Jeanna Duerscherl | The Roanoke Times

The Villages at Lincoln Hope VI opening celebration featured children's activities and carriage rides. The development is considered on of the Roanoke Redevelopment and Housing Authority's successes, but questions have surfaced about IMG's management of the program.

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• See the areas that the federal audit may cover
• Key players
• IMG's influence

Federal officials will launch an audit today to examine whether the Roanoke Redevelopment and Housing Authority mishandled more than $1 million in government contracts by giving preferential treatment to a private Roanoke consulting firm.

Just three months on the job, new housing authority executive director Ellis Henry called for the probe after a review of contracts between the authority and Issues Management Group. His review was prompted by a citizen request for information this summer.

Henry is concerned about preferential treatment and conflict of interest involving IMG's 11 contracts with the authority during the nine-year tenure of Henry's predecessor, John Baker.

IMG, a small company led by former housing authority board chairman Rob Glenn, was hired by the authority for various jobs ranging from setting up authority board retreats to managing the $41 million overhaul of the Lincoln Terrace public housing development. In managing the Lincoln Terrace project, IMG was responsible for making sure construction occurred on time and within budget, guiding authority staff to complete its tasks, and ensuring the work was done in compliance with governmental regulations.

Glenn billed a rate of $175 an hour.

After reviewing the authority's files, Henry has raised questions about IMG's influence over authority contracts it obtained and whether the authority's procurement process was fair. Henry also is concerned about incomplete and missing documents.

"It's clear that we did restrict competition. That's simply not fair," Henry said.

Baker was sent a summary of the details in this story by The Roanoke Times, but he did not respond to a request for an interview.

Glenn referred questions to his attorney, Ed Natt. Last week, Natt said Glenn has no formal information about what he's supposed to have done.

"No one officially from the authority has contacted us," Natt said. "Rumors, media questions, and basically that's it."

At this point, Natt said he didn't know how to respond. But he said generally that Glenn did not use his friendship with Baker to influence the housing authority's contracting process.

Henry organized his questions and supporting documents from authority files into a 400-page report for the authority's city council-appointed board and for the U.S. Department of Housing and Urban Development. HUD supplies the authority's funding, and the authority is also required to follow its policies.

In a Thursday letter to Henry, HUD officials said they will be in Roanoke from today through Wednesday to review the agency's spending practices, including a final review of the Lincoln Terrace project.

"Anytime there is an audit, the board takes it seriously," board Chairman Ben Fink said at the start of a board meeting Monday.

Fink said the board and staff will cooperate, although the board's lawyer, John Grove, has advised its members not to talk to the press, Baker or Glenn.

Housing authority procurement policy requires board approval for contracts over $50,000. Government spending rules require a competitive bidding process to ensure that vendors have a fair opportunity to win government contracts, and that taxpayer money is spent by government agencies in a prudent manner.

Henry's report details several areas he's asked HUD to investigate:

• IMG wrote grant proposals, defined the work to be funded by those grants, and was then awarded the $210,000 contract to do the work after HUD had warned the authority not to do business that way because it creates a conflict of interest.

• Dates on correspondence related to a $760,000 contract with IMG suggest the authority chose to award IMG the contract and began negotiating with it before the interviews with other bidders on the contract were complete. Other documents give conflicting dates.

• Key paperwork related to that contract is missing from authority files. The contract, for program management of the $41 million overhaul of the Lincoln Terrace public housing development, was questioned several times during HUD audits at the time.

Henry's research began after Roanoke resident Bob Craig filed a state Freedom of Information Act request this summer with the authority. Craig, a retired Marine Corps colonel who spent years in finance operations, said he filed the request seeking information about potential conflicts of interest involving Councilman Bev Fitzpatrick, who was a partner in IMG and is a former member of the housing authority board. Based on the documents he received, Craig, who devotes much of his time to serving as an unofficial city government watchdog, said his questions were satisfied.

Henry, though, pored through much more documentation than what was involved in Craig's information request. Henry now questions exactly what services IMG delivered to earn the hourly rate billed by Glenn, a former Roanoke Gas executive with degrees in electrical engineering and business administration. IMG has consisted of Glenn and one or two full-time employees who bill at a lower hourly rate.

"I cannot determine by looking at either the specifications or other documents, in some cases what the deliverable is," Henry said.

HUD cited conflict in 2001

HUD, in fact, reviewed the authority's procurement practices in 2001, according to documentation obtained by The Roanoke Times under the Virginia Freedom of Information Act. HUD explicitly told authority leaders then that it is an "organizational conflict of interest" to allow a vendor to work on the specifications for a program contract and then bid on that contract.

Yet two years later, Glenn's firm wrote a set of grant proposals and not only bid on contracts funded by the grant money received, but also won a $210,000 contract through a process Henry now questions, according to authority documents.

Glenn, by his own claim in a June memo, wrote five proposals for HUD grants to fund five different authority-proposed programs to pursue such initiatives as improving the quality of life of elderly and disabled public housing residents, increasing home ownership, and forming a consortium of social service organizations to better serve clients.

In October 2003, the housing authority advertised a request for proposals to coordinate those programs. Three firms responded, including IMG.

An authority document indicates that at least one potential bidder asked for copies of the grant proposals. Though Glenn wrote those proposals, the authority responded that it wasn't going to honor the request.

A bid by Total Action Against Poverty, a Roanoke nonprofit, community action organization, received the highest score, evaluators' score sheets show. But no contract was awarded because the authority received only one of the five federal grants. With funding for only one program, no coordinator would be needed, the authority decided at the time.

Subsequently, the authority paid Glenn and IMG $5,000 to restructure the whole set of programs to accomplish them all with one $250,000 grant, documents show. Under the revised program description, which Glenn also wrote, IMG would be hired as program coordinator.

In an April 30, 2004, letter, HUD officials told Baker that IMG could not be awarded that work without a competitive bidding process.

Rather than advertise a new request for bids, Baker sent letters to Glenn and TAP President Ted Edlich advising them of the new opportunity to coordinate the programs. No letter to the third bidder -- Best Practice Services of Roanoke -- was in the files obtained by The Roanoke Times.

Edlich wrote back that TAP had no interest in the revised programs. "We do not believe in taking on tasks that are too ambitious, or where realizing the objectives is seriously in question," he said.

In the end, Glenn, who wrote the grant proposals and then revised them to again create the need for a program coordinator, was awarded the contract.

Out of the $250,000 grant, IMG was to receive $210,000 to coordinate five programs. After Glenn's fee, there remained $40,000 in funding for those programs. The proposed work included a vast array of goals from coordinating training and counseling to setting up partnerships with area businesses to convening and attending meetings.

The contract remains in effect through May, though the authority sent Glenn a letter on Aug. 31 directing him to suspend all work pending the HUD audit.

Prior to the suspension of contracts, however, Glenn billed the authority about $160,000, the great bulk of it for attending meetings. The remaining balance on his contract is approximately $50,000.

Glenn met weekly with Baker, and as of June billed the authority more than $57,000 for those meetings alone. In addition, authority officials say, the two regularly met for lunch at restaurants near Valley View Mall -- Flat Rock Grill was a favorite -- with the authority often paying the tab for Baker and Glenn.

Invoices show Glenn continued to bill for some meetings with Baker even after Baker left the job in late May.

Many of the meetings dealt with a consortium of social service providers in the city that Glenn set up under the auspices of the grant. The consortium itself generated numerous meetings for which Glenn also billed.

In June 2004, for example, IMG billed for 51.75 hours of work that consisted entirely of "meetings," "contacts" and "discussions." The total amount of that one invoice came to $7,946.25.

Questions from the start

HUD had questions about contracts between the housing authority and IMG almost from the start of the relationship, as far back as 1999.

IMG's largest contract from the authority was for $670,000, later extended to $760,000, to serve as program manager for the $41 million overhaul of what was then called Lincoln Terrace, a public housing community in Northwest Roanoke.

Based on his investigation, Henry is concerned that Baker was negotiating contract terms with Glenn and IMG before interviews with two other bidders were completed.

Early correspondence shows interviews with all bidders were planned for March 10, 1999. An undated letter from Baker to then-Mayor David Bowers says on-site interviews of the bidders were completed on April 1, 1999.

Also, in an October 1999 letter to HUD, an authority official wrote "three firms were selected for interviews that were conducted on April 1, 1999."

Letters from Glenn and authority board meeting minutes, meanwhile, indicate that the authority was already negotiating a contract price with IMG and planned to authorize IMG to do limited consulting work starting weeks before in mid-March. Glenn's initial bid had a total cost of $1.4 million, but during negotiations he reduced the cost by removing two subcontractors.

Baker signed a letter of agreement with IMG on March 31, 1999.

Henry wants to know now if the housing authority made its decision to go with IMG without fully and fairly considering other offers.

Henry and his staff have found it difficult to determine exactly how the procurement of the contract worked because nearly all of the relevant documents, including the proposals, are missing. The only bid score sheets in files supplied to the newspaper through a Virginia Freedom of Information Act request gave IMG the highest score, but the sheets have no evaluator's name on them. A December 2000 memo from a HUD reviewer says the evaluation sheets were in the file at that time.

While HUD approved the contract to manage the Lincoln Terrace overhaul, it continued to question the terms.

HUD said the contract gave IMG the right to terminate the contract and lacked a means of measuring IMG's performance. One HUD letter said Glenn should not be both a contractor and a board member of the authority's nonprofit arm, the Roanoke Valley Housing Corp. It's unclear when Glenn left that board.

A later HUD review of the housing authority's procurement practices and policy raised numerous concerns including missing files and the lack of a centralized filing system.

"In reviews, if the documentation can't be produced, it will be treated as non-compliance," an April 2001 memo reads.

The transformation of Lincoln Terrace into the Villages at Lincoln was ultimately completed, and Henry said it is undeniably a success. The project included the demolition of about half of Lincoln Terrace's old units and a renovation of the rest, along with construction of 22 lease-purchase homes.

He said it appears IMG "directed the staff to do the work that I would have thought should be the responsibility of the program manager," adding that, based on his reading of authority files, "we did not get three quarters of a million dollars in that one contract."

Henry meets Glenn

Henry said he would much rather have started his tenure under different circumstances. Henry came from St. Louis, where he worked for its housing authority and later as a private consultant.

"My concern, and the reality is, that this has been such a distraction that I've not been able to focus on improving this agency's ability to provide services. That's really why I think I was brought here."

But the former Air Force contracting officer added that: "We are public servants funded by taxpayers' dollars, and therefore we have a fiduciary responsibility to all citizens, and more specifically to the citizens of this community. When we see these types of procurement violations, it's usually an indication that our financial stewardship is questionable."

The first person Baker introduced Henry to outside the authority was Glenn, Henry said. Baker, Glenn and Henry met over lunch at South Roanoke's Fork in the Alley. Glenn later billed the authority for the lunch, Henry said.

Shortly after that, Henry told Glenn he was concerned about how IMG was fulfilling its current contract with the authority. Glenn responded, sending several letters to the housing authority administration in recent weeks.

"A significant amount of my time has been spent over the past 20 years with RRHA [the vast majority of it as a volunteer]," he wrote on July 30. "I regret providing management consulting services at RRHA for fee; it muddied the water. I care deeply about the organization and the residents it serves."

Glenn then billed the authority $175 for that letter, according to an invoice obtained by The Roanoke Times.

Henry said the authority doesn't plan to pay.