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Bid Conflicts Arise at $1.5B MO Airport Project

Thursday, August 6, 2020

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More debate has been raised around Missouri’s $1.5 billion Kansas City International Airport project and the hiring choices made by developer Edgemoor Infrastructure and Real Estate.

The project, which is still on schedule to open in March 2023 and has been largely unphased by the COVID-19 pandemic, has been plagued with political turmoil from the start.

Now, the conflict surrounds the contract for an out-of-state subcontractor and further discrepancies on the hiring of women- and minority-owned businesses.

Project Background: Initial Bidding

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

More debate has been raised around Missouri’s $1.5 billion Kansas City International Airport project and the hiring choices made by developer Edgemoor Infrastructure and Real Estate.

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 Kansas City 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 Developer Contract

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, as well as 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.

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 End?

By the end of January in 2019, 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.

The project, which is still on schedule to open in March 2023 and has been largely unphased by the COVID-19 pandemic, has been plagued with political turmoil from the start.

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 reported 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.)

Hiring Talks

In early November, however, a statement released by the Kansas City Black Chamber demanded a review of contracting procedures and more oversight on the project, claiming that Edgemoor was lying about its numbers for contracts with companies owned by women and minorities.

At that time, there was a discrepancy on how to read the hiring data. The goals in the contract include that 15% of the construction work on the terminal is to go to subcontractors owned by women and 20% is to go to minority-owned firms.

The Chamber said that at the time, Edgemoor’s numbers were deficient; Edgemoor has challenged the Chamber’s math and cites the city’s Human Relations Department.

In November, minority-owned firms up until that point had received $2.1 million for construction services and $4.7 million for professional services. For women, they’ve received a combined $4.8 million.

The Chamber is looking at the contract totals in relation to the total budget for the project, which would put the participation for minority-owned businesses at .32% for construction and 6.4% for professional services and women-owned businesses at .3% and 3.9%, respectively.

Edgemoor’s numbers, however, go by the budget that has been spent so far, not the total, which would then put minority-owned construction services at 19.5% and professional services at 16.9%, and women-owned construction services at 19.5% with professional services at 10.3%.

Edgemoor says it expects to make up ground on the professional services figures over the next few months of design work.

Now, however, that sentiment is being put to the test as a group of local trade groups, unions and subcontractors held a news conference earlier this month to criticize Edgemoor’s selection of ESCO Construction Co., of Colorado, to do concrete work for the project.

The Heavy Constructors Association of Greater Kansas City called for the city’s Aviation Department to reject Edgemoor’s recommendation of ESCO, which only listed one woman-owned firm in its bid.

The bids are still in active procurement, however, so no one from the city nor the developer will comment on the bids.

“The Edgemoor team remains committed to delivering the new terminal at Kansas City International Airport on budget, on schedule and providing the best value for our client and airline partners,” the developer said. “We are also committed to utilizing as many Kansas City businesses and local workforce as possible.”

   

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

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