Jerry Forte

Has the time come to replace Colorado Springs Utilities CEO Jerry Forte?

That’s the question City Councilman Tim Leigh ponders today in his electronic newsletter.

“I’m still fuming over the Neumann contract with the Colorado Springs Utilities.  I can’t figure out who thought this was a good deal,” Leigh wrote.

“Who should be held to account? Is it time to consider changes in leadership?” Leigh asked.

Here is the full text of Leigh’s newsletter:

I’m still fuming over the Neumann contract with the Colorado Springs Utilities.  I can’t figure out who thought this was a good deal.

The underlying rationale for the decision is easy to understand.  [Pay less-get more.]  The ultimate business points aren’t as easily understood.

Nuemann was going to provide a robust, full-bodied technology and equipment that would clean Drake’s coal-fired power plant emissions, removing SOx, NOx, particulates and CO2 at ½ the cost of other, (readily available), solutions and we were going to receive sale commissions when he sold the elixir.  Now he’s merely brewing Neumann-Lite, a solution for SOx only with significantly less cost savings; and there are no customers.

From Neumann’s perspective – this is a sweet deal.  He gets all his costs covered plus 10%.  And there is NO cap on costs and NO date-certain for installation.  And, if we use his technology at the Nixon Power Plant, we pay him more!  His contract becomes cost plus 15%!  How wonderful it must be, to be a government contractor.  (Remember fishing when you were young?  It was always a good time – except for the fish.)

I’m not faulting Neumann for being clever enough to pull-this-off.  I’m faulting CSU’s system-of-governance and those board members specifically who were driving it when the contract was contrived.  There was no legitimate oversight then, nor is there yet.

Realize – Neumann had no buyable product – nor does he.  [He does not yet possess a proven-scalable product!]  And shame on us, because his contract clearly says “Statement of Work for Experimental Emission Control Systems”.  Furthermore, even if Neumann had a proven technology, I’ve been told he didn’t have sufficient funding available to build or install without CSU.  We’ve given Neumann a free-pass.  And if his stuff doesn’t work, we’re the schlemiel.

Legitimate questions are:

• Did the CEO and his team understand the deal?

• • Did they read the contract?
  • Can they justify the speculative risk to the ratepayers and the outrageous profit to the vendor?
  • Did the empanelled board members at the time understand the deal?
    • Did they read the contract?
    • Can they justify the speculative risk to the ratepayers and the outrageous profit to the vendor?
    • Why was a contract of this magnitude signed by a procurement manager and not the CEO?
      • Are there other, similar decisions made by these same folks that need to be re-evaluated?
      • Are there other, similar contracts that need to be re-evaluated?

• Interesting Rhetorical Questions:
  • If a leader believes Neumann-style contracts are good for the consumer, is he miscast in his role?
    • Should his overall skill-set be questioned?
    • Should his business-decision-making ability be questioned?
• What other decisions have been made by CSU leadership, which are sheltered by the shadows of an errant bureaucratic process and that are deleterious to the citizens, need to be revisited?
  • How do we shed light on those decisions and contracts?
• Who should be held to account?
  • Is it time to consider changes in leadership?

The Neumann spend at Drake ($121,000,000) will cause about a 10% electric-cost rate-increase to the average consumer by 2015.  And CSU is facing at a similar spend at Nixon’s coal plant by 2016 (another 10% rate increase); and a similar spend for Mercury Emission Monitors across the system by 2017 (another 10% rate increase).   [10% + 10% + 10% = 30% electric cost rate increase by 2017.] It’s time to look for alternative solutions!  .  .  .  and there are alternatives!

• BTW – For commercial property owners, think of these rate increases this way:
  • This is taxation without representation – EPA mandates have no explicit authority in law.
  • For every dollar increase in operating costs, your building loses about $10 in value.
    • And for the tax collectors amongst us – realize that in the aggregate, every $10 decrease in property value reduces tax collection substantially.
• This is how we’re all connected.

I remember questioning the leadership and board at Memorial Hospital.  (You may recall; I called for the CEO’s firing.)  Of course, I was quickly thrown off that bus by many of my contemporaries for making that request.  That was a brutal time when I learned you need thick-skin to play this game.   Eventually, the MHS bus ran into a cathartic ditch emerging as the new CSU/MHS healthy-heath system.   I’m at the same point with CSU with a special indictment of the Carver Model and the lack of oversight driven therefrom.

The CSU bus has left the road.  .  .  That it has, is manifest by dissatisfied employee groups, a divided board and a community crying for greater accountability.  It’s time for serious change at CSU and this Neumann situation proves the point.