Whistleblower alleges conflict of interest in Monticello, Minn., road project

MONTICELLO, MINN. – In the 18 months since he was hired as Monticello's new city engineer and public works director, Matthew Leonard has tried to put more contracts for professional services out for competitive bids to save city taxpayers' money and get top quality work.

But that practice met resistance in July, when City Administrator Jeff O'Neill directed him to pull back a published bid request for engineering work on a $2.1 million road resurfacing project and negotiate directly with longtime city consulting engineer WSB, a Minneapolis firm that employs his son. Months later, an anonymous whistleblower filed a conflict-of-interest complaint about O'Neill for pushing that contract to WSB.

Leonard, who was hired by the city in May 2018, responded to O'Neill's directive in an e-mail saying that he wanted to issue a request for proposals (RFP) as he had done on other engineering projects.

"I would like to continue this practice going forward and I don't see why WSB wouldn't have a good chance of getting the project given their history here with the City," he added.

But shortly after the RFP was posted on the city's website, O'Neill ordered it taken down, saying that City Council members wanted to better understand the project. He then told Leonard to negotiate with WSB directly.

WSB initially offered to do the job for $224,573. Leonard told O'Neill that he thought the work could be done for about $160,000 if the city solicited bids. O'Neill told him to dicker with WSB for a better price. "If we can't negotiate a price that is justifiable based on history of good service and associated added value then we go out to the market," he wrote.

Leonard got WSB down to $211,833, a price he called "satisfactory" in materials presented to the City Council in late August. He recommended approval of the contract but noted that the council could seek bids. The council approved the WSB contract, though recent cuts to the scope of the job will reduce the price to just under $185,000.

In an interview last week, O'Neill defended the decision to seek a sole-source contract with WSB. Before Leonard started, he said, WSB was the city's consulting engineer and eventually had an employee based at City Hall. O'Neill cited the firm's experience as the reason he wanted to hire it for what's called the 2020 Street Improvements project. "You develop a relationship," O'Neill said.

In an interview, Leonard said that while he was satisfied with WSB's price, "It's hard to know without doing a competitive proposal what you might have got." He said that after he learned that O'Neill's son Dan O'Neill worked for WSB, he checked with the city attorney to ensure that he wasn't breaking any laws by negotiating a sole-source contract with the firm, and he was assured that it was lawful to do so.

Jeff O'Neill said his son was hired by WSB in 2015 as a water resources engineer in its St. Paul office and has nothing to do with the street resurfacing contract in Monticello. The company has more than 600 employees, he noted. "According to the city attorney, this process is in complete compliance with local policies and state law," O'Neill said.

O'Neill was hired by the city in 1988 and has been city administrator for 12 years. In that time, two complaints were filed against him in 2017 and two this year, in August and in October. All were closed without any discipline so the allegations remain private under state law. At least one of the complaints this year appears to have alleged that O'Neill violated the city's ethics policy in his handling of the WSB contract. Tracy Ergen, the city's human resources manager, wrote to O'Neill Oct. 28 addressing that complaint.

"As a follow-up to our conversation today below is a copy of our Code of Ethics," she said. "Regardless of how long Dan has been working for WSB, I think it's best to be transparent and notify all council members of the situation." She reminded O'Neill that employees have a responsibility to ask questions, seek guidance, report suspected violations and express concerns regarding compliance with the policy.

City financial records show that its annual payments to WSB ranged from $268,000 to $686,000. That jumped to $1.1 million in 2015 and climbed steadily to $1.9 million in 2018. This year, though, the city has paid the firm just $627,539 through October.

WSB has responded to four RFPs since 2018, O'Neill said. Three of the awards went to other companies. Leonard recommended another company for the fourth RFP as well, citing its experience, O'Neill said. That contract was recently withdrawn from the City Council's agenda "for further study," he added.

O'Neill praised Leonard for watching out for taxpayers. But after working for 32 years in Monticello, O'Neill said, he believes he knows better what city residents want on disruptive neighborhood projects like road resurfacing. "We can always go out for quotes in the future," he said.

Dan Browning • 612-673-4493