Denver Worldwide Airport’s $2.1 billion terminal renovation challenge wants stronger administration and oversight of its main contractor to make sure the airport isn’t overpaying for work, metropolis auditors present in a long-awaited report launched Thursday.
The audit spurred push-back from airport challenge officers, who defended each their dealing with of the fast effort to reboot the troubled challenge in late 2019, after DIA terminated its prior challenge contracting staff, and their oversight of the brand new contract association. Since Hensel Phelps Development took over the Nice Corridor Mission three years in the past, work has proceeded extra easily — although with a vastly expanded price range and a timeline prolonged by a number of years, to 2028.
However auditors questioned a scarcity of documentation supporting the number of Hensel Phelps via a fast, streamlined bid course of during which DIA restricted the pool to firms that had accomplished earlier airport work. Additionally they had been crucial of DIA’s oversight of subcontracting, which is a significant characteristic of Hensel Phelps’ contract — giving the corporate duty for choosing smaller companies via aggressive bids to carry out important quantities of labor.
In some instances, the audit suggests DIA overpaid for some work, however the quantity isn’t quantified.
DIA took difficulty with a number of findings and rebuffed a lot of the auditors’ suggestions. For some, it agreed partly with solutions to enhance its oversight or processes however nonetheless labeled its response to a given merchandise as “disagree.”
“I’m disillusioned airport officers selected to agree with solely three of our 10 suggestions,” Auditor Tim O’Brien wrote within the 81-page report’s opening letter. “Denver Worldwide Airport could be higher in a position to make sure it receives the contracted work it pays for at the perfect worth to town if it had been to implement our suggestions” in a number of areas.
Throughout an Audit Committee assembly Thursday morning, O’Brien characterised DIA’s responses to the audit suggestions as “disingenuous at greatest.”
“As you’re in your solution to 100 million passengers, there shall be extra initiatives,” O’Brien advised airport challenge officers who had been within the room. “You’ve said that you simply really feel that you simply oversee these contracts effectively, and my expertise with the airport overseeing contracts has not been — I might not describe it as effectively in any respect.”
A DIA official who oversees main initiatives conceded among the auditors’ criticisms.
“I feel the underlying (thrust of) the audit is to enhance our documentation and higher doc our procedures, and so we’ll sit up for that,” mentioned Jim Starling, the airport’s chief building and infrastructure officer, to the Audit Committee. “However we at all times admire getting suggestions in order that we are able to make enhancements (and) efficiently handle all of the work that we have now arising — and there’s a big quantity of progress that’s obligatory.”
Michael Sheehan, DIA’s senior vp for particular initiatives, defended choices made in late 2019 to side-step regular contracting processes, one thing the airport publicly acknowledged on the time. Officers, together with Mayor Michael Hancock and then-DIA CEO Kim Day, needed to herald a brand new foremost contractor shortly.
The airport lacked an analysis course of to determine whether or not another contracting method — on this case, for the overall contractor additionally to function a building supervisor — however determined a full challenge restart would take an excessive amount of time. Nonetheless, auditors identified that the dearth of data documenting the choice deliberations go away unclear whether or not Hensel Phelps was greatest certified for the job.
“We perceive that it was a compressed procurement,” Patrick Schafer, the senior audit supervisor, mentioned Thursday. “… We knew they needed to work quick. However we’re speaking $2.1 billion spent. And there’s not one iota of documentation that we are able to see that that was given to Hensel Phelps they usually had been deserving of it.”
Sheehan agreed with a suggestion that the airport develop particular contracting procedures to comply with the following time it faces an sudden want for an expedited contract course of.
Development on the Nice Corridor terminal challenge bought below manner in mid-2018 and consists of the relocation of safety screening and overhauls of airline check-in areas to ease congestion as DIA sees document passenger visitors progress.
DIA has confronted scrutiny individually for the way its earlier contracting association — a long-term partnership cope with a Spanish firm and its American companions — soured in 2019. A “classes realized” assessment commissioned by DIA final yr assigned blame to officers on either side of that deal for choices that resulted in escalating price overruns and delays, effectively past the $650 million unique price range, earlier than DIA pulled the plug in August of that yr.
The brand new metropolis audit doesn’t delve deeply into the primary contracting association. It focuses on DIA’s oversight of the contract with Hensel Phelps to ship a rebooted first part, a second part and a brand new “completion” part for the challenge.
Auditors really useful that DIA officers extra tightly monitor Hensel Phelps’ subcontracting practices. They discovered that the corporate incessantly doesn’t obtain three bids for every element, which is a really useful greatest apply, and says it’s unclear if it at all times selects the bottom certified bidder, as required by its contract.
However Sheehan identified in a written response to the audit that the contract doesn’t require three bids, and that’s not at all times possible.
Auditors pointed to 2 instances the place they mentioned DIA officers didn’t know Hensel Phelps had chosen itself as a subcontractor, together with for practically $1.8 million in concrete work. However Sheehan replied that officers had been conscious it was dealing with that work itself, below change orders for process orders.
For the concrete subcontract, the audit raises the chance that Hensel Phelps packaged routine and specialised kinds of work collectively in a manner that will have dissuaded exterior contractors from bidding for the work. In the end, Hensel Phelps carried out the specialised portion of the work, for vertical concrete columns, whereas choosing an organization as its accomplice for the extra routine a part of the job.
“Had the 2 kinds of work not been mixed or if the procurement had been extra truthful, a unique concrete building firm might have been awarded the job,” the report says.
Sheehan wrote that Hensel Phelps didn’t mark up the pricing for the work it handed to its accomplice firm, so finally it didn’t price DIA greater than it could have below separate subcontracts.
He added that “DEN Particular Tasks has seen no proof that (Hensel Phelps) structured the bidding for its self-performed work packages to its benefit and would have required the Contractor to re-do a bundle if this occurred.”
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