Someone in Oakland County violated state law when a private company owned by a county employee received a six-figure contract, according to county executives and a summary of findings from a private law firm’s investigation released on Tuesday, Oct. 21.
But Oakland County executives do not believe criminal charges are needed. Instead, they hope policy changes − including making many employees acknowledge the county’s standards of conduct policy before they can apply for benefits − will prevent similar misconduct in the future.
“Did not believe that there was an intention to defraud, but the ends don’t justify the means,” Oakland County Deputy Executive Sean Carlson said during a committee meeting of the Oakland County Board of Commissioners.
“We should have caught this.”
In July, a whistleblower told county officials a company called ZaydLogix received a $450,000 county contract, despite the owner also working as a county employee. Such a deal is against state law. No county money went to the company as part of the contract, but the fact that it could happen at all raised substantial questions.
Carlson and Oakland County Chief Deputy County Executive Walt Herzig told commissioners during a meeting on Tuesday that the county is still going through the formal process of potentially levying additional punishments against up to four employees in connection with the awarding of the contract to ZaydLogix.
But Commissioner Brendan Johnson, a Democrat representing parts of Auburn Hills and Rochester Hills, seemed surprised the executives did not want to involve law enforcement.
“I’m not an attorney, but this is a pretty black and white violation of state law,” Johnson told the executives.
“That’s great that we can tell all of our employees to have a periodic review of our policies. That’s nice. This is a law.”
Herzig said after taking into account the “totality of the circumstances” and the law firm’s findings, he did not believe a formal referral to law enforcement was necessary.
Broader ethics concerns
The scrutiny comes amid broader concerns about ethical conduct in the county. The Free Press and others revealed Board of Commissioners Chairman Dave Woodward also serves as a private consultant for Sheetz, a gas station and convenience store empire looking to expand in the region. The Free Press also found that Woodward regularly voted on issues directly related to multiple other private, political clients or a business partner.
While a private law firm investigated the ZaydLogix contract situation, County Executive David Coulter called for the commission to adopt what he described as sweeping ethics reform proposals.
Both the private law firm’s findings and the broader ethics policies were discussed at Tuesday’s commission committee meeting.
Carlson and Herzig told commissioners they reviewed the ZaydLogix situation immediately after learning about it this summer, but they thought it was appropriate to ask for outside help. The county eventually hired the law firm Miller, Canfield, Paddock & Stone to conduct an investigation.
The law firm received $17,836 for their work, said Bill Mullan, a Coulter spokesman. The county did not release a report created by the law firm. Instead, the county lawyer, called corporation counsel, issued a four-page document described as a summary of the findings.
Miller, Canfield, Paddock & Stone determined that someone broke the law and county policy. They did not find evidence someone tried to defraud the county, but instead determined county employees took an “outcome over the means” approach in awarding this specific contract: the employee who owns ZaydLogix told others he planned to retire soon, so someone awarding the contract thought by the time he got it, he might not work for the county, according to the law firm findings and county executives.
He still worked for the county when his business got the contract.
“ZaydLogix’s bid was improperly approved without appropriate oversight and without regard for county policy or attention to the details of ZaydLogix’s proposal,” states the county lawyer’s summary of the private law firm’s findings.
“Supervising staff should have recognized a potential or actual conflict of interest existed and should have known not to use ZaydLogix until the employee retired (or at a minimum sought guidance from leadership or the county corporation counsel’s office before doing so).”
Decision landed with IT department
The law firm also reviewed the broader process for awarding IT contracts. Instead of allowing the county’s procurement department to handle outside contractors, the IT department conducted this work internally.
The IT department would put out a broad, nonspecific bid for potential work that could be conducted over a five-year period. This process made a company “prequalified” for possible contracts in the future, Carlson explained. During the five-year timeframe, the IT department could award a contract to one of these prequalified companies faster — but with potentially less oversight — than other contracts.
In this case, the IT department requested bids in June 2024. It received roughly 130, including one from ZaydLogix. The single person who evaluated the bids knew the owner of ZaydLogix worked for the county, according to the law firm report.
Carlson said an employee thought this was fine, since they figured the owner of the company may no longer work for the county by the time ZaydLogix would receive any contract.
That was wrong, Carlson said.
“He still should not have been prequalified. That was an error on IT professionals that had reviewed that. He is a current contract employee,” Carlson said.
Carlson and Herzig outlined county changes either in place or in the works in response to the investigation.
The county already has a policy that every solicitation for bid includes a form requiring a company to discuss if they are or were a county employee, Carlson said. The policy went into place after ZaydLogix submitted its bid, but before the whistleblower contacted executives, he said. The county also recently ensured that any business with an IT contract, or that is prequalified to receive one, filled out the same form.
IT staff are undergoing additional training. And Herzig said before county employees can enroll in benefits this fall, they have to read and acknowledge a copy of the county’s standard of conduct policy.
No ethics code in Oakland
Unlike Wayne County and other municipalities in the state, Oakland County does not have an ethics code. Instead, the one-page standards of conduct policy provides broad guidance and no ramifications for violations.
Carlson said the IT contract ZaydLogix received is going back out for bid in January. It was not immediately clear if ZaydLogix could submit again for the contract, as long as the owner retires from the county by then.
County commissioners also briefly discussed financial disclosure proposals at the end of the committee meeting. The measures would require county commissioners and other high-ranking county officials to disclose more financial information on a regular basis, in an effort “for government to increase transparency, build public trust, and help to prevent conflicts of interest,” states a summary of one proposal.
In addition to financial disclosure requirements, Coulter called for the creation of a county “ombudsman” role, a person who could receive and review ethics referrals from county employees and the public at large. None of the proposals referenced at the meeting on Tuesday included the creation of such a position.
Woodward said that while he is still awaiting guidance from county lawyers on a few issues, he and Coulter’s office hope to have a new disclosure policy in place by the end of the year.
Reach Dave Boucher at dboucher@freepress.com and on X @Dave_Boucher1.
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