City must revoke NOI contract HUD says regulations were violated on bid for high-rise security

November 10, 1995|By Michael James and JoAnna Daemmrich | Michael James and JoAnna Daemmrich,SUN STAFF

Rebuked by the federal government, Baltimore is tossing out a controversial contract with the Nation of Islam Security Agency to patrol its public high-rise housing projects and must repay hundreds of thousands in taxpayer dollars.

Federal housing officials ruled Wednesday that the Housing Authority of Baltimore City "arbitrarily" hired NOI Security, the highest bidder, and they ordered that the contract be revoked.

The Housing Authority now will turn over security at its high-rise apartment buildings to Wells Fargo Guard Services, which offered to do the job for $1.1 million less a year ago and later sued, charging federal rules were violated.

Mayor Kurt L. Schmoke called the demand "tremendously disappointing" but said yesterday that he was giving up a two-year struggle to keep NOI Security. He credited the unarmed, bow-tie clad guards with restoring calm and reducing violent crime in public housing.

"We do not do this voluntarily. We do this because we were ordered to do so," he said. "I know the residents of public housing simply wanted peace. There has been a substantial improvement in the relationship between residents and security officials, a sense of pride, an esprit de corps that never seemed to be there."

The federal ruling angered many tenants who were pleased with the way NOI kept order. Residents promptly called a news conference to voice their support of the group.

Since NOI Security officers began patrolling the Baltimore housing projects, serious crime dropped 38 percent in 1993 and 44 percent last year. But federal officials said that success could not be a factor in awarding the contract.

In its final verdict on the NOI contract, the U.S. Department of Housing and Urban Development found Baltimore violated federal regulations in trying to keep the security agency. The federal government notified city Housing Commissioner Daniel P. Henson III in a letter Wednesday of its order and said the agency cannot use federal funds to repay the difference on the NOI contract -- which could be as much as $800,000.

The ruling ends a long-running feud between the city and federal government over the security agency affiliated with the Nation of Islam. The contract was questioned from the start. Housing managers initially awarded a no-bid contract to the company in an attempt to restore a semblance of order in the dangerous, drug-infested high-rise developments.

After criticism over the no-bid arrangement, the Housing Authority selected NOI over 10 other companies to provide security at 18 public high-rise buildings -- despite its high bid of $4.6 million. Wells Fargo, by contrast, bid $3.5 million.

In March, HUD determined that hiring NOI had resulted in higher costs to taxpayers. The Housing Authority was given three options: refund the excess money, re-rank the bids, or throw them out and start over. The agency opted to reassess the 11 proposals, and a panel chose NOI a second time as the best company for the job despite its steeper price tag.

But once again, the choice violated federal procurement laws, which try to ensure that public contracts go to companies with the highest qualifications and lowest prices, the HUD regional office concluded.

Wells Fargo lawyer Laurence A. Marder applauded the decision yesterday for "restoring faith in the public procurement process."

The Housing Authority "engaged in a pattern and practice which showed an illegal bias and favoritism toward NOI Security," Mr. Marder said.

An immediate effect of the HUD ruling is that a suit brought by Wells Fargo against the Housing Authority is being settled. The suit was scheduled to go to trial Dec. 10 in Baltimore Circuit Court, but Mr. Marder said the two sides have reached "an agreement in principle" in which Wells Fargo will waive its claim to monetary damages.

Wells Fargo is expected to take over security at the 12 high-rise apartment buildings, two of which are closed, in about 30 days. The contract is now for 12 buildings because the city demolished six deteriorated towers at Lafayette Courts in August. Five more towers, including the two vacant ones, at Lexington Terrace will be torn down in the spring.

Mr. Henson said he is reviewing the contract to determine the amount the agency is expected to repay because there are fewer apartment buildings. But he said the agency does not have $800,000 in nonfederal money available, and its only recourse would be to put a lien against the buildings it owns.

When a figure is decided upon, the Housing Authority must repay the funds within 30 days to its own federal account -- "in essence, they refill their own kitty," said Alex Sachs, a HUD spokesman.

Like Mr. Schmoke, Mr. Henson made it clear that he had no regrets about hiring NOI. Both men also emphasized that they don't want security guards to carry guns -- with which Wells Fargo quickly agreed to abide. And both officials blamed HUD's order on Capitol Hill pressure over the Nation of Islam and its leader, Minister Louis Farrakhan.

"If we took a risk, we erred on the side of safety and service," Mr.

Henson said.

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