-court gymnasium project at Ghazvini Learning Center. 23—————— before the Board for final hearing the same day as this report, are attached as Exhibit J. A complete listing of all policies adopted in this area since our work began is included as Exhibit K. Asa result of these changes, the Board must be given notice of and approve major expenditures related to construction. In December, 2014, the Superintendent added Jim Connell to his staff as Chief of Facilities and Construction. Connell isa retired Army Jicutenant colonel and a longtime top facilities staffer with Clay County schools. Connell has played and will continue to play an important role in addressing the problems with record keeping and transparency within the department. ‘The District has amended Leon County Schools (LCS) Policy 6330 to specifically require compliance with Section 287.085, Florida Statutes, in the selection of construction and architectural firms. It calls for a short list committee to rank each from most to least qualified using factors set forth in the policy. The top five firms will then be given an opportunity to make presentations to an interview committee. The interview committee must then recommend the top three firms in order to the Superintendent. Both committees are required to use standardized forms for evaluation and ranking. This policy also requires the Board to approve construction delivery method and delineates the specific process to be followed when the 24Board has approved selection of the appropriate construction delivery method for projects over $300,000. The District has created LCS Policy 6320.20, entitled Continuing Contracts, which has established total cost thresholds of no more than $300,000 for construction trade work, $500,000 for architects and engineers, and $1.5 million for emergency services. Bids for each of the services will be let during the third quarter of each fiscal year, The policy requires a specific evaluation process and documentation throughout. LCS Policy 6321 addresses the practice of dividing or phasing projects. Now, once a concept or proposal for construction work is memorialized in the District’s Five Year Facilities Work Program and is assigned a project number, it may not be modified except as permitted by policy. The policy requires that the Board determine whether itis necessary and in the District’s best interest to divide or phase a project. Also, the total cost of a divided or phased project must be used in determining threshold requirements for compliance with Section 287.055, Florida Statutes. LCS Policy 6321 also now seeks to keep costs down by aligning cost per square foot and general conditions costs to those throughout Florida. For each project over $300,000, the Board must be informed of the 25 oe Iestimated cost per student station, the estimated gross cost per square foot and whether these costs exceed the statewide average. The Board must receive a written explanation if the costs exceed the average by more than 10%. General conditions must also be measured against similar projects to ensure reasonable costs. New LCS Policy 6323 requires that all requests for payment of a firm’s general condition costs be in sufficient detail to enable the District to discern whether they are reasonable and contractually acceptable. The policy also directs chat procedures be implemented to evaluate firms’ payment requests prior to payment, and that District staff assist to ensure that subcontractors are licensed and subcontractor functions are competitively bid. B. Political Influence/Lobbying On June 11, 2013, the Board adopted Leon County Schools (LCS) Policy 6324, entitled “Code of Silence.” ‘The policy, among other things, prohibits any communication regarding the subject matter of the Procurement between “the potential vendor, service provider, bidder, lobbyist, or consultant and the staff of the District, including school principals” or “any one (1) or more of the Board members or member- 26elects.” The District is considering a revision (which we encourage) to make clear that the policy applies to all District employees including the Superintendent. The District is preparing a new policy for Board consideration aimed at providing greater transparency. The policy will require registration and semi-annual reporting responsibilities with respect to persons and entities that engage in commmnications about Board matters with specified District officers or employees outside of a public meeting, Future Policy Additions When adhered to, the District’s current policies related to ethics, conflicts of interest, procurement and political activities are sound. We have participated in preliminary discussions toward the development of additional Policies concerning lobbying, consultant agreements, ethics training and the potential establishment of an Inspector General, We recommend the District continue to examine whether the implementation of additional policies will guide District personnel and increase public confidence. 27