City Subcontracting Outreach Program costs taxpayers millions more

2008-08-15 / Business

Commentary by John Temple Ligon Temple@TheColumbiaStar.com

What has already appeared before Columbia City Council, a million- dollar difference between the lowest bidder and the winning bidder in a city construction project, happened last Wednesday, August 6. Again, the second lowest bidder won the deal due to misdocumentation in what used to be called the city's Minority Subcontracting Outreach Program. With a nod to the U.S. Supreme Court, it's now called the (Race and Gender Neutral) Subcontracting Outreach Program, as they say to reporters at City Hall.

According to legal precedent, race and sex cannot be deciding factors in awarding competitively bid public contracts. Long before there was such a practice, back when competitive bidding meant the lowest bid was the winning bid, construction sites all over the country had natural and full diversity in the work force.

The origins of affirmative action had something to do with the argument that like tends to hire like, something similar to like chooses to live among like. An African- American masonry subcontractor, for example, could be expected to hire plenty of African- American bricklayers for the firm's labor force. Hence, let the minority subcontractor win the job even if he failed to submit the lowest bid because he'll bring to the job site African- Americans to diversify the work force.

But it automatically happens without the social engineering and the bid rigging.

In fact, construction sites have always been populated with heavy percentages of minorities. Every contractor in the country has always been in the business of hiring the best people for the least amount of money, race regardless.

The City of Columbia has long practiced affirma- tive action, later known as its Minority Subcontracting Outreach Program, popularly defended as diversity, and now called simply its Subcontracting Outreach Program.

But what are the criteria to make the city's approved list of the underprivileged and the downtrodden and the unfairly cast about beyond any hope of otherwise winning a contract in the evil environs of the private sector?

Once a subcontractor gets on the approved list, and once the general contractors see who is being hired for what reasons, the same subcontractors tend to get hired time and again on city jobs. So, after a short while on the short list, the favored few elevate themselves above the criteria that put them on the list to begin with.

Somehow, the same subcontractor names appear across the board in the bidding. The same subcontractors can be included among different general contractors competitively bidding the same city jobs.

Last December, Trussell Brothers bid $12,058,567 for the city's CIP Project - North Main Street Streetscape, and the lowest bid by Trussell Brothers was almost $1 million dollars less than the second lowest bid. Trussell met the overall 20% goal and scored 80% with the city's Office of Business Opportunities. Trussell successfully slogged through the city's Administrative Policies and Procedures, Section 19- 3 of the Subcontracting Outreach Program. However, Trussell "did not meet the requirements under Section 59 of the Special Provisions of the Contract Documents and Specifications. Specifically, the mandated 10% participation of certified DBEs as set forth in 49 CFR Part 26."

In the end, it means the taxpayers of Columbia are paying almost a million dollars more for the same job, the North Main Street Streetscape. Or maybe it means the second lowest bidder is making a million dollars more on the same job. Expressed either way, the city is getting hit with another million dollars in costs.

Last Wednesday at City Hall, Stephen Strapec of Mainline Contracting (Durham, N.C.) sat in the pews on the third floor. He was invited by city staffers to come down to see his lowest bid for the Columbia Canal Front project officially accepted

by city council. No one told him his lowest bid would not be accepted by city council.

Mainline's bid was $8.8 million, and city council's distributed written material accompanying their decision not to award the job to Mainline said the second lowest bid, the winning bid, was $12.8 million.

Later that day, city staffers said the winning bid by Columbia- based Cherokee Construction, the second lowest, was actually $9.8 million, but there were some soft costs "such as design" and unnamed contingencies that had to be covered in the contract sum of $12.8 million, a $3 million add- on to the winning (second lowest) bid.

The contract documents let out to bid, however, included sheets of design and construction details. The job couldn't be bid without complete design and documentation. Mainline's Strapec wondered: Why pay the contractor for design? And what's the rest of the $3 million for?

Mainline Contracting was expected to file a formal protest with the city before the end of the work week, August 15.

According to the city staffers, even though Mainline Contracting attended the pre- bid conference and appeared fully briefed on the requirements of the city's Subcontracting Outreach Program, Mainline "did not comply with the Subcontracting Outreach Program," as cited by Steve Gantt in a July 22 memo to Columbia City Manager Charles Austin.

In a July 8 memo from John Dooley, the city's director of utilities and engineering, what was ordinarily a 20% targeted participation under the city's Subcontracting Outreach Program became a 30% participation, and Cherokee was identified as the winning contractor with the 30% participation.

Result? At the least, the city pays an extra $1 million, just like the North Main Street Streetscape project. There well could be litigation, like the city's hotel deal that soured. The city is being sued for millions of dollars by the real estate consultant Charles Gary and by the architecture/engineering firm Stevens & Wilkinson, both hired for the canceled city- financed and city- developed convention center headquarters hotel.

The worst of the bottom lines, though, happened a few years ago when the city's convention center was completed on Lincoln Street. It was part of a fully adhered Minority Subcontracting Outreach Program.

The privately developed Columbia Conference Center behind Hampton Automotive was not. It was built along the same time line for about $100 a square foot.

The federal government's National Advocacy Center on Pendleton Street was not. It was built along the same time line for about $100 per square foot.

The convention center on Lincoln Street and its city- directed Minority Subcontracting Outreach Program costs more than $260 per square foot.

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