Kilpatrick friend not authorized to sell, service machines, records show; council could rescind deal.Paul Egan / The Detroit News
DETROIT -- The administration of former Detroit Mayor Kwame Kilpatrick and the Detroit City Council gave a $10 million photocopier contract to a former Democratic state House colleague of Kilpatrick's who is not authorized to sell or service the copiers involved, city records and interviews show.
Today, Councilman Kwame Kenyatta will ask Mayor Kenneth Cockrel Jr. and the City Council to rescind the contract awarded last June to Olive Delivery Service LLC, owned by former state Rep. Ken Daniels, D-Detroit.
"We've got a lot of cleaning up to do," after the resignation of Kilpatrick following his guilty plea to felony obstruction of justice charges, Kenyatta said in an interview Wednesday.
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"This was a bogus contract from the very beginning, to help your friends out."
Daniels said Wednesday the contract is saving the city money and that he got it legitimately.
City audits of the six-year copier contract, the most recent of which is dated Sept. 17, show most of the work is performed not by Daniels' Olive Delivery, but by Leader Business Systems Inc. of Oak Park in Oakland County and the city's own information technology department.
"Olive Delivery receives the equipment orders from the city departments and gives them to Leader Business," Auditor General Loren Monroe said in a Jan. 8 report.
"Leader Business, who is the authorized dealer, orders the equipment from the manufacturer. The manufacturer delivers the equipment to Leader Business, and Leader Business delivers the equipment to each city agency."
Daniels, a term-limited legislator who was appointed to the city water board by Kilpatrick, acknowledged he is a friend of the former mayor's but denied cronyism was involved in his company receiving the contract after a competitive bid.
He acknowledged he is not authorized to sell or service the Kyocera machines specified in the contract but insisted city audits are wrong when they say he does not come close to performing 80 percent of the contract work, as required.
"I think I do more than 80 percent," said Daniels, who says he performs an assessment of various city departments' copier needs, delivers the equipment, and performs some of the training. "This is a Herculean task."
Audit to be released
The latest audit is to be released today at a 1 p.m. meeting of the internal operations committee Kenyatta chairs.
In the new audit, Monroe found that Daniels' company is not complying with the contract terms and the Olive Delivery toll-free number attached to machines, for users to call if they need help, was not in service.
Olive Delivery listed its service and parts facility address as 1935 McGraw in Detroit. However, "the owner of the building at the McGraw location stated that Olive Delivery never rented, leased, nor occupied space in the building at any time," the audit says.
Also, 41 percent of city departments that received copiers under the contract did not receive the required training and Olive Delivery did not list the city of Detroit as being insured under its general liability insurance policy, as required by the contract, the audit says.
Kenyatta said he doesn't understand how the information technology department gave Olive Delivery the highest rating of nine companies that responded to a city request for qualifications, but he suspects Derrick A. Miller, a close Kilpatrick friend who headed the department as chief information officer, was involved in pushing the contract to Olive Delivery.
Miller, who resigned his city job in November and whose name was mentioned by FBI agents in connection with search warrant documents filed in a wide-ranging City Hall corruption investigation, declined comment Wednesday.
A claim of 'bad blood'
Joseph Sims, president of Advance Digital Systems LLC, said his Detroit company was the first and is one of the only black-owned, manufacturer-authorized copier dealers in Michigan and that his firm provided machines to several city departments before Detroit last year moved to a single provider for all departments and awarded the contract to Olive.
"It's devastating for a small business like me," said Sims. "They effectively eliminated me from doing copier business with the city, except for the existing contracts I had already won."
Sims said Daniels approached him about becoming Daniels's subcontractor on the deal, but Sims told him no. Daniels denied approaching Sims about the contract.
Daniels said there is "bad blood" between him and Kenyatta from when they served together on the board of the Detroit Public Schools and he believes that's the reason Kenyatta opposes the Olive contract.
Kenyatta said he is not convinced Olive's costs are lower than what a company such as Advanced Digital would charge, since Olive is not doing most of the work.
Numbers provided to the auditor general by the IT department for the September report show Olive is performing 39 percent of the contract work, Leader 29 percent, and city IT workers are doing 32 percent.
"I am known for supporting black-owned and operated businesses," Kenyatta said. "However, it must be qualified, certified, bona fide, dignified black-owned and operated businesses, not just help a brother out."