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Downtown project teaches hard lessonsBY TONY ILLIA BUSINESS PRESS The Regional Justice Center was supposed to be the glittering jewel of downtown, a civic symbol for a community on the rise. Instead, it has become a lead weight and a costly embarrassment, serving as an untoward reminder of Clark County's shortcoming.
Its future recently took another ominous turn when the county ousted its general contractor, A.F. Construction Co., Inc. of Las Vegas, five years after work began. The 702,000-square-foot Regional Justice Center, at South Casino Center Boulevard and Clark Avenue, is now expected to open by year's end. But it will need another $11 million worth of construction defects repairs before that can occur. The building was supposed to house 41 courtrooms and 2,200 employees starting in January 2002. Tenants like the state Supreme Court have extended their current 6,300 square-foot office lease twice as a result, says Ron Titus, court administrator. The Regional Justice Center is part of a $120 million public safety bond package approved by voters in September 1996. The price-tag, originally pegged at $80 million, increased after public officials made tenant additions and improvements. In 1999, the joint-venture team of ICI/J.A. Jones Construction emerged as the apparent low bidder at $120.8 million. But a dispute centering on a state law that adds five percent to out-of-state firms' proposals scuttled the contract award. Bidders' preference is a controversial practice that critics say prevents more capable contractors from participating, while proponents believe it keeps local dollars from leaving the state. "There have been a lot of problems with out-of-state contractors coming into town for just a job or two and leaving," says Mike Pack, president of the Associated General Contractors, Las Vegas chapter. "Local contractors pay taxes and contribute to the community. They are also more willing to work with local agencies." Charlotte, North Carolina-based J.A. Jones Inc., who built the Lloyd D. George Federal Courthouse, partnered with a local firm to circumvent the preference rule. So the county chose the second lowest bidder, A.F. Construction, which had a $123.5 million proposal. (The total cost of the center has since reached $195 million and counting.) Perini Building Company, the firm responsible for the Clark County Government Center, submitted a bid $1.5 million higher than the one that landed A.F. Construction the job. Much of the project's difficulties stem from the state's mandatory low bid procurement process, which awards contracts based on cost alone. The method doesn't evaluate company experience, history, personnel or financial strength. In other words, a contractor who builds a 7-11 could also land a multi-million dollar public project if the price was low enough. Some unscrupulous contractors purposely bid projects low in order to secure the deal, hoping to make a profit from change orders. The county has since implemented a partial pre-qualification process based on a dozen different criteria ranging from bonding capacity to project experience. The measure became effective January 6, 2004. "The legislation enables the county to pre-qualify contractors on buildings, parks and other non-right away projects exceeding $250,000 that are not federally funded," says Erik Pappa, county spokesman. "The method has seemingly worked well so far." Despite this, the low bid environment has deterred many of the valley's best and most capable contractors from seeking public work. Resort contractors such as Perini and Marnell Corrao Associates focus on private negotiated work where the project award is based on best value as opposed to cost alone. "Low-bid public projects create an adversarial relationship between the contractor and owner from the outset because it awards jobs based on the cheapest price," says Richard Rizzo, president of Perini Building Company. "By contrast, a private, negotiated contract has a guaranteed maximum price with a fixed fee for the contractor, which brings the contractor, architect and owner together under an umbrella of cooperation for a team atmosphere with shared goals." Some believe that A.F. Construction, a non-union contractor, who performs only a small portion of its own work, was in over its head from the start. The firm was also doing a $67 million Detention Center expansion at the same time the Regional Justice Center project was taking place. The 1,372-bed detention addition opened 13 months late in October 2002, finishing $18 million over budget. "The biggest and most successful general contractors self-perform work because it enables them to control the project schedule and pacing while setting a high quality standard," says Marc Fuhrman, senior administrative assistant for the Southwest Regional Council of Carpenters. "For traditional nonunion contractors, operating in this market, it's difficult to get qualified trades on a daily basis. Having access to a large skilled workforce when you need them is much more important on a big complex project than it is with something smaller like a house or a convenience mart." As things worsened, the county recruited Randall Walker, its aviation director, to help straighten out the mess in March 2002. McCarran International Airport has a strong history of successfully handling large multi-faceted building projects. Walker subsequently recruited some internal staff as well as personnel from the airport's construction manager, Bechtel Infrastructure Corp. of San Francisco, to oversee the center's progress. What they discovered was a laundry list of construction defects that included leaking roofs, uneven floors and shoddy electrical work. A.F. Construction's bonding company, Fireman's Fund Insurance Cos. of Novato, California, was notified of the deficient work, which prompted them to send Clark Construction Group, Inc. of Methesda, Maryland, to oversee the job and rescue the performance bond from going into default. The county eventually stopped paying the company in March 2003, and began assessing $12,000-a-day damages, which now total over $14 million. Predictably, the project troubles have led to finger-pointing, with each side blaming the other for its current dilemma. The differences will be worked-out in binding arbitration trials, which won't begin until 2007. "A.F. has done a lot of work in the last year, but most of it was for repairing faulty construction rather than actual progress work," says Randall Walker. "When you have a problem, you normally work through it. We didn't seem to be able to do that with A.F. It was extremely painful." Although the center is now about 92 percent complete, it must still undergo defect repair work in order to meet building codes for occupancy. Fireman's Fund Insurance is responsible for hiring someone to finish the work. "We've received the notice from the county, and we have a number of questions. We will ask them to clarify their complaints so that we can do a full investigation," says John Kozero, spokesman for Fireman's Fund. "But [we] will make sure this project will be completed exactly the way it should be." The county is presently assessing the scope of repair work needed, and hopes to begin a phased occupancy starting on October 1, with the state Supreme Courts and Marriage License Bureau moving in first. The center is anticipated to be completely occupied by late December. tonyillia@aol.com | 702-303-5699 TIMELINE TO DISASTER Sept. 1996 - Public Safety Bond initiative passes Sept. 1999 - Project put out to public bid; bid dispute occurs Oct. 1999 - Regional Justice Center wins receives a design award from the American Institute of Architects' Committee on Architecture for Justice. Dec. 1999 - County selects A.F. Construction as general contractor Jan. 2000 - Regional Justice Center breaks ground May 2001 - County hires consultant Marty Solomon for $100,000 to monitor project progress and report back to the board Jan. 2002 - Regional Justice Center misses its first scheduled opening Mar. 2002 - County brings in Randall Walker to oversee the project Apr. 2002 - County agrees to pay $30 million in project cost overruns Feb. 2003 - Fireman's Fund brings in Clark Construction to oversee the project Mar. 2003 - County stops paying its general contractor, A.F. Construction Aug. 20, 2003 - A.F. Construction files a lawsuit against the county Jan. 2004 - County pre-qualification criteria goes into effect April 19, 2005 - County notifies bonding company that it has removed its contractor Oct. 1, 2005 - Regional Justice Center expected to begin phased move in Dec. 2005 - Regional Justice Center scheduled for complete occupancy 2007 - Arbitration trials are scheduled to begin |
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