September 15, 2004

County attorney Timothy Mullaney acknowledged that, so far as he knows, the controversial insurance consulting contract is the only self-renewing contract that county government has. It apparently was amended to become such by one of his predecessors without County Council being aware of the change.

The contract at issue is with A.I.S. Risk Management, which is owned by Lynn Moroz, the county's former risk manager. A.I.S., in turn, subcontracts with Freebery & Houghton, a law firm. Michael Freebery, one of the firm's principals, is the brother of Sherry Freebery, the county's chief administrative officer, the second-ranking position in the administration, and Joseph Freebery, general manager of the county Department of Special Services.

Council's finance committee, at a meeting on Sept. 14, grilled Mullaney at length about the validity of the contract; whether the arrangement it covers is the best deal the county can get; how much is rightfully owed to A.I.S.; and why he authorized payment of $450,000 to the firm despite the fact that Council had specifically deferred approval of a purchase order which, at the time it was entered, purported to provide for the payment.

"The whole thing just stinks," said Council president Christopher Coons.

In another matter before the committee, Council members questioned a proposal to use proceeds from the sale of long-term bonds to finance three large grants which at least some people previously understood would be financed from the county's operating surplus.

Councilman Robert Weiner, at whose behest action on the purchase order was tabled at Council sessions in both August and July, said he has "questions about the county attorney's conduct in this case" and alleged that Mullaney "seems to be working for the chief administrative officer's interests and not the county's." Weiner and Mullaney have clashed several times in the recent past.

"A.I.S. Risk Management is providing a service to the county," Mullaney said. "We entered into this agreement and they (sic) have performed the service. There is no way we can not pay them."

He added that Council has the option to not renew the contract, but said that requires 60 days advance notice and the contract's present iteration runs until Apr. 1, 2005.

Mulllaney said Council approval of the purchase order was not required because existence of the contract had the effect of authorizing the payment.

He did acknowledge Weiner's contention that the arrangement with Freebery & Houghton is the only one in which county government pays for outside legal services through a contractor rather than directly through its law department.

According to conversation at the meeting, Council approved an initial contract with A.I.S. in 1998. That agreement evidently had a one-year term. Subsequently, however, former county attorney William Rhodunda twice amended it with the second amendment making it, in Weiner's words, 'evergreen'. That means it can be cancelled at the end of a contract year but, absent any action to do so, it gets extended for another year.

Council members said there is no indication that it ever approved the amendments. Nor was it asked to nor informed that the changes had been made. Rhodunda, who was not at the finance committee meeting, had not responded to a Delaforum request for comment as this article was being prepared.

Coons said he "can't see how it can be appropriate to go on for years ... without Council's knowledge and approval."

"I have a belief this contract violates county law. My experience has been that we [have to] approve all contracts," he added.

"How did [it] slip through the cracks of Council not knowing there was a contract out there?" Councilwoman Patty Powell asked.

Weiner earlier had questioned why Moroz's firm is being paid $450,000 and Moroz himself draws a monthly salary of $16,500 when "his only duty is to pay funds Freebery & Houghton."

Mullaney replied with a list of various tasks that he said A.I.S. performs for county government as part of its management of worker compensation claims. Moroz's monthly salary is $13,500, Mullaney reported.

"I am not a proponent of 'evergreen' contracts, [but] we have a contract with a vendor who is providing a service," Mullaney told the committee. Council members seemed to agree that A.I.S. is entitled to payment for services rendered, but no poll was taken at the committee meeting on that point.

Councilman Penrose Hollins said the matter would not have come to light nor would Council members and others who thought that Moroz was a county employee learn that he is a contractor were it not for an audit by auditor Robert Hicks. A report on that audit was issued last April over objections by the county administration to the public 'release' of information about that aspect of the audit.

Weiner questioned why the position of in-house risk manager has not been filled. Mullaney replied that a new position, insurance and control manager, was added to the county government roster as of July 1, 2002, and that the county advertised for candidates to fill it in March and April of that year. It was re-advertised, he said, in March and April of 2004 and nine applications were received. Three of the current applicants, who include Moroz, have been found to have the "minimum qualifications" required for the job, he said.

Mullaney at the committee meeting repeated a previous assertion that the original agreement with A.I.S. was entered into as a way to save the county money and said that it has worked out that way. He did not offer a specific figure. "With Lynn Moroz making $162,000 a year, I don't accept the fact we've saved a lot of money," Weiner said.

Moroz did not attend the committee meeting.

Declaring that it was apparent there would be no resolution of the matter at the meeting, Councilwoman Karen Venezky, who chairs the finance committee, requested that Coons meet with Mullaney and other county officials in an effort to come to some kind of resolution of the situation.

At Council's regular business session, which followed the committee meeting, Venezky decided not to introduce a proposed resolution authorizing an $80 million bond sale, pending further consideration by the finance committee. Such resolutions are normally introduced and approved routinely.

In this case, however, Hicks questioned whether it was appropriate to include the county's $15 million share of the buy-out of property owners in Glennville whose houses were destroyed by flooding during the September, 2003, storms; $10 million for a nature education center on the Christina River waterfront in Wilmington; and $1 million for the Iron Hill Museum.

Noting that borrowing money for those grants will require county taxpayers to pay for what he described as one-time spending over the next 20 years. "You buy short-term goods with short-term money; you buy long-term goods with long-term money," he said.

Ronald Morris, the county's chief financial officer, disputed that, saying that using the Glennville site to provide mitigating wetlands to allow widening of Interstate 95 "is something that will last 100 years."

"Everyone has been made aware that these [grants] were going to be paid for by issuing bonds," he added. Hollis disputed that saying that "there was a lot of discussion about these grants coming from surplus."

Morris said a desire not to have to raise property taxes for as long as possible also justified going the bond route. But, he added, the policy decision concerning whether to use long-term financing or pay for projects from the current operating budget rests with Council. "You make the decision -- a large bond issue or no bond issue," he said.

Other components of the proposed issue are $16 million for the new county police headquarters; $8 million for acquisition of another office building in New Castle Corporate Commons, and $15 million each for sanitary sewer rehabilitation in Brandywine Hundred and extension of sewers in the southern part of the county.

2004. All rights reserved.

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