AHHA MOMENTS INC./Jeff Mulligan re: City of Lloydminster Professional Services Agreement
October 8, 2015
This release is in response to the misinformation that has been disseminated in the mainstream media and across social network sites recently regarding the Professional Services Agreement between AHHA MOMENTS INC. and the City of Lloydminster. This agreement was entered into after I tendered my resignation as Mayor.
What seems to have been missed in all the discussions is the simple fact that this agreement set out a structure for terms and rates of hiring my company if, and only if, there was a project to be performed, and then only under a formal Terms of Reference approval process on a project by project basis. If there was no project, or if some other consultant was hired for the project, my company would be paid nothing by the City. If there was a potential project, my company was required to submit a proposed Terms of Reference document for review and approval by the City, including the consulting costs anticipated for that project. The Terms of Reference process was followed for the only project I worked on for the City. I put in a proposal setting out the scope of the project and anticipated costs to perform the work, and that proposal was approved by the City on August 2, 2013. Without that formal project approval, no fees were payable by the City.
As regards the contract termination payment, although the agreement was terminated by the City without notice in the middle of a project, I will waive the termination payment of $120,000 and return this money to the City in recognition of the concerns raised by the Citizens of Lloydminster.
BACKGROUND & OPERATING FRAMEWORK
The Mayor does not appoint the City Manager. The City Manager is appointed by a motion of City Council and each Council Member has a vote. The Mayor did not create the post of Deputy Mayor nor does the Mayor appoint the Deputy Mayor. Council approved the creation of the position of Deputy Mayor and an election for the post was held. As it happened, only one candidate put his name forward and he was, therefore, acclaimed Deputy Mayor.
In July 2013, I indicated to members of my office that I believed I would have to step down. Due to unanticipated, serious health concerns of a member of my immediate family, I needed a more flexible work schedule, requiring less travel and fewer evening commitments. We had by then completed several important initiatives, but we were still in the midst of other important projects.
During the first half of fiscal 2013, before I indicated my intention to step down, City Management were already looking for opportunities to outsource management work to complete pressing projects in a timely manner. Management had expressed concerns to members of Council that they were unable to meet some important project timelines and had not been able to engage suitable consultants for a reasonable fee.
Upon the announcement of my resignation, July 22, 2013, City Management, whose sole responsibility it was to secure resources to complete operational tasks and projects, entered into an agreement with my company to provide consulting services, if needed. This agreement did not commit the City to use my services or to pay any money to my company. Rather, the agreement merely secured preferred pricing for the City and resource availability, should the City ever wish to use our services. It, in no way, bound the City to use our services or pay AHHA MOMENTS INC. any money whatsoever.
DETAILS OF THE AGREEMENT
The agreement was intended to provide maximum flexibility to the City of Lloydminster, while removing any risk to the City. If AHHA MOMENTS INC. had chosen to withdraw its services in the middle of a project, for instance, potentially exposing the City to unforeseen expense, my company would have been bound to provide six months notice or pay $120,000 to the City. Similarly, AHHA MOMENTS INC., having committed itself to have the necessary resources available as needed, at a reduced rate to the City while the agreement was in place, was entitled to six months notice if the City wished to terminate the agreement. If the City failed to provide such notice, it would be liable to pay the same fee in lieu of notice, amounting to $120,000.
A day rate was established at $2,000/day, which was never utilized nor incurred by the City of Lloydminster. A Monthly Retainer Rate, guaranteeing no less than 18 days per month, was the option chosen by the City for the three months of the life of the agreement, which resulted in a daily rate that was much less than the going rate for the work. The City of Lloydminster was afforded price certainty, guaranteed resource availability, but was not required to commit to any usage or fee commitment whatsoever.
The City would only incur costs under the agreement IF, and only IF, management identified a suitable project for AHHA MOMENTS INC. capabilities, we submitted a proposal, and that proposal was accepted by the City as offering good value for the fees that would be incurred. In other words, no contractual commitment, whatsoever, was entered into by the City of Lloydminster to use or pay for the services of AHHA MOMENTS INC.
The City was always free to use any qualified consultant who offered the best value for any project. As it turned out, the City of Lloydminster only assigned one project to AHHA MOMENTS INC., which was well underway, when the agreement was terminated, without notice, and without any reason being provided by the City of Lloydminster in October 2013. The City of Lloydminster had options available to it that would have limited their liability, under the terms of the agreement, but for reasons not disclosed to me the City chose to terminate without notice. The City could have provided notice that the agreement would end in six months and no further work would be allocated to AHHA MOMENTS INC. during the notice period. This would have resulted in absolutely no termination fee being payable.
Instead, the City of Lloydminster chose, without discussion or input from AHHA MOMENTS INC., to verbally advise AHHA MOMENTS INC. of its immediate termination without notice. My company subsequently received a cheque from the City, in accordance with the terms of the agreement, for payment in lieu of notice and I have previously provided full disclosure of all payments made to AHHA MOMENTS INC., in my Letter to the Editor, Lloydminster Source, on December 17, 2013. I appreciate that the circumstances surrounding this agreement have troubled the citizens of Lloydminster. As I respect those concerns, even though the City terminated the agreement mid-project, I will waive the termination payment, and return the $120,000.
There is no doubt, in hindsight, more communication, a mandated cooling period time before former councillors may do business with the City, and a clearly defined community consultation process, would have achieved a more satisfactory outcome. The citizens of Lloydminster have clearly been troubled by the circumstances surrounding the agreement and the payment made to my company upon termination of it without notice. For my part, I am deeply sorry that such concerns have arisen and offer my unqualified apology to the citizens of Lloydminster and to my former colleagues on Council. In my passion to see the City achieve success and my desire to continue to make a positive contribution to its citizens, while better balancing family medical commitments, I simply did not foresee anything like the fallout that has resulted from my entering into this agreement.
We were, and we remain, good people who have contributed significantly to the City of Lloydminster. My only goal was to do whatever I could to help build a community for ourselves and our children we could all be proud of.