Two state-affiliated development corporations at the center of a federal corruption probe operated for years without rules commonly used by government agencies to promote competition, discourage favoritism and get the best deal for taxpayers when choosing companies to do business with.
As a result, they’ve used unusually loose procurement policies to select developers for multimillion dollar projects, an Investigative Post analysis shows. Some of their contract awards – often to Gov. Andrew Cuomo’s major campaign donors – are now being investigated by state and federal prosecutors.
The Fort Schuyler and Fuller Road Management Corporations, which act as the real estate arms of the SUNY Polytechnic Institute, administer many of Cuomo’s most ambitious initiatives to boost the upstate economy, from the vast solar panel factory nearing completion in Buffalo, to high-tech hubs in
Albany
,
Utica
,
Syracuse
and Rochester.
The development corporations say they follow the procurement policies of their parent organization, the Research Foundation for the State University of New York – but only as “guidelines.” And, in fact, the way they do business is sometimes out of step with the procurement practices of the Research Foundation and other state entities.
The development corporations have often failed, for instance, to ensure the minimum level of competition the Research Foundation requires. In at least three cases the development corporations awarded contracts to companies who were the lone bidder. In Syracuse, for example, COR Development
faced no competition
when the company submitted a proposal to become Fort Schuyler’s go-to developer in the region.
Moreover, the development corporations have given contracts to developers who rank among Cuomo’s largest campaign contributors, sometimes in ways that have raised questions about whether bid specifications were written to favor certain companies.
In Buffalo, a requirement that developers have at least 50 years’ experience in the market
seemed to limit
the field to just one company, LPCiminelli, whose owner is a major donor to the governor. That requirement was later changed to 15 years, with officials explaining it as a “clerical error”. LPCiminelli got the job anyway.
“The absence of a procurement policy that’s robust and written in a way that ensures fair bidding is a huge problem,” said John Kaehny, executive director of good government group
Reinvent Albany
.
Investigative Post’s review of over 500 pages of records obtained from the development corporations under the state Freedom of Information Law found a lack of consistency in the way Fort Schuyler and Fuller Road advertised and awarded lucrative contracts to developers.
Sometimes, the selection process was clearly competitive, with a detailed evaluation of a number of firms who had submitted proposals. On other projects, officials were choosing from only a handful of companies – or, in several cases, just one.
Officials from SUNY Poly refused to respond to repeated requests for comment. David Doyle, the college’s vice president for public policy, has
previously said
that SUNY Poly and its affiliated development corporations “follow New York state government’s well-established and legally defined procurement procedures – to the letter.”
But a lawyer for the development corporations appeared to contradict this, saying in response to an FOI request from Investigative Post that Fort Schuyler and Fuller Road “utilize the procurement policies promulgated by the Research Foundation for the State University of New York as guidelines.”
The development corporations have made changes to their procurement practices over the past year and
now behave
more like state agencies. But these changes come only after they have found themselves at the center of state and federal investigations into potential bid-rigging and improper lobbying – and after much of the money allocated for major projects had already been spent.
“As guidelines”
For years, Fort Schuyler and Fuller Road have spent public money while insisting that they are private nonprofits and, therefore, exempt from state Freedom of Information and Open Meetings laws.
Control over construction work worth hundreds of millions of dollars gives the development corporations immense power with limited oversight compared to state agencies. The state comptroller’s office, for example, does not review or approve their contracting.
The development corporations were created as nonprofits to get around state and federal rules SUNY Poly says prohibit the state university system from leasing space to private companies. The development corporations equip and lease these high-tech facilities to private companies like General Electric and IBM, who invest in research and development and create hundreds of new jobs.
Fuller Road was created in 1996 by foundations associated with the SUNY system and oversaw the construction of SUNY Poly’s vast NanoTech complex in Albany. Its younger sister, Fort Schuyler, was established in 2009.
The development corporations expanded their reach across upstate after Cuomo took office in 2011.
SUNY Poly’s founding president, Alain Kaloyeros, has become Gov. Cuomo’s point person on many of the state’s largest economic development projects. Fort Schuyler has been administering state funds for the Buffalo Billion initiative, as well as for projects in Syracuse, Utica, and Rochester. Fuller Road has been performing a similar role for projects in the Capital Region.
Both development corporations say they follow the SUNY Research Foundation’s procurement policies only “as guidelines,” and it’s clear they sometimes depart from those guidelines.
The Research Foundation’s procurement policy requires at least three written bids or proposals for any contract worth more than $100,000. Fort Schuyler and Fuller Road have failed to establish this minimum level of competition on some far larger contracts.
After advertising for a “preferred developer” for projects in the Rochester area, for instance, Fuller Road received just two proposals – and awarded both firms the contract. Instead of covering just one project, the preferred developer contracts are open-ended, potentially involving additional work the development corporations carry out in the region for up to 10 years.
In Albany,
another preferred developer contract
went to yet another major Cuomo donor, Columbia Development, whose president, Joseph Nicolla, and LLCs connected to the company have given the governor at least $210,000 over the past six years. Columbia was the only firm to express interest in that contract, much less submit a complete proposal. Documents suggest that Columbia has only received a relatively small amount of work under this contract so far.
Used by FRMC to evaluate companies for a preferred developer contract in the Capital Region.
A year later, when Columbia was again the only company to respond to a request for proposals to build student housing, Fuller Road once again awarded them the contract. The RFP included a preference for a site within a 10-minute walk of SUNY Poly’s campus. As the
Times Union reported
, Columbia had been buying up property in the area months before the request for proposals went out.
The project was later rebid, with eight firms submitting proposals and the “walking distance” preference removed; the original selection process is currently the
subject of an investigation
into potential bid-rigging by state Attorney General Eric Schneiderman.
Like other contracts for professional services, these developer contracts aren’t simply awarded to the lowest bidder; a company’s past experience, qualifications and track record are also taken into account.
Best practices still call for a competitive selection process, though. Instead of soliciting proposals from a wide range of companies, however, the development corporations appear to have done little to encourage competition for work on major projects.
Advertisements were typically placed in the legal notices of local newspapers, but not on the state’s centralized procurement website or sent to potential candidates directly, as is more usual for major public contracts.
Two contracts for work on Fort Schuyler’s Central New York Hub, a $15 million film production facility