City officials said they withheld payments because its pool vendor did not perform its contractual obligations
TRENTON -- City officials on Friday pushed back against claims made by its pool vendor, saying that the decision to sever ties had nothing to do with its ability to pay.
Instead, they say, it had everything to do with USA Management breaching its contract and failing to deliver on its promised bid.
"The city never had any financial difficulty. This was never about financial difficulties," city spokesman Michael Walker said. "This was about performance of the contract, safety of city residents who are using the pools and our fiduciary responsibility to taxpayers. ... We expected them to deliver what they promised within the scope of services in the bid and they did not do that."
Tensions between the city and USA Management surfaced this week after a late payment prompted the lifeguards to walk off the job Wednesday afternoon over concerns that they would not be paid on time.
Both said that they had intentions to cut ties before going into a 1 p.m. conference call Thursday.
Following that call, USA Management cited a risk of nonpayment as the reason behind its decision to pull out of its contract. The city, meanwhile, put out its own statement, saying that it informed USA Management that it would be recommending to City Council that the company's contract be terminated.
On Thursday night, City Council unanimously voted to terminate the contract and award an emergency contract to YMCA of Trenton, the only other vendor who had submitted a bid.
Last month, Georgia-based USA Management was awarded the $185,188 contract to operate the city's four public pools. Its bid cost was $71,299 less than the YMCA's proposal.
"After they were awarded the contract, they started charging us for things that should have been included in the price they gave us," Walker said.
In its notice of intent to terminate, the city laid out four major concerns: lifeguard-to-swimmer ratios, the company's attempt to charge residents for swim lessons, its refusal to withhold state and federal withholding taxes and its failure to drug test its lifeguards in a timely manner, which caused the pools to open two days late on June 29.
The city's business administrator, Terry McEwen, said Friday that it came to his attention in late June that parts of the bid weren't being followed.
The city requires that there be one lifeguard for every 60 swimmers, or four per shift. But despite assurances that USA Management would provide that number, the city later learned that USA only planned to staff the pools with two lifeguards per shift.
In email exchanges between USA Management's Alison Abbott and Fiah Gussin, the city's recreation director, Abbott said the company follows the national standard based on square footage and that the extra lifeguards would cost an additional $77,540.
"We are willing to accommodate your request if you would like the additional zones and hours for the costs," Abbott wrote in a June 20 email.
A July 6 email explains that USA Management instead chose to allocate the money that would have been spent on security toward the extra lifeguards. In total, another $13,037 would have added to the bid cost, making it $198,225.
"It's not fair to the city to have the awarded bidder start to increase the pricing to the city because that incurs an additional cost to our taxpayers that wasn't put into the process," McEwen said.
The city also says USA Management failed to disclose in its proposal that it planned to charge residents for swim lessons.
"That was supposed to be a free service," McEwen said. "That's something that we were not going to allow."
He said the city also took issue with the fact that USA Management classifies its seasonal workers as independent contractors, meaning that taxes are not withheld from their paychecks.
The city's bid, however, required that the vendor be "responsible for the payment of all employment taxes and social security taxes related to the employment of said personnel." In a July 8 email, Abbott said it would be in the lifeguards' best interest to receive 100 percent of their money.
"As a company we are able to pay team members with a W-9 vs government agencies which is part of the attraction for governments to use private companies," she wrote. "We reduce costs and risks for you as well."
In its termination letter, the city said that, all told, it had to incur at least $58,523.40 in additional costs because of the company's "mismanagement."
McEwen and Walker said that the city decided to withhold its July 8 payment of $41,790 because of the contract deficiencies. They wired the money Wednesday night and Thursday morning only because USA Management said the pools would remain closed until a payment was made.
"Our residents depend on the pools and we wanted to make sure that operation of the pools was uninterrupted," Walker said.
Asked why the city did not terminate the contract when the problems first cropped up, McEwen said they wanted to try to work it out.
"They already said yes they could do all these things, so now you're trying to hold them to their word that they can do these things at the cost that they had put in the bid," he said. "A few weeks into it, you find out that they're not, you have to cancel it."
Elle Anderson, a spokeswoman with USA Management, said Friday that there were some discrepancies that its contracting department had been working out with the city, but that it had nothing to do with the way they bid it.
"It has everything to do with the city changing after they selected USA Management as the contractor," she said. "They had no problems with the job that was being done. This was all caused because they didn't pay their bill and the guards walked off because of an internal communication."
USA Management will continue to be the vendor through the end of the month. The YMCA's $158,560 contract will run from Aug. 1 through Sept. 12.
Cristina Rojas may be reached at crojas@njadvancemedia.com. Follow her on Twitter @CristinaRojasTT. Find NJ.com on Facebook.