The contentious bid for the San Jancinto Park Redesign came before council today. People I usually support on council fell over with a simple nudge from city staff and the contractor while the council members I usually complain about stood up and asked the right questions.
At the end this long read I point fingers and you don’t want to miss that – somebody’s entire political career is in the wind here.
If you need a quick refresher…
- San Jancinto park has been redesigned with lots of public input (this means it’s going to be ugly – the public is terrible at design).
- The city put the project out for bid and only three construction companies submitted a number.
- Two of them were at roughly $7.5 million and the winner was at $4.5 million.
- The winner is Basic IDIQ and there were lots of questions as to why their bid was so much lower than the other two.
- Council put the item off for a week to study the bid.
I’ll spoil the ending – council voted six to one to award them the bid with Dr. Noe not present. Limon voted against award.
Here are the things you need to know about today’s meeting and how this irresponsible bid was approved.
City staff were relying pretty hard on something called the “engineer’s estimate.” This is a dollar amount that the designer of the project estimates it can be completed for. This helps the project owner know if the bids they get are in the neighborhood of what the project should cost to complete. In theory, this is a perfect bellwether to measure bids. In practice… not so much.
That’s a good question, I’m glad you asked.
My parents’ firm is one of those odd midsize construction and engineering outfits that can build whatever it designs and design whatever it builds. We give pretty awesome “engineer’s estimates” because we have people on staff who do nothing but estimate all day every day. Most other engineers do not. They’ve got a guy who kind of does a back of the napkin estimation based on a limited amount of research that may be dated or lacking detail.
For example, if a project has a bunch of sidewalks the engineer can call up several concrete suppliers, get their prices and then average it out. Or he can just flip back to some pricing he saw a few months ago and pencil in that number. The same goes with things like the pavers to be used in this park. The problem with raw materials like concrete and steel is that they are commodities and their prices can whip wildly up and down from week to week. If the estimator is off by $10 a yard on the concrete and there’s 1,000 yards of concrete on the job, that’s a big difference. Same goes for pavers when you have them for $2 and they actually cost $3 and there are 35,000 of them in the project. Little errors can make for one huge error when added together.
Engineer’s estimates are notoriously wrong and they trip up dumb contractors all the time. Some contractors will find out what that engineer’s estimate is and just mark their bid right at that or a little lower. This is a good way to lose your ass on a project. And judging by Basic IDIQ’s bid – this might have been what they did.
Another thing to think about in this situation is that the city only had a certain amount of money budgeted for the project. The engineer’s estimate may have been solely based on that number because it had to be. You can’t go to the city and say, “I know you wanted me to design something for $4.5 million dollars, but I decided to design something for $7.5 million instead.” What you do is lower your engineer’s estimate and then blame the contractors for the cost overruns.
I did hear today that the reason there were only three bidders is that a few of the other usual bidders put a number together, looked at the budget and then laughed. They knew the project could not be built for the budget number given. They didn’t waste their time and money putting a formal bid together for something the city couldn’t afford to build. However, they did tell me that their numbers would have been north of $7 million as well.
Joyce Wilson did say that the two other bids could not have been awarded because they exceeded the budget. Just in case you needed proof…
Once the item got started council members started asking staff questions and giving their general impressions. I’ll give Rep. Limon credit when she said that a bid on home repairs that was way lower than others gave her an uneasy feeling. It should. We are taught as wee little children to pick the thing that doesn’t fit in a set of pictures or words. Our “gut reactions” in life aren’t uneducated guesses – they’re very much based upon our experiences in life. In this case Rep. Limon’s gut was right.
Most of the other staff interaction was pretty much pass-offs. At one point staff got onto the aspect of Basic IDIQ’s bonding. They did get bonded for the project – you have to. That means little or nothing when it comes to whether they can actually finish the project on time and with the materials specified in the specs. All a bond says is that the bonding company thinks the construction company is financially healthy enough to weather the storm. Or, in more precise terms – there’s enough money to extract from the construction company if they fail to complete the job.
Relying on a contractor’s bonding company to finish a project is a very time consuming process. It takes a minimum of six months for a bonding company to even get around to negotiating finishing the project from the day work stops. They will put up barrier after barrier after barrier hoping the project owner will just pay to have someone else finish it and thus release the bonding company of its responsibility. It’s a game that an entity like the City of El Paso very rarely ever wins (they know this). You NEVER want to deal with a bonding company in situation like this. City staff will go out of their way to avoid it (more on this in a minute). The delay once a bonding company takes over is more than a year.
Rep. Acosta had the best question of the day. She was on her game and informed on the issue. She asked about change orders. Contractors can make up a lot on change orders when they underbid a project. Acosta could see where a change order could be used to bail out this contractor. City staff told her that change orders can only get to 25 percent of the total project cost. That is wrong. It can only get to 25 percent without council getting involved. You can double the price of the contract in change orders if council votes on it. The city can give Basic IDIQ $1.1 million in change orders before having to go to council to get more. Too bad the city only has $400,000 in contingency money set aside for this project. Yes, you read that right – city officials admitted that their contingency is inadequate for the project.
I thought Oscar Venegas who owns Vemac and his staff did a good job of explaining their protest (that was denied by purchasing) and giving some basic math that showed Basic IDIQ was way off on a couple obvious things. Venegas also hinted at Basic IDIQ’s subcontractor and their lack of experience. Lisa Turner made good points as well. It should be noted that Venegas’ staffs are El Pasoans with El Paso addresses and El Paso lives and El Paso families. If you know someone at UTEP in engineering school or even business school, it’s a guy like Oscar Venegas who might hire them. That’s got to count for something.
The reason Vemac’s protest was denied by purchasing is pretty simple. Purchasing has no way of judging Basic IDIQ’s subcontractors. Purchasing is made up bean counters. All they did was affirm that Basic IDIQ turned in the proper paper work. Anyone can fill out the forms. However, not everyone can perform the work. The protest should have triggered an in depth review of Basic IDIQ’s subcontractors. It did not for some reason and that’s odd.
The city is usually very picky about who you have as a subcontractor when concrete is involved. I mean VERY PICKY. They scrutinize my parents’ subs on jobs to the point of harassment. I know they do this to other contractors as well. I have seen low bidders disqualified dozens of times because the city doesn’t like their subcontractor. And by “city doesn’t like” I mean that one person in engineering doesn’t like your subcontractor’s uncle so you either find a new sub or lose the contract.
In Basic IDIQ’s case, their subcontractors for the OUTDOOR SITEWORK is a company who does INTERIOR work. Their name is “Adobe Interiors” for God’s sake! Never in a million years would Vemac, FT James, Foster Jordan, JAR Concrete or any other local firm get away with hiring a drywall crew to poor and finish concrete. Would mayor Leeser hire a paint and body guy to build him a motor? I don’t think so.
Oh, and since the noise started around this issue with the bid, Adobe tried to register with the local Associated General Contractors chapter, but had to have Basic IDIQ do it for them. Local contractors have called Adobe to get prices from them and they now swear they’re not an interior construction company. I mean, who wouldn’t want to get a bid from a company who is doing $1.7 million in concrete and site work for $800,000? That’s highway robbery!
It doesn’t seem that Basic IDIQ has a single subcontractor who has completed a project of this scope and this park is set to be the crown jewel of El Paso parks. You have to wonder how Basic IDIQ got engineering to all of sudden be so unconcerned with subcontractors and got council members to follow along… No other contractor in town is getting this treatment (which is why they are all f*cking pissed, by the way).
You can see everyone’s bid and list of subcontractors in these documents:
After public comment they let the representative from Basic IDIQ get up there and plead his case. His story matched staff’s story and city council’s story and you got the impression that they all had some kind of meeting to get that story straight. Hard questions were not asked. Although, the guy did kick Stanley Jobe right in the crotch when he declared that his price is so low because Jobe gives him a 30 percent better deal than every other contractor in town. In the world of construction you NEVER NEVER NEVER NEVER EVER tell anyone what your deal with a supplier is. That’s the best way to lose your deal with that supplier. I’m sure Jobe is getting phone calls from some very angry customers right now. I wouldn’t be surprised if Basic IDIQ doesn’t get that 30 percent discount in the future.
(Oh, and suppliers always tell you that you are getting a way better deal than everyone else… like 30 percent better.)
It all ended when Rep. Niland made an impassioned speech on behalf of Basic IDIQ even going as far as praising their previous work for the city and then calling for the vote. Work, mind you, that was performed without the proper adherence to the federal law when it comes to apprenticeship programs. Something the city did nothing about and then punished the local contractors who brought it up in the first place. And it was “no bid” work purchased through a buy board that could have been bid and completed for less.
The result is that Niland launched her own personal Shawver Park debacle today by getting out in front and vouching for a very suspect bid. She is already going to take major heat for the Country Club Road project and this is will be the cherry on top. I have no idea what power they have over her, but she made a grave political mistake by not only voting to award the contract, but by also putting her name on their work product. I hate to see a pretty good political career veer off into the ditch like this. She could have said nothing and voted for the project. That would have been much better.
How does this project get finished? Here’s my opinion on how this gets done. None of this has been done yet, so this is just my guess at how a company could bid so low and still finish the project. Again, this is my opinon – we’ll have to see how it plays out.
Basic IDIQ is big enough that losing their ass on this project won’t put them out of business. Because city council and city staff both vouched for them and their ridiculously low bid they don’t have to worry about losing money. Hell, Niland already made a suggestion that would allow them to submit a $3 million change order.
Niland said that she wished the project could be finished by December 2014 for the tree lighting instead of February of 2015. Realistically you’re talking about moving the project up four months to October 31, 2014. That allows 30 days for punch list items and closeout and a short time to decorate the park for the festivities. That’s wiping out a third of their time to complete the project and that’s extremely expensive. That’s easily a $2 million change order if not more and that doesn’t even get into the stuff I’m going to mention next. Bottom line – that’s a damn convenient request for Basic IDIQ and I bet city staff and city council think the public is dumb enough to go for it. I assure you they are not.
Since city staff and city council have publicly accepted what the public thinks is a flawed bid, they have to do whatever it takes to make sure it gets done and they don’t look bad. That means approving change orders for anything and everything. That 25 percent $1.1 million change order I mentioned earlier is a no-brainer. They’re going to claim “differing site conditions” by saying that the soils that make up the subgrade are unusable and have to be hauled out and new soil hauled in. Fooling YOU on this won’t be hard. You don’t know anything about preparing the dirt below sidewalks, so you won’t ask many questions. Their cost to remove and replace the soil will be a couple hundred grand. You’ll be paying them $1.1 million.
Next comes the downgrading of materials specified in the original plans and bid documents. Since the subcontractors who provided prices to Basic IDIQ don’t have any experience working on these types of projects for the city, they likely took some liberties with the plans. You can often do this when you are doing “interior work.” Those special decorative pavers they called for in the plans aren’t likely what the subcontractors bid. They, not being used to bidding civil-type construction projects, bid a cheaper alternative. Again, you can do this when dealing with interior vertical construction. However, you can’t when dealing with this type of construction (which is why Vemac and FT James didn’t). You know that nice teak wood they call for in the plans? Fat chance you’ll see that. The first thing Basic IDIQ will do is offer the industry standard alternative to real teak. Lots of parks feature this wood – in fact almost all the new parks in El Paso do. In my opinion it was stupid to call for teak in the first place.
Those two substitutions will be just the tip of the “alternative product” iceberg. It’s obvious by their bid that their subs were thinking that’s the way this should go. Now that the city staff and city council have staked their reputations on Basic IDIQ finishing this project, they’ll approve the cheaper versions of everything on the project so as to keep Basic IDIQ whole.
If city staff balks and makes Basic IDIQ try to finish a $7.5 million project for $4.5 million they’ll have to eat major crow. They stood behind this bid today. There’s no way they are going to let that happen. People could get fired.
If city council balks and makes Basic IDIQ try to finish a $7.5 million project for $4.5 million they’ll have to eat major crow. Rep. Niland will eat most of it and you can bet if there’s a recall option to be used on her it will be used. Stepping out in front of this bullet was either really stupid or she knows something we don’t.
The big loser will be YOU.
First of all, you could have had the park built for free. Paul Foster wanted to pay to have the park redone and to match all the work he’d put into the surrounding areas. In typical El Paso fashion you guys told Paul Foster that you have a better idea of how he should spend his money. You didn’t want to put up a dime, but you wanted to dictate every inch of the project.
Foster, not wanting to pay for a park that featured pink flamingos set to a gigantic 70 foot tall Dallas Cowboys star, pulled his funding and walked (I’m not lying about the Dallas Cowboys theme – there were people who wanted that). Now, you morons are stuck paying for a park designed by a crowd of unqualified citizens who had nothing better to do than show up to community meetings to play amateur architect for an hour.
It is likely now that you won’t even get those things for the park that you asked for. You’re going to get some kind of stripped down Shawver park-type job that’s going to make you the laughing stock of the country again.
What I can’t wrap my head around is why my parents’ firm and other construction firms get jerked around on every bid, but Basic IDIQ shows up with the biggest red flag of the century and nobody really did anything about it. It stinks. It stinks that Saab construction lost a bid over a measly thousand bucks because members of council don’t like my blog, but Basic IDIQ got away with this.
Something is very very wrong here. It’s time to start asking harder questions about how staff and council are coming to their decisions. They don’t make sense and that’s worrisome.