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Inspector General pries into conflicts in prison contracts
By JIM WALLS
Consultant Michael Lovelady leased office space to the contractor whose work he monitored installing new locks at a south Georgia prison. Lovelady named his son’s business as one of three acceptable suppliers for the $638,000 job. Lovelady’s son also owned
Lovelady may even have owned half of the contractor’s company.
But Georgia prison officials never noticed anything amiss, Inspector General Deron R. Hicks reported Monday.
In a new investigative report, Hicks called on the Georgia Department of Corrections to tighten up procurement policies, including the need for an explicit ban on collusion in the bidding process and authority to terminate contracts over undisclosed conflicts of interest.
Hicks singled out Larry Latimer, Corrections’ chief of engineering and construction, for failing to detect such conflicts between three seemingly interconnected businesses:
- Correctional and Security Consulting Inc., owned by Lovelady, a go-to consultant for prison officials looking for help with construction projects;
- Engineered Systems for Manufacturing Inc., owned at one time by Lovelady and partner Charles T. Cimarik, a business that won more than a dozen jobs installing locking systems at Georgia prisons from 2007 to 2009; and
- Correctional Electronics Supply Inc., owned by Lovelady’s son Gary, which sold parts to ESM for a number of the prison projects. Gary Lovelady now owns ESM.
Together, the three firms have collected nearly $8 million from Corrections since 2007, investigators said.
Hicks said Latimer should have caught the cozy relationship between the businesses, which shared offices, staff, a computer server — even credit cards. Another business owned by the elder Lovelady leased office space to ESM for $5,000 a month.
Lovelady, reached by telephone today, declined to comment until he had reviewed the Inspector General’s report. A Corrections spokeswoman said the department would have no comment because the investigation is ongoing.
Competitors told Hicks’ office they didn’t even bother to bid on projects for which Lovelady was the consultant:
OIG Investigators spoke with representatives from two companies that have historically bid on Division 17 and locking control renovation/repair projects for GDC, both of whom stated that their companies would no longer bid on any projects on which CSC – i.e., Michael Lovelady — served as the consultant.
Corrections procurement director Charles Smith, Hicks’ report observed, had noticed that Lovelady’s and Cimarik’s companies seemed to be “getting most of the business”:
Smith had worked with Ken Stone of GDC Engineering to attract other qualified vendors who were also interested in working with GDC. Smith recalled that initially his efforts seemed productive and other vendors were responding to solicitations. However, he stated that it seemed like GDC Engineering Staff and the institutions always wanted to return to working relationships with Michael Lovelady.
Latimer told investigators he had known Lovelady and Cimarik had been in business together but thought they had separated years before Corrections employed the two companies on the same project.
It’s unclear whether Lovelady and Cimarik worked together at other prisons. Corrections officials told Hicks’ office they could not tell who consulted on contracts for locking systems at four other facilities.
Lovelady told investigators he had owned 50 percent of ESM until the end of 2007, when he transferred his interest to his son. Investigators said they could find no evidence that Corrections was notified of that transaction
no evidence of that transaction until 2010, which is when Gary Lovelady said he learned that he owned half of the firm, and no written evidence that Corrections was ever informed of either man’s half-ownership of the business.
After learning of these connections and ownership interests, one GDC official stated that he felt as though he had been deceived. The official added that if he had learned of these connections prior to OIG’s investigation, it would have affected his decisions to use the companies.
As a consultant, the elder Lovelady was tasked with preparing bid specifications for the project and providing oversight until it was completed.
Consultants are instructed not to communicate with prospective bidders, prison officials said. Lovelady maintained he and Cimarik operated as separate entities and that Cimarik never asked to see specifications concerning projects on which he might bid, the inspector general reported.