SD5 JAG Phase II Report 9.19.2022 FINAL - Redacted

PROCUREMENT EXAMINATION AND CONSULTING
PHASE II REPORT
SEPTEMBER 19, 2022

TABLE OF CONTENTS
Page
BACKGROUND 3
PROCUREMENT OF PWES REAL ESTATE BROKER AND LAND PURCHASE 4
PROCUREMENT OF ARCHITECTURAL DESIGN SERVICES CONTRACTS 5
PROCUREMENT OF CONSULTANT 7
ETHICS VIOLATIONS AND COMPLAINTS 7
CONTRACT CONSTRUCTION, INC. – PWES CONSTRUCTION MANAGER 12
UNAVAILABLE INFORMATION 36
RISK ASSESSMENT AND INTERNAL CONTROLS 36
RECOMMENDATIONS 37
NEXT STEPS 39
DISCLAIMER 40
Page 2 of 40
Jaramillo Accounting Group LLC
Certified Public Accountants
Audit, Fraud, Consulting
www.JAG.CPA
PRELIMINARY RESULTS REGARDING

PROCUREMENT EXAMINATION AND CONSULTING
SERVICES – PHASE II REPORT
Board of Trustees and

Dr. Akil Ross, Superintendent of
School District Five of Lexington and Richland Counties
Irmo, South Carolina
We have been engaged to review procurement of the School District Five of Lexington and Richland Counties’
(the "District") for the period July 1, 2016 through June 30, 2021 and to examine other risk areas which may be
outside this period. Our services are directed to answer Board and administration questions regarding
procurement and other areas of compliance.1 Management is responsible for the District's internal controls,
fraud prevention and detection, and compliance with all requirements. Our examination does not provide a
legal determination on the District's compliance with specified requirements. We encourage the Board to
consult with its legal counsel on these matters. This the second report on our procedures regarding the
District's compliance and indicating risks areas we recommend further procedures on. This report focuses on
the Piney Woods Elementary School (“PWES”, “ES13”, or “Amicks Ferry”) procurement and transactions and
known Ethics Commission complaints.
BACKGROUND
Piney Woods Elementary School was built during 2019 - 2021 utilizing 8% bond money and recorded in
accounting Fund 539. Management has represented to us that 2008 bond referendum funds were not used for
this project. The construction company, Contract Construction Inc. (CCI) reported consistently the project was
ahead of schedule.2 The project had a guaranteed May 2021 completion. Questions arose from the public and
the Board of Trustees regarding timing and quality and because project costs exceeded the $30MM the District
was authorized to borrow. Compliance with procurement was also questioned, as it was discovered that
Selection Committee members had possible conflicts of interest3,
on the project and also Board of Trustees with campaign contributions from CCI and the
Architect, Quackenbush.
1
S.C. Code Ann. Section 11-35-540 (4). Authority and duties of the board.: “The board shall consider and decide matters of
policy within the provisions of this [procurement] code including those referred to it by the chief procurement officers. The
board has the power to audit and monitor the implementation of its regulations and the requirements of this code.”
2
Including in Video of Board of Trustees meetings, June 15, 2020 and many areas ahead of schedule per September 14,
2020.
3
Selection Committee members each signed Conflict of Interest Forms stating they had no conflicts or possible conflicts
even though several may have either through immediate family or campaign contributions received.
Page 3 of 40
Procurement Examination and Consulting Services – Phase II Report
September 19, 2022
The underlying purposes and policies of the District’s Procurement Code are explicitly listed.4 They include but
are not limited to: the purpose and policy of maximizing “to the fullest extent practicable the purchasing values
of funds while ensuring that procurements are the most advantageous to the District and in compliance with
the Ethics Government Accountability and Campaign Reform Act; to foster effective broad-based competition
for public procurement within the free enterprise system; to develop procurement capability responsible to
appropriate user needs; to ensure fair and equitable treatment of all persons with the procurement system of
the District which will promote increased public confidence in the procedure followed in public procurement;
to provide safeguards for the maintenance of a procurement system of quality and integrity with clearly
defined rules for ethical behavior on the part of all persons engaged in the public procurement process;… to
mandate the existence of a structured system of auditing and monitoring in order to assure adherence to the
provision of this Code.” (Emphasis added).
Every contract or duty within the Code imposes an obligation of good faith in its negotiation, performance, or
enforcement. “Good faith” means honesty in fact in the conduct or transaction concerned and the observance
of reasonable commercial standards of fair dealing.
There are other procurement violations and possible noncompliance as presented below. We were also
requested to examine ethics complaints from the SC Ethics Commission and have analyzed them below as well.
PROCUREMENT OF PWES REAL ESTATE BROKER AND LAND PURCHASE

Broker Services, Including PWES
The District contracted with Al Berry of Peak The Educational Group, Inc. on September 23, 2015 for broker
services. This contract was executed on September 23, 2015 by Mr. Bruce Shealy and designated Mr. Berry
with Broker/Agent/In-Charge authority as Buyer’s Exclusive Agent. Around this time, there were executive
sessions for contractual matters (negotiations but not executions are allowed 5). The District’s Procurement
Director and JAG have not found the required approval of the Broker. Thus, this is a procurement violation.
The District’s Procurement Code Exemptions lists brokerage services; however, it specifies “subject to Board
approval”. 6 The District’s FEE Site Acquisition policy in effect at the time does not specify Board approval7 but is
silent, irrelevant, to procurement requirements. Per review of the second and final reading of the revision of
the FEE Site Acquisition policy, Board approval has now been added to the requirements,8 even though this is
duplicative and specifically stated in the District’s Procurement Code.
4
District’s Procurement Code, Section 20.1. Purposes and Policies; S.C. Code Ann. Section 11-35-20; S.C. Reg. Section 19-
445-2000.
5
S.C. Code Ann. Section 30-4-70 (a)(2). FOIA Exemptions, Meetings which may be closed; procedure; circumvention of
chapter; disruption of meeting; executive sessions of General Assembly.: “Discussion of negotiations incident to proposed
contractual arrangements and proposed sale or purchase of property…”
6
District Procurement Code Exemptions: Section 6. Policy and Legal Services, “d. Financial advisors, investment
management, brokerage services (subject to Board approval)”.
7
District Policy FEE Site Acquisition, Adopted 5/19/2003; Revised 2/10/14: “District administration will do the
following…Retain a realtor to represent the district as a buyer, if necessary.”
8
Supra. Second and Final Reading – January 24, 2022: “Retain a licensed Realtor approved by the board to represent the
district as a buyer, if necessary.”
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September 19, 2022
Broker Campaign Contributions

Additionally, we noted the following contributions from Al Berry, Broker to sitting Board Trustees:
Date Amount Candidate Election Date Contributor

Name Name
10.5.2012 $200 Robert Gantt 11.6.2012 Al Berry
10.6.2016 $200 Robert Gantt 11.8.2016 The Peak Group
10.30.2016 $250 Edward White 11.6.2018 The Peak Group
9.3.2020 $250 Robert Gantt 11.3.2020 Peak Storage
9.7.2020 $175 Robert Gantt 11.3.2020 Al Berry
It appears the contributions after September 23, 2015 are illegal, as the law prohibits a contractor from making
a campaign contribution to an “official [who] was in a position to act on the contract’s award” after their
contract has been awarded,9 in this case, Trustees Robert Gantt and Edward White. The Board Trustees were in
the position to award the broker services before, during, and after 2015.
PWES Land Purchase

On January 24, 2017 the District signed a contract to purchase the land on Amicks Ferry for the new school.
After this decision was made in Executive Session, the Board approved (6-1), the land purchase in an open
meeting on July 17, 2017 for $932,950. This is a violation of law, as “no action may be taken in executive session
except to (a) adjourn or (b) return to public session. The members of a public body may not commit the public
body to a course of action by a polling of members in executive session.”10
PROCUREMENT OF ARCHITECTURAL DESIGN SERVICES CONTRACTS

During our testing, we noted violations relating to the procurements of Quackenbush Architects and Planners.
Quackenbush was awarded the contract for the Chapin Middle School (CMS) under the 2008 bond referendum
project. When the District decided to build the third wing, the CMS addition, then Superintendent Heffner
determined a sole source award to Quackenbush on September 23, 2016. However, this was a violation of the
District’s Procurement Code. It did not meet the requirements for sole source, as there were other architects
who could have provided the services (even if Quackenbush was ultimately more familiar with the project, there
may have been an experienced, qualified, firm with better value to the District, which is why the competitive
process is so important). Sole source procurement is not permissible unless there is only a single supplier.11
Additionally, we discovered another violation of the District’s Procurement Code relating to the selection of
Quackenbush Architects on the PWES project. Legal invoices show that Quackenbush had a competitive
9
S.C. Code Ann. Section 8-13-1342.: “No person who has been awarded a contract with…a political subdivision thereof,
other than contracts awarded through competitive bidding practices, may make a contribution after the awarding of the
contract…if that official was in a position to act on the contract’s award.”
10
S.C. Code Ann. Section 30-4-70 (b).
11
District Procurement Code, Section 1560.1, S.C. Code Ann. Section 11-35-1560, S.C. Reg. Section 19-445-2105.: “A
contract may be awards for a supply, service, information technology, or construction item….Sole source is not permissible
unless there is only a single supplier. Written documentation must include the determination and basis for the proposed
sole source procurement. In cases of reasonable doubt, competition must be solicited. Any decision by a District that a
procurement be restricted to one potential vendor must be accompanied by and explanation as to why no other will be
suitable or acceptable to meet the need.” (Emphasis added.)
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September 19, 2022
advantage afforded by the District on the PWES procurement RFP #2018-044 for design services. On May 9,
2018, the , Facilities Director Scott Carlin, and Consultant Dan Neal, School
District Attorney Montgomery Willard, LLC, and Doug Quackenbush had telephone conferences regarding the
RFQ for architectural design services. This was after the RFQ had been issued on May 3, 2018. The RFQ states
that only , could be contacted for questions and contact with other
could be grounds for elimination from the competition. Questions were allowed to be asked at the pre-
submittal conference and then only in writing to . All these questions must be in writing so as not
to provide an advantage to one bidder over another.12 This is a required common practice with government
procurements and well-known by bidders to eliminate influence and interference in the competitive, fair
bidding process. Subsequently, with Amendment #2 on May 24, 2018, the time for response was extended.
Notification of selection of Quackenbush was issued on July 19, 2018. While the District’s Procurement Code
does allow discussions with offerors, it clearly states this is for clarifications of the already submitted proposals13
and the RFP prohibits discussions with anyone other than the Procurement Officer.
Thus, Quackenbush was the Architect for the PWES project, which as described below has significant
irregularities. The firm was required to perform its services consistent with the professional skill and care
ordinarily provided by architects practicing in the same or similar locality under the same or similar
circumstances. The Architect shall perform its services as expeditiously as is consistent with such professional
skill and care and the orderly progress of the project. The Architect will assign to the project only persons with
similar skill, knowledge, experience, and ability to perform to the standard of care of their respective
professions. The Owner is relying upon these representations.14
We noted unusual Quackenbush invoices for “Responses to Board Inquiries” as follows:
Date Invoice # Project Fee Total

9.11.2020 18.225.00-24B ES #13 Principal: $250 x 3.5 = $875 $2,150
Civil Engineer: 5 x $150 = $750
Electrical Engineer: 3.5 x $150 =
$250
10.1.2020 18.225.00-25B ES #13 Principal: $250 x 9.5 = $1,995 $3,570
(handwritten note says $2,375) (handwritten note
Civil Engineer: 6 x $150 = $900 says $3,950)
Electrical Engineer: 4.5 x $150 =
$675
Total $5,720 (or $6,100)
12
RFP #2018-004 Section 3.1.6 and Section 1.1.3. The later states, “It is the intent and purpose of this solicitation to give
equal consideration to all Offers.”
13
District Procurement Code, Section 1530.6, S.C. Code Ann. Section 11-35-1530(7), “…discussions may be conducted with
offerors who submit proposals determined to be reasonably susceptible of being selected for award for the purpose of
clarification to assure full understanding of, and responsiveness to, the solicitation requirements. All offerors whose
proposals, in the Procurement Officer’s sole judgment, need clarification must be accorded such and opportunity.”
14
AIA Document B133-2014, Standard Form of Agreement Between Owner and Architect.
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September 19, 2022
Normally, charges related to oversight on a client’s (the District, the Owner) project such as answering questions
is included in the bid and regular design services. In fact, the RFP specifies, “The Owner expects all parties to
this project to work closely together and deal appropriately with project conditions to finish the job
successfully.”15
Quackenbush Campaign Contributions

Additionally, we noted the following contributions from Doug Quackenbush, Architect to Board candidates:
Date Amount Candidate Name Election Date Contributor Name

10.31.2014 $100 Ellen Baumgardner 11.4.2014 Douglas Quackenbush
9.6.2016 $100 Flora Hutchison 11.8.2016 P. Douglas Quackenbush
8.31.2018 $150 Ellen Baumgardner 11.6.2018 Doug Quackenbush
10.30.2018 $150 Edward White 11.6.2018 Douglas Quackenbush
10.31.2018 $150 Jan Hammond 11.6.2018 Doug Quackenbush
11.1.2018 $150 Larry Haltiwanger Sr. 11.6.2018 P. Douglas Quackenbush
8.29.2020 $250 Robert Gantt 11.3.2020 Doug Quackenbush
It appears the contributions after the CMS Addition project after July 19, 2018 may be illegal, as the law
prohibits a contractor from making a campaign contribution to an “official [who] was in a position to act on the
contract’s award” after their contract has been awarded.16 Although there is an exception for competitive
bidding contracts, we have found non-competitive bidding practices in relation to these contracts, as listed.
PROCUREMENT OF CONSULTANT
Dan Neal, Consultant, entered into an initial contract in 2014 with the District and another in 2018 with a rate
increase. It does not appear that payments to Mr. Neal agree to his Statements of Economic Interest or to the
IRS Form 1099s the District has recently provided. This has not yet been reconciled. Per the
, the administration stated he was a consultant, and his services were exempt from procurement under
“Section 6. Policy and Legal Services to include, but not be limited to”. However, even though this is a violation
of procurement because he did much more than “policy” work, this contract would have been subject to Board
approval and the District could not provide clear evidence that the Board approved his contracts. According to
the Construction Manager, “Mr. Neal was the designated Owner’s representative up until he resigned from that
position. He attended all project meetings and was on site at least once a week. He was involved in decision
making on the district’s behalf, with the counsel of Clay Cannon.”
ETHICS VIOLATIONS AND COMPLAINTS

At the reasonable suggestion by Board Trustee Blackburn Hines, JAG asked Superintendent Dr. Ross to request
from the SC Ethics Commission any records on ethics complaints filed related to the District. As the Commission
does not retain information by entity, but rather, by individual, the District compiled a list. These included past
and current Board members, Superintendents, CFOs, HR Directors, and
15
RFP #2018-004 Section 1.3.2.
16
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September 19, 2022
[email protected] responded:
“Please note that complaints have been resolved against the following individuals:
Robert Gantt
Jan Hammond
Kim Murphy
Ken Loveless
Carol Sloop
Jerry Fowler
I have attached documents pursuant to your request for Jan Hammond and Ken Loveless.
Due to the age of the cases, the following publicly available documents can be found at State
Archives:
Robert Gannt (2005-075, 2005-107)
Kim Murphy (2005-074)
Carol Sloop (2003-065)
Ken Fowler (2005-073)”
JAG called the Executive Director on 8.15.2022 at the suggestion of Superintendent Ross and Board Member
Huddle, as the information appeared incomplete.
Meghan L. Walker
Executive Director
South Carolina State Ethics Commission
201 Executive Center Drive, Suite 150
Columbia, SC 29210
Phone - 803-253-4192
Fax – 803-253-7539
Per Ms. Walker, the Commission provided in the FOIA response the ONLY public records available17 which were:
17
S.C. Code Ann. Section 8-13-320. Duties and powers of State Ethics Commission.
(g) All investigations, inquiries, hearings, and accompanying documents are confidential and only may be released pursuant
to this section.
(i) After a dismissal following a finding of probable cause, except for dismissal pursuant to item (10)(b), or a technical
violation pursuant to Section 8-13-1170 or 8-13-1372, the following documents become public record: the complaint, the
response by the respondent, and the notice of dismissal.
(ii) After a finding of probable cause, except for a technical violation pursuant to Section 8-13-1170 or 8-13-1372, the
following documents become public record: the complaint, the response by the respondent, and the notice of hearing. If a
hearing is held on the matter, the final order and all exhibits introduced at the hearing shall become public record upon
issuance of the final order by the commission. Exhibits introduced must be redacted prior to release to exclude personal
information where the public disclosure would constitute an unreasonable invasion of personal privacy. In the event a
hearing is not held on a matter after a finding of probable cause, the final disposition of the matter becomes public record.
The respondent or his counsel, by written notice, may waive the confidentiality requirement. The commission shall not
accept any partial waivers. The wilful release of confidential information is a misdemeanor, and a person releasing such
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• PENDING complaint on Board Member, Ken Loveless. This was only provided to JAG because he had
previously, voluntarily, and transparently signed a release form to allow these records to be released to
the public.18
• RESOLVED complaints on Board Member Jan Hammond. These files (2021-018, 2021-060) were
provided because the complaints had been resolved and there is a Consent Order.
The list of complaints resolved is here. However, this DOES NOT INCLUDE cases “resolved” if no Probable
Cause was found.
https://ethics.sc.gov/sites/ethics/files/Documents/Complaints/Complaints%20Resolved%20Archived/Complaint
s%20Resolved_FOR%20ONLINE%208.10.22.pdf
The list of “pending” complaints is here. However, this DOES NOT INCLUDE cases which are still under
investigation.
https://ethics.sc.gov/sites/ethics/files/Documents/About%20Us/hearing%20docket_online%208.2.22.pdf
For complaints still under investigation, the Commission “cannot confirm or deny the existence of a complaint or
a complaint for which probable cause was not found”.
The Commission also provided a list of people who had resolved cases which are in Archives. Megan said she
does not know how to access those records. Since these are from 2003, 2005, we do not need these records.
This means we do not have access to what was already investigated and resolved for purposes of not
duplicating work, other than Mrs. Hammond’s 2 cases, which are largely irrelevant to this procurement
engagement. It has been reported to us that there are additional and pending ethics complaints.
JAG did analyze the information made available to us. Our observations are as follows:
Trustee Jan Hammond. Mrs. Hammond had two ethics complaints filed against her, one by Kim Benson on
February 26, 2021 and another on July 30, 2021 by Kristin Batchelor. The Notice of Hearing on February 1, 2022
indicated there were 15 counts; 7 regarding failure to report income on the required Statement of Economic
Interests19 and 8 regarding the use of public property (email) to influence the outcome of an election20. The
Commission issued a Consent Order on April 19, 2022 issuing a written warning and judgment of $2,000 for
administrative fees and civil penalties. These complaints have been completely resolved per Ms. Walker.
Trustee Ken Loveless. Kim Benson also filed an ethics complaint against Mr. Loveless on February 17, 2021
alleging a conflict of interest with Contract Construction (CCI) since his company, Loveless Commercial
Contracting, Inc. (LCC) had a subcontract with CCI to perform construction for SLED Forensic Services Lab
confidential information, upon conviction, must be fined not more than one thousand dollars or imprisoned not more than
one year.
https://ethics.sc.gov/sites/ethics/files/Documents/Advisory%20Opinions/Advisory%20Opinion%20Topics/2022/AO2022-
001.pdf
18
As allowed by S.C. Code Ann., Section 8-13-320 (10)(b).
19
S.C. Code Ann., Section 8-13-1120 (A)(2).
20
S.C. Code Ann., Section 8-13-1346.
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September 19, 2022
project. Per Ms. Walker, this case (C2021-016) is pending hearing. We detail below information for the Board
not only because of the request, but also since it directly relates to the topics of this report: Procurement,
Ethics, Tone at the Top, and the PWES project.
Mr. Loveless sought advice from the South Carolina Ethics Commission (SCEC) regarding his contract issue on
September 21, 2020. While they did not find his contract with CCI a violation, it was not prohibited, they did
state he should recuse himself regarding CCI matters. The opinion quotes the law which states that no public
official may make, participate in making, or in any way attempt to use his office to influence a governmental
decision involving the matter with which he has a financial relationship.21 Although CCI’s contract with the
District to construct PWES is NOT the matter in which Mr. Loveless has a financial relationship (SLED subcontract
of March 13, 2020), it was recommended by SCEC to recuse because CCI may be a “business with which [he was]
associated with”.
Per review of the Ethics Commission’s materials provided to JAG, they have determined probable cause for four
counts relating to Mr. Loveless’ participation in discussions and a site visit. The counts refer to “Failure to
Recuse from a Governmental Decision in which a Business with Which Associated has an Economic Interest.”22
The counts listed do not refer to decisions, they refer to the following:
Count 1 Trustee Loveless wrote a letter to the Superintendent inquiring about construction work on PWES by CCI,
dated March 24, 2020.
Count 2 Trustee Loveless discussed construction work on PWES by CCI on June 15, 2020.
Count 3 Trustee Loveless discussed construction work on PWES by CCI on September 14, 2020.
Count 4 Trustee Loveless attended a Board site visit of PWES being constructed by CCI in June 2020.
We reviewed the SCEC materials and note the following relevant dates:
Date Circumstances
9.18.2018 The District awarded CCI the CM@R contract for ES #13, with Trustees Gantt and Haltiwanger on the
Selection Committee. Trustee Loveless was not on the Board yet. No conflict at this time.
11.19.2018 Swearing-in Ceremony of new Board Members, including Trustee Loveless.
12.10.2018 Trustee Loveless voted: YES to delay construction at Amick’s Ferry site until another site already
purchased by the Board could be explored; NO to approve CCI’s contract; NO to approve $30MM in
8% bonds to build Amick’s Ferry. These decisions were not in favor of CCI. No conflict at this time.
12.6.2019 One year later, text to Trustee Loveless from Constituent/Principal at High School where previous
construction did not go well. She now observed concerns with PWES project and stated, “Concerned
over quality and property cement and supervision, etc.”
12.9.2019 Trustee Loveless meets with Superintendent Dr. Melton and PWES Consultant Mr. Dan Neal regarding
his role as governing body elected official exercising oversight. He also brought out these concerns
during the Board meeting this same date.23
12.9.2019 Ms. Susan Baker publicly expresses her concerns about contractors working at night. We noted that
CCI’s contract stated they would work regular business hours only.
21
S.C. Code Ann., Section 8-13-700 (B).
22
Id.
23
District Board Policy KDB Public’s Right To Know/Freedom Of Information. “To establish the board’s vision for the public’s
right to know about board and district operations. The board and district are public servants…” and are bound to comply
with FOIA to accomplish the public’s right to know about operations.
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12.9.2019 Last date of any vote by Trustee Loveless regarding CCI matters. He voted YES to have discussions
regarding construction Guaranteed Maximum Price (GMP) in open session; NO to approve CCI’s GMP;
YES to restrict total outlay on the project to $24MM; NO to approve CCI’s GMP of $26.6MM, which
was higher than the $24MM budget. These were not in favor of CCI. No conflict at this time.
2.11.2020 Trustee Loveless received low bidder subcontract for SLED project where CCI was the general. The
state ran this competitive process. At a minimum, an appearance of a conflict of interest begins.
3.13.2020 Loveless Construction received executed contract back from CCI.
Dec 2019 – Trustee Loveless persists in requesting information and answers24, exercising his oversight in his public
February 2021 representative role.25 This responsibility included the parties (District administration, consultants, and
various contractors) but was resisted strongly by other Board members and the Administration. We
note that carrying out these duties did not seem to impact Trustee Loveless’s company’s finances (the
fixed price SLED subcontract with CCI). Based on the SCEC evidence, his concerns reflected the
interest of the public and proper stewardship of taxpayer funds/assets, within the context that a
previous High School project went very poorly, and the public did not want quality issues repeated.
We do not see evidence that his public representation on the PWES project provided personal
financial gain.
2.13.2020 Trustee Hutchinson emailed several administrators and other Trustees, “…Here is what I told
[Loveless]: Not only are you cheap, you are a dumb ass. Quote me on that. Beth”. On the same
date, Trustee White states, “This is how out of control [Loveless] is”.
8.21.2020 Trustee Ed White emails Superintendent Dr. Melton and instructs her to ask questions of Attorney
Mike Montgomery in an upcoming meeting so he isn’t “asking all the questions” and states, “This is
more Ken Loveless crap.” We note Board Trustees White and Cates are using personal emails to
communicate with the Superintendent.
9.11.2020 Board Chair Michael Cates tells Consultant Dan Neal and Attorney Michael Montgomery that he
refused Trustee Loveless’s request to show a PowerPoint of his research and concerns (provided to
Superintendent Dr. Melton per policy on March 24, 2020), censoring a governing body member’s role
and communications.
Leading up to Certain Board Trustees join together with the Administration, District Attorneys, Consultant, and
9.14.2020 Vendors without Trustee Loveless’s knowledge, to prepare an organized presentation (this seems
unusual because his was denied). This may have cost the District significant funds, which was not
known or approved by the entire Board. It is also a violation of attorney’s ethics and model rules to
represent one part of the Board adversely against another part since the entire Board is the attorney’s
client.26 We see Trustee White planning questions for the meeting with the Superintendent as early
as 8.21.2020. It is alleged that veteran Board Trustees had not discussed ethics concerns with Trustee
Loveless, but they did bring up these concerns in this board meeting, regarding his subcontract with
CCI. Trustee White stated he had conferred with his law partner, James Burns, the former Chair of the
SCEC in the February 8, 2021 Board meeting.
9.14.2020 Trustee Loveless misrepresented he received concrete tickets anonymously in the mail to protect his
source of information, who later admitted he gave them personally to Loveless. Trustee Loveless has
24
District Board Policy DA Fiscal Management Goals/Priority Objectives. “To establish the board’s vision for the sound fiscal
management of the district….Provide timely and appropriate information to the board and all staff with fiscal management
responsibilities. Establish and implement efficient procedures for accounting, reporting…payment of vendors and
contractors and all other areas of fiscal management.”
25
District Board Policy BBA Board Powers and Duties. “Reviewing action. The board has final authority within the law for
the operation of schools No section of these policies and procedures may be construed to limit the statutory powers of the
board to exercise its own judgment on the basis o the recommendation of the superintendent.”; “Operational action. The
board is responsible for carrying on board business….and ensuring compliance with state laws…”.
26
For example, the ABA Model Rules of Professional Conduct Rule 1.7: Conflicts of Interest: Current Clients.
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September 19, 2022
stated he did this since he could not get answers from the Superintendent. It is reported that there
were valid, reported questions from a constituent – oversight questions regarding the quality and
methodology of the concrete work.
9.14.2020 CCI President Greg Hughes states Loveless Construction did not do anything other than be the low
bidder to be awarded the SLED subcontract.
9.21.2020 After the concerns about his contract and media reports of ethics concerns, Trustee Loveless emails
the SC Ethics Commission (SCEC) to seek opinion.
9.28.2020 Trustee Loveless shares the SCEC opinion and the LLC SLED contract with the Board.
1.28.2021 Trustee Loveless and two other Board members attend a site visit of PWES with the Administration
and CCI.
2.8.2021 Trustee Loveless submits the written statement referred to by SCEC.
Late 2021 LCC completes the SLED work. Communications continue between CCI and LCC regarding the delay of
their last payment.
6.20.2022 CCI prints retainage (last) check to LCC on the SLED work. This ends the potential conflict of interest.
From reading the information provided by SCEC, questions (which will likely be resolved at the SCEC hearing and through
the legal process) come to mind whether or not:
1) CCI is a “business with which [Loveless] is associated with” because he is not an employee, owner, or stockholder
of CCI? The only way this definition applies is if Trustee Loveless is a “contracted agent”.
2) Loveless Contracting is a contracted agent of CCI (LLC’s customer) in a principal/agent relationship? Should Board
members recuse themselves anytime a customer is also a customer of the District?
3) Loveless Contracting’s engagement on the SLED project was an “arms-length arrangement”?
4) Trustee Loveless has “an economic interest” in CCI’s contract with the District and if any interest is incidental to his
position and the $30MM PWES project and/or “to no greater extent” than all other members and the public,
taxpayers, staff, and students? 27
5) Trustee Loveless’s oversight activities were serving his own interest or the people of the District? 28
We are aware of other ethics complaints filed pending investigation, probable cause determinations, and/or
hearings:
Former Trustee Edward White.

Former Trustee Robert Gantt.
Former Trustee Larry Haltiwanger.
Consultant Dan Neal.
Trustee Tiffani Moore.
.
CONTRACT CONSTRUCTION, INC. – PWES CONSTRUCTION MANAGER

The Construction Manager at Risk (CM@R) is the District’s Agent during the pre-construction phase of projects.
The CM@R serves as a consultant during design, but then becomes a contractor by providing a lump sum or
guaranteed maximum price (GMP) to construct the project according to plans and specifications. The CM@R is
27
S.C. Code Ann., Section 8-13-100 (11).
28
S.C. Ethics Reform Act Preamble provides that, “it is inevitable that conflicts of interest and appearances of impropriety
will occur. Often these conflicts are unintentional and slight, but at every turn those who represent the people of this
state must be certain that it is the interest of the people, not their own, that are being served.” (Emphasis added).
Page 12 of 40
September 19, 2022
an agent just as is the architect or engineer.29
CCI is contractually bound to work “consistent with the Owner’s interests”30 and “act in the best interest of the
Owner”.31 The Construction Manager (Mr. Greg Hughes) “shall exercise reasonable care in preparing schedules
and estimates.”32 CCI must also comply with all laws, including immigration and other programs.33 CCI had a
fiduciary duty which arose out of agency but allegedly failed to protect the District.
CCI began the unusual practice of changing the Schedule of Values on Applications and Certifications for
Payment from month to month. First, there was an undisclosed amount of contractor’s contingency included in
the GMP. Second, there “invented allowances” which appeared and disappeared monthly from the Schedules
of Value. Third, the Owner was supposed to receive 100% of any savings not spent.
The invented allowances were removed and converted to CCI’s project labor as the project progressed. One
created allowance was, for example, was the stage curtain. It disappeared from the Schedules of Value, but the
curtain’s value was converted to CCI’s labor. The District’s savings disappeared as the conversion proceeded.
The Architect and Dan Neal contributed to the unusual practice by approving the applications for payment.
Certain of these complex Applications and Certifications for Payment were approved the same day or within 5
days as submitted, a highly unusual phenomenon in construction.
The following summarizes potential questioned costs:
29
S.C. Attorney General Ruling, October 1, 2004.
30
CCI & District Contract AIA Document A133 – 2009, Section 1.2.1: “The Construction Manager accepts the relationship of
trust and confidence established by this Agreement and covenants with the Owner to cooperate with the Architect and
exercise the Construction Manager’s skill and judgment in furthering the interests of the Owner; to furnish efficient
construction administration, management services and supervision; to furnish at all times an adequate supply of workers
and materials; and to perform the Work in an expeditious and economical manner consistent with the Owner’s interests.
The Owner agrees to furnish or approve, in a timely manner, information required by the Construction Manager and to
make payments to the Construction Manager in accordance with the requirements of the Contract Documents.”
31
CCI & District Contract AIA Document A133 – 2009, Section 1.2.2: “The Construction Manager represents that it is an
independent contractor, competent, knowledgeable, and familiar with the type of work contemplated by this Contract. The
Construction Manager agrees and understands that neither it nor any of its agents or employees may act in the name of the
Owner except and unless specifically authorized in writing by the Owner to do so. The Construction Manager further
represents that it owes the Owner the duties of good faith, trust, confidence, and candor, and that it must exercise a high
standard of care in managing money and property. The Construction Manager will, to its best abilities, act in the best
interests of the Owner and the timely completion of the work. The Construction Manager shall furnish design review,
construction administration and management services and use the Construction Manager’s best efforts to construct the
Project in an expeditious and economical manner consistent with the interests of the Owner and its programmatic
objectives.”
32
CCI & District Contract AIA Document A133 – 2009, Section 2.1.8.
33
Supra, Section 2.1.9.
Page 13 of 40
September 19, 2022
List of Certain Potential Questioned Costs Estimates
Unexplained Use Contingencies & Allowances $ 934,662

Cost Savings $ 815,411
Drafts/Broxten 2 weeks $ 13,600
Temporary Labor $ 193,918
Project Manager $ 133,965
Superintendent $ 93,455
Assistnt Superintendent $ 214,905
Overtime Charged $ 297,578
Net Unbilled Amount $ (54,815)
Business License Fees $ 28,200
Construction Manager's Fee $ 14,224
Temporary Labor & Cleaning $ 315,855
Credit for No Liquidated Damages Need Estimate
Credit for No LEEDS/Green Building Certification Need Estimate
Time/Fees for Disputes Need Estimate
These May Not be Summed; Certain Lines' Costs are Included in Others
Changes in Allowances, Contingencies, GMP, OH&P

Should the Construction Manager find any inconsistencies or inaccuracies in the information with the GMP, they
must make adjustments to the GMP proposal, their basis, or both.34 Additionally, CCI’s overhead and profit for
the allowances shall be included in the GMP, but not in the allowances. Each GMP must be adjusted by Change
Order to reflect the actual costs when they are greater than or less than the allowances.35
The following presents in green the Original approved contingency and allowance budgets in Pay Apps #1 and
#3. It can be seen that these were eliminated by Pay App #26 except for one (Electrical Contingency) which was
never contractually approved. It also shows “invented” allowances and contingencies:
34
35
Page 14 of 40
September 19, 2022
CCI Allowances and Contingencies Pay App #1 Pay App #3 Pay App #26
Code SOV Line Item 10/31/2019 12/31/2019 1/31/2022 Difference
1701 Coogler Bond Contingency $ 23,605 $ 23,605 $ - $ (23,605)
1801 OSF Comments Allowance $ 15,000 $ (15,000)
1802 Interior Blinds/Shades Al $ 50,000 $ (50,000)
1803 Soils Allowance $ 170,000 $ (170,000)
1804 Termite Control Allowance $ 11,234 $ (11,234)
1805 Hardware Allowance $ 154,700 $ (154,700)
1807 Roof Drain w/boots Allowa $ 13,500 $ (13,500)
1808 Overhead Coiling Doors $ 11,000 $ (11,000)
1809 Stage Curtain Allowance $ 27,000 $ (27,000)
1810 Contractors Contingency A $ 182,843 $ 182,843 $ (182,843)
1811 Amendment 2 Contingency $ 1,023,438 $ (1,023,438)
2314 Sitework Contingency $ 40,100 $ (40,100)
3301 Concrete Contingency $ 11,000 $ (11,000)
7342 Waterproofing Cont $ 11,050 $ (11,050)
10332 Canopy Allowance $ 10,200 $ (10,200)
16353 Electrical Contingency $ 176,750 $ 177,870.33 $ 1,120.33
$ 206,448 $ 1,931,420 $ 177,870.33 $ (1,753,549.67)
Difference
Original Contractual Allowance/Contingency $ 417,843 $ 239,972.67
A Renamed "Early Site Contingency" in Pay App #3.
While there are clearly allowances and contingencies included in CCI’s Pay Apps, when questioned the
Construction Manager replies, “Regarding your request for details of each allowance and the changes that were
made and who approved those changes, if you review all of our pay apps, the only allowance was a soils
allowance. This allowance was not touched and was with the credit that was given to the owner on the last pay
app.” (Emphasis added).
The following is a reconciliation comparing CCI’s Pay App #1 Schedule of Values to the GMP 1 Amendment.
We note that the Construction Manager was confident the project would be under budget was foregoing the
Contractor’s Contingency of 5% of allowable costs plus fee, or $1,267,588. This contract was GMP cost plus, and
all the contingency belongs the Owner – Pay App #3 begins the District’s “Amendment 2 Contingency” of
$1,023,438.
The Construction Manager also shares, “Regarding your request for details of each contingency fund and the
changes that were made and who approved those changes, we are including the final contingency
accounting. This running log was attached to each pay application each month and all expenditures / credits
were reviewed and approved by the Owner Representative at that time as well as the Architect.”
Page 15 of 40
September 19, 2022
PWES CCI GMP Amend 1 Reconciliation Pay App #1

Early Site Package
Estimate - GMP
Code SOV Line Item 10/31/2019 Amendment 1 Notes
0 Preconstruction $ 50,000
2 Clerical Salaries $ 2,500
14 Project Management $ 19,925 $ 22,425 Sr Project Manager and Project Manager, no clerical
15 Superintendent $ 29,136 $ 29,136 Superintendent
1151 Payroll Tax $ 20,624 $ 20,624 Taxes
1209 Misc. Materials $ 970
1215 Office Supplies $ 972 Office Supplies includes sales tax
1222 Project Sign $ 1,833 $ 1,833 Job Sign includes sales tax
1312 Temp Fence $ 34,500 $ 34,500 Temp Fence
1401 Temp Office Storage $ 2,052 $ 2,052 Office Trailer - GC and Tool Trailers includes sales tax
1554 Temp Toilets $ 1,600 $ 1,600 Temp Toilet
1506 Business License $ 10,971 $ 10,971 Business License
1700 Performance Bond (CCI Only) $ 23,347 $ 23,347 Bond
1701 Coogler Bond Contingency $ 23,605
1810 Contractors Contingency $ 182,843 $ 182,843
Clear and grub, Earthwork, Erosion Control and Maint,

Paving Sidewalks, Something and HD Paving, Paving
Asphalt, Turnkey Paving something and striping, Road
2313 Sitework (Coogler) $ 3,167,382 $ 3,190,985 Widening, Drainage, Storm Drainage, Water, Sewer
99999 Overhead & Profit 3.85% $ 135,570 $ 135,570
$ 3,706,858 $ 3,656,858 GMP 1 Amendment total
Less Preconstruction $ 50,000
$ 3,656,858
Preconstruction $50,000 was correctly specified in the contract.36
Subcontractors to CCI on PWES

We were not able to obtain the audit trail to determine if the Construction Manager bid out the subcontracts on
the PWES project.37 Per the Construction Manager, “Regarding your request as to who specifically (from all
parties) approved the subcontractors, prior to finalizing Amendments 1 and 2, Barb Haller, Dan Neal and Clay
Cannon came to our office to review all subcontractor and supplier bids received and who would be awarded
each scope of work.”
Subcontractor Bonding
It does not appear that all subcontractors were bonded. Per the Construction Manager, “Regarding your
request for details charged to District on 100% Performance and Payment Bonds on subcontractors, we are
including a bond log that outlines the cost of the payment and performance bonds on each of the subs we chose
to bond.” We see Pay App #12 included a list of 14 subcontractors; however, CCI provided a schedule that only
6 were bonded, for a total of $102,206.
36
37
Supra. Section 2.3.2.1.
Page 16 of 40
September 19, 2022
Missing Audit
The District and its former attorney could not provide a copy of an audit Montgomery/Neal had on CMS original
project for the 2008 bond referendum. It has been reported to us that the Former Superintendent Dr. Melton
and Former Trustee White attempted to make attorney invoices off limits to Board members and on several
occasions the Board voted to release the invoices, but each attempt was blocked.
Conflict of Interest – Rabon Enterprises

Rabon Enterprises sued the District and subsequently was masonry subcontractor for CCI for PWES. Whether or
not there was a legally defined conflict or just an appearance of a conflict or no conflict was for the Board to
decide. The Construction Manager was to run any possible conflict and all subcontractors through the Board for
approval but did not.
Related Party Subcontractor – Owens Cleaning Services, LLC (Owens)

During our testing of the CCI pay applications, we noted an unusual vendor, Owens Cleaning Services, LLC
(Owens) which was created right before the PWES project began. This company appears to be a related party
subcontractor38, as its owner, Susana Owens is married to Arthur Wilburn “Will” Owens, who is a
Superintendent at CCI.39 His brother, Doug Owens, is also a Superintendent at CCI.40 Their brother, Dale Owens,
is/was a Superintendent at China Construction America, Inc.41 (this company constructed Chapin High School).
CCI did not notify the owner as required42 43 and stated in an email to the current Superintendent in response to
JAG’s questions, that they were not aware of any conflicts of interest.
This graph shows Will Owens’ hours on the PWES project from the timesheets provided to us:
38
CCI & District Contract AIA Document A133 – 2009, Section 6.10.1. The term “related party” shall mean an “…affiliate or
other entity having common ownership or management with the Construction Manager…..it includes any member of the
immediate family of any person identified above.”
39
https://www.linkedin.com > will-owens-1aa59373; https://www.zoominfo.com/pic/contract-construction-inc/29806000
(last update 9.13.2022).
40
https://www.facebook.com > doug.owens.9484; https://www.linkedin.com > doug-owens-30b31089;
https://www.zoominfo.com/pic/contract-construction-inc/29806000?pageNum=2 (last update 9.4.2022).
41
https://www.linkedin.com > dale-owens-335205100
42
CCI & District Contract AIA Document A133 – 2009, Section 2.3.2.4. “4 If the Construction Manager recommends a
specific bidder that may be considered a “related party” according to Section 6.10, then the Construction Manager shall
promptly notify the Owner in writing of such relationship and notify the Owner of the specific nature of the contemplated
transaction, according to Section 6.10.2.”
43
CCI & District Contract AIA Document A133 – 2009, Section 6.10.2. “If any of the costs to be reimbursed arise from a
transaction between the Construction Manager and a related party, the Construction Manager shall notify the Owner of the
specific nature of the contemplated transaction, including the identity of the related party and the anticipated cost to be
incurred, before any such transaction is consummated or cost incurred.”
Page 17 of 40
September 19, 2022
Additionally, we immediately noted typical invoice fraud “red flags” with the Owens charges.
• Owens Cleaning LLC SC business registration was filed 9/16/2018. CCI contract with District was dated
12/16/2018.
• The invoices are not from a billing system.
• Per our research, the business address is 178 Cheryse Dr, Lexington, SC 29073. This is a home address,
not a business.
• The hours and billings do not make sense for the type of business (cleaning service).
• The invoices are numerically consecutive without gaps for work performed for other projects.
• Time is not shown by day, by employee.
• Work descriptions do not coincide with project stages.
• Logo on the invoices appears to be pasted into Word.
• There is no website or other indications of valid business (other than business registration to Susana
Owens).
• Why didn’t the subcontractors clean up after themselves? Normally there is some cleaning and punch
work at the end of construction, but not to this extent ($315,855). According to the Construction
Manager, “Regarding the cleaning, we hire cleaning crews for general housekeeping and collection of
unidentifiable scrap. All subcontractors are responsible for cleaning their work areas and identifiable
scrap.”
• Why weren’t there Deductive Change Orders on the subcontractor’s pay apps since they were paid AND
the general paid Owens? Anything the subcontractors could not perform on should have been deducted
so the District did not pay twice.
• In the Pay App data, the temporary labor line was increased but not the cleaning subcontractor line item.
• It is standard in the industry that temporary labor invoices are always accompanied by timesheets to back
Page 18 of 40
September 19, 2022
them up. None of the Owens invoices had timesheets. All documents should be signed and approved.
According to Owen’s Cleaning invoices, they provided labor for items covered under a subcontractor’s scope of
work. This can occasionally be the case when additional work on a subcontractor’s scope needs to be
completed or repaired and they are unable to come back due to scheduling. In that case, a deductive change
order would be issued to the subcontractor to reduce their contract by the amount of the labor provided by
temp labor service. There is no indication that this was done. Instead, the subcontractor line items remained
the same and the labor line item increased. Additionally, Owen’s Cleaning appears to have provided both
temporary labor and cleaning services, but the invoices provided do not indicate the split or which employees
did what tasks. Temporary labor companies provide an invoice that indicates the role of each employee as well
as weekly timesheets for each employee signed by the contractor’s onsite representative (usually the
Superintendent). None of this was provided. Owen's Cleaning routinely billed overtime. Work hours per the
contract were 40 per week with no provision per overtime. Any amount over 40 should not have been billed to
the owner without Change Order approval. It appears any amount over 40 hours billed should be returned.
For example, Invoice #44, for the 7 days 2.26.2021-3.4.2021 charges $7,266 with a total of 341 hours. This
invoice is only for general cleaning, protecting carpet with plastic, and pre-punch list. Since the CCI is only
contracted for normal business hours, this equates to 68.2 hours/day and the invoice lists 9 employees. It does
not appear realistic that it would take this amount of labor for simple tasks on one school, especially considering
the same types of items are listed weekly.
Another example is Invoice #53 for the 7 days 4.16.2021-4.22.2021 charges $6,888 with a total of 328 hours for
8 employees. This invoice is also for general cleaning, [same?] pre-punch list, and installing toilet accessories.
We also noted potential mismanagement of the Owens billings. On Pay App #22, there is a note which describes
that, “a credit for $21,756 was issued on pay app 20 due to the SOV [Statement of Values] being overbilled and
not yet updated with the cost billed prior on pay app 19. The partial rebilling of $5,552 on invoice 44 from pay
app 19 and credited on pay app 20 in addition to the other invoices above bring the total billed to date current
and accurate.” The total listed for pay app 22 alone is $36,533.
Contractually, the labor costs include “wages of construction workers directly employed” by CCI. (Emphasis
added).44 The total paid to Owens for temporary labor and cleaning was $315,855 over the term of this open-
ended contract arrangement. Construction Management at Risk contracts may not be based open-ended cost
plus a fee agreement under Contract Article 2.3.2.3.
Change Orders
Change orders should be used for items that increase the Owner’s (District’s) cost but does not change items on
the critical path schedule. They shall not be binding unless in writing and approved and executed. They are
required for a change in the scope of work, an increase or decrease in the amount of the construction costs, or
to adjust the substantial or final completion date of a construction project. When the proposed need for a
44
Page 19 of 40
September 19, 2022
change order is first known by the architect/engineer, it shall be prepared. They must be presented to the
School Board at the next regular meeting.45
A change order meant a written amendment authorizing a change in the scope of work, an adjustment in the
contract sum and/or an adjustment in the contract time. These shall not be binding unless in writing and all
construction change orders shall be funded by contingencies approved by the School Board.
Per District Policy:

A. The Superintendent is required to recommend to the Board any major or minor change order greater than
$50,000, or that increases the cumulative total of all construction change orders of a construction project
approved by the Superintendent or designee to greater than $150,000, or by more than 2% of the original
construction contract amount, whichever is less.
B. The Superintendent is also required to do this for any change order that alters or eliminates the School
Board’s right to pursue liquidated damages.
C. All change orders approved by the Superintendent or designee must be reported to the School Board at
the next regular meeting and were not.
This policy was not followed by CCI, Quackenbush, and the District. We also note that CCI’s contract states the
GMP is subject to additions and deductions by Change Order (other than minor changes to the work).46
Reportedly, by CCI and the District there were no change orders. However, we did note in our testing a
Deductive Change Order applied on Pay App #26 which was not approved by the Board.
The contract also refers to Article 7 (below) of the General Conditions of the Contract for Construction.47 This
explicitly states that Changes Orders are required. In particular, if time is to change. Even though the times of
the construction did change, there were no change orders submitted as required. Contractually, CCI was
working “normal working hours”.48 However, our testing shows significant overtime and temporary labor was
charged to the project. Additionally, CCI’s time kept increasing as they changed the SOV. Budgeted lines items
for Allowances for example, were moved into labor costs, which did not agree to the contractual budgeted items
in the GMP amendments and exhibits.
CCI also stated there were no change orders on the project during a Board meeting on September 14, 2020.
The following is Article 7, showing details on changes in work:
45
District Change Order Procedures. These were implemented during the 2008 Bond Referendum construction with the
assistance of Halligan law firm as a result of a construction audit. Since CCI was doing a project at Dutch Fork High School,
reportedly they were or should have been aware of these requirements.
46
CCI & District Contract AIA Document A133 – 2009, Section 5.2.2, 5.3.
47
CCI & District General Conditions AIA Document A201 – 2007.
48
CCI & District Contract. Exhibit C, Item 4.
Page 20 of 40
September 19, 2022
Cost Controls
In our testing, we noted the cost controls reports, mainly the monthly Statement of Values, were moving targets
instead of the contractual intended system.49 The actual and estimated costs could not be properly determined,
as CCI moved budget and allowance fund around to various line items. Tracking the cost savings to the District
was no longer feasible as the line items changed monthly. This contractual safeguard for the District was not
properly monitored by Quackenbush and the District.
A report detailing the construction change orders, activities and finances shall be provided to the School Board
comparing the initial budget approved by the School Board for the construction project and the actual cost to
construct the project so that the School Board is informed, in a summary format, of construction change orders
affecting the project costs and schedules. The information shall be entered into the official minutes of the
School Board.
49
CCI & District Contract AIA Document A133 – 2009, Section 2.3.2.8. “The Construction Manager shall develop a system of
cost control for the Work, including regular monitoring of actual costs for activities in progress and estimates for
uncompleted tasks and proposed changes. The Construction Manager shall identify variances between actual and
estimated costs and report the variances to the Owner and Architect and shall provide this information in its monthly
reports to the Owner and Architect, in accordance with Section 2.3.2.7 above.
Page 21 of 40
September 19, 2022
Another cost area which could be examined is the costs of the PWES project, which was estimated at $20MM in
the RFP and ended up to be approximately $30MM per the District’s accounting records. With inflation at that
time roughly 5%, the significant increase during the project and even comparing to other District projects (CMS
and its addition) does not make sense. The CM@R’s portion with GMP 1 & 2 was $26,569,355 with a later
deductive change order in 2022 of $369,467.25, for a final contract sum of $26,199,887.75.
The District and its former attorney could not provide any communication or documentation of “all appropriate
steps” , and other District employees taken to ensure the District did
NOT knowingly enter into purchase commitments that could result in a conflict of interest.53
Conflict of Interest Subcontractor – Collins & Wright (C&W)

CCI subcontracted with C&W on the Chapin Middle School Addition project and on PWES project.
To our knowledge, the conflict of interest was not reported by CCI to the District.
C&W received a large sum of additional project money ($94,138) greater than their original listed subcontract
sum ($697,500) late in the project (total of $791,638).
Our testing showed C&W is line item 9308 on the CCI Pay Applications. There were increases in the amount in
Pay Apps #16 and #17 of $6,492 and $6,648, respectively. A significant increase was charged on Pay App #20,
$84,019, but they didn’t bill it out fully until App #22. CCI claims they pulled it all out of the Amendment #2
50 S.C. Code Ann. Ethics Reform Act Section 8-13-700(A): “[n]o public official, public member, or public employee may knowingly use his
official office, membership, or employment to obtain an economic interest for himself, a member of his immediate family, an individual
with whom he is associated, or a business with which he is associated.”
51 S.C. Code Ann. Ethics Reform Act Section 8-13-700(B): “[n]o public official, public member, or public employee may make, participate in
making, or in any way attempt to use his official office, membership, or employment to influence a governmental decision in which he, a
member of his immediate family, an individual with whom he is associated, or a business with which he is associated has an economic
interest.”
52 S.C. Code Ann. Ethics Reform Act Section 8-13-700(B)(1)-(5) provides
for disclosure of any conflicts of interest by public official, public
members or public employees, which meets the requirement of CAA Section 128(a)(2) that “any potential conflicts of interest…be
adequately disclosed.”
53 Per the District’s 2008
Procurement Manual, 2. Conflicts of Interest: “Each employee of the District and the Procurement Department
has the responsibility to take all appropriate steps to ensure that the District does not knowingly enter into any purchase commitment
that could result in a conflict of interest. The staff of the Procurement Department will bring any questionable situations to the attention
of the proper authorities.” (Emphasis added).
Page 22 of 40
September 19, 2022
Contingency, but in examining the differences between pay apps, they actually pulled from other line items, not
just the Amendment #2 Contingency.
The C&W pay apps show 4 change orders: $225, $3,246, $6,648, and $84,019. Another item that appears
unusual to us is that C&W's Pay App #9 is dated 2.15.21 and includes the first three change orders, but they did
not bill again until 7.13.21. This July bill includes the $84,019 change order. Subs usually are not okay with
floating $84k on a project for 5 months. The change orders do not appear to be in compliance with the contract
requirements for subcontractors54, which also follows Article 7 shown above.
The $84,019 was part of CCI’s “charge” to “’contingencies” for added acoustical treatments, which may not have
been bid and within C&W’s scope.
Conflict of Interest – District Employee on Selection Committee

CCI included a letter of recommendation from the District’s employee, Scott Carlin, in their bid. Mr. Carlin also
served on the selection committee.
Per the Construction Manager, “Regarding your request as to who specifically (from all parties) approved any
situations where there may be a conflict of interest, neither the Owner’s Representative, Architect, or
Contract Construction encountered any situation where there may have been a conflict of interest.”
Construction Manager’s Fee, OH&P

Since the Construction Manager’s Fee (Overhead & Profit) was set at 3.85% ($963,020) of the Cost of the Work,
it contractually should have been decreased in any circumstance of savings, including labor and the Deductive
Change Order issued in Pay App #26.55 The final contract amount decreased by $369,467.25 but CCI’s OH&P of
3.85% never changed. If the amount from which the 3.85% OH&P is calculated decreases, then the contractor
should also decrease the OH&P amount, in this case by $14,224.
Schedule of Values (SOV)

Contractually, CCI was required to submit with the Pay Apps the payrolls, petty cash accounts, receipted invoices
or invoices with check vouchers attached, and other evidence for cash disbursements already made.56 The Pay
Apps must be based upon the SOV submitted with the Contract Documents.57 According to the Construction
Manager, “the Owner Representative at the time and the Architect reviewed and approved each pay application
and their schedule of values adjustments.”
54
CCI & District Contract AIA Document A133 – 2009, Section 5.3.3. “Adjustments to subcontracts awarded on the basis of
a stipulated sum shall be determined in accordance with Article 7 of AIA Document A201 – 2007…”
55
CCI & District Contract AIA Document A133 – 2009, Section 5.3.5. “If no specific provision is made in Section 5.1.2 for
adjustment of the Construction Manager’s Fee in the case of changes in the Work, or if the extent of such changes is such,
in the aggregate, that application of the adjustment provisions of Section 5.1.2 will cause substantial inequity to the Owner
or Construction Manager, the Construction Manager’s Fee shall be equitably adjusted on the same basis that was used to
establish the Fee for the original Work, and the Overall Guaranteed Maximum Price shall be adjusted accordingly.” We
note there is no provision in Section 5.1.2 (page 10 of the contract).
56
57
Page 23 of 40
September 19, 2022
It is industry standard that SOVs do not change from the contract documents and certainly not without
approved change orders. The SOV is comparable to a budget to actual schedule and is utilized to track the
District’s cost savings or need for GMP change. We have an extended schedule showing the differences
between Pay Apps but have not included it here. It shows considerable changes from one Pay App to the next.
The SOV schedule below indicates reductions in the amounts of 32 line items. These represent cost savings that
should have been returned to the District totaling $815,411.09. Instead, CCI moved these savings into other line
items to account for a deficit in contingencies and allowances. This should be done through the submission and
approval of change orders, but no change orders were submitted by CCI.
Per CCI, in a PowerPoint presentation to the Board of Trustees on December 9, 2019, stated “Owner receives
100% benefit of savings.” Per the Construction Manager to the Former CFO, CCI “returned” $369,467.25 via
deductive change order and “charged” $449,420” to the “contingencies” for playground equipment
($349,836.08), a kiln ($4,294.08), graphics ($11,270.84), and acoustical treatments ($84,019).
Reconciliation of Overall PWES Construction Contract
CCI Overhead and Profit 3.85% $ 963,020
Guaranteed Maximum Price 1 & 2 $ 26,569,355

Total Payments to CCI (includes questioned costs) $ (26,199,887)
2022 Unapproved Deductive Change Order Pay App #26 $ 369,468
Guaranteed Maximum Price 1 & 2 $ 26,569,355

Contingencies & Allowances Pay App #3 $ (1,931,420)
Amount to Pay CCI, Not Considering Contingencies & Allowances $ 24,637,935
Total Payments to CCI (includes questioned costs) $ (26,199,887)
Amount of Contingencies & Allowances Used $ (1,561,952)
Playground $ 349,836
Kiln $ 4,294
Graphics $ 11,271
Added Acoustical Treatments $ 84,019
Per CCI Amount the Only Amounts Charged to Contingencies $ 449,420
JAG Identified Amount Charged to Electrical Contingency $ 177,870
Total Use of Contingencies & Allowances $ 627,290
Unexplained Use of Contingencies & Allowances $ (934,662)

(There are costs in addition to this which are questioned)
The following chart presents the original, approved, Statement of Values, or budget, and the final expenditures
in those categories. This shows line items which would have rendered a cost savings to the District and the
total, which would have been returned to the District:
Page 24 of 40
September 19, 2022
Pay App #3 Pay App #26 District

Code SOV Line Item 12/31/2019 1/31/2022 Cost Savings
2 Clerical Salaries $ 12,363 $ 6,089.50 $ (6,273.50)
16 Assistant Project Manager $ 46,410 $ 3,218.36 $ (43,191.64)
19 Quality Control $ 70,000 $ 29,222.60 $ (40,777.40)
1102 Labor/Hourly Wage $ 237,951 $ 105,607.85 $ (132,343.15)
1106 Div. 8 & 10 Labor $ 47,200 $ 15,447.32 $ (31,752.68)
1151 Payroll Tax $ 260,935 $ 52,144.98 $ (208,790.02)
1211 Equipment Fuel $ 24,750 $ - $ (24,750.00)
1212 Per Diem Expense $ 8,500 $ 2,765.67 $ (5,734.33)
1213 Safety Equip. Temp Barricade $ 31,350 $ 2,701.63 $ (28,648.37)
1215 Office Supplies $ 7,350 $ 434.65 $ (6,915.35)
1221 Misc. Small tools/equip $ 15,000 $ 1,954.84 $ (13,045.16)
1222 Project Sign $ 1,833 $ 1,112.40 $ (720.60)
1310 Cleaning Subcontractor $ 72,080 $ 33,392.00 $ (38,688.00)
1312 Temp Fence $ 34,500 $ 19,800.00 $ (14,700.00)
1401 Temp Office Storage $ 23,472 $ 14,688.44 $ (8,783.56)
1500 Waste Disposal $ 81,000 $ 56,501.16 $ (24,498.84)
1506 Business License $ 28,908 $ 28,236.00 $ (672.00)
1551 Telephone Service $ 5,500 $ 4,330.73 $ (1,169.27)
1552 Electrial Service $ 156,020 $ 94,599.92 $ (61,420.08)
1605 Architectural Plans $ 6,400 $ 5,705.51 $ (694.49)
1700 Performance Bond (CCI Only) $ 155,576 $ 133,896.00 $ (21,680.00)
1808 Overhead Coiling Doors $ 11,000 $ - $ (11,000.00)
4301 CMU Utility Brck Assembl $ 2,774,580 $ 2,769,787.56 $ (4,792.44)
6215 Roof Nailers/Wood Blocking $ 42,300 $ 18,476.21 $ (23,823.79)
7219 Expansion control $ 8,859 $ 5,667.79 $ (3,191.21)
7314 MEP Fire Stopping $ 37,520 $ 37,250.00 $ (270.00)
7341 DEFS $ 28,500 $ - $ (28,500.00)
8208 Wood Doors $ 72,000 $ 51,600.00 $ (20,400.00)
10212 Fire Ext./Cabinets $ 4,530 $ 3,473.88 $ (1,056.12)
10315 Storage Shelving $ 6,894 $ 1,743.93 $ (5,150.07)
14312 Elevator $ 73,500 $ 71,771.00 $ (1,729.00)
15350 Plumbing & HVAC $ 2,803,704 $ 2,803,453.98 $ (250.02)
Total Cost Savings $ (815,411.09)
Business License Fees

We have requested, but not received, the validity of the following business license fees CCI charged in the Pay
Apps: #1 $15.00, #4 $16,954.61, and #25 $11,266.39. Town of Irmo business license fees were paid from PWES.
There are no business license fees in Lexington County for facilities located outside of a political subdivision such
as a town or city. Therefore, there are no direct license fees charged to this project. CCI’s office is located in
Richland County which does assess business license fees. These would be part of the company’s normal
Page 25 of 40
September 19, 2022
overhead fees included within their 3.85% percentage charged to the project. According to the Construction
Manager, they are “it is a project cost that is paid based on the project’s contract amount.”
Other Questioned Costs

Ryan Drafts and Charles Broxten were given 2 extra weeks “per company memo.” Those 2 weeks were billed to
the District on Pay App #19. If the extra weeks were not for time worked on the project, then $13,600 should be
returned to the District. (Ryan Drafts 80 * $85 = $6,800. Charles Broxton 80 hours * $85 = $6,800).
We noted unusual fuel charges, but per the Construction Manager, “Regarding your request as to why are there
gas and cleaning charges which is overhead and sometimes sub responsibilities, fuel charges are for the
equipment rented by Contract Construction. Equipment used by subcontractors was fueled at their expense.”
The Assistant Project Manager disappeared on Pay App #8 then reappeared called "Safety Manager" on Pay App
#13.
Line 1160 Temporary Labor was originally budgeted for $88,545 and ballooned to $282,463.
Line 14 Project Management was $300,895 originally and increased to $484,213.77 (then decreased with an
unapproved deductive change order to $434,859.67 in 2022).
Line 15 Superintendent was $256,023 originally and significantly increased to $349,477.50.
Line 18 Assistant Superintendent was originally approved at $137,250 and swelled over time to $352,155.
Payroll attachments with the Pay Apps to do not always match what was billed.
Weekly hours per the contract were 40 with no provision for overtime. CCI routinely billed overtime to the
project. Typically, overtime must be owner approved in order to be paid and is done through a change order.
As there were no change orders submitted or approved, all amounts billed over 40 hours per employee per
week should be returned.
The following chart shows CCI hours by employee monthly and the overtime charges:
Page 26 of 40
September 19, 2022
CCI Hours by Employee Monthly and OT Charges
Monthly OT Hours Rate per Amount Charged

Row Labels Hours (Over 273/mo) Hour for OT
Charles Broxton 1,418 $ 85.00 $ 120,534

Feb-20 298 125
Mar-20 190 17
Apr-20 235 62
May-20 212 39
Jun-20 240 67
Jul-20 196 23
Aug-20 240 67
Sep-20 368 195
Oct-20 250 77
Dec-20 332 159
Jan-21 176 3
Mar-21 288 115
Apr-21 326 153
May-21 305 132
Jul-21 362 189
Christopher Quinones 731 $ 45.00 $ 32,912
Nov-19 277 104
Feb-20 276 103
Mar-20 198 25
Apr-20 256 83
May-20 186 13
Jun-20 206 33
Jul-20 196 23
Aug-20 206 33
Sep-20 356 183
Oct-20 239 66
Dec-20 242 69
Jim Ott 98 $ 185.00 $ 18,132
Mar-20 183 10
Apr-20 243 70
May-20 192 19
Joshua Ott 58 $ 24.00 $ 1,400
Feb-20 204 31
Mar-20 201 28
Ryan Drafts 1,466 $ 85.00 $ 124,600
Nov-19 443 270
Feb-20 298 125
Apr-20 295 122
May-20 202 29
Jun-20 237 64
Jul-20 197 24
Aug-20 240 67
Sep-20 368 195
Oct-20 251 78
Dec-20 332 159
Jan-21 193 20
Mar-21 280 107
Apr-21 326 153
May-21 231 57
Grand Total $ 297,578
Page 27 of 40
September 19, 2022
Rates per the contract58 are:

Title Rate/Hour
Sr. Project Manager $185
Assistant Project Manager $110
Superintendent $85
The President of the company paid himself a salary and charged a portion of it to the Piney Woods Elementary
(PWE) project. His salary is also within the 3.85% fee mark-up on costs as a cost-plus a percentage relationship
of Construction Manager at Risk. According to the Construction Manager, “Regarding your request as to why
wasn’t the company President charged within the Overhead rate approved, but also separately, Greg Hughes
served as Senior Project Manager for this project and his time is considered cost of the work not overhead.”
This chart shows the hours by timeframe and employee:
We noted an unusual code charging the project, “Amicks-Ferry 242C-Loveless”, charged 32.03 hours, or
$5,925.55, from March through September 2020 by Mr. Greg Hughes. We believe this was for Board Trustee
Loveless’ inquiries.
It appears the company charged the District high rates and unrealistic hours, including charging quality control
and other staff who were not in the original bid.59 Further information from the Job Cost Journals is needed.
We also noted the following example detailed exceptions while testing the pay apps and timesheets:
58
CCI & District Contract AIA Document A133 – 2009, Section 11.5.
59See Article 9.2 AIA A-201 general Conditions of the Contract for Construction for this project which is included by reference under
article 12.2 of the AIA A-133 Contract between Owner (District) and CM@R.
Page 28 of 40
September 19, 2022
Large balances unbilled

Cheryl working OT somehow under 10 hours worked
Christopher working well outside of 8-5 hours
Pay App 12 Cheryl Reg hours 1.5 OT 2 hours
Pay App 12 Charles Entire pay outstanding
Top of Pay Apps list Christopher Quinones, Timesheets show Juan Quinones
Pay app 13 Christopher should be $7,800 pay
Pay app 17 Christopher overpaid
No pay app for Feb 21 - Split between 17 & 18
Pay app 18 Cheryl underpaid
Pay app 18 Kenny & Travis paid above salary
Pay app 19 Jenny paid above salary
Pay app 19 Charles not paid at all
Pay app 21 Cherly overpaid
No Pay app for June 2021, in Pay app 22
Pay app 23 Leericka finally being paid. Underpaid and not annotated
Pay app 23 Greg underpaid and not annotated
Pay app 23 Cherly overpaid
Pay app 24 no additional pages or information on payroll
Pay app 24 could be Aug?
The following page shows a list JAG also compiled, tracking the billings of time from one pay app to the next.
There was a net unbilled amount. This demonstrates CCI’s lack of controls over timing and billing properly in
accordance with the contract:
Page 29 of 40
September 19, 2022
CCI Billed / Unbilled Amounts

Pay App Cost Code Name Amount Billed/Not Billed
5 18 Charles Broxton 8,075.00 not billed
13 18 Charles Broxton (21,190.00) billed
20 18 Charles Broxton (27,710.00) billed
Charles Broxton Total $ 29,847.16
3 2 Cheryl Young 0.02 not billed
23 2 Cheryl Young (0.54) billed
Cheryl Young Total $ 16.32
4 1102 Christopher Quinones 440.00 not billed
5 1102 Christopher Quinones (440.00) billed
6 1102 Christopher Quinones 6,475.00 not billed
7 1102 Christopher Quinones (3,744.00) billed
13 1102 Christopher Quinones (520.00) billed
14 1102 Christopher Quinones 160.00 not billed
Christopher Quinones Total $ 59.75
11 14 Greg Hughes (0.45) billed
12 14 Greg Hughes 0.45 not billed
23 14 Greg Hughes 2,128.65 not billed
Greg Hughes Total $ 2,128.65
2 14 Jim Ott 7,425.25 not billed
3 14 Jim Ott (7,425.25) billed
Jim Ott Total -
23 14 Leericka Miller 4,995.00 not billed
Leericka Miller Total $ 4,995.00
5 15 Ryan Drafts 4,420.00 not billed
20 15 Ryan Drafts 12,790.50 not billed
Ryan Drafts Total $ 17,210.50
14 16 Will Owens 163.53 not billed
17 16 Will Owens 393.75 not billed
Will Owens Total $ 557.28
Grand Total Unbilled $ 54,814.66
Page 30 of 40
September 19, 2022
LEED/Green Globes Certification Requirements Eliminated

These key requirements were eliminated by CCI from the contract when it submitted its GMPs. This significant
contract provision from the RFQ60 and Bids61 was removed, giving CCI an apparent competitive advantage. Their
fee could be much less due to the amount of time, risk, and effort would be much less without complying with
these requirements. This criteria were a major part of the selection process, on which gave CCI, with their
Green experience, higher scores. When we asked the Construction Manager about this, he only replied,
“LEED accreditation was never included in the contract, thus it was never removed.”
CCI’s Selection Package was rated in two criteria categories with respect to LEED/Green Globes. They were
Management Plan (30 points out of 100 points) and Qualifications and Experience of the Proposed Project Team
another (25 points out of 100 points). LEED/Green Globes Certifications were significant contributory factors
rated by each of the committee members in each of these criteria categories. CCI showed no less than 12
projects in the very limited number of pages in their proposal submittal package.
LEED/Green Globes Certifications were prominently displayed in the submittal package. The inclusion was
undoubtedly intended to impress the selection committee, yet LEED/Green Globes Certification was quietly
dropped when the GMP was submitted a year after the contract was signed. But as the budget for the project
increased from $24,000,000 to $26,539,355 over that same timeframe, no credit for deletion of LEED/Green
Globes Certification was given. In the way of credit, the district should have paid reduced costs because
LEED/Green Globes Certification can be expensive especially in terms of expected management contribution to
overall general and administrative overhead.
The Procurement Code requires unconditional acceptance of bids without alteration or correction and with the
evaluation factors in the invitation/solicitation for proposals.62 When it is determined that the requirements
have not been met, the bid shall be cancelled.63 Ordinarily a bid should be rejected when the bidder attempts to
impose conditions which would modify requirements of the invitation for bids or limit his liability to the District
since to allow the bidder to impose such conditions would be prejudicial to other bidders. For example, bids
should be rejected in which the bidder attempts to protect himself from future costs or limits the rights of the
District under any contract clause.64
When an awards has been issued but before performance and the District’s requirements for the goods or
services have changed or have not been met, it may be cancelled and either re-awarded or a new solicitation
60
District RFP #2019-007, LEED certifiable Construction Waste Plan requirements under #5; 1.2 The Project Objectives
Sustainability 1.2.1 on page 4 of the RFQ, “The Owner expects to have the project designed to be certified by the Green
Building Initiative (GBI) for a minimum of two (2) Globes or a project designed to achieve LEED Silver Status….The
requirement for ability of Green Globes certification of this project scope will be combined with the site development
package of a separate scope.” (Emphasis added).
61
Responses to RFQ and later RFP #2019-007 selection criteria have Management Plans with the “firms plan to attain the
project’s desired LEED or Green Globes certifications”. Each CM@R offeror was ranked by its ability to meet this criterion.
62
District’s Procurement Code, Section 1520.6.1.
63
Supra. Section 1520.6.4.2; Specifications have been revised (S.C. Reg. Section 19-445.2065(B)(2)); The supplies or services
being procured are no longer required (S.C. Reg. Section 19-445-2065(B)(3); The bids were collusive or not independently
arrived at in open competition (S.C. Reg. Section 19-445.2065(B)(7)).
64
Supra. Section 1520.6.5.4. Modification of Requirements by Bidder.
Page 31 of 40
September 19, 2022
issued, including when specifications have been revised, the supplies or services being procured are no longer
required, or when the bids were not independently arrived at or collusive.65
The District may only approve and pay for amendments and change orders relating to architectural/engineering
and construction contracts which do not alter the original scope or intent of the project, and which do not
exceed the previously approved budget.66
Overtime & Liquidated Damages Provisions Eliminated

CCI shifted risk onto the District by deleting overtime and liquidated damages requirements at the time the GMP
was established. The fundamental changes to delete overtime and liquidated damages effectively shifted risk to
the District away from the Construction Manager @ Risk which this type of procurement is meant to prevent. A
year after the District signed the contract, it received nothing in exchange for late CCI changes. If the project
time had gone beyond that prepared by CCI in its schedule in item 3 of the CD Estimate Clarifications and
Assumptions exhibit, the District would receive nothing. When we asked the Construction Manager about this,
he stated, “liquidated damages were never included in the contract, thus they were never removed.” This is not
industry standard. Worse yet, the District could not have demanded that CCI work overtime to remediate the
schedule. Only contracts that promote the best interests of the District may be used.67
It appears the deletions were disclosed very late in the process, significantly altering the CCI contract, which
effectively by-passed the selection committee process and the competitive bid process. The procurement
should have been re-bid without these requirements in order to ensure the District received the best value.
Cost to Remove and Replace Unsuitable Soils

CCI shifted risk onto the District by adding an Allowance to the GMP 2, which was the building (not the early site
work that soils related to). According to CM@R, this allowance was returned to the District in the deductive
change order in the last Pay App. JAG verified this $170,000 was part of the $369,467.05 deductive change
order credited to the District with Pay App #26. There was also $145,864.09 returned from Amendment 2
Contingency (originally $1,023,438) and $3,191.21 from Expansion Control as part of the $369,467.05
“returned”.
We noted many other non-industry standard changes made by the CM@R which could be investigated further,
but we have not listed them here. Per CM@R, CCI’s, PowerPoint to the Board of Trustees, the Construction
Manager is supposed to minimize risk and “minimizing risk means maximizing value to the client.”
Timing of Payments to CCI

Contractually, “Payments are due and payable upon presentation of CM invoice. Amounts unpaid thirty (30)
days after invoice date shall bear interest…”68 On average the check dates were within 17 days of the invoice
date. The variety appears reasonable at first glance. However, there are three Pay Apps over 30 days which
indicates poor payment deadline controls at the District. There are four which are within 5 days which indicates
poor review and quality control, including one Pay App paid on the same day it was invoiced. The Architect and
65
Supra. Section 1520.7.4. Cancellation of Award Prior to Performance.
66
Supra. Section 3025.1. Approval of Changes.; S.C. Code Ann. Section 11-35-3025.
67
Supra. Section 2010.1. Types and Forms of Contracts.
68
Page 32 of 40
September 19, 2022
District should be thoroughly reviewing all supporting documents, asking questions, and going through the
proper diligence and approval processes.
Days from Invoice # of Pay

Date to Check Date Apps
0 days 1
1-5 days 3
6-10 days 4
11-15 days 4
16-20 days 2
21-25 days 4
26-30 days 3
Over 30 days 3
As well, the District is responsible for the payment of all supplies, services, or information technology within
thirty (30) workdays after the acceptance of the goods or services and proper invoice, whichever is received
later.69
Allowances & Contingencies

CCI was required to include in the Contract Sum all allowances stated in the Contract Documents.70 Whenever
costs are more than or less than allowances, the Contract Sum shall be adjusted accordingly by Change Order.
The amount of the Change Order shall reflect (1) the difference between actual costs and the allowances under
Section 3.8.2.1 and (2) changes in Contractor’s costs under Section 3.8.2.2.71 This did not occur. GMP 1
Amendment Early Site Package Estimate does not include any allowances and only Contractor’s Contingency of
$152,642 is included. GMP 2 Amendment includes only OSF, Soil Plasticity, and Window Shades allowances.
None of which were used. The contract does not mention an owner’s contingency, only a contractor’s
contingency.
Accounting Records 72
The Construction Manager is required to keep full and detailed records related to the cost of the Work and
exercise such controls as may be necessary for proper financial management under this Contract and to
substantiate all costs incurred. However, CCI has not provided certain documents the District requested, such as
the Daily Job Cost Labor Journal Reports. CCI must preserve records for three years after final payment, or for
such longer period as may be required by law. The District is entitled to audit the books and records of a
contractor or any subcontractor.73
Contractually, all records shall be maintained in accordance with Generally Accepted Accounting Principles
(GAAP), consistently applied. CCI did not follow the principles of Permanence of Methods and Consistency,
which require that consistent procedures and standards are used in the preparation of all financial reports and
69
District’s Procurement Code, Section 45.1.
70
CCI & District General Conditions AIA Document A201 – 2007, Section 3.8.1.
71
CCI & District General Conditions AIA Document A201 – 2007, Section 3.8.2.
72
73
District’s Procurement Code, Section 2220. Right to Audit Records; S.C. Code Ann., Section 11-35-2220.
Page 33 of 40
September 19, 2022
throughout the financial reporting process. The Pay Apps were not consistently prepared and violated the Time
Period principle, as costs were also charged later in incorrect periods.
The Procurement Code states the CPO may require (which the District does through the contract) the
contractor’s accounting system to permit timely development of all necessary cost data in the form required by
the specific contract type contemplated and be adequate to allocate costs in accordance with GAAP.74
CCI Campaign Contributions

We noted the following contributions from CCI to sitting Board Trustees and candidates:
Date Amount Candidate Name Election Date Contributor Name

10.25.2010 $1,000 Edward White 11.2.2010 Contract Construction, Inc.
10.27.2010 $500 Kevin Alberse 11.2.2010 John Farley
10.12.2012 $250 Robert Gantt 11.6.2012 Contract Construction
9.13.2016 $750 Flora Hutchinson 11.8.2016 Contract Construction, Inc.
10.7.2016 $500 Robert Gantt 11.8.2016 Contract Construction, Inc.
10.7.2018 $100 Jan Hammond 11.6.2018 Gregory Hughes
10.11.2018 $100 Ellen Baumgardner 11.6.2018 Gregor Hughes
10.15.2018 $100 Ellen Baumgardner 11.6.2018 Kyle Farley
10.15.2018 $100 Jan Hammond 11.6.2018 Kyle Farley
10.27.2018 $100 Ed White 11.6.2018 Gregory Hughes
10.27.2018 $100 Edward White 11.6.2018 Kyle Farley
10.29.2018 $100 Larry Haltiwanger Sr. 11.6.2018 Gregory Hughes
10.29.2018 $100 Larry Haltiwanger Sr. 11.6.2018 Kyle Farley
8.31.2020 $1,000 Robert Gantt 11.3.2020 Contract Construction
9.11.2020 $1,000 Michael Cates 11.3.2020 Contract Construction
It appears certain contributions listed above may be illegal, as the law prohibits a contractor from making a
campaign contribution to an “official [who] was in a position to act on the contract’s award” after their contract
has been awarded.75 Although there is an exception for competitive bidding contracts, we have found non-
competitive bidding practices in relation to the PWES contract, as listed above. Gantt and Haltiwanger were on
the selection committee on the PWES CM@R contract CCI was then awarded after the contributions.
Additionally, RFP #2019-007 for the PWES CM@R contract, CCI agreed to the Ethics Certificate76 and Restrictions
74
District’s Procurement Code, Section 2020. Approval of Accounting System; S.C. Code Ann., Section 11-35-2020.
75
76
District RFP #2019-007 Section D. ETHICS CERTIFICATE: By submitting an offer, the Offeror certifies that the offeror has
and will comply with, and has not, and will not, induce a person to violate Title 8, Chapter 13 of the South Carolina Code of
Laws, as amended (ethics act). The following statutes require special attention: Section 8-13-700, regarding use of official
position for financial gain; Section 8-13-705, regarding gifts to influence action of public official; Section 8-13-720, regarding
offering money for advice or assistance of public official; Sections 8-13-755 and 8-13-760, regarding restrictions on
employment by former public official; Section 8-13-775, prohibiting public official with economic interests from acting on
Page 34 of 40
September 19, 2022
Applicable to Offerors and Gifts, which prohibits the offeror from giving anything to the Owner, any affiliated
organizations, or the employees, agents, or officials of either, prior to award.77 CCI or its agents made the gifts
above to District officials between the RFP date (8.9.2018) and the contract award (12.22.2018). CCI Principals
Hughes and Farley made contributions to four of the seven Board Members during this time. Trustees
Haltiwanger and White then voted to award CCI’s contract/GMP. Since CCI violated these restrictions, they are
subject to an ethics violation and debarment. The RFP states, “SD5 [the District] may rescind any contract and
recover all amounts expended as a result of any action taken in violation of this provision.”
In relation to CCI’s subcontractor

this also violates the ethics certificate: “If contractor participates, directly or indirectly, in the
evaluation of award of public contracts, including without limitation, change orders….” CCI and Quackenbush
did not submit change orders to the Board for approval as required. By submitting the RFP, CCI also agreed to
the Conflicts of Interest and Related Party provisions.
Procurement Code – Authority to Debar or Suspend; Reporting of Anticompetitive Practices; Dispute Resolution
The question of whether or not there are consequences for potential violations of the District’s Procurement
Code has arisen during our testing. We do see a provision for the District’s Authority to debar or suspend
vendors. Contractors must “have a satisfactory record of integrity. Integrity is the quality of being honest and
fair.”78 As well, the District may need to report to the S.C. Attorney General’s Office because “when any
information or allegations concerning anticompetitive practices among any bidders or offerors, come to the
attention of any employee of the District, immediate notice of the relevant facts shall be transmitted [to the
Office]”. Article 9 of the District’s contract with CCI details Dispute Resolution. There are specific
requirements79 80 81and we encourage the Board to consult with its legal counsel on these matters.
contracts; Section 8-13-790, regarding recovery of kickbacks; Section 8-13-1150, regarding statements to be filed by
consultants; and Section 8-13-1342, regarding restrictions on contributions by contractor to candidate who participated in
awarding of contract. SD5 may rescind any contract and recover all amounts expended as a result of any action taken in
violation of this provision. If contractor participates, directly or indirectly, in the evaluation or award of public contracts,
including without limitation, change orders or task orders regarding a public contract, contractor shall, if required by law to
file such a statement, provide the statement required by Section 8-13-1150 to the procurement officer at the same time
the law requires the statement to be filed.
77
District RFP #2019-007 Section E. RESTRICTIONS APPLICABLE TO OFFERORS & GIFTS: Violation of these restrictions may
result in disqualification of your bid, suspension or debarment, and may constitute a violation of the state Ethics Act. (a)
After issuance of the solicitation, offeror agrees not to discuss this procurement activity in any way with the Owner or its
employees, agents or officials. All communications must be solely with the Procurement Officer. This restriction may be
lifted by express written permission from the Procurement Officer. This restriction expires once a contract has been
formed. (b) Unless otherwise approved in writing by the Procurement Officer, offeror agrees not to give anything to the
Owner, any affiliated organizations, or the employees, agents or officials of either, prior to award. (c) Offeror acknowledges
that the policy of SD5 is that a governmental body should not accept or solicit a gift, directly or indirectly, from a donor if
the governmental body has reason to believe the donor has or is seeking to obtain contractual or other business or financial
relationships with the governmental body. Regulation 19-445.2165(C)broadly defines the term donor.
78
S.C. Code Ann. Regulation 19-445.2125, State’s Standards of Responsibility.
79
District Procurement Code, Section 4220; S.C. Code Ann., Section 11-35-4220.
80
District Procurement Code, Section 2420; S.C. Code Ann., Section 11-35-2420.
81
CCI & District Contract AIA Document A133 – 2009, Article 9, page 16.
Page 35 of 40
September 19, 2022
UNAVAILABLE INFORMATION
The District only recently uploaded emails regarding correspondence with CCI; however, they were incomplete.
We have requested the .pst files for completeness to review these for any other evidence needed. CCI has not
provided all information the District requested. However, this report was required for this September 19, 2022
special meeting. Therefore, this report does not include information not provided timely or completely to JAG
and our report may have been different based on additional information.
RISK ASSESSMENT AND INTERNAL CONTROLS

Effective internal controls require independent and ethical oversight with integrity, accountability, and ongoing
risk assessment in order to provide reliable indicators of an entities’ performance. The U.S. Governmental
Accountability Office, in Section OV1.01 of the Green Book, defines internal control as “a process effected by an
entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives
of an entity will be achieved ...” Without the appropriate design and implementation of these controls, entities
are more susceptible to fraud, waste, and abuse. JAG recommends the District adopt the US GAO Green Book as
the basis for its internal controls, guiding the ongoing development of its policies and procedures. These policies
and procedures need to ensure transparency and risk assessment and monitoring are occurring.
Auditing standards provide that it is the responsibility of management to ensure that agencies have sound internal
structure. Statement of Auditing Standards (SAS) Codification (AU) Section 110, paragraph .03 explains that it is
management's responsibility to adopt sound accounting policies and to establish and maintain internal control
that will, among other things, initiate, authorize, record, process, and report transactions (as well as events and
conditions) consistent with management's assertions embodied in the financial statements. SAS AU 316
paragraph .04 states that "Management, along with those charged with governance, should set the proper tone;
create and maintain a culture of honesty and high ethical standards; and establish appropriate controls to
prevent, deter, and detect fraud. When management and those charged with governance fulfill those
responsibilities, the opportunities to commit fraud can be reduced significantly."
Furthermore, Statement on Auditing Standard AU Section 325 paragraph 3 provides that "internal control is a
process – effected by those charged with governance, management, and other personnel – designed to provide
reasonable assurance about the achievement of the entity's objectives with regard to reliability of financial
reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations."
(Emphasis added). Each agency should evaluate the internal controls by reviewing and testing internal controls
to ensure they are properly designed and implemented. Any violation of law or good accounting practice including
instances of non-compliance or internal control weaknesses must be reported as an audit finding or management
letter recommendation.
We want to emphasize it is vital for the District to perform frequent risk assessments for all financial areas at all
campuses and monitor procedures over its corrective actions, along with accountability for non-compliance, to
prevent, detect, and report situations promptly in the future. District management must then be dedicated to
implementing these safeguards to further secure funds and compliance at the District. The Board of Trustees has
already taken some corrective action with policy changes and directed the Superintendent to implement certain
changes to prevent future fraud, waste, and abuse.
Page 36 of 40
September 19, 2022
RECOMMENDATIONS
Requirements such as laws and controls over compliance with those constraints help to ensure that the people
who operate state and local government and public institutions act honestly, diligently, transparently, fairly,
within the limits of their lawful authority, and with integrity. The key that binds all these strands together is the
concept of rule of law, sometimes referred to as a government of laws, not of men and women. What these
phrases signify is that the people who make and carry out the laws do so according to binding legal principles, not
according to their personal interests and whims. Adherence to the rule of law is necessary for fair decisions by
the government, respect for the government, meaningful voting and public petitions to the government, and the
existence of personal liberties.
We recommend the District’s Board of Trustees, an Audit Committee, an Internal Auditor, Administration,
Department heads, and other staff should assess risk and put into place strong controls and accountability to
prevent and detect any future fraud or non-compliance. It is vital that the culture reported to us of “sweeping
things under the rug” is changed and that high ethical standards are expected and monitored with timely and
strong staff evaluations. The current Board and Administration should continue to change any entitlement or lack
of accountability in the organizational culture. This starts with tone at the top and should include training,
employee evaluations, consequences for violations, rewards for ethical behavior, posting a Fraud Hotline around
the District, implementing an Audit Committee, hiring an Internal Auditor, carefully choosing procurement
committee members, and many other tasks.
District procurement must be free from bias, undue influence, conflicts of interest, personal/family self-interest,
etc. We recommend the District’s Board of Trustees, an Audit Committee, an Internal Auditor, Administration,
Department heads, Procurement Director, the CFO/Certified Procurement Officer (CPO), and other staff should
assess risks surrounding purchases of assets and services and put into place durable internal controls and
accountability to prevent and detect any future fraud or non-compliance. This, along with risks assessments
related to other findings, will require several meetings to go through all the District’s risks and brainstorm
compensating controls. The District may wish to hire a consultant to assist in this complex process.
Written procedures, instructions, and assignments of duties will also prevent or reduce the risk that unauthorized
transactions could occur, funds could be inappropriately accounted for, and transactions could be inaccurately
recorded and reported. The District will need to be forever vigilant in light of these findings. JAG recommends the
District consider the following items to strengthen internal controls over compliance to prevent embezzlement,
fraud, errors, or non-compliance from occurring in the future:
• Communicate from the top down the expectation that employees elevate instances such as this up the
chain of command or even to an anonymous hotline. Without collusion, situations may normally be
alleviated if those who observed red flags had bring the urgency to the Superintendent or another agency,
who could have interceded in the process and initiated discussions with the employees sooner. When
people in authority in the District are not responsive, and even oppose reform, it is many times necessary
to involve third parties as the Board now has.
• Trustees and employees should be trained to report any red flags or hunches that something is not right.
“See something, say something”.
• The Board of Trustees should hire an Internal Auditor. Internal Auditors pay for themselves many times
over with the preventative and detective measures.
Page 37 of 40
September 19, 2022
• The Board should appoint an Audit Committee as an independent check and balance on the District.
Quarterly and surprise audits could be performed, and they could identify/monitor any risks in the District.
• Quality control procedures, perhaps with a checklist, should be created for those preparing and reviewing
work in many transaction cycles and compliance areas, such as procurement. The person performing the
quality control review (someone other than the preparer or approver, independent of the process) will
carefully details and support items.
• There should be strict consequences for not following policies, laws, deadlines, job requirements, and
corrective action plans.
• Document retention and security are vital.
• Procurement is short-staffed, this should be remedied.
• Contract compliance controls must be in place to ensure compliance.
• The District must address the systemic tone at the top issues. This leads to lack of accountability and
higher risks of fraud and errors.
• Key personnel should have annual training in purchasing and procurement, internal controls, reconciling,
safeguarding assets, District policies, oversight regulations, applicable SC State Statutes, District
procedures, accountability, and the consequences for violations. The ramifications for Procurement Code
violations should be communicated to all employees. It is best that the District develop and utilize
handbooks and assist new hires to feel comfortable with their roles, responsibilities, and tasks, including
asking questions and making reforms.
• It is critical to address the reported long standing organizational lack of accountability at the District.
• The District may wish to consult with a consultant for risk management purposes and to implement
stronger controls.
• The Audit Committee should document their purposes, responsibilities, functions, and procedures to
assess risks and monitor the correction of existing deficiencies in the accounting internal controls
environment. We recommend that the Audit Committee remain active throughout the year to increase its
effectiveness. Examples of remaining active include attending finance and ethics trainings, performing
random audits of funds, requesting reports from administration on specific areas with findings or risks,
evaluating internal controls, following up on audit findings and rumors, following up on fraud risks,
addressing rumors or red flags, issuing quarterly internal audit reports, managing risks, etc.
• Board and committee members are principally adept at assessing risks that may exist in the District and
monitoring correction of problems because they are the closest to the people – parents, children, staff,
business owners, and community members – and are accountable to their constituents.
• The District’s administration should monitor that corrective action is being taken and that all risks they
determine are resolved promptly. Setting an ethical and strong tone at the top, followed through with
accountability for staff is critical, as this sets the tone for standard conduct. We recommend freshly
analyzing the internal controls over the District’s accounting and operational processes. They must
address various risks and set up stronger accountability for staff to remain in compliance with District and
oversight agency policies, procedures, laws, and regulations. We recommend strong procedures and
monitoring. An Internal Auditor with the expertise could assist Administration with this process.
• The District should hold employees accountable for their duties and for retaining the documents required
to perform their duties in all government activities and decisions.
• We recommend the Board and Superintendent, as top leaders of this entity, establish a practice for the
identification of risks affecting the District. Mechanisms that should be in place to identify risks applicable
to the District and financial reporting objectives include a) changes in operating, economic, and regulatory
Page 38 of 40
September 19, 2022
environments; b) participation in new programs and activities. The District should consider routine events
or activities that may affect the District’s ability to meet its objectives as well as non-routine events. We
recommend developing forward looking mechanisms to provide early warning of potential risks relevant
to all transaction cycles and preparation of financial statements. Any risks related to the ability to initiate
and process unauthorized transactions, skim cash, submit late or falsified reports, pay related vendors,
not follow procurement, violate the Anti-Donation Clause, misuse District funds, violate the Governmental
Conduct Act, fail to safeguard District records, abuse time off, etc. should be appropriately identified.
• Fraud assessments should be part of the risk identification process. The assessment of fraud risk should
consider incentives and pressures, attitudes, and rationalizations as well as the opportunity to commit
fraud. It should consider risk factors relevant to its activities and to the geographic and political region.
Plans should be implemented to mitigate identified risks and then monitor them.
• We recommend the Board, an Audit Committee, an Internal Auditor, Administration, and all other District
Employees design and implement controls, communicate them to all employees, and then continually
monitor compliance. All purchases should be reviewed using the above criteria. It is vital that employees
and community members are empowered to anonymously report fraud, waste, and abuse (including
constitutional and statutory violations) without fear of retaliation. This may be a cultural change the
District needs. Trainings, accountability, and posting the fraud hotline in numerous places are all
important steps in the right direction.
NEXT STEPS
In Phase III, we will continue to test risk areas, noncompliance, and information being provided. Known areas
are temporary staffing services, 2008 Bond Referendum, and other accounting anomalies. We cannot estimate
a time period, as information to-date has been difficult to obtain, staff have not always been available as
requested, and we do not know ahead of time what violations or risks may be discovered. We will report on the
results of the testing and interviews and provide further recommendations for the District to take corrective
action once all available facts are known.
The District has committed to ensuring that any potential malfeasance is reported to the proper law
enforcement agencies, which may include the Attorney General and the Office of Inspector General and the
Ethics Commission. The District’s Finance Department will develop a Financial Recovery Plan approved by the
Board of Trustees and submitted to SCDE (and perhaps other oversight agencies as necessary). The Financial
Recovery Plan will address the possible recovery of funds as well as process remediation to ensure future vendor
payments are correctly reviewed and authorized prior to payment.
This report is intended solely for the information and use of The Board of Trustees and management of
the School District, its oversight or enforcement agencies, and their designees and is not intended to be
and should not be used by anyone other than these specified parties.
Jaramillo Accounting Group LLC (JAG)

Albuquerque, New Mexico
September 19, 2022
Page 39 of 40
September 19, 2022
DISCLAIMER
We are not lawyers and are not a law enforcement agency or prosecuting officer. We do not have power to subpoena records
or power to subpoena witnesses to testify under oath. We are private accounting firm conducting a specified forensic
consulting services based on information voluntarily provided by the subject of the engagement. Here, the subject of the
consulting procedures has incomplete information due to inadequate controls, documentation, and transparency at the
District. Because we have incomplete information, this letter is intended only to raise potential fraud, waste, and abuse, as
well as potential non-compliance with laws, regulations, and contracts, as well as potential criminal violations in connection
with the financial affairs of the District.
We cannot conclude on the guilt or innocence of any party. We cannot and do not purport to be in a position to establish
beyond reasonable doubt whether such violations occurred. Importantly, these allegations of potential fraud, waste, or
abuse and/or potential violations of criminal statute in connection with financial affairs cover many years and will require
further investigation by the relevant offices and authorities, which may include referral to the “proper prosecuting
officer.” We do not draw legal conclusions here and, instead, raise the matters below for consideration and investigation
by appropriate authorities. Exercising our auditor judgment and erring on the side of transparency and disclosure, we are
identifying these risks to the District so that they can determine appropriate next steps.
Page 40 of 40

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PROCUREMENT EXAMINATION AND CONSULTING

SEPTEMBER 19, 2022

PROCUREMENT OF PWES REAL ESTATE BROKER AND LAND PURCHASE 4

PROCUREMENT OF ARCHITECTURAL DESIGN SERVICES CONTRACTS 5

ETHICS VIOLATIONS AND COMPLAINTS 7

CONTRACT CONSTRUCTION, INC. – PWES CONSTRUCTION MANAGER 12

RISK ASSESSMENT AND INTERNAL CONTROLS 36

PRELIMINARY RESULTS REGARDING

Board of Trustees and

PROCUREMENT OF PWES REAL ESTATE BROKER AND LAND PURCHASE

Broker Campaign Contributions

Date Amount Candidate Election Date Contributor

PWES Land Purchase

PROCUREMENT OF ARCHITECTURAL DESIGN SERVICES CONTRACTS

We noted unusual Quackenbush invoices for “Responses to Board Inquiries” as follows:

Date Invoice # Project Fee Total

Quackenbush Campaign Contributions

Date Amount Candidate Name Election Date Contributor Name

ETHICS VIOLATIONS AND COMPLAINTS

Former Trustee Edward White.

CONTRACT CONSTRUCTION, INC. – PWES CONSTRUCTION MANAGER

an agent just as is the architect or engineer.29

The following summarizes potential questioned costs:

List of Certain Potential Questioned Costs Estimates

Unexplained Use Contingencies & Allowances $ 934,662

Changes in Allowances, Contingencies, GMP, OH&P

PWES CCI GMP Amend 1 Reconciliation Pay App #1

Clear and grub, Earthwork, Erosion Control and Maint,

Preconstruction $50,000 was correctly specified in the contract.36

Subcontractors to CCI on PWES

Conflict of Interest – Rabon Enterprises

Related Party Subcontractor – Owens Cleaning Services, LLC (Owens)

Per District Policy:

The following is Article 7, showing details on changes in work:

Conflict of Interest Subcontractor – Collins & Wright (C&W)

Conflict of Interest – District Employee on Selection Committee

Construction Manager’s Fee, OH&P

Schedule of Values (SOV)

Reconciliation of Overall PWES Construction Contract

CCI Overhead and Profit 3.85% $ 963,020

Guaranteed Maximum Price 1 & 2 $ 26,569,355

Guaranteed Maximum Price 1 & 2 $ 26,569,355

Unexplained Use of Contingencies & Allowances $ (934,662)

Pay App #3 Pay App #26 District

Business License Fees

Other Questioned Costs

Line 15 Superintendent was $256,023 originally and significantly increased to $349,477.50.

CCI Hours by Employee Monthly and OT Charges

Monthly OT Hours Rate per Amount Charged

Charles Broxton 1,418 $ 85.00 $ 120,534

Rates per the contract58 are:

This chart shows the hours by timeframe and employee:

Large balances unbilled

CCI Billed / Unbilled Amounts

LEED/Green Globes Certification Requirements Eliminated

Overtime & Liquidated Damages Provisions Eliminated

Cost to Remove and Replace Unsuitable Soils

Timing of Payments to CCI

Days from Invoice # of Pay

Allowances & Contingencies

CCI Campaign Contributions

Date Amount Candidate Name Election Date Contributor Name