MSD board lifts suspension of concrete suppliers, citing ‘incorrect’ clearance of business arrangement given by agency in 2010
The board of the Metropolitan Sewer District voted Monday to accept the recommendation of a hearing officer and lift the suspension of concrete suppliers Advance Ready Mix and Bancroft Group — with board chair Cynthia Caudill indicating the agency incorrectly gave clearance to their business relationship in 2010.
The two companies were suspended from future MSD contracts last year by former executive director Greg Heitzman, following an investigation finding evidence that minority-owned Bancroft had merely served as a “passthrough” for majority-owned Advance — with Bancroft winning lucrative contracts but Advance supplying all of the labor, concrete and equipment for those projects — undermining the rules of their supplier diversity program. The investigation was initiated due to an Insider Louisville report on Bancroft’s business model last year, and MSD officials said the examination by a contracted auditor confirmed our reporting.
In September, however, MSD conceded it had withheld an internal document from both IL’s open records request and the auditor in which it appeared that the agency had given its blessing to the business arrangement of Advance and Bancroft years earlier. In response to a complaint from another minority-owned concrete supplier, MSD supplier diversity administrator Joy Walker replied in a 2010 letter — also forwarded to Bancroft — that there was nothing about the companies’ business relationship that violated MSD rules. MSD said the omission of the document was an “oversight,” and added that Walker’s remarks in the letter were incorrect.
After the companies’ hearing to appeal their suspensions earlier this year, former Judge Ann Shake — the hearing’s presiding officer — ruled that MSD was incorrect to suspend the companies, largely citing the existence of Walker’s letter blessing their arrangement. She strongly recommended lifting the suspensions, and the MSD board did so on Monday by a 5-to-1 vote, with only Dan Arbough voting to keep the suspensions in place.
After the vote, board chair Cynthia Caudill read a statement arguing that while Advance and Bancroft did not “live up to the spirit” of their supplier diversity program, they should not be further punished due to the “incorrect” clearance given to them by the program’s administrator in 2010.
“It is clear that the business arrangement between Bancroft and Advance did not live up to intended spirit of the program,” said Caudill. “Therefore, the letter sent to Advance in 2010, which did not take issue with the arrangement between these two contracts, was incorrect and a misapplication of our supplier diversity policies. So, while we will reinstate both companies as potential suppliers as recommended by the hearing officers, we will not allow this type of business relationship between contractors as we move forward.”
MSD scrapped its entire supplier diversity program following the investigation of Advance and Bancroft, and current executive director Tony Parrot and his staff are currently finalizing recommendations for a new one. Caudill emphasized that Walker’s 2010 letter was “null and void” going forward, and that “any future interpretations of MSD policy must be approved by the executive director before we provide it to any person or entity.”
Advance attorney Michael Shull III of Frost Brown Todd praised today’s vote, telling IL he is happy that the MSD board accepted Judge Shake’s findings that “Advance should never have been suspended, operated in an open and transparent manner, and did nothing inappropriate.”
Shull further stated his client was “wrongly vilified,” and he urged MSD to publicize the fact that the suspension has been lifted “to the same degree it publicized the suspension itself.”
“MSD sent out around 80 letters to local contractors apprising them of the suspension,” Shull said. “We will be calling on them to expeditiously notify the same companies that the suspension is lifted.”
Advance Ready Mix CEO Camilla Schroeder released the following statement after Monday’s decision:
“I am pleased with the board’s decision to reinstate Advance and Bancroft. We felt all along that once the facts were known, that this would be the proper decision. I am grateful to Judge Ann Shake for her ruling which helped attain this result. Due to MSD’s actions, my company has lost millions of dollars in revenue this past year, incurred substantial legal fees to challenge and remove the suspension, and has a tarnished reputation as a result of this process. We are focused on moving forward to regain the confidence of our customers.”
MSD had no additional comment on the board’s vote today, and attorneys for Bancroft did not return an email seeking comment.