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City has hired third parties for dozens of worker complaints



The city and Colorado Springs Utilities apparently have paid nearly $400,000 to outside firms in the last five years to investigate complaints filed by employees, far more than several other Front Range governments combined.

The city refuses to explain why it's spent $197,043 on investigations according to human resources and accounts payable documents, except to say in a prepared statement that, "There are many reasons the City uses an outside agency to investigate employee complaints including, but not limited to, lack of internal resources, the complexity of the claims, and potential conflicts of interest."

As for the nature of the complaints, the city also won't say. But on records obtained through the Colorado Open Records Act, Utilities gives specific reasons for its 32 outside investigations, which cost ratepayers $188,313. They include unequal pay; hostile work environment; sexual harassment; bullying in the workplace; ethics violation; retaliation; intimidation; age, race, gender, and disability discrimination, and violation of policies.

The level and cost of third-party involvement surprised two former Colorado Springs city managers, Jim Mullen and Lorne Kramer. Says Kramer: "I would be asking what's going on in the culture of the organization that results in these kinds of investigations."

Different elsewhere?

Roughly $77,000 a year, on average, spent by the city and Utilities is paltry as compared to their budgets of $373 million and $1.059 billion, respectively. But the money spent to investigate employee claims far outpaces that of other Colorado entities contacted by the Independent (see chart).

For example, Aurora, with 2,600 full-time employees — more than either the city or Utilities — conducted only eight outside investigations at a cost of $27,434 in the last five years.

"We typically handle investigations internally," says its director of internal services, Dan Quillen, via email. "Most 'routine' complaints are handled either by upper management of the department or by our HR division."

It's a similar story closer to home, in El Paso County government. "We attempt to do them in-house whenever we can, and we are equipped to do that, because it's smart, it's fiscally responsible, and we can handle matters much quicker than hiring someone outside and getting them up to speed," County Attorney Amy Folsom says in an interview. "We don't have a formal policy when we go outside, but when something involves a political issue, or a novel or complex employment law issue, then we'll seek assistance of outside counsel."

In Fort Collins, an HR rep is trained to conduct these investigations, says director Janet Miller via email. And In Pueblo, it's been handled by HR, according to director Marisa Pacheco, except on three occasions when "workload did not provide adequate staffing to handle the investigation, there was a perceived conflict of interest with Human Resources' involvement and in one case, an investigation involved an appointed official of the City Council and the council preferred an outside party to handle the inquiry."

So many investigations

The city of Colorado Springs' records of investigations, which ranged from 10 days to more than three months, are confusing. An HR document lists 20 investigations at a cost of $125,023 conducted by Mountain States Employers Council, a 3,000-member nonprofit organization that provides advice on legal, employment, wage and training issues. The city hasn't been billed for three of those, and there's another one for which "the record has no amount," city spokeswoman Kim Melchor says.

In response to a records request, the city also provided an accounts payable log of payments made to Mountain States from 2009 through early August this year, but that totals only $88,174. The record also shows one payment made in July 2009; yet, the HR list of cases contains no cases for 2009. The city refuses to explain either discrepancy.

A 21st city case is reflected in an accounts payable document showing the city paid $72,020 to Denver law firm Kelly, Stacy, and Rita LLC in four payments in late 2011 and early 2012. That firm was hired to investigate wrongful termination and discrimination allegations raised by former finance director Terri Velasquez. Mayor Steve Bach said the investigation found her claims to be baseless, but Velasquez extracted a $250,000 settlement before dropping the case. She now works for the city of Aurora.

In the 29 months leading up to Bach taking office, the HR document indicates the city spent $54,884 on investigations, compared to $142,159 in the 27 months since Bach took office.

The Independent submitted numerous questions in writing, but the city refused to respond regarding how many internal investigations are conducted by HR; why the city has outsourced more investigations in recent years than in prior years; what actions have resulted; who receives the findings; and whether the city sees the number and cost of outside investigations as an indicator of issues with its work force, management or some other element. HR director Mike Sullivan didn't return a phone call seeking an interview.

On the Utilities side, spokesman Steve Berry says outside agencies are hired "when a third-party perspective is critical to fully evaluating the merits of an employee complaint." He adds that consultants "have enabled us to protect customers and their rate dollars by resolving issues away from a courtroom and avoiding much costlier lawsuits."

Asked about the high number of investigations, he notes, "I've also been told that quite a few municipal agencies do not pursue all complaints brought to them. We do."

Councilor Jan Martin, who chairs the Utilities Personnel Committee, called the statistics "interesting" and adds via email, "I will certainly add it to a Personnel Committee agenda in the near future so we can explore the problem and possible solutions."

Seeds of discontent

Jim Mullen, the Springs' city manager from 1996 to 2002, says the high number of expensive investigations could stem from a number of factors, including a "lack of trust between the employer and the employee, a high level of fear and insecurity on the part of the employees and a more legalistic approach by the city management to the problems that arise."

Mullen, who still lives in the area, said employee privacy wouldn't be compromised by the city's release of specific reasons for the investigations. "Failure to reveal this information," he says via email, "is an indication of a cover up of possible mismanagement at the top levels of the government."

Taxpayers also might want to know what action, if any, is triggered by the investigations, he adds. "If no one but the mayor, attorney and possibly the HR department gets any feedback on the investigations, of what values are they to the organization in terms of learning how to avoid future problems?"

Kramer served as Springs police chief for 11 years before being hired as city manager in 2002. During his five years in that role, he recalls authorizing only one outside investigation. He says recent expenses could signal a breakdown of trust between management and employees. Utilities' high number of cases, in particular, he says, "should be cause for alarm."

"If nothing else, somebody should be asking questions: 'What's going on?'" says Kramer, who is now a principal at KRW Associates LLC, which consults on public policy and strategic planning, organizational assessments and headhunter services.

Kramer notes a "huge turnover at the top" could have an impact. First, new supervisors might not have government experience, which could create a handicap in dealing with public-sector personnel rules. (Several top-ranking Springs city officials have no experience in government, including Mayor Steve Bach himself.) Second, he says, changes in workplace culture that lead to disharmony rarely bubble up from the ranks; rather, a change in leadership is usually the culprit.

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