Millions of dollars in questionable Houston water department contracts uncovered by KPRC 2 Investigates

While city water rates increase, this is where your money is going

HOUSTON – KPRC 2 Investigates uncovers millions of dollars in city contracts related to the water department linked to questionable companies.

When we reported what we discovered to Houston Public Works, a spokesperson told us they requested an investigation by the Houston Office of Inspector General.

Since this report was published, HPW announced that “some of these allegations have been substantiated” and an employee is now relieved of duty pending the outcome of the OIG investigation.

Your tax dollars ‘DRAINED’ while so many people are struggling with increasing water rates and sky-high bills.

You probably remember all of the water main breaks gushing for weeks and months all over the city. Hundreds of new leaks a day caused low water pressure from faucets, even from fire hydrants as firefighters tried to put out fires. Mayor Sylvester Turner called it an emergency.

Without enough manpower to repair the lines quickly, Houston Public Works asked City Council to approve emergency contracts worth $80 million this year to pay about a dozen companies to help patch the city water lines.

Council voted unanimously to approve about $47 million on October 3rd.

The summer drought caused water lines to crack and break, leaking water for weeks before workers could make repairs. (Copyright 2023 by KPRC Click2Houston - All rights reserved.)

“Do you now regret that vote?” investigative reporter Amy Davis asked District A Council Member Amy Peck.

“Obviously, having that information would have changed the vote at the time,” Council Member Peck answered.

The information Peck is referring to is what we discovered digging into the background of many of the businesses awarded emergency contracts or EPOs (emergency purchase orders).

Multi-million dollar Contracts awarded to questionable companies

KPRC 2 Investigates confirmed Patrece Lee, a Houston Public Works Project Manager, gave emergency contracts to at least two relatives.

Lu’s Construction and Inspection received a $4.5 million contract. State business filings show the company is owned by Lee’s brother, Andrew Travis Thomas. The company was created on February 23rd, just six months before Council approved the contract. We also discovered the registered business address for Lu’s is the same address Lee has used for multiple other businesses in her name. The address goes to the same box at a UPS Store in Bellaire.

KPRC 2 'DRAINED' Investigation uncovers questionable contracts within the City of Houston water department. (Copyright 2023 by KPRC Click2Houston - All rights reserved.)

KPRC 2 Investigates stopped by Thomas’ home to talk with him about the connection and the contract. When he answered his door just after 10 a.m. on a Tuesday, he confirmed he was Andrew Thomas, the owner of Lu’s Construction.

“I just want to talk about how you happened to get a city of Houston contract for $4.5 million,” Davis said to Thomas.

“Yeah, I can understand, but just it’s not a good time right now,” he replied.

Handing over her business card, Davis asked Thomas, “What we find troubling is that your sister works for the city of Houston. Did she give you that contract?”

Following up with, “What’s your experience fixing water lines and breaks? What gives you the experience to do that?”

Thomas told her, “Like I said, I can give you all that information. I am on a call right now.”

Thomas took Davis’ phone number and promised to call when he wasn’t busy.

When Davis called Patrece Lee, the woman hung up when Davis told her she was outside of her brother Thomas’ home.

We wanted to ask Lee about other questionable contracts she handed out, like the $3.6 million contract awarded to Space City Environmental, owned by Lee’s ex-brother and sister-in-law.

No one was at the Sugar Land office listed as the registered address for Space City Environmental and the business number property management gave us was out of order.

We did find another phone number for co-owner Conetta Hilliard. When she returned our call, she did admit Patrece Lee was married to her brother many years ago and that Lee was her point of contact for the city contract.

Hilliard said her company has had many city and other government contracts in prior years. When we asked what proof she had to provide the city of her company’s work history, specifically with water line repairs, she said she has never been asked to show or explain what experience Space City Environmental has in any government contract it has been awarded.

Hilliard told us she would reach out to some prior cities and businesses she has worked under in the past to ask if they would vouch for her, but we did not hear back from her before our broadcast.

water contracts amy drained (Copyright 2023 by KPRC Click2Houston - All rights reserved.)

C & J Arsenal Construction had only existed for about 6 weeks when city council approved a $3 million contract for an emergency waterline repair on Oct. 3rd. Their Rosenberg address on C & J’s business filing goes to a house whose homeowners were less than thrilled to see Davis.

“We don’t know nothing,” an older couple told Davis when she showed them the filing from the Secretary of State, listing their address. They lowered their garage door as she tried to get more information.

Frank Perkins, Jr., the owner of CST Connections, told Davis that Patrece Lee was his point of contact for the $3.9 million contract he received. Perkins explained that CST Connections is a staffing company that specializes in placing admins and data entry personnel where they are needed. For the nine-month contract, Perkins said he had provided about 12 to 13 data entry employees to the City of Houston to help process work orders.

City not releasing documents related to contracts

The city is now withholding all documents we requested through a public information request. An HPW employee first claimed it had no responsive documents when we asked for “bid tabulation sheets that show the payouts and the price of each individual repair & inspection of the repairs” for each of the EPO contractors.

When we modified our request, asking for all documents relating to the contractors, HPW said they would be ready by November 17th. A week later, they said they were asking the Attorney General whether they had to release the records.

KPRC 2 'DRAINED' Investigation uncovers questionable contracts within the City of Houston water department. (Copyright 2023 by KPRC Click2Houston - All rights reserved.)

Related: DRAINED investigative series leads to thousands in refunds

Contracts approved under emergency purchase orders like these don’t have to go through a competitive bidding process. It’s more of a “Hurry up and find people to help now” problem.

Related: Documenting one year of bad billing for Houston water customers

When we asked Public Works who found these newbie companies, they sent us the following statement.

“The City utilizes contractors who previously provided quality work, having already gone through a competitive process, or contractors whose work is verified and can mobilize quickly.”

Officials wouldn’t tell us who verified the work history of the companies.

KPRC 2 Investigates Amy Davis talking with Council Member Peck about city water contracts. (Copyright 2023 by KPRC Click2Houston - All rights reserved.)

Council Member Peck told us she assumed the companies were vetted by the city before they were presented to the council for approval.

“Yeah, and usually they are vetted. And so, there’s some level of confidence there that it’s a reputable company and it’s been vetted and usually that’s the case,” she said.

Related: Houston leaders promise change, accountability after DRAINED customers take over council meeting

When we asked Houston Public Works Director Carol Haddock what she would do about Patrece Lee and the questionable contracts pending the OIG investigation, an HPW spokesperson emailedWe received your question and will follow up with you once we have an update.”

District D Council Member Dr. Carolyn Evans-Shabazz told Davis, “Stop... just as if the contractors- stop! Don’t continue to pay people if there’s something questionable going on in how they are doing business.”

“I think it should be paused, definitely until the investigation is done,” said Peck. “But that is really a decision for at this point, the Mayor and Houston Public Works.”

Houston Mayor refuses to answer questions from Investigator Amy Davis about the KPRC 2 'DRAINED' Investigation. Amy has asked repeatedly to meet with the Mayor. (Copyright 2023 by KPRC Click2Houston - All rights reserved.)

Mayor Turner and Houston Public Works Director Carol Haddock refused to talk with KPRC 2 Investigates.

On Wednesday, the Mayor held a public press conference. Davis waited until it was over to ask him about the contracts.

“You are very rude!” the Mayor told Davis. “You are very rude. I will talk to your General Manager.”

The mayor still hasn’t called KPRC 2 General Manager Phil Lane.

We do know Lee is still on the job and working. City Council has approved more than $80 million in emergency waterline repairs this year, compared to $33 million in all of 2022.

RELATED: Do you need help with a water bill issue? Check out the many ‘DRAINED’ stories we have done to see if you can find the help you need there.

About the Authors:

Passionate consumer advocate, mom of 3, addicted to coffee, hairspray and pastries.

Award-winning TV producer and content creator. My goal as a journalist is to help people. Faith and family motivate me. Running keeps me sane.