Recreation Center Spotlights Inclusion Difficulties

When municipalities or other government entities set high goals for minority and women participation in contracts, it places bidders in the untenable position of either gaming the system or losing the bid.  An extraordinary political compromise reached by the City of St. Louis in the letting of contracts for the new O'Fallon Park Recreation Center offers a case in point.

Critics of the city's handling of the construction contracts for the recreation center say the changes made in the scope of the project are so great the city should have re-bid the job. Two changes top the list of complaints: the city increased the level of minority participation required in the contract and negotiated a price for that increase with the prime contractor, S.M. Wilson & Co.; and the city added a construction manager, Kwame Building Group, over the job after the prime contract was awarded with the understanding that the prime contractor would be responsible for managing the job.

Richard Bradley, president of the City of St. Louis Board of Public Service (BPS), said the controversial construction management contract is not what it appears.

"It is not a conventional construction management contract," he said. "Most of the contract is for compliance monitoring, and they'll also help my staff some with other things," he said.

As for S.M. Wilson, "we didn't pay them one nickel extra for meeting the stated minority goals," Bradley said. "The extra $650,000 is because we raised the goals above those required in the bid, so it was a change in scope," he said.

Taken together, the two changes increased the cost of the project by $1.28 million.

CM or Not?

Within the construction community, controversy over the construction management contract grew out of the sequence of bids.

The prime contract for construction of the $17 million recreation center facility was bid on December 22, 2009. At the pre-bid conference on December 7, the project delivery method that was discussed utilized a traditional owner-to-general contractor relationship without the intermediary of a construction manager, according to two contractors who spoke on the condition of anonymity.

But two months later the BPS issued a request for qualifications for construction engineering services for the O'Fallon Park Recreation Center project, with a deadline for statements of qualification of March 10, 2010.

"Originally I was going to have my staff do the construction management, but we have $40 million in stimulus projects going on ... and this is the first project where we're doing labor force requirements," Bradley said.

The upshot of that request for qualifications was that the BPS approved a $634,825 contract with Kwame Building Group for construction management services for the recreation center project on May 20.

Normally, owners hire construction managers before hiring contractors to build a project. The construction manager (CM) works with the architect to improve the constructability of the design and breaks the job up into bid packages for contractors. After contractors are hired, the CM coordinates the schedule and manages the budget. In this case, the BPS already had a design and had already bid the job of building it as a single package - although they had not yet formally awarded that package to any contractor.

For the city however, "it is not unusual for us to augment our staff after bidding," Bradley said.

Kwame's president and CEO, Anthony Thompson, said that his company was brought onboard the project to avoid a repetition of problems that he said plagued the construction of the south side recreation center - budget, schedule, and minority participation problems.

"To Rich Bradley's credit, he did not want to make the same mistakes as happened [under his predecessor] on the south side recreation center," he said.

"We're running the job the same as we've always done for 20 years," Thompson said. "The difference here, the added value, is we can assist with assuring that we maximize participation. Any project we've been involved in has met or exceeded participation goals. That is not our primary service, but if owners want us to do that, we will," he said.

Bradley, however, stressed that he never intended for Kwame to be viewed as the construction manager, which is why he had requested statements of qualifications for construction engineering, not construction management.

"This is the first project where we're doing labor force requirements," Bradley said. "Kwame is helping to monitor compliance and assist my staff ... They are not a real construction manager [on this job]," he said.

The compliance issues that Kwame is charged to monitor are much broader than just compliance with minority hiring, apprenticeship, and minority subcontracting goals, although Kwame will monitor those as well. Kwame also is charged with monitoring compliance with LEED (Leadership in Energy and Environmental Design) goals, compliance with prevailing wage regulations, and compliance with the schedule. Kwame also is charged with utility coordination and reviewing change orders and claims.

"Many of us [aldermen] had reservations about Kwame, because they are tied to the mayor and they are doing a lot of other City work," Alderman Antonio French said. Bradley remembers it differently. He said French was the only one who was opposed to Kwame. Thompson, for his part, denied that Kwame has any other City work, except for one contract at the airport that has been on-going for 10 years.

In the end, Kwame had by far the highest evaluation scores of the 10 firms evaluated by a committee of five city employees that consisted of: Bradley; Joseph Kuss, deputy city engineer, BPS; Thomas Behan, chief of construction, BPS; Gary Bess, director of parks; and Daniel Skillman, commissioner of parks. The BPS approved Kwame's contract one month before approving a contract with the general (prime) contractor, S.M. Wilson & Co.

What Took So Long?

It took six months from bid opening for the BPS to approve a contract with S.M. Wilson. At $16,732,688, S.M. Wilson's was the lowest of five bids submitted to the BPS. The next three bids were closely grouped, ranging from $17.564 million to $17.878 million. The high bid was $18.129 million.

The reason it took so long to award the contract, Bradley said, was, "we had negotiations with aldermen and others to increase the minority participation [in the project]. We had to work through that before we could award the job."

"We were concerned about minority involvement, especially workforce involvement," said Alderman French, who apparently took the lead in raising concerns for the Black Aldermanic Caucus. Within days of the bid opening he asked Bradley for copies of the bids.

Minority participation was a concern from before the bids were opened. "This was the second time the project was bid. The first time all the bids were thrown out, because none of them gave close to our participation goals. That's why we went to pre-qualification," French said. That meant the City would only invite bids from contractors who "pre-qualified" as able to meet the bid requirements.

On bid day, S.M. Wilson and the next two lowest bidders all submitted written statements that they would fail to meet the city's goals of subcontracting 25 percent of contract dollars to minority owned firms and five percent to firms owned by women. The only two firms that stated that they would meet the minority and women participation goals were the two highest bidders, whose bids were $1.1 million and $1.4 million above S.M. Wilson's bid.

In an email dated December 26, 2009, the Saturday after bid opening, Bradley, in responding to Alderman French's request for the bids, said that he had concerns about minority participation in S.M. Wilson's bid.

In the two months that followed the opening of bids, while S.M. Wilson tweaked the minority participation on their sublist, French complained that the company was not taking the aldermen's concerns seriously.

On February 1, 2010, Francoise Lyles Wiggins, contract compliance officer at the Airport Authority, which is the agency that certifies the legitimacy of minority- and women-owned firms, certified that S.M. Wilson had made a good faith effort to meet the city's participation goals. She calculated that the minority (MBE) participation rate in the project would be 22 percent and the woman-owned business (WBE) participation rate would be eight percent.

Aldermen weren't satisfied, however. On February 16, alderman Jeffrey Boyd asked for a copy of S.M. Wilson's sublist and asked to be included with aldermen Terry Kennedy and Antonio French in all future meetings about the contract.

A month later, however, S.M. Wilson got an endorsement from Michael Holmes, executive director of SLATE, which was to monitor compliance with the contractor's plan for meeting the city's participation goals. He send Bradley a letter recommending "moving forward" with the S.M. Wilson contract and stating that SLATE had reviewed the contractor's plans for meeting the city's apprenticeship, minority, women, and residency goals.

Aldermen French and Kennedy, however, said "hold on", and the contract was pulled from the agenda of the BPS.

Over the next few weeks, S.M. Wilson increased the level of certified minority involvement to 25 percent, and Bradley and Lyles Wiggins worked to convince skeptical aldermen that the percentage was valid.

It wasn't enough for the north side aldermen. Ultimately, they insisted on changing the project scope to increase the level of minority participation on the project.
Sometime during May, S.M. Wilson and the City came together on a new, much higher goal. French said aldermen told S.M. Wilson CEO Scott Wilson that they would move to cancel the project if he couldn't raise the level of minority participation in the project. "Then he came around," French said.

S.M. Wilson agreed to increase the level of minority participation beyond what was required by the bid to at least 32 percent and strive to get it up to 40 percent, and the City agreed to pay them an additional $650,000 to do it. Wilson declined to comment for this story.

On June 15, 2010, the BPS finally approved a contract with S.M. Wilson, complete with a change order for the additional minority participation commitment. Even at the new price of $17,382,668, the contract was $180,000 below the next closest initial bid, and $5.1 million less than the cost estimated by the BPS when bid invitations went out. The question that is unanswered and cannot be answered is how other companies would have changed their bids if the job had been bid with a construction manager and a higher minority participation level.

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