The City of Whitewater, together with UW-Whitewater and the Whitewater Community Development Authority, is undertaking an eleven-million dollar, publicly-funded technology park project. The centerpiece of that project is an Innovation Center building.
(I have written about the project before; for information on the relationship between the three organizations involved in the project, see the Memorandum of Understanding between them, available online at the Technology Park’s website.)
The project, including the centerpiece ‘Innovation Center’ building, relies on a federal grant from the Economic Development Administration, with additional funding from the issuance of millions of dollars in federally-subsidized Build America bonds.
In late September, the federal Economic Development Administration sent a letter to the City of Whitewater’s city manager, Kevin Brunner, among others, directing work on the project cease and desist based on an alleged violation of federal regulations on competitive practices. The letter is from C. Robert Sawyer, Regional Director of the Economic Development Administration. I have embedded a copy of the letter below, the first paragraph of which describes the federal directive to halt work related to the Innovation Center:
It has come to the Economic Development Administration (EDA) attention that the construction contractor for the Whitewater Technology Park building portion of the Project has not been awarded per EDA Standard Terms and Conditions. The construction contractor is also working as a construction project manager developing specifications, requirements, statements of work, and invitations for bid and/or requests for proposal. This is a clear violation of the Grant Award Terms and Conditions and in particular, CFR 15 § 14.43 Competition. This unauthorized action subjects the grant to possible termination for cause.
The City of Whitewater, Community Development Authority and the University of Wisconsin-Whitewater, as co-grant Recipients, are hereby advised to cease and desist, all construction activities associated with this EDA investment….
A full accounting of this matter by the EDA will be required before it will authorize any additional Project activities….
See, full letter from the Economic Development Administration to the City of Whitewater, among others:
(Note: The letter does not say what prompted the review and directive from the Economic Development Administration.)
Federal Legal Requirements
The Code of Federal Regulations, Section 14.43, Competition, requires that
All procurement transactions shall be conducted in a manner to provide, to the maximum extent practical, open and free competition. The recipient shall be alert to organizational conflicts of interest as well as noncompetitive practices among contractors that may restrict or eliminate competition or otherwise restrain trade. In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, invitations for bids and/or requests for proposals shall be excluded from competing for such procurements. Awards shall be made to the bidder or offeror whose bid or offer is responsive to the solicitation and is most advantageous to the recipient, price, quality and other factors considered. Solicitations shall clearly set forth all requirements that the bidder or offeror shall fulfill in order for the bid or offer to be evaluated by the recipient. Any and all bids or offers may be rejected when it is in the recipient’s interest to do so.
(Emphasis added.)
Selection of a Construction Services Firm: J.P. Cullen
A review of the minutes from the August 11, 2009 meeting of the Technology Park Board, available online at the Technology Park website, shows that the Board selected a construction manager at the meeting, as recorded at Item 5 of the minutes:
Discussion of Approval of Construction Management Services Agreement, Gayhart explained that he, Brunner, Knight and Cliff Goodhart had interviewed three firms for construction management services yesterday. These firms were Findorff Construction (Madison), J. P. Cullen & Sons (Janesville), and Miron Construction (Menasha). After due deliberation and consideration, the committee is recommending that J. P. Cullen be selected to provide construction management services for the Whitewater Innovation Center project and that a recommendation be made to the Community Development Authority and Common Council to approve a construction services agreement yet to be finalized with Cullen. It was moved by Gayhart and seconded by Brunner to approve the recommendation to hire J. P. Cullen and Sons for construction management services. The motion was unanimously approved.
(A summary of estimated costs from Cullen, in a letter dated April 16, 2010, and linked below, indicates that Cullen estimated its construction management charges at $285,436.)
A review of the minutes of subsequent meetings shows that Cullen’s representatives routinely participated in Technology Park Board meetings. See, online minutes.
The Construction Management Firm Recommends Itself for a $2.8 Million-Dollar General Construction Bid
At a Whitewater Community Development Authority meeting on April 19, 2010, as recorded at Item 6 of the meeting minutes, the CDA took action on bids that Cullen, as the construction management firm, itself recommended:
6. Discussion and Possible Action on Bid(s) for construction of the Whitewater Innovation Center (as part of the Whitewater University Technology Park and Economic Development Administration Grant) Brunner noted that bids were opened on Thursday, and it was a competitive process. Low bidders were outlined in an outline provided by JP Cullen.
Attached to the minutes is a letter from the Cullen firm, addressed to City Manager Brunner, and outlining recommended bids. For the general construction base bid, Cullen recommended that
For Base Bid #1 — General Construction, three responsive bids were received ranging from $2,890,195 to $3,070,000. JP Cullen & Sons, Inc. submitted the lowest responsive bid at $2,890,195 and we recommend that they be awarded a contract for Bid Category #1.
The minutes record that
Jeff Knight motioned to (on behalf of both the CDA and the Whitewater Technology Park Board) approve the bids for the construction of the Whitewater Innovation Center. Jim Allen seconded.
CDA Ayes: Jim Allen, Jeff Knight, Alan Marshall, Tom Miller, Jim Stewart
Nays: None
Absent: Al Stanek, Marilyn Kienbaum
Tech Park Board Ayes: Chancellor Telfer, Kevin Brunner, Peter Zaballos, John Chenoweth, Jim Stewart, Bud Gayhart, Jeff Knight
Nays: None
See, minutes of the April 19, 2010 Community Development Authority Meeting, with letter from the J.P. Cullen firm:
The minutes record no discussion of Code of Federal Regulations 15 § 14.43 on competition and the prohibition against a construction management firm receiving compensation as a contractor.
Latest Community Development Authority Meeting
On September 27, 2010, the Whitewater Community Development Authority held a regular board of directors meeting. The agenda for the meeting is available online. Item 10 from the agenda lists a discussion of the technology park:
10. Whitewater Technology Park
a. Innovation Manager Search Update
b. Economic Development Administration Update
c. Infrastructure Updates
i. Starin Road Extension
ii. Tech Park Infrastructure
A video recording of the meeting is available online. Beginning at 1:17:45 into the recording, Whitewater city manager Brunner discusses item 10 b, “Economic Development Administration Update.” I have embedded the video below, with my own transcription of the relevant discussion:
Transcript of conversation:
Brunner: Economic Development Administration update. We continue to work with the EDA on a variety of compliance issues. We have a meeting scheduled with them next week to discuss some concerns the EDA has regarding the Innovation Center and we hope to work out the details of that with them next week.
[Cross talk with Mary Nimm, CDA Coordinator]And we have a new rep who has brought a new set of eyes and a lot more [laughs] detail, a lot more detail that we have to go through… So, that’s that… I don’t know, Mary, do you want to make any other EDA comments?
Nimm: Just that we have a new rep.
(Notes: 1. Although the letter from the Economic Development Administration bears a stamp of 9-28-10, it is likely that other telephone, email, or written communications on this subject preceded receipt of the letter. The addressees in the letter likely knew about the directive in the letter before the September 27, 2010 CDA meeting. 2. Although the Economic Development administration apparently has a new project representative, the federal regulations on competition in construction have been the same during the entire course of the project. The representative may be different, but the law and the obligations for the project have been the same throughout.)
Additional posts will follow as developments warrant.