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Report: JV Withheld Info for $1.5B KCI Bid

Monday, October 21, 2019

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According to a report by the Kansas City Star, the winning bidder of Missouri’s $1.5 billion Kansas City International Airport Project, Edgemoor Infrastructure and Real Estate, failed to disclose that one of its contractors has had a history of fines, court penalties and missed timelines.

Edgemoor won the project after a long and arduous bidding process that called into question the company’s plans multiple times.

The Saga: The Beginning

Back in 2017, developer Edgemoor was awarded the bid after nudging out firms AECOM, Jones Lang LaSalle and Burns & McDonnell.

In the beginning, some took issue with the project proposed as a no-bid contract by Burns & McDonnell, a local firm, leading to a public outcry when the bidding was opened up. In addition, several airlines that fly out of the airport came out in support of Burns & McDonnell, though they did add that they’d be willing to work with any of the four teams that had bid on the project.

Images: Edgemoor

According to a report by the Kansas City Star, the winning bidder of Missouri’s $1.5 billion Kansas City International Airport Project, Edgemoor Infrastructure and Real Estate, failed to disclose that one of its contractors has had a history of fines, court penalties and missed timelines.

Another glitch was that the bidding process was handled differently by each company, with some releasing financial information and design renderings publicly. Others also publicly criticized the process.

According to the Star, Karl Reichelt, an AECOM Capital senior manager, had said that the committee’s follow-up questions to bidders were “moving the goalposts” and allowing other competitors to alter proposals.

Burns & McDonnell held rallies and alleged conflict of interest, going so far as to say within recent weeks that the process should start over.

In the end, the selection committee said it recommended Edgemoor because of terminal project experience and finances, but also because the company kept a low profile.

The Saga: More Drama

Then, in December 2017, the Kansas City Council rejected the original memorandum of understanding with Edgemoor, with members posing concerns about the agreement’s vague terms and insufficient community benefits, but a questionable provision that put the city on the hook for up to $30 million, even if the deal never closes.

When it came to light that the council was questioning the MOU, AECOM and Burns & McDonnell announced that they had teamed up and were waiting to step in if the council decided to completely scrap the deal with Edgemoor.

However, the council and Edgemoor came to a revised agreement in February 2018, which included a more robust description of community benefits, such as free or subsidized transportation options and licensed child care for workers. It also added contributions to several charitable organizations, detailed an apprenticeship program and made commitments to hiring minority- and women-owned businesses.

Costs of the project had been rising since its inception, and in November 2018, officials released new estimates, putting the price of the project as a whole at nearly $2 billion, which includes about $400 million in finance costs.

Costs of the project had been rising since its inception, and in November 2018, officials released new estimates, putting the price of the project as a whole at nearly $2 billion, which includes about $400 million in finance costs.

Geoffrey Stricker, managing partner for terminal developer Edgemoor, told the Star at the time that the ballooning costs were because the airlines (who are financing the project) have requested four additional gates, more parking for airplanes and larger gate holding areas.

The Saga: The End?

By the end of January of this year, developer drama was still continuing, with three members of the council—Scott Wagner, Teresa Loar and Lee Barnes—reportedly asking a consortium, KCI Partnership, which was led by AECOM, for an updated financial proposal, highlighting how divided the council members were on the project in the first place.

AECOM claimed it could save the project $1.113 billion. The council did not entertain the idea of switching developers, however.

By March, a ceremony was held for the groundbreaking where the projected 1 million-square-foot project is expected to generate up to 5,000 jobs.

In August, Edgemoor, along with architect SOM released updated renderings and a construction update. News outlet 41-KSHB Kansas City reports that more than 60 local firms—including 41 minority- or women-owned businesses—are on the docket to participate in the project. Many of those companies are listed on the expanded BuildKCI.com.

Officials also note that the design will incorporate materials that are “unique to Kansas City,” and will include wood ceilings and stone walls.

What Now

According to the report, Edgemoor did not disclose that the Weitz Company, one of three contractors on the docket to help manage the project, has been in a slew of legal trouble in various past projects.

The Star reports that, since 2015 more than 30 former subcontractors have filed liens for payment against three separate Weitz projects.

According to the report, Edgemoor did not disclose that the Weitz Company, one of three contractors on the docket to help manage the project, has been in a slew of legal trouble in various past projects.

And, in 2006 and 2007, Weitz was fired from two separate projects with Denver-based developer MacKenzie House because of months-long delays, poor quality construction and inadequate supervision and payment of its subcontractors. Weitz sued over its firing and MacKenzie counter-sued on one of the projects and won nearly $5 million. Weitz did win the other suit, winning about $980,000.

When confronted with the omission, Edgemoor’s managing director Geoff Stricker said in a statement that Edgemoor answered the history question for itself as the bidder, not for the entire team, and pointed to Edgemoor’s lack of prior penalties. He did acknowledge that he was aware of the issues.

Weitz’s executive vice president and general manager, Mike Tousley, said in a statement to the Star that the firm would “not discuss business related to private projects or disclose information related to legal matters.”

City Manager Troy Schulte said that the city should have done the due diligence and asked about penalties or the whole team, and noted that if Weitz was in a general contractor role, previous complaints about its jobs in the city would concern him, but noted that Weitz is in more of a management role and the high-profile project is being watched very closely.

“If there are issues, we’ll know about them early,” Schulte said. “... Obviously if there’s enough issues in (Weitz’s) background, that, to me, would be a potential disqualifier, and that decision is made jointly by the Aviation Department, Edgemoor and the airlines.”

Construction is still aiming to be completed by spring 2023 ahead of the NFL draft, which is slated to take place in Kansas City in April of that year.

   

Tagged categories: Airports; Bidding; Contract awards; Good Technical Practice; Laws and litigation; NA; North America; Ongoing projects

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