Water district loses $1.5 million on Hollywood company’s failed pumps; now buying $2 million more

By Dan Christensen, BrowardBulldog.org 

A flood control structure on Lake Okeechobee where pumps failed

 

The cash-strapped South Florida Water Management District spent $1.5 million in 2006 to buy 15 large electric pumps from a politically connected Hollywood company. 

But the Morrison Pump Company’s pumps quickly failed after their installation in April 2007. 

Morrison later refused the district’s request to honor its five-year pump warranty – asserting it was void because the pumps were misused, according to Water District documents obtained under the Public Records Act. 

The pumps were needed to draw water from Lake Okeechobee in case of a drought, and the district ultimately was forced to seek new bids. It purchased 14 replacement pumps from a different supplier for an additional $1.85 million. 

Stuck with $1.5 million in worthless equipment, unhappy district staff fired off what’s known as a “cure notice” to Morrison President Luis Botero in May 2008. It warned that if the company did not honor the warranty on its 42-inch axial flow pumps within 30 days it would “pursue all legal remedies available,” plus take steps to suspend Morrison as a vendor. 

But the district’s threats proved hollow. For nearly three years, until Broward Bulldog inquired about the failed pumps in February, the district took no steps to either recover its money or suspend Morrison. 

“Why? That’s a good question,” said Morrison’s lawyer, former Water District chairman Nicolas Gutierrez. 

More work flows to contractor 

Instead of going after Morrison, the district allowed it to continue to supply expensive pumps for the district’s important water moving projects. 

Morrison is currently a subcontractor on an $11.9 million pump station being built off U.S. 27 as part of the district’s enormous Everglades restoration program. 

The cost of the pumps, which have yet to be delivered, is approximately $2 million, said district spokesman Randy Smith. 

Morrison spokesman and sales manager Michael Murazzi said his company’s pumps for the G-435 pumping station were inspected and approved for installation by district engineers. 

“We asked them, ‘Do you guys still have a problem with us from the other issue?’” said Murazzi. “They said, ‘No problem. Let’s forget about the past. They’ve been very happy with us.” 

Murazzi said others at the district have sought to wrongly blame Morrison for their mistakes. “Whatever their internal problems were, we were the fall guy,” he said. 

Water District officials did not respond to questions about why they did not seek to recover the $1.5 million that was lost on the failed pumps. But Smith offered a different take on why the district continues to buy Morrison products. 

“At the time that the (Everglades) contract was awarded the district had not completed its investigation into the failure of the Lake Okeechobee forward pumps. Therefore, the district did not have a sufficient basis to prevent (contractor) Close Construction from utilizing Morrison pumps,” he said. 

That contract was awarded in August 2009. The existence of the investigation was not mentioned in hundreds of pages of project records reviewed by Broward Bulldog. 

The district would not answer questions about the investigation, or explain the reason Morrison’s Lake Okeechobee pumps failed in 2007. A district lawyer denied a public records request for a copy of the report saying it was prepared in anticipation of litigation and was “exempt from public disclosure until the litigation is concluded or settled,” Smith said. 

The district’s renewed talk of action stems from a “termination for default” notice it sent last month to Morrison. The March 14 letter formally notified Morrison that it had “failed to cure” its warranty breach for the Lake Okeechobee pumps that failed three years ago and warned again of a possible suspension. 

A meeting between the two sides is scheduled today (April 7) at the district’s headquarters in West Palm Beach. 

Bad timing 

The South Florida Water Management District is a regional governmental agency with an unelected board and a $1.5 billion budget that oversees water resources in 16 counties from Orlando to the Florida Keys. About a third of its revenue comes from property taxes it levies. 

News of the district’s lack of aggression in collecting money owed to it comes at a bad time. 

Gov. Rick Scott and leaders in the state’s Republican-controlled Legislature are looking to slash the district’s budget by as much as $120 million next year as part of a larger effort to rein in government spending at each of Florida’s five water management districts. 

Also, The Palm Beach Post reported last month that the district recently hired district Executive Director Carol Wehle’s boyfriend for a $120,000-a-year job in an internal watchdog office. 

Morrison Pump had a significant inside political connection at the district when it was awarded the $1.5 million contract in 2006. The company’s lawyer, Nicolas Gutierrez, was then vice chairman of the district’s nine-member governing board. He served on the board from 1999 until April 2008. 

Morrison, a wholly owned subsidiary of Morrison Manufacturing of Panama, was awarded the Lake Okeechobee contract five years ago after submitting the lowest sealed bid – $720,000 less than its nearest competitor, Moving Water Industries (MWI) of Deerfield Beach. After Morrison’s pumps failed, and another round of bids, MWI supplied the replacement pumps that are now in place. 

Gutierrez said that while Morrison was – and is – a paying client he had “no involvement” in its 2006 efforts to win the pump contract – either by representing Morrison at the district or as an influential member of the district’s governing board. 

In fact, the contract never went before the board for a vote. Gutierrez said that at the time the $1.5 million purchase was not large enough to require board approval. It is now. 

Nevertheless, Gutierrez was hit with an ethics complaint shortly after leaving the board. The complaint alleged that his representation of two corporate clients doing business with the district, including Morrison, created recurring conflicts that “impeded the full and faithful discharge of his public duties.” 

In December 2008, the Florida ethics commission found probable cause to believe the allegation was true regarding Morrison, but not the other company, Subaqueous Services Inc. 

Specifically, it found that Gutierrez had failed to comply with state law requirements that he file disclosure forms declaring his interest in Morrison’s 2006 pump contract bid. 

But the commission, saying “the public interest would not be served,” chose not to proceed further against Gutierrez. It explained that Gutierrez had not participated in Morrison’s selection and that if he filed the forms he could have availed himself of a legal exemption that would have negated the conflict. It also said Gutierrez “was not aware of the filing requirement.” 

Battle for business 

The backdrop to the district’s big money pump purchases is a pitched competition for work between Morrison and MWI, a longtime district vendor with political connections of its own. MWI’s principal owner, J. David Eller, has contributed tens of thousands of dollars to the Republican Party and was once a business partner of former Gov. Jeb Bush. 

Gutierrez, appointed to the district by Bush, refers to MWI as the district’s “quintessential good old boy vendor.” He blames “all the issues we’ve had with the district over the years” on MWI mischief. 

An MWI spokesman said the company had no comment. 

After losing the initial bid to sell its pumps to the district in 2006, Eller’s son, MWI vice president Dana Eller, sent a complaint letter to executive director Wehle. He accused the district of secretly helping Morrison keep its bid price down by waiving “virtually every provision” listed in the project’s engineering specifications. 

“There appears to be many non-disclosed exceptions being taken or allowed in their submittal that, had these exceptions been advertised beforehand, would have resulted in a more transparent bidding process, more qualified bidders, and ultimately lower prices for SWFMD,” Eller wrote. 

Wehle later replied that any deviation from the bid specs complied with proper procedures and “in no way impairs the integrity of the procurement process.” 

Morrison’s pumps failed less than a year later for reasons the district has so far refused to publicly explain.

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5 Comments Post a Comment
  1. Nancy Smith says:

    Outstanding job of investigative reporting, Dan. Your effort was worth it. Thanks for keeping your eye on these misfits.

  2. Isabel says:

    When is Governor Scott going to do something about these Bureucrats wasting our taxpayers money. Awarding contracts to their friends. Dan you need to investigate how South Florida Water Management awarded to their favorite appraisers to appraiser the Sugar Land deal, you will be surprise as to what you find. Just as in the case above no bid was submitted.

  3. Gary Waters says:

    Dear Mr. Christensen:

    Thank you for revealing the cronyism and political pay-back system found in the bidding process for the South Florida Water Management District construction pojects. If you keep digging, I’m confident you’ll find this corruption is not unique to the SFWMD and the Broward School Board.

  4. Ruth Courtney says:

    Dan,
    This is a great article. Thank you for writing it.
    Ruth

  5. Jeff says:

    They have lost more money than that!!!!!
    Someone should inspect their coastal structures in Miami……
    And then when they fail, all the people who live close to these structures will be underwater!!! And alot spent on hiding problems they create..Plus their firing practice’s are a very big problem!!!!!!
    Firing people who have worked their for up to 20 or 30yrs.
    If they want to save money, take it from the top!!!
    If you want the truth, just ask the people that work in the field…And keep the manager’s away so there is no retaliation..How do I know this??? After working there 20yrs, they got rid of me..Funny all this time I had worked there, with out any type of disipline or blemishe’s on my personnel file…I get fired..Something to think about…
    Jeff C

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