Charleston County said it spent $30M on recycling center. The real cost was millions more.

When Charleston County cut the ribbon on its new $30 million recycling center last year, members of the County Council hailed it as a generational investment in green waste management.

The ribbon-cutting also marked the end of a yearslong construction saga dating to 2016. But documents received from the county under a Freedom of Information Act request also show the ultimate cost of the project was millions more than the county disclosed. 

The reasons behind the cost overrun are complex. A former county employee overseeing Charleston's solid waste management program said he decided during the design phase of the project to downsize the Material Recovery Facility, or MRF, because the budget set for the building wasn't big enough. But County Council members claim they only became aware of this design change more than a year later, and decided they wanted to make the complex larger again. The fix meant Charleston County spent roughly $7.7 million on work done by two initial contractors that were later abandoned.

This wasted work that cost millions of dollars included custom equipment that was never delivered, a building design that was scrapped and a concrete pad and foundations that were partially ripped out after the eventual building's size and orientation were changed. 

That's on top of the roughly $30 million that the county said the facility cost at its grand opening last December.

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In addition, council started vetting new contractors for the project while the first two contracts were still open, documents show, raising questions about the legality of the procurement process it used. And when the final companies for the building and sorting equipment were selected, the votes by County Council only vaguely referenced discussions that had happened behind closed doors and didn't name the new companies.

The switch left the county at risk of being sued. One vendor it dropped accused county officials of breaking their own procurement code, according to the public documents.

Meanwhile, county officials insist they followed their own rules. A county spokeswoman referenced a section of the procurement code that gives County Council wide latitude in selecting vendors without publicly asking for bids. And County Council Chairman Teddie Pryor, when asked whether the process to select the new contractors was proper, said, "We followed procurement. That's all I'm going to say."

Pryor deferred all other questions about the recycling center to the county's solid waste consultant, Mitch Kessler.

Kessler said Council "took an action to direct it to be done (without a public bid process), because of how disappointed they were in how long this was taking, and the results to date." When Council eventually picked a new construction contractor, work on the site had been paused for a year.

The green dream

A new recycling center was a years-long goal for former Charleston County Councilwoman Colleen Condon, originally elected in 2005. During her tenure, collection of "single-stream" recyclables began with blue rolling carts at individual homes. The county also decided to build the new material recovery facility to replace the outdated one on Romney Street on the Charleston peninsula.

"The vision for the MRF was to be able to really have effective recycling that was scalable, so it could be a smaller size and serve Charleston County, or scale bigger and be able to do Dorchester, Berkeley and other counties," Condon said. 

By the time Condon left county government at the end of 2016, all the pieces seemed to be in place.

After years of searching for a site, the county secured a North Charleston parcel along Palmetto Commerce Parkway. It awarded a contract to Mashburn Construction, which is based in South Carolina, for the building design and construction, after a public request for proposals. The custom equipment contract was awarded to Machinex Technologies, Inc., the U.S. arm of a Quebec-based company.

Also in 2016, the county hired Andrew Quigley to lead its Environmental Management department. The original scope of work called for almost 70,000 square feet for the sorting center, an education center and staff offices, according to the request for proposal. But Quigley said the planned building was too big to meet budget.

Quigley's past experience working in solid waste for communities in Virginia, Illinois and Arizona also convinced him the MRF would work in a smaller building. As long as it had a 25 ton-an-hour sorting system, he said, the facility could run two shifts a day and easily accept material from outside the county.

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So he directed his staff to have Mashburn scale down the building, decided the fleet of collection trucks would not move to the new site, and tried to have Environmental Management offices placed at the main county building off Leeds Avenue instead of at the MRF. Quigley insists others were aware of what he was doing, and that he reported on his progress to council and his supervisors. 

"No one told me, 'Andy, don't do that,'" Quigley said. 

Council members reached for this article said they did not recall Quigley telling them that the building was being shrunk.

With a slimmed-down design, Mashburn broke ground in May 2017. The Post and Courier reported then the budget was $24 million, and that the facility would open in 2018. The newspaper also reported a smaller footprint than the original RFP called for: about 57,000 square feet.

A representative of Mashburn declined to comment for this story.

Bumps in the road

The problems that came next have been reported before: By that autumn, Mashburn found problematic soils on the site that wouldn't support its planned foundation. That led to significant delays and the excavation of 4,000 cubic feet of soil. 

In the meantime, there was a quieter bump in the road. Quigley abruptly resigned his job and left the county officially in February 2018. He said he left because Kessler, the outside consultant, had been rehired without Quigley's knowledge.

"I was just flummoxed about why Kessler needed to come back," Quigley said. "I didn't need him back. I didn't want him back." The unannounced hire was enough to tell Quigley, he said, that the county didn't value his expertise.

Kessler's 2018 contract, which was provided through the FOIA request, indicated his firm would analyze the county's arrangement with Horry County, where it was shipping recyclables while the MRF was completed. The arrangement was a costly one, and roughly a third of the material trucked there was deemed too contaminated, and trucked back.

By March, Kessler's firm was also reviewing the status of the MRF project, according the invoice his company sent the county. And in an April committee meeting, Councilman Brantley Moody told his colleagues that he'd recently discovered the project was inconsistent with "the council's stated philosophies," and that they needed to go into closed session to discuss it.

Moody, who chaired the council's Environmental Management Committee from 2018 until the beginning of this year, did not agree to a phone interview after multiple requests. In a brief emailed statement touting the MRF that was eventually built, he wrote, "It was a long road to get here, but we now have one of the most efficient recycling facilities in the Southeast."

Examining options

Documents show the county and its consultants tried over the next year to move Mashburn and Machinex's plans closer to the original plan: a bigger building that would also centralize the collections fleet and Environmental Management offices.  

But as early as October 2018, another design-build firm, Freese Johnson, sent in a conceptual proposal for a larger building, according to documents received from the county. Kessler said in an interview that county staff selected a group of design-build contractors and asked them for proposals, instead of publicly advertising another bid solicitation. 

Machinex, meanwhile, had already manufactured 70 percent of the equipment for the smaller building before the county told them to stop. While continuing to negotiate with Machinex for a more state-of-the-art system, Kessler's firm also contacted a handful of sorting equipment manufacturers for their proposals.

"Council then wanted, appropriately, to look at, well, is that the best and right company for us?" Kessler said. "It wasn't like 'Hey, I'm giving it to my uncle who makes MRF equipment in, you know, Tennessee. These were all leading, national, reputable firms."

The county is still taking Kessler's advice, as his firm advises it on how to find private contractors for everything from compost to landfill management. Invoices received in the FOIA response showed from the time Kessler Consulting got its contract at the beginning of 2018 to the point the MRF opened in late 2020, the firm billed just under $328,000 for its services.

Meanwhile, in 2019, the County struggled to sort the stream of recyclables it was still collecting. Its agreement with Horry County had ended. So Charleston County spent an additional $1.8 million to retrofit the old Romney Street sorting site, which still couldn't keep up with the waste stream. Eventually, the material was sent to RePower South in Berkeley County, which sorted and sold the recyclables, and transformed paper and plastic trash into pellets that are burned for power.

Competition

For Machinex, it wasn't clear until the spring of 2019 that they were being compared to competitors, said Chris Hawn, CEO of the company's U.S. division. It first arose in a late March conference call with former County Attorney Joe Dawson, Hawn said. Dawson, now a federal judge, could not be reached for comment through his court office. 

A few days later, Council started making some key decisions. At an April 4 committee meeting, county staff gave detailed presentations on how the site plan was being adjusted to align with council's original wishes; the square footage of the complex had grown to roughly 85,000 feet. Meanwhile, construction had been halted for roughly the prior year.

But much of the rest of the MRF discussion was held behind closed doors. In that executive session, Dawson presented a comparison of costs between new contractors and the original one. The recommendation, according to a copy of the presentation provided in the FOIA response, was to fire Mashburn and hire Freese Johnson, which had provided a cheaper quote for the new, larger building; and to try and negotiate with Machinex to reduce the cost of an updated sorting system. If that was unsuccessful, Dawson recommended a different firm, Sherbrooke OEM, for the sorting machines.

Former County Councilman Vic Rawl said it was appropriate for the discussions of new contractors to be held behind closed doors. 

"We had to know what our alternatives were. So you don't get into discussing alternatives to a contract that's in existence, when you're likely to be sued by that contractor, until you go the full route of trying to allow him or her to fix it," Rawl said. "Therefore, it is not public information yet."

But Rawl conceded he was always uneasy with Dawson's involvement in the county's solid waste program; the county attorney ran that program before Quigley was hired, and re-engaged in the work after Quigley left. 

It left a gray area in whether Dawson was presenting in closed sessions as lawyer or recycling manager, and also meant he could have been named in a lawsuit if the county was sued by a contractor, Rawl said. "He could not really wear the two hats appropriately," Rawl added.

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Even when council members came out of closed session from that April 2019 committee meeting, they didn't name the companies they would use. Committee members only voted on a motion "to authorize staff to implement the construction and equipment contracts discussed in executive session," according to a recording of the meeting. In a full council meeting a few days later, the panel again voted to authorize this without naming the companies involved. 

South Carolina's public officials are allowed to discuss contracts in private. But when the work is awarded, it needs to be plainly announced to the public, said attorney Wesley Peel, who represents contractors at the Bruner & Powell law firm in Columbia. Peel has sued the county before in an unrelated procurement case.

He said it's important to announce not just so the public knows, but to alert other companies who may have competed for the work.

Peel also questioned whether work could be reawarded without a public bid solicitation. The county's procurement code allows for such an award in an emergency, but Peel said that doesn't seem to apply in this case.

Problems that needed to be remedied with the MRF were of the county's own making, Peel said. "There's nothing related to recycling that's going to be an emergency."

Closing out

Charleston County terminated Mashburn's contract "for convenience," meaning both parties negotiated the exit. A closeout contract provided through an FOIA request showed that Mashburn ended up receiving just under $5 million for its work. 

Negotiations with Machinex, on the other hand, soured. They died not with a whimper, but a flurry of legal letters. 

After several months of haggling over the price of an updated system, an attorney for Machinex sent the county a September 2019 letter. It claimed that "Charleston County has not followed its procurement code in soliciting bids for this revised design-build contract and equipment vendor contract … The fact that Charleston County was obviously negotiating with a new equipment contractor while still under contract with Machinex is troubling."

Later the same month, the county inked a contract with Sherbrooke. Its procurement director then drew up a letter claiming Machinex had defaulted on the contract in February 2020. Dawson would try, well into that year, to claw back much of the $2.7 million the company had been paid by the county. Machinex's insurance company denied the claims, and said the county didn't have proof that the equipment manufacturer failed to hold up its side of the contract. 

Hawn said the company considered suing the county over the episode, but there was no guarantee the cost of a suit would be worth it. Suing a public entity could also hurt the company's reputation with other local governments it might seek work from, he said.

"It's a nightmare I'm glad is behind me," Hawn said.

Today, the MRF that two other companies built processes 25 tons an hour for a 10-hour shift four days a week, and a half-shift on Fridays. Facility manager Tim Yohman said commodity prices are bouncing back after markets flagged during the coronavirus pandemic. Glass, the least-valuable commodity, is being used for roads at the landfill, a county spokeswoman said.