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$ 8.7 million for Nexus Solutions

Citizens for Accountable Government (CAG) recommended a NO vote on the school referendum. The primary reason was concern about the process the School District followed in hiring its consultant Nexus Solutions, and the millions of dollars it would pay to Nexus under the contract terms. We’ve subsequently learned that Nexus has already been paid $8.7 million since it was first hired by the District less than four years ago. The following facts and chronology, confirmed by School District documents, are disturbing.

On May 24, 2012, Michael David, identified as Director of Business Development for Nexus Solutions from Champlin, Minnesota, submitted a proposal to Julie Cink, the District’s Business Director. It was only after this on June 20, 2012 that Nexus registered with the Secretary of State as a Minnesota company. Then, on July 30, 2012 Julie Cink signed an agreement with Nexus Solutions “to develop the comprehensive facilities improvement program” for the District that included “projects both immediate and long range.”

While the contract cost was set at a not-to-exceed amount of $85,000, the agreement included a statement that would result in millions for Nexus. It stated “the client (ISD School District 719) will contract with Nexus Solutions for all professional services required to implement the work,” these services “to include, but not limited to program management, engineering, architecture, construction management, and commissioning.”

While this contract might be legal under Minnesota law, the language effectively locks the School District into an agreement making Nexus the exclusive provider of all professional services, without the requirement for competitive bidding.

On September 16, 2014, Ms. Cink signed another contract with Nexus for a sum of $5,376,583. Based upon information we have been able to obtain, we have no evidence that the District solicited or evaluated competitive bids or proposals for the consulting work specified in this contract. Inexplicable and highly irregular is the fact that this 2014 contract included significant dollars for a High School addition that had been started a year earlier, and was essentially completed by the time the contract was signed.

The most recent contract with Nexus dated October 8, 2015 was signed by Michael David from Nexus on November 20, 2015 and signed (but not dated) by Stacey Ruelle, School Board Chairperson. Phase 1 & 2 of this contract involve assessment and evaluation for a cost “not to exceed $85,000” and it also spells out that the District “has selected Nexus Solutions to provide all professional services associated with Phase 3.” Phase 3 was intended to be the implementation of those projects funded by referendum financing, plus maintenance projects funded from other sources.

CAG’s concern about the terms and conditions of this latest contract that were summarized in a letter from John Siskoff (Vice Chair of CAG) to School Board Members, can be found on the CAG website. It was this concern that caused the CAG Steering Committee to recommend a NO vote on the referendum, and to dig further to discover additional facts spelled out above.

The payments to Nexus seem to far exceed the amount authorized by contract. The 2012 contract included a not-to-exceed price of $85,000. The 2014 contract included a $5,376,583 price tag. The 2015 contract included a not-to-exceed price of $85,000 for phase 1 & 2. Adding these together yields $5,546,583 as compared to $ 8.7 million already paid to Nexus.

These facts raise serious questions. First, what led District Administration to conclude that Nexus was the most qualified consultant available to provide “all professional services” to implement a “comprehensive facility improvement program,” when Nexus had no history as a company, and only registered as a company after making its proposal to the District? Second, why would the District commit millions without an appropriate competitive bidding process, and then enter into contractual commitments to exclude other potential vendors by agreeing that all required professional services “shall be provided exclusively by Nexus?” Third, why did the District enter into a fixed price contract (the 2014 contract) for over $ 5 million one year after the work was begun, and what tangible deliverable did the District get other than architectural drawings for an expansion of the high school to accommodate an additional 200 students?

And lastly, why has Nexus Solutions already been paid $8.7 million when the 2012, 2014, and 2015 (Phase 1 & 2) contracts allow only $5,546,583? Does this suggest Nexus has already been paid $3.2 million for Phase 3 even though voters defeated the proposed referendum funding?

These are questions that have gone unanswered by representatives of the District. An $8.7 million taxpayer bill for consulting that includes no labor, materials, or on-site project costs, is a lot of money. Taxpayers deserve answers, not reprimands for asking.