West Chicago makes deal without seeking bids; two employees lost jobs
When West Chicago privatized its municipal garage and street sweeping operations last fall, officials touted the savings for taxpayers.
The outside contract cost two 30-year city employees their jobs but is expected to save $52,000 a year.
“No longer are we an employment agency,” Mayor Mike Kwasman said. “We run West Chicago like a business.”
Yet the city did not seek competitive bids — nor did it really shop around to see if it could get a better deal — before signing a five-year, $2.3 million contract to become Municipal Management LLC's first client.
The contract was unanimously approved with virtually no discussion at a city council meeting lasting 49 minutes. City administrators didn't even wait for that formality before giving the two employees notice; they were told on the Friday before the Monday city council meeting not to come back to work.
Municipal Management is an offshoot of American Ground Cover, a landscaping company in West Chicago. The city has contracted with American Ground Cover for some tree removal, plantings and similar work since 2006.
State records list Jon Kassaros as the manager of American Ground Cover and Lora Kassaros, his wife, as the manager of Municipal Management.
The company management's track record made it a natural choice to take over the West Chicago's fleet maintenance and street sweeping operations, city officials said.
“American Ground Cover is a company that's done very good work here for the city of West Chicago,” said City Administrator Michael Guttman.
“When you're going to do something like this (privatization) and make a such a wholesale change, the senior staff and the city council need to be very comfortable with who's going to be doing it,” Guttman said. “Because if not, then the city staff is going to be managing it and we lose all the benefits associated with privatization.”
City officials say the pact is a “professional services contract,” which makes it exempt from the competitive bidding requirement. The Illinois-Indiana-Iowa Foundation for Fair Contracting, a labor-management organization, disagrees and is preparing to file a lawsuit against the city.
“I feel that a contract of this magnitude should have gone out to bid to allow other local companies the right to bid on it,” said Dave Henkel, the union mechanic who lost his job after 32 years with the city.
“There are several businesses in town that would have been interested in bidding if they were given the opportunity. It's what municipalities should do to be fair to taxpayers.”
Henkel said it's widely known among city staff members that Kassaros has been a close friend to Robert Flatter, West Chicago's public works director, since high school, and the two have coached softball together. But if the two men are friends, the city council didn't know about it, Guttman said.
Flatter did not return repeated phone calls, and Kassaros said he wouldn't comment until the union proceedings are sorted out.
But Kwasman isn't fazed by the threatened lawsuit, noting that the Foundation for Fair Contracting is associated with the Local 150.
“Anybody can try to sue. It doesn't mean you're going to win. We feel and our legal counsel feels that we did not commit anything or do any wrongdoing,” he said.
Patrick Bond, attorney for West Chicago, said the city was not required by the Illinois Municipal Code to put the contract out for bid because “it's not work on a public project, it's not a road or sewer to be built.” Even when competitive bids are required, the code also permits a city council or village board to waive the bidding process by a two-thirds majority.
“I think the staff did their due diligence in terms of determining whether or not this company (Municipal Management) could do the work and determining (the company) could do it at a significant savings to the taxpayer,” Bond said.
West Chicago has been gradually privatizing city services for the past five years, saving taxpayers “millions of dollars,” Kwasman said. The vehicle maintenance garage — the last to be privatized — was “one of the worst, inefficient operations we've had,” he said.
Municipal Management is able to repair more equipment in-house, provides coverage without having to pay overtime during snowstorms and other major events — including the recent blizzard — and offers a better preventive maintenance program, city officials said.
Municipal Management leases the street-sweeping equipment from the city. “In the first 12 hours, they picked up more dirt, debris and leaves than any staff member had ever done,” Kwasman said. “The performance has been phenomenal.”
Henkel and his supervisor were notified Oct. 1 that the vehicle maintenance department was being privatized. The two men were told not to return to work, but that they would be paid through the end of the month.
“It was a shock, that's for sure,” said John “Butch” Horn, the supervisor.
Horn, a 36-year veteran, was able to retire. “I'm fine; I've got no beef,” he said.
But Henkel, 53, was two years shy of retirement eligibility. He still has a daughter to put through college and has been able to find only part-time work.
“That was my life, basically,” Henkel said of his job in the vehicle maintenance department. “That's who I was.”
The following Monday, Oct. 4, the agreement with Municipal Management was on the city council agenda. IUOE Local 150 asked the city council to delay the vote to allow time to negotiate an alternative arrangement as called for in the union contract. But council members unanimously approved the privatization contract.
“(It happened) very, very, very fast,” said Kenneth Edwards, attorney for Local 150.
The union filed a grievance, and the matter is now in arbitration.
“The city administrator, I believe, did his best to try to work something out with us,” Edwards said. “But we ended up not being able to work it out.”
Henkel was making $67,000 a year and said his boss earned approximately $82,000.
In tallying up the savings, the city also included two vacant positions in the public works department.
“Had we not done this, we would have filled them,” Guttman said.
The privatization contract is expected to save the city $261,374 in the next five years, or $52,275 a year. “I'm sure we could have helped the city figure out how to save $50,000,” said the union's Edwards. “We're in 100-plus municipalities and to a town, they've all worked with us. ... The sad part of this is, now both sides will be spending a lot of time, effort and legal fees on an arbitration that never should have come up in the first place.”
Kwasman said he finds the controversy “hysterical.”
“It's a tough decision, but I have 27,000 investors I have to account to — the public,” Kwasman said. “If I can save them money, which reflects on their taxes, yeah. It reflects on my taxes, too.”
West Chicago's projected savings
Projected five-year costs before privatization
<B>Salaries, overtime, FICA, Medicare, IMRF and insurance for four employees: </B>$2.25 million
<B>Repairs sent out: </B>$250,000
<B>General liability insurance:</B> $10,000
<B>Uniforms:</B> $11,000
<B>Other contractual services: </B>$12,500
<B>Other:</B> $5,100
<B>Total: </B>$2.5 million
<B>Five-year contract with Municipal Management:</B> $2.3 million
<B>Total savings for five years: </B>$261,374
<B>Savings for one year: </B>$52,275