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Denver Taps New Firm for Convention Center

Thursday, August 27, 2020

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The city of Denver has selected a new firm to finish the $233 million Colorado Convention Center Project. The expansion has been plagued with an alleged bid-rigging scheme for the past few years.

Hensel Phelps was tapped last month as the new design-build contractor for the project.

Construction is slated to begin in mid-2021 and finish in late 2023; however, the space is currently outfitted to serve as a temporary medical facility in the wake of the COVID-19 pandemic. So far, it hasn’t been needed to serve in that capacity, but it’s unclear how long officials will keep the space on standby.

Hensel Phelps was responsible for building the original convention center in 1990, and doubled the structure’s capacity in 2004.

An official contract is expected to be brought to Denver City Council in the coming months.

Project Background

The city hired 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

The city of Denver has selected a new firm to finish the $233 million Colorado Convention Center Project. The expansion has been plagued with an alleged bid-rigging scheme for the past few years.

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 released statements saying they were fully cooperating with authorities. Further, in a statement from Mortenson CEO Dan Johnson, the company said 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.

Around that same time, the AG announced that Mortenson settled with the state 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.

“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.”

Earlier this year, a second settlement was reached as Colorado Attorney General Phil Weiser’s office announced that Trammell Crow will pay $250,000 and make corporate compliance and ethics reforms because of its alleged role in the incident.

Investigators say that they found evidence that Trammell Crow and a former employee, Michael Sullivan, sought Mortenson’s help on certain aspects of the procurement work, including the estimations for the preliminary design and interview questions.

After Mortenson responded to Sullivan’s requests, he used the Mortenson analyses and calculations and represented this information as his own. The AG alleges that Mortenson employees looked to benefit from influencing the bidding process by continuously responding to Sullivan’s requests.

Sullivan, meanwhile, shared confidential information with Mortenson related to the procurement that other prospective bidders did not receive.

Weiser’s office says that, by giving Mortenson preferential treatment and benefitting from its work, Trammell Crow and the employee compromised the fairness of the bidding process and violated the Colorado Antitrust Act.

The agreement with Trammel Crow requires the company to:

  • Establish a comprehensive, internal compliance program and forward complaints to the Attorney General;
  • Disclose the agreement to any Colorado governmental or public entity that asks for or requests information relating to whether the company has ever been investigated by or entered a settlement with a Colorado government entity;
  • Make an annual presentation over the next three years on lessons learned in ethics and compliance issues at the University of Colorado Leeds School of Business, Colorado State University School of Construction Management or a conference or program sponsored by the Colorado Association of General Contractors;
  • Continue to support minority and women business programs as part of its ongoing commitment to ensure that minority-owned and women-owned businesses are treated fairly and have every opportunity to bid for public projects; and
  • Cooperate fully with any ongoing legal proceeding related to the convention center bid-rigging scheme and the office’s investigation into Sullivan’s conduct is ongoing.

   

Tagged categories: Bidding; Contract awards; Convention Centers; Design build; Good Technical Practice; NA; North America; Ongoing projects

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