Federal funding agency Rural Development has informed the Carroll County Public Service Authority that a conflict of interest may exist with the Fancy Gap Water and Sewer Project and will discontinue funding for the project until the matter is resolved.
In a letter sent to the Carroll PSA dated April 16, Rural Development Area Specialist Travis Jackson stated that Rural Development will not disburse any more funds for inspection services relating to the project until a satisfactory response is received from the PSA. Nehemiah Engineering President Jeremy Hendrick said after the meeting the conflict arises from his brother, Joshua Hendrick, working for the company and also serving as one of the county’s board of supervisors.
After hearing a recommendation from county attorney Jim Cornwell, the Carroll County PSA voted Wednesday night to request Commonwealth’s Attorney Nathan Lyons to investigate the matter and to issue an opinion on whether a conflict of an interest exists. In the meantime, the PSA also voted to allow PSA staff to handle inspection services on the project during the transition period until Lyons issues an opinion.
The Carroll County PSA held a special called meeting on the matter Wednesday night. After going into closed session for approximately 70 minutes, the PSA invited Jeremy Hendrick into the closed session. Both parties came out of the closed session 35 minutes later when the issue was discussed in public. At that time, Cornwell noted that Jackson had written a letter to the PSA titled “Conflict of Interest Inquiry for Inspection Services.”
In the letter, Jackson wrote that it had come to the attention of Rural Development that “there may be a conflict of interest in the administration of inspection services funded by Rural Development.” Cornwell then read a section of code titled “RUS Instruction 1780.70” from the letter that states ‘No employee or agent of the owner shall participate in the selection, award, or administration of a contract supported by Agency funds if a conflict of interest, real or apparent, would be involved.’
“Any conflict of interest as described in 1780.70 must immediately desist. Rural Development funds shall not be used or disbursed to fund any contract where there is a conflict of interest, ‘real or apparent,’” Jackson writes in the letter. “Rural Development will not disburse any funds for inspection services until a satisfactory response has been received from the Public Service Authority. Please provide a response within seven days of the receipt of this letter as to whether the PSA has determined that there is a conflict of interest and what action will be taken to correct the situation, if there is a conflict of interest.”
After reading the letter, Cornwell recommended the PSA request Carroll County Commonwealth’s Attorney Nathan Lyons investigate the issue relating to the possible conflict of interest matters involving inspection services. He added that he would recommend that during the investigation that inspection services be transitioned to the PSA staff.
“And once the issue is resolved you can request the inspection service provider be put back on the job,” Cornwell said. “We’ve talked to the inspection service provider and he is ready, willing and able to cooperate fully because he believes there is no conflict of interest.”
At that time, PSA member David Hutchins made a motion for the Authority to request Lyons to perform the investigation and to provide the information back to the PSA so it could forward his findings to Rural Development. His motion also included for the inspection services to be provided by the county during the time of transition. Authority Member Sam Dickson seconded the motion, which passed unanimously.
After the meeting, Jeremy Hendrick said Nehemiah Engineering hoped for a quick resolution to the issue and that the company would work with the PSA on the transition until the Commonwealth’s Attorney makes a decision. Hendrick said he felt confident there would be no finding of a conflict of interest because he said the company consulted with several attorneys about the matter prior to Joshua Hendrick’s election to the board of supervisors in November of last year.
“I can tell you we talked with several attorneys prior to November, prior to Josh being in the election. This contract was put in place before the new board ever took effect. So it wasn’t a conflict because of that,” Jeremy Hendrick said. “Josh had already made the decision not to serve on the PSA board before we were ever awarded this contract. When he won the primary (in May of 2011) he had already determined if he won the November election he was not going to serve on the PSA just because he feels there is a checks and balances by having someone on that board other than himself. And so of course when his contract came up he consulted attorneys and they told us there was no conflict. So now we will just have to wait on a ruling from the Commonwealth’s Attorney.”
Hendrick said Nehemiah Engineering would work with the Commonwealth’s Attorney on the matter, adding that the company hopes for a quick decision.
“We just hope it is not a long process,” he said. “We will work with PSA staff on the transition but hopefully we will have a ruling very quick to where that isn’t much of a transition.”