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$1.3M Settlement Reached in CO Bid-Rigging

Friday, April 17, 2020

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In an agreement announced earlier this week, construction company M.A. Mortenson Co. settled with the state of Colorado on charges that alleged bid-rigging on the $233 million Colorado Convention Center project.

Colorado Attorney General Phil Weisner announced the settlement this week for $1.3 million, which will consist of Mortenson paying $650,000 to the Colorado Department of Law and donating construction services for a COVID-19 project valued at $650,000 or more.

What Happened

The city hired local development company Trammell Crow as project manager for the convention center in February 2018, agreeing to pay the firm $9.3 million to oversee the work.

In July, Trammell and the city launched the bidding process for the $200 million contract for the expansion. Three companies—Mortenson Construction, PCL Construction and Hensel Phelps—were shortlisted in October.

arinahabich / Getty Images

In an agreement announced earlier this week, construction company M.A. Mortenson Co. settled with the state of Colorado on charges that alleged bid-rigging on the $233 million Colorado Convention Center project.

The Denver Post reported that shortly after, officials grew suspicious when a city employee noticed a discrepancy in the project’s design: A whole room had been added without authorization, an extra that would’ve tacked on about $4 million.

This launched the initial investigation, and the city announced on Dec. 11 that it had fired Trammell on suspicions that “it had improperly leaked information and even altered plans for the project, potentially to favor a bidder.”

City officials also claim that Mortenson was “implicated” in what they had found.

At the time, both Trammell and Mortenson have released statements saying they are fully cooperating with authorities. Further, in a statement from Mortenson CEO Dan Johnson, the company says that the company found no evidence in its internal investigation of inappropriate communication.

“Thus, in contrast to some erroneous reports, there has been no 'bid-rigging,’” according to the statement. “We have confirmed there were communications, initiated by Trammell Crow's lead representative, with Mortenson team members that clearly were not appropriate when part of a public procurement. Those communications are unacceptable to Mortenson.”

The city of Denver moved forward with soliciting new companies for the project in April 2019.

What Now

“The communications between Mortenson and Trammell Crow were improper and gave Mortenson an unfair advantage in the competitive bidding process for the Colorado Convention Center expansion project. This egregious behavior caused Denver officials to cancel the procurement process and delay the project at significant cost to the City and to the residents of Colorado,” said Weiser.

“Today’s announcement shows we will hold accountable those companies and individuals that undermine the competitive bidding process when they bid for public construction projects and put millions of taxpayer dollars at risk. The silver lining is Coloradans will benefit from additional resources to respond to needs we have from the COVID-19 pandemic in our state.”

As part of the terms, Mortenson will pay all of its own costs of service and construction costs, including building materials and costs of any subcontractor and design services contracted to complete the pandemic-related project.

The company will also cover all change orders that increase the project cost up to 15%.

In addition to the monetary aspects of the settlement, Mortenson is also required to:

  • Establish a comprehensive, internal compliance program and disclose the existence of the agreement when it bids on any public construction projects in Colorado for a period of two years; and
  • Adopt policies in Colorado to encourage Minority and Women-Owned Business Enterprises to work with Mortenson on public projects in Colorado, which includes hosting an informational open house or forum for these businesses to learn about maximizing opportunities in public projects.

On the employee level, all those involved in the alleged bid-rigging must be actively involved in the work or management of the new project. They must also:

  • Make a presentation on ethics and antitrust compliance issues related to public projects to a large construction conference within a year of the effective date of the agreement;
  • Make an annual presentation on ethics and lessons learned from the convention center expansion project at a four-year college or university in Colorado as part of an ethics, corporate social responsibility, or business management program or class; and
  • Enroll and complete the Certificate in Corporate Social Responsibility offered by the University of Colorado Leeds School Of Business within two years.

While Mortenson has agreed to the terms, officials note that the settlement is not an admission of guilt.

"While we have resolved the Colorado Convention Center matter with the Colorado Attorney General without adjudication or finding of liability, our involvement in this matter was neither consistent with who we are as a company nor our longstanding reputation,” Johnson said in a statement. “Simply put, we did not meet our own expectations. Striving to do the right thing means learning from times when we may fall short.

"We are committed to the assurances outlined in our agreement and have made several changes to our compliance and training programs as a result. We will also share the lessons we’ve learned with others in our industry. The most immediate example of how important this relationship is to us is our commitment to the Attorney General that Mortenson will donate construction services support to help Colorado’s efforts to battle the COVID-19 pandemic."

   

Tagged categories: Bidding; Convention Centers; COVID-19; Good Technical Practice; Health Care/Hospitals; Lawsuits; NA; North America

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