Kansas City’s downtown streetcar project has overcome a host of legal and financial obstacles in recent months, and city officials are gearing up for actual construction.
But the streetcars could now face another big pothole.
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City staff chose St. Joseph-based Herzog Contracting Corp. and California-based rail contractor Stacy and Witbeck to manage the construction, and they plan to present that crucial contract for City Council approval in the next few weeks.
No so fast, say prominent Kansas City construction labor groups and some City Council members. They are criticizing the contractor selection process and calling for further scrutiny before any contract is signed.
“I’m not convinced they’ve actually picked the lowest and best bidder,” said Councilman John Sharp, echoing concerns from council members Ed Ford, Jim Glover and Jermaine Reed. Councilman Scott Wagner said he, too, has questions about the recommendation.
“We’ve got a lot of questions about it because it is a high-profile project,” said Ed DeSoignie, executive director of the Heavy Constructors Association of Greater Kansas City. “We want to get some things looked at very carefully before the city moves forward.”
Among the concerns: the subjective bid scoring and the winning bidder’s non-local and non-union status. Another worry is whether the winning bidder’s approach to potential change orders will drive up the project’s cost.
Public works officials respond that they’ve chosen the best team for what will be one of the most challenging infrastructure projects Kansas City has done in years. The total project, including design and construction, is expected to cost $100 million and run from the River Market to near Union Station.
Actual construction is expected to be in the range of $60 million, and the construction manager will be allowed to do at least 25 percent of the work without additional bidding.
The Herzog joint venture beat out two Kansas City-area competitors, Kiewit-Clarkson Infrastructure Co. and JE Dunn, based on a bidding process that combined experience, project approach and pre-construction management price.
City officials said this process allows them to bring the construction manager on early to address potential problems with project designers before the construction manager negotiates an actual price later this year.
In that regard, Public Works Director Sherri McIntyre concedes this was not a typical construction bid, in which the city sets out project specifications and seeks a low-dollar bid.
“It’s the best-value bid,” McIntyre said.
Ralph Davis, streetcar project manager for the city, said a similar process was used to pick the out-of-town construction manager for the downtown Sprint Center in late 2004. That selection also sparked City Council grumbling, but a city audit found no impropriety. Other cities have used this process for streetcar projects, McIntyre said, and the Federal Transit Administration signed off on Kansas City’s approach.
Mayor Sly James said he’s fine with a vigorous council debate, but he doesn’t want to stall progress.
“I think we really have to be careful that every time there’s a contract let and it doesn’t appease somebody that we go back and find a way to redo it so that it does appease them,” he said.
Al Landes, president of Herzog and spokesman for the winning team, declined to comment about the selection process.
A representative of the Kiewit-Clarkson team, which got the second-highest score, also declined to comment, and council members said they have not heard objections from the competing bidders. But they are hearing lots of complaints from the heavy constructors and the Greater Kansas City Building and Trades Council, which represents more than 20,000 metro-area union workers.
Those groups say Herzog’s non-union bid got preference over the two union bidders, and they are concerned Kansas City skilled craft workers will not get the benefit of hundreds of construction jobs created by the project.
“This does nothing for our community,” said Alise Martiny, business manager for the building and trades council. “We have the quality work force.”
Davis points out Kansas City hasn’t built a streetcar route in more than 60 years and says the city wants to make sure it gets this right.
While JE Dunn is known mostly for constructing buildings, the city was pleased to have two other bidders with strong mass transportation construction track records.
The Herzog-Stacy team has extensive streetcar experience, including in Seattle and Portland, Ore. Meanwhile, Kiewit is working on the Denver light-rail system and Kiewit-Clarkson was on the Kit Bond Bridge team.
A selection group made up primarily of public works engineers and transit representatives met with each bidder in mid-July and unanimously scored Herzog-Stacy highest for streetcar expertise in a congested urban environment and other factors. Herzog got 75 points, while Kiewit-Clarkson got 59 and JE Dunn 41.
Then when price bids were opened July 16, Herzog bid a much lower pre-construction price, $50,000, versus Kiewit-Clarkson’s bid of $184,300 and JE Dunn’s of $198,000. That was the only price spelled out on the bid sheets.
Among critics’ concerns:
. Herzog clearly had the lowest pre-construction bid and got added points for that. But it also bid significantly higher fees than the other two bidders for possible change orders. It was not downgraded for that in the scoring.
Sharp points out the pre-construction management fee is just a tiny fraction of the expected construction cost and gives no assurance this will be the lowest bid. Ford and others agreed the winning team’s higher change-order fees are cause for worry.
“The scoring criteria seems to be backward,” Ford said. “On the price portion, there’s more emphasis on the (pre-construction) fee and less on the overruns and the change orders, which can drive the price up.”
McIntyre said Stacy and Witbeck did not request many change orders on past projects, and the city would work diligently to limit change orders.
. Some council members and labor groups wonder why local firms didn’t benefit more in the scoring.
“We certainly had a history with the two other bidders,” said Joe Mabin, executive director of the Minority Contractor Association of Greater Kansas City. “And frankly, we were hoping one of them would be successful.”
Sharp said he hoped any winning bidder could work out a project labor agreement with local unions to ensure labor peace.
“If there isn’t a project labor agreement for this project to protect against strikes and other work stoppages, this could be disastrous for downtown businesses,” he warned.
Davis said he has heard that the Herzog-Stacy team has worked out project labor agreements in the past but he can’t mandate that. He predicted the vast majority of jobs will be local, including many for minority firms.
“I’ve heard all the contractors talk about a commitment to using substantial amounts of local workers,” he said.
Councilman Russ Johnson, the council’s primary streetcar advocate, defended the selection process and said council members will have time to get their concerns addressed before the contract comes up for a vote.
Davis said he’s confident the choice and contracting approach will provide the best and most cost-effective result for the city.
“The truth is, nobody has built a lot of streetcars. So the whole industry across the country is relatively in its infancy,” he said. “This cooperative work with the contractor allows us to fine-tune everything. Done properly, this really helps you maximize the value.”