WThe hat that has happened recently in the acquisition of planned infrastructure projects in Massachusetts and Texas are examples of how confidence in public works can erode, a bad sign when the 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 bay contracts appeared not to take seriously public works procurement rules that limit unauthorized contact between contract candidates and awarding agencies during active competition. After losing the award, the unsuccessful developer of the service plaza sued and forced the release of emails and text messages exchanged between the Massachusetts Department of Transportation and the winning contract team, developer Applegreen and its design partner, Suffolk Construction.
Nothing in the emails between a state DOT procurement official and Applegreen and Suffolk executives suggests anything illegal. what for what or offer of favors, the companies argued. Its executives, including Suffolk CEO John Fish, strongly denied offering anything of value to the agency’s development officer, with whom the contractor had worked on a recent building project.
But Applegreen’s team and especially the state DOT development officer seemed unaware or indifferent to the perception of his many casual communications on various matters during the competition. When the communications became public, the agency was negotiating with Applegreen, which later declined to continue. Texting and e-mail conveyed the impression of closer relationships rather than distance. Professional friendships may have been genuine, but they were improperly exercised during what is supposed to be an impartial selection process based on what you know, not who you know. This is what the public expects, to preserve integrity and the appearance of incorruptibility in spending tax dollars.
The whole issue may taint the future use of evolving procurement processes, empowering critics who believe that traditional lowest-price-only bidding is the bulwark against favoritism and rigged selections.
Misguided design-build
In the case of Corpus Christi, the city recently halted a progressive design-build desalination plant procurement, canceling a reimbursable contract awarded to contractor Kiewit upon learning that the construction price tag could be $1.2 billion. Progressive design-build, by its very nature, is a gradual business of identifying work packages and pricing. The project had to be expedited to deal with Corpus Christi’s water supply crisis and to fine-tune the contractor’s labor needs, with bid preparation involving more than 100 of its staff.
But one council member, who said he was blindsided by the huge cost estimate, said: “Whoever chose design-build, they were fooled”, saying it allowed the designer-contractor to “charge whatever they wanted”.
Other council members, as well as Corpus Christi’s mayor and the city-owned water company, communicated an apparent understanding that inflation, as well as the city’s decisions about the plant’s location and capacity increase, were contributing to its higher cost. One member, with a distinctly more informed and realistic view, wryly noted that at least the plant is not expected to cost $1.5 billion. What is hardly believable is the degree of ignorance or misunderstanding of the realities of the cost impact by the council members who voted to withdraw from the project and the Kiewit contract.
While the Corpus Christi city council plans to reconsider the desalination option at a Nov. 18 meeting, hearing details of a proposal from the second-place team in its original procurement, it’s critical that the new bidder clearly outline its benefits and costs of the design-build strategy, and that council members fully understand how they apply to the complex facility they want to build.
Design-build in Texas is not new, with successes but also some failures. All those voting to spend public money on a new water project to meet a critical city need must get the details necessary to defend the approach they select, and those seeking to win a new contract must ensure the client’s team fully understands the pros and cons, at the risk of their company’s financial health and reputation.
