Controversy still surrounds $21.4 million contract for downtown Ann Arbor parking deck project
Chris Colasanti says he's dumbfounded that his firm, Colasanti Construction, isn't being hired to pour the concrete for a new underground parking deck in downtown Ann Arbor.
Last month, when it came down to a decision between his firm and another, project officials initially determined Colasanti had submitted the lowest qualified bid. But the construction manager, the Christman Co., still awarded the $21.4 million contract to its own subsidiary.
A large amount of excavation work has been done on the Library Lot site, between Fifth and Division, where the Ann Arbor Downtown Development Authority is building a four-story underground parking deck.
Ryan J. Stanton | AnnArbor.com
It's a decision that continues to generate controversy — and one that's supported by the Ann Arbor Downtown Development Authority, which is paying for the parking deck.
"It is Christman's decision, and they did what they felt they needed to do," said DDA executive director Susan Pollay.
Chris Colasanti said he's convinced now it was a no-win situation from the beginning for any of the bidders other than Christman Constructors Inc.
"I've been running my company for 35 years, and this is probably one of the worst things that I've seen," Colasanti said. "I feel worse about what happened to all the bidders here than I've felt about not being paid for work in the past. This one was a tough one to swallow. We spent a lot of money for a no-win."
Christman has been taking heat from other contractors ever since it awarded the bid to its own subsidiary last month.
Two weeks ago, representatives of Granger Construction Co. aired their grievances publicly at a DDA board meeting. They alleged the process by which Christman overlooked Granger — which bid $526,000 less — and then jumped past Colasanti — the second lowest bidder — to award the work to itself was a convoluted "shell game" that raises questions about integrity.
Granger was ruled out at a post-bid review as being unqualified for the job, but Christman and Colasanti both were deemed qualified.
Colasanti's base bid came in $45,000 less than Christman's base bid. Even after factoring in a required "bid alternate" — an added snow melt system under Library Lane — Colasanti's bid still beat Christman's by $22,800.
"Our recommendation at that stage is that the difference is virtually insignificant," said Pat Podges, Christman's vice president. "It was a virtual tie."
Christman then reduced its bid by $40,000 by factoring in a voluntary bid alternate, which included using a stainless steel door alternative. That brought Christman's price $17,200 lower than Colasanti's bid.
Christman continued to sharpen its pencil and brought its costs down by another $614,800 by choosing a series of voluntary bid alternates. In the end, the company worked its bid down to $21.438 million, less than Granger's original low bid.
When the Christman Co. publicly opened bid packages for concrete work, these results were reported.
With those savings factored in, Christman was able to announce this month that it would be returning $1 million from the project budget to the DDA. But some say that presents the appearance of a "kickback" to the DDA for allowing Christman to award $21.4 million worth of concrete work to itself.
"It's like fish in the refrigerator — after a couple of days, it really smells," said Ed Shaffran, owner of the Ann Arbor-based real estate firm The Shaffran Companies Ltd.
Shaffran predicted this scenario would play out last fall when the DDA hired Christman to act as construction manager for the project. Shaffran asked at the time that the DDA not allow Christman to hire itself as a subcontractor, but the DDA never took steps to include that stipulation in the contract.
"I can't believe that the DDA would even permit that to take place," Shaffran said. "Christman should take the higher ground and step aside. It's things like this that give the construction industry a bad name — I think it sucks."
When Christman was hired, it gave the DDA a guaranteed maximum price of $44.38 million for delivering the project. With that, the company assumed all financial risk in case the project came in at a higher cost. It also assumed the right to pick which subcontractors would work on the project, regardless of price.
Podges said the $1 million is not a kickback to the DDA, but is a contractual obligation. He said Christman is obligated to return any savings it realizes during the course of the project to the DDA, and that is what's happening.
The contract between the DDA and Christman, obtained through a Freedom of Information Act request, shows that $750,000 was budgeted for the project as an "estimate contingency," and another $1.3 million was included as a "risk contingency." Because bids came in favorably, Christman is returning the $750,000 estimate contingency in full. And because Christman is self-performing on the largest part of the project, it is reducing the risk contingency.
"In the end, we did the right thing," Podges said. "We did what was good for the project. We're not a company that plays shell games. We are not a fly-by-night, mysterious, backstabbing, unethical contractor. To the contrary, we pride ourselves on everything but that."
But the series of voluntary bid alternates that Christman used to make its price the lowest — and allow for much of the return to the DDA — is being questioned by Colasanti and others in the construction industry.
Colasanti cites official records of a Feb. 17 pre-bid meeting that show Christman told contractors who were present that voluntary alternates included in the base bid would be cause for rejection of their bids.
"They told us we couldn't do what they did to award themselves the job, and that's wrong," he said. "The bid documents clearly stated that any voluntary alternates or any type of reworking of the proposal is grounds to have your bid thrown out. We talked about it at length during the bid process. We had a ton of cost-saving ideas that we would have normally proposed and, because of what was said, we didn't do it. We were afraid that we were going to get thrown out."
Podges said Christman's only direction to contractors was not to include voluntary alternates in their base bid. He said they could include whatever alternates they wanted separately, and that's what Christman did.
After finding out Christman awarded the job to itself, Chris Colasanti said he called Christman and asked how the company reached its decision.
"I didn't really get that far with them," he said. "I think they really wanted to try to run away from what they had done."
Colasanti wrote a letter to Pollay at the DDA, asking if she could explain what happened. Pollay's response supporting Christman's decision only further indicated it was a no-win situation, he said.
Podges said the decision, in the end, wasn't about money — it ultimately came down to who was the best choice for the project. He said Christman recently constructed two nearly identical below-grade parking structures in Grand Rapids.
"Nobody knows this project better," Podges said, adding that Christman understands the complexities and logistical challenges.
"People want to be hung up on the difference in price, people want to be hung up on how could we skip over Granger given how low they were," he said. "And I understand Colasanti's frustration, but this is a decision we have to make just as you would make if you were hiring a painter to paint your house."
Podges offered another analogy.
"It's like if you've got a problem with your car," he said. "You get a couple of quotes and one guy comes back with a price half that of the other guy, but the one guy doesn't explain how he's going to fix your car, you don't like how his garage looks, and you make a value judgment."
If the tables were turned, Podges said he thinks Granger and Colasanti would be doing exactly what Christman did.
"And would I be frustrated? Yes, I recognize the frustration," Podges said. "But I've been around long enough to know what drives some of these decisions. I've been through a thousand post-bid reviews, and there is subjectivity in the end in determining who you think is the right firm for the job. And we tell the bidders that we will not be issuing an award based strictly on the numbers."
Podges said he couldn't say whether Christman didn't accept the lowest bid in any other parts of the project.
Colasanti estimates his firm spent about $65,000 over the course of several months putting its bid together, including flying people into town from Florida. He admitted no one in his office but him was interested in the project because they all thought Christman would award the work to itself no matter what.
Matthew Buck, a professional engineer who owns several properties in Ann Arbor, declined an offer by Colasanti to assist with preparing the bid.
"In my 30 years, I have never seen such abuse and liberties taken," Buck said. "I took one look at the drawings, went to the pre-bid meeting, and came back with the recommendation to Chris Colasanti not to waste the time and money bidding it as it had fingerprints all over the drawings and a very bad smell at the pre-bid as being as a setup, which unfortunately became true."
Colasanti said he assumed it would be a fair and open process, and his firm would get the project based on its credentials.
"We've done $300 million to $400 million worth of parking decks in the last four or five years," he said. "We do more decks than anybody out there. We have a job very similar to this being built down in Nashville, Tenn., and we're just getting rave reviews from everybody."
Ryan J. Stanton covers government for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529.
Comments
Radar
Sun, May 2, 2010 : 3:49 p.m.
dbob, As I understand it, it was Granger's responsibility to prove they understood how to build an underground parking deck with their proposal and at a post bid interview. According to the four firms that were present, including Carl Walker, Granger had no execution plan. Why should Christman or the DDA take the risk when a subcontractor cannot explain how he would perform the work. Low bid is not the least cost at the end of the project. Granger had a responsibility to explain their approach. They were given the opportunity and failed. They are to blame and no one else. Get real. Construction Manager's post bid review all of their subcontractors and do not hire those that do not understand the work. I heard Granger has never built an undergound deck. Therefore, it was their job to prove their knowledge and understanding. Granger may be a good company as you suggest but that doesn't give them a free pass especially when awards require more than just the low bid to obtain a subcontract.
dbob
Wed, Apr 28, 2010 : 1:43 p.m.
Granger was ruled out as being unqualified???Then why was Granger selected by the DDA as a qualified contractor to propose on being the CM for this very project? Granger has constructed many parking structures around the state has has performed very complicated concrete work. Ask the lead designer (Carl Walker) if Granger is unqualified. They have constructed many Carl Walker designed structures. It is slanderous to suggest that they are not qualified.
Victor Munoz
Tue, Apr 27, 2010 : 9:44 a.m.
As a retired architect, 40 years working for major Michigan architectural firms, I am appalled at the decision by the Christman Company to award the concrete work to their own subsidiary rather than to the lowest bidder, Colasanti Construction. Having been involved in many bidding procedures; both, interviewing and selecting bidders, it was always our understanding that if the bidding process was by invitation only or if bidders had been interviewed and accepted as a qualified bidders, that the award would go to the lowest bidder. I have worked on projects where Colasanti was the sub-contractor for the concrete work and in projects where Granger was the Construction Manager and or the General Contractor. Both companies are more than qualified to do this work. The statement from the DDA, it ultimately came down to who was the best choice for the project is a cop-out; Colasanti is an expert on concrete work and has probably done many projects of this type. To rule out Granger Construction Company as unqualified to do the job is incredible. If both of these companies were either unqualified or not the best choice to do the work, why were they asked to bid the project? a very expensive procedure, I have been there, I know the amount of work it takes to prepare a bid. I agree with Mr. Shaffran, something smells.
logo
Mon, Apr 26, 2010 : 3:55 p.m.
Downtown has been losing spaces for years, they had to tear down an old structure and they are losing street spaces. The structures are mostly full every day. If you look at the numbers, parking is going up every month. That's remarkable in the middle of the recession. Unless you want businesses to locate in the townships there has to be more parking downtown. Downtown is what makes this town hum. This structure has been needed for years.
Jon Saalberg
Mon, Apr 26, 2010 : 7:42 a.m.
"It is Christman's decision, and they did what they felt they needed to do," said DDA executive director Susan Pollay.But that doesn't make it right or make it reasonable.Hmm, kind of like the whole parking project. I guess the DDA and the Council think that building even more unused parking will make more people come to downtown Ann Arbor?
Matt
Sun, Apr 25, 2010 : 8:03 p.m.
@Scotsman is right on with all the Change Orders or on the reverse side, Christman will come up with Value Engineering and give back next to nothing as long as it stays under the GMP (they pocket this V/E $$). This also helps them "protect their CM fee". A huge damage has been done in the public bid arena now. The owners had better decide from now on, if they are going to award jobs thru the CM process should they allow this potential conflict of interest. That is, allowing a sister company to bid to the parent company and give the parent sole control of that decision!! I can guarentee you one thing. If The Christman Company is a CM and looking for concrete bids again (and they are allowed to bid it too), they will be the only bidder. You owners ready for that?
say it plain
Sun, Apr 25, 2010 : 5:03 p.m.
for some reason my comments that included links to stories about the christman co role in the Traverse City plant failure was up for a minute and then deleted. I won't try posting the links anymore, just the comment that it seems to be the same company. They work under a number of websites and guises, which is also a little suspicious it seems to me. Investigations might be profitable, but apparently it's not okay for readers to comment about this?! Oh well...
David Cahill
Sun, Apr 25, 2010 : 4:14 p.m.
Karen, could you please set forth for us the provisions of Chapter 14 of the Charter, and related ordinances, that you think were not followed?
logo
Sun, Apr 25, 2010 : 3:43 p.m.
It would be ridiculous to require the lowest bid be accepted. Every request for bids has a qualifier on it. It is not just the lowest price but who can complete quality work on time. The general contractor makes that decision and it is subjective. Others have made the good points here that having ultimate control over the quality and timing makes up for a few percentage points of a lower bid. The house painting analogy is a good one, I don't want the cheapest painter for my house I want the best painter. The DDA set this up properly in the best interest of the people. A guaranteed price with the project delivered on time. The DDA is not involved in picking among bids or the squabbles that go with the process.
Basic Bob
Sun, Apr 25, 2010 : 3 p.m.
This 'controversy' is really quite silly. First off, the purpose of competitive bidding is to ensure that the city/DDA gets a fair price for the work, not gouged by any one company. This purpose has been met. Second, to have Christman manage Colasanti creates a huge risk that a conflict over the scope of work will develop and the project stalled or reworked. Then the lawyers get involved, ultimately driving the cost of the project up. Third, the same tradesman will be hired to perform the work regardless of which company is managing the job. So why does it really matter who is passing out the checks? There will always be some 'favoritism' in bid selection; Granger was able to get on the bid list, but then their low bid was rejected because they were considered to be unqualified. If anyone feels really strongly about this, they should drag it into court. This will certainly delay the project by years and drive up the cost by millions of dollars. But would that really be the right thing to do for the city of Ann Arbor?
john e le beau
Sun, Apr 25, 2010 : 2:41 p.m.
This just smells,I have been in this business 27yrs,it is just getting worse!!!! NO MORE GOOD,honest,HARD WORKING PEOPLE. This is wrong,in so many ways.I would like to see a list of other contractors!!!!
Macabre Sunset
Sun, Apr 25, 2010 : 2:08 p.m.
Ultimately, it's the city's fault for setting up this conflict of interest. Down the line, this will hurt the city, as reputable and viable subs simply won't bid on their projects, which in turn will drive up costs or, worse, mean that unqualified subs will win contracts. Christman was just doing what it was allowed to do. Once the rigged system was in place, the result was inevitable. Hopefully they'll still do a good job.
digger
Sun, Apr 25, 2010 : 1:13 p.m.
If prime contractors continue to have these issues, they will start having a hard time getting quality contractors to bid thier work. It may come back to bite them on projects
glenn thompson
Sun, Apr 25, 2010 : 1:12 p.m.
I have worked as a project manager both from the government purchasing side and as a contractor to the government. I never saw a government contract that so completely violated the practice of "award to the lowest bid" as this one. A very important point is that the Guaranteed Maximum Price (GMP) for this contract was never bid. It was simply negotiated by Christman after they were awarded the contract for management of the project. Since the GMP was not low bid and now the construction subcontracts are not being awarded by low bid, the government practice of awarding to the lowest is is completely circumvented.
walterge
Sun, Apr 25, 2010 : 12:42 p.m.
Let's see, on a fixed timeline project, you got two bids on a key part of it, one from your inhouse people and one from an outside contractor. The pricing difference is about a tenth of a percent, who do you go with? Personally, I would think I could control the quality and TIMING of my inhouse people then that of an external contractor which more than justify's tenth of a percent increase in costs (messed up timing can cost more than that).
Sarah
Sun, Apr 25, 2010 : 12:01 p.m.
welcome to ann arbor. it happens everywhere here, and it's a damn shame.
bunnyabbot
Sun, Apr 25, 2010 : 11:45 a.m.
well, one more reason I will never use the parking garage.
jcj
Sun, Apr 25, 2010 : 10:59 a.m.
@logo Sounds like you have done some very critical thinking.lol! And which of the Christman companies pays your ticket?
Spyker
Sun, Apr 25, 2010 : 10:51 a.m.
With 30 years of experience as a Project Manager over-seeing construction projects with multi-million dollar budgets, I read this article very carefully. From the information presented in the article I could see no foul, and I would have made the same decision. I think the issue is the public's (and media's) mis-understanding of the term Base Bid. A Base Bid is the initial proposed cost submitted by a contractor. This price is them reviewed to ensure that no exclusions to designs or specification were taken by the contractor in submitting their proposal. Then all Alternates are examined, both Owner Requested and Contractor Voluntary alternates. In this case the savings experienced by accepting the bidders' voluntary alternates changed the ranking of bidders. The contractor with the low base bid now became the contractor with the second lowest total bid. I am sure some will wonder why these alternates were not then "shopped" to the other bidders for cost revisions to their bids. Taking this step is legally questionable as the voluntary alternates could be considered as the Intellectual Property of the contractor who submits them. This job was identified in the article as a GMP project - Guaranteed Maximum Price. The owner (city or DDA) already has completed their project over-sight by issuing the original contract. They have "no horse in the race" when it comes to sub-contractor selection, provided all selected contractors meet the requirements the owner stipulated in the original contract to the developer. Just because a student works hard on a class project doesn't mean they should be guaranteed an "A" in the class. This is true in the work world also, and sometimes it hurts even more.
LB
Sun, Apr 25, 2010 : 10:44 a.m.
By the time this project is completed, not only will the refrigerator smell like fish, but the whole kitchen.
logo
Sun, Apr 25, 2010 : 10:38 a.m.
This is sour grapes among contractors. They all know each other. This company is finishing a giant underground structure in Grand Rapids. They have tremendous experience and they chose the best sub for the job among some close bids, it happened to be themselves. It happens, get over it.
Vivienne Armentrout
Sun, Apr 25, 2010 : 9:41 a.m.
It may be of interest to note that Christman is also the proposed construction manager for the Acquest hotel proposal for the top of the parking.
Karen Sidney
Sun, Apr 25, 2010 : 9:02 a.m.
I'm surprised no one has raised the issue of whether accepting the Christman bid is legal. The city will own the parking structure and it is being built with bonds backed by the full faith and credit of the city. The DDA has to follow the bidding rules in Chapter 14 of the city charter and the related ordinances. Christman offered the city a maximum price but no other companies were allowed to offer competing maximum price deals. Therefore, the Christman contract for the whole project does not satisfy the competitive bid rules. Since there were no competitive bids for the project as a whole, the only way to meet the competitive bid requirements of the charter is to competitively bid the subcontracts. This is not like hiring a painter to paint your house. This is about following the law on how public money is spent.
Awakened
Sun, Apr 25, 2010 : 8:59 a.m.
Anyone want to start a pool on the time/cost overruns?
Scotsman
Sun, Apr 25, 2010 : 8:52 a.m.
Sounds like Susan Pollay is drinking the CCI Kool-Aid. She should know better and take the extra steps to ensure that decisions made regarding how to spend public money are above reproach. Shame. For those that don't know, a Guaranteed Maximum Price (or GMP) is only valid until the first change order. After that the cost to the city can, and likely will, exceed the GMP amount. A project of this size is likely to have numerous change orders. Each time a change order is issued CCI will add a % fee to the cost, first as the CM and again the trade contractor. Can you say double dip? And when Christman is reviewing the costs for these change orders, how likely are they to take a hard line with themselves? The real money in construction is made on change orders. It is obvious that CCI is unfit to do this. So now either a 3rd party can be brought in to review quotes (which adds cost to the project) or we can let the wolf watch the hen house. Great choices! Also, why not ask Colasanti to offer a credit to change from stainless steel doors, perhaps they would have offered even more than $40,000. If CCI really had the best interests of the city at heart this voluntary alternate would have been a mandatory alternate prior to the bid date. That is called value engineering and that is part of what a CM is hire to do. This quote shows the arrogance and blatant disregard for the trust placed in CCI to be a steward of public funds: "Our recommendation at that stage is that the difference is virtually insignificant," said Pat Podges, Christman's vice president. "It was a virtual tie." A virtual tie??? If so, then why doesnt Mr. Podges pony up the $22,800? That is not an insignificant amount of money in my book.
Fred&Barney
Sun, Apr 25, 2010 : 8:15 a.m.
Robbery of public funds, in plain sight, figures never lie, but liars always figure.
Ryan J. Stanton
Sun, Apr 25, 2010 : 8:10 a.m.
@Tom I'm not sure, but one would think it would be illegal to have two contractors operating in the state of Michigan under the same name. Here's some background on the issue: http://archives.record-eagle.com/2006/jun/18septage.htm
tom
Sun, Apr 25, 2010 : 7:59 a.m.
Is this the same Christman Co that was general contractor for the septage plant in Traverse City that collapsed within a month of completion?
digger
Sun, Apr 25, 2010 : 7:43 a.m.
Gill look up the new city ordinance enacted Feb. 1 about city CUB Agreements.I'm starting to see them pick and choose witch project works for that agreement witch don't
Gill
Sun, Apr 25, 2010 : 7:35 a.m.
Digger, most of the city work projects are done using private non-union companies with the city overseeing the work. Also, there is a constant pendulum swing for corruption and power between the employers and unions. Right now it is swinging back to the employers.
A2frank
Sun, Apr 25, 2010 : 7:27 a.m.
Our Overlords strike again! What not enough Bentleys in this town?
digger
Sun, Apr 25, 2010 : 6:52 a.m.
welcome to ann arbor mentality. why anyone would even bid a public project in that city is beyond me.If the citizens really could know the waste and behind closed door dealings. lucky most of this project I think is being paid for by the DDA. God forbid a non-union contractor even gave a better price for this prject------
a2grateful
Sun, Apr 25, 2010 : 6:51 a.m.
"It's like fish in the refrigerator after a coupe of days, it really smells," said Ed Shaffran... Actually, it didn't even take a few hours... The project had that "aura" before a shovel touched the ground... What's that smell? Another City of Ann Arbor folly project... Get used to it until we wake up and hire representative leaders...