What’s happened recently on planned infrastructure projects in Massachusetts and Texas are examples of how trust in public works can erode—a bad sign when need for public works is so high now.
In Massachusetts, some members of a team seeking to win a contract to rebuild and operate 18 state highway service plaza seemed not to take seriously rules of public works procurement limiting unauthorized contact between contract contenders and awarding agencies during an active competition. After losing the award, the unsuccessful service plaza developer sued and forced release of e-mail and text messages exchanged between the Massachusetts Dept. of Transportation and the winning contract team, developer Applegreen and its design-build partner, Suffolk Construction.
Nothing in the emails between a state DOT contracting official and Applegreen and Suffolk executives suggests any illegal quid pro quo or offer of favors, the companies contended. Their executives, including Suffolk CEO John Fish, strenuously denied offering anything of value to the agency development officer, with whom the contractor had worked on a recent building project.
But the Applegreen team and especially the state DOT development official seemed unaware of, or indifferent to, the perception of their numerous casual communications on various matters during the competition. As the communications were made public, the agency was negotiating with Applegreen, which then declined to continue. The text and email messages conveyed the impression of closer than arms-length relationships. The professional friendships may have been genuine but were exercised inappropriately during what is supposed to be an unbiased selection process based on what you know, not who you know. This is what the public expects, to preserve the integrity and appearance of incorruptibility in spending tax dollars.
The entire matter may taint future use of evolving procurement processes, empowering critics who believe that only traditional bidding based on lowest price is the bulwark against favoritism and rigged selections.
Design-Build Wrongly Targeted
In the Texas case, the Corpus Christi city council recently halted a progressive design-build procurement for a desalination plant, cancelling a cost-reimbursable contract awarded to contractor Kiewit in learning that the construction price could be $1.2 billion. Progressive design-build, by its nature, is a gradual business of identifying work packages and prices. The project needed to be expedited to address Corpus Christi’s looming water supply crisis and to refine the contractor’s workforce need, with bid preparation involving more than 100 of its staff members.
But one city council member, saying he was blindsided by the huge cost estimate, said, “Whoever picked design-build, they screwed up,” claiming it allowed the designer-contractor to «charge whatever it wants.»
Other council members, as well as Corpus Christi’s mayor and the city owned water utility, communicated an apparent understanding that inflation, as well as city decisions on plant location and increased capacity, all contributed to its higher cost. One member, with a clearly more informed and realistic outlook, noted ironically that, at least, the plant is not projected to cost $1.5 billion. What is hardly believable is the degree of ignorance or misunderstanding of cost impact realities by council members who voted to back out of the project and Kiewit’s contract.
While the Corpus Christi city council now plans to reconsider the desalination option at a Nov. 18 meeting, hearing details from a proposal by the second-ranked team in its original procurement, it is critical that the new contender clearly outlines its design-build strategy benefits and costs, and that council members absolutely understand how these apply to the complex facility they seek to build.
Design-build in Texas is not new. All of those voting to spend public money on a new water supply project to meet a critical city need must gain details needed to defend the approach they select, and that those who seek to win a new contract must be sure the client team fully understands the pros and cons, at the risk of their company financial health and reputations.
