A community college in southern California hired an at-risk construction manager in 2010 to build a new multiuse building but that company based its proposed fee on a higher construction cost than its top competitor, and no one is sure exactly why.
The contract was awarded to the construction manager whose price proposal was based on the higher amount, $59 million, according to a review report released last month. The runner-up based its fee proposal on an estimated construction cost of $55 million.
Sometimes proposals where price is one of several criteria can allow for flexibility in the estimated cost basis of the fee. “It does happen when they are evaluating based on the intangibles and style of the design,” says an estimator and cost consultant not connected to the project.
But because of a lack of documentation and an ongoing ethics probe at the school, Southwestern College in Chula Vista, Calif., the contract has drawn special attention. The college has since terminated the winning construction manager, the project architect and the school’s business vice president, who led the school’s selection of designers and contractors. Work on the project, a multiuse building to house a conference center, restaurant, bookstore, gallery and other functions, has been called off for now.
On April 11, the college’s trustees voted to file lawsuits against Bunton Clifford Associates Architects Inc., Echo Pacific Construction, the winning construction manager for the Corner Lot, as well as Seville Construction Services, the program manager for the community college district’s bond-funded projects.
Officials of the program manager could not be reached for comment.
A statement from Echo Pacific Construction says it has received no information or notice of a lawsuit and that its termination "for convenience" by the college came without any stated reason after Echo Pacific had "notified the College's board that the project faced delays and administrative concerns" caused by the college. The college hasn't answered Echo Pacific's requests for money it is owed, the contractor says.
Origins of Controversy
The controversy over construction at the school started more than a year ago. After local media reports about pay-to-play practices at the community college school district, Southwestern Community College District hired a consulting firm to review some of its procurement and construction practices related to Proposition R, a bond referendum in which voters were asked to approve funding for the new construction.
The report by Seo Consulting, released March 14, documented numerous questionable practices in connection with the bond-financed construction program and a project known as Corner Lot.
The San Diego County district attorney, Bonnie Dumanis, is investigating the community college construction program. Paul Bunton, a principal of Bunton Clifford Associates Architects Inc., has pleaded guilty to a misdemeanor charge of violating rules of the state's Fair Political Practices Commission and, though a spokesman, says he is cooperating in the investigation.
In essence, Bunton admitted to failing to follow-up to see that gifts given to Southwestern Community College's business vice president, Nicholas Alioto, were properly reported. The gifts to Aliota included dinner and golf outings valued at $2,800.
Norma Hernandez, board president of Southwestern College, said “the board wants to ensure that we are fulfilling our duty to properly safeguard public funds in this project." She noted that the improprieties were brought to the board’s attention in summer 2010 “before a new board was elected,” and that the current board is ensuring transparency an compliance.
According to the review report, the community selected committees for hiring designers and contractors but much of the work was conducted by Alioto.
Of the nineteen firms that submitted proposals to perform design services, Alioto and his staff narrowed the list down to seven architects, who participated in a design competition. When BCA was selected, Alioto negotiated that BCA would be paid a fee of 5.75% of construction costs for the new building on the Corner Lot.
The proposals to perform construction on the Corner Lot came from 17 firms, five of which were selected for interviews: Echo Pacific Construction, Barnhart Balfour-Beatty, C.W. Driver, PCL and Sundt. A selection committee picked Echo Pacific and Barnhart as finalists, according to the report.
Alioto drove a hard bargain, apparently, with the two finalists, and told the report authors that he played the companies off against one another to drive down their prices.
School Official Suggests Joint Venture
According to the report, Alioto first suggested to Barnhart and Echo Pacific officials that the two companies form a joint venture, but the companies declined.
According to a description of the structure on schooldesign.com, the 141,500-sq-ft structure was being designed to cost $388 per square foot.
On June 23, 1010, the companies submitted cost proposals for the Corner Lot based on a $55 million construction cost, substantial completion by August 2012 and daily liquidated damages for late completion.
Barnhart proposed a lump sum fee of $2.09 million, with $258,000 for preconstruction services, 20 months of general conditions at $89,304 a month and $3,000 of liquidated damages per day for late completion.
Echo Pacific proposed $2.42 million, with $292,000 for preconstruction services, 20 months of general conditions at $97,000 a month and $7,500 of liquidated damages a day for late completion.
Alioto, the report said, then told Barnhart that Echo Pacific had lower its fee to 2.5% of construction costs, Barnhart revised its percentage from 3.8% to 3%.
So Barnhart’s proposal was to $1.65 million, with $258,940 for preconstruction services and a fixed fee for general conditions of $1.78 million. The total came to $3.69 million.
Echo Pacific reduced the fee portion of its proposal from 4.4% to 2.5%, but its proposal was based on an estimated construction cost of $59 million. The fee proposal was $1.475 million, with $500,000 for preconstruction service and a fixed fee for general conditions of $2.08 million. The total came to $4.06 million.
Neither Alioto nor Echo Pacific nor BCA Architects could say why Echo Pacific based its construction management fees on construction costs higher than Barnhart’s, says the report.
"The board decided to take a year to revamp the college's educational master plan and create a facilities master plan," says SouthwesternCollege spokeswoman Lillian Leopold. When the college resumes accepting bids for additional bond-funded projects next spring, it will accelerate the construction schedule to complete projects 10 years earlier than originally planned, she adds.