'Conflicted' contract may be rebid

'Conflicted' contract may be rebid

Under pressure from state authorities, the University of Illinois plans to rebid a multimillion-dollar contract with BLDD Architects of Champaign because of concerns about a potential conflict of interest, Chancellor Phyllis Wise said Monday.

The Illinois Procurement Policy Board raised questions this spring about the UI's $4.6 million contract with BLDD for work on the renovation of the 120-year-old Natural History Building because a top UI planner is married to a BLDD employee. The board recommended in April that the contract be voided, and it planned to discuss the matter again today in Springfield.

"I don't think there was a conflict of interest," Wise told The News-Gazette on Monday.

But she added, "We will rebid it (the contract). And it will cause a significant delay in the renovation of the Natural History Building, but it probably is wise to rebid it."

Michael Bass, senior associate vice president who oversees UI capital projects, said the university will await the outcome of today's hearing before deciding how to proceed. He said the contract will be "a topic of discussion" at this week's UI Board of Trustees meeting Wednesday and Thursday in Chicago.

The controversy has already delayed the work by four months, at a cost of $366,000, and any further delays could push that cost over $1 million, UI officials said in documents provided to the state board.

At issue: Jill Maxey, UI associate director of planning in Facilities and Services, who supervises some aspects of campus construction projects, is married to Bruce Maxey, who works at BLDD and owns a 8.9 percent share of the firm. Jill Maxey is also a former BLDD employee.

BLDD disclosed the relationship, as required under state law. And the state's chief procurement officer for higher education, Ben Bagby, last month refused to void the contract, saying he found no evidence that the potential conflict resulted in any improper actions, documents show.

But the state procurement board didn't learn about the potential conflict until March 2012, more than a year after BLDD beat out 33 other firms for a $368,000 contract for conceptual design work on the project. The UI also expanded the contract in December 2011, agreeing to pay BLDD $4.3 million for architectural and engineering services for the duration of the project.

The procurement board's executive director, Aaron Carter, said board members today could accept Bagby's recommendation or vote again to void the contract, based on procedural violations — namely, he said, the failure to report the potential conflict to the board in advance and Bagby's decision to move forward with the project before it was vetted by the board.

A state law that took effect in July 2010 requires that when a potential conflict of interest is identified or "reasonably suspected," the state chief procurement officer must send the contract to the Procurement Policy Board. The board then recommends whether to allow or void the contract or bid offer, "weighing the best interest of the state of Illinois."

UI officials made a determination in 2010 that notification wasn't required under its interpretation of the new law, according to testimony from a hearing in May prompted by the procurement board's vote.

Assistant Vice President Maxine Sandretto, the UI's state purchasing officer, saw the potential conflict as a "serious concern given the close relationship involved," emails show. But she consulted with the UI's legal department, which advised that the statute didn't apply to Maxey because she did not meet the salary threshold in the state procurement code.

The UI also argued that it had an internal procedure in place to prevent a conflict, as Facilities and Services had set up an informal "firewall" to remove Maxey from the decision-making process if BLDD bid on a project. Therefore, they argued, no potential conflict existed.

But the procurement board said documents and testimony from the hearing revealed several "breaches" in that firewall. Maxey recused herself once BLDD bid on the Natural History project but was later copied on several emails about the scope of the project, before a firm had been chosen.

Also, the employee that Maxey assigned the project to, Anthony Battaglia, testified that he had connections to the firm, playing in a band with some BLDD employees. His wife's brother-in-law works at the firm, documents show. Battaglia testified that he removed himself from the process after the four finalists were chosen.

Bagby conceded in his decision that the university's efforts at the firewall were "weak," adding, "The process was simply lacking." And he said the UI should have submitted the contract for review before it was signed.

"The university has changed its position and is now submitting disclosed potential conflicts for review before signing contracts," Bagby noted in his decision last month.

But he also said it would be too expensive to rebid the project now.

Carter said both the UI and Bagby have made that argument, but "had it been disclosed initially it would have been a whole different story."

The university said Maxey did not participate or comment on the selection of BLDD architects or on the fee negotiations with the firm, and she was removed from any decision-making involving BLDD. But that didn't preclude her involvement in earlier stages of planning, scheduling or budgeting, part of the scope of her job, the university said.

However, the university has since modified its procedures in Facilities and Services to tighten the firewall, directing that a formal memorandum to be sent to all staff directing any questions to Maxey's supervisor when BLDD bids on a project. It also says that Maxey won't be copied on any emails or consulted on any matters related to the selection, negotiation, contracting or management of BLDD.

Bass said the policy needs to be formalized "at a minimum," and a conflict management plan put in place.

"The firewall was not as effective as we thought it would be," Bass said Monday.

Carter indicated the university may have to make substantial changes to satisfy the board's concerns.

"The board will have the same feeling every time this issue comes up unless there's some pretty good policy in place to prevent this," he said. "There's no way right now we can distinguish that this individual wasn't involved ... from influencing a decision."

The Natural History Building was initially scheduled to reopen by fall 2015, but that's already been pushed back to winter break of 2015, and any further delays mean the building wouldn't be available until the summer of 2016. The total cost of a 12-month delay would top $1.1 million, the university said.

The UI said the project carried some urgency because a structural analysis in June 2010 determined that 40 percent of the building was structurally unsound. The floors were sagging, and the entire 1908 addition had to be evacuated.

The state procurement board contacted the other three finalists for the project, asking if they would be willing to take it over using BLDD's work from the initial phase as a basis. All three said yes.

Bill Latoza of BauerLatoza Studio, which finished less than a point behind BLDD in the UI's scoring system for the finalists, said it would take two weeks for his firm to become familiarized with the project. He said that would not add any cost to the firm's initial base-fee bid.

The third-place firm, Holabird & Root, estimated that it would cost $100,000 to $150,000 to review the work to date and propose any modifications. The UI would also have to pay BLDD for any work to date, principal James Baird wrote.

Maxey could not be reached for comment Monday evening.

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rsp wrote on July 17, 2012 at 10:07 am

I hate to say it but maybe they need an outsider to look at the conflict policies they have and how they are implimenting them. An outsider would know you don't copy the emails to someone but when you work there and it's someone you know and trust you don't think about how things look. Especially when that is part of that person's job. Poor implementation of a recent law result in a lot of wasted time and money.

Sid Saltfork wrote on July 17, 2012 at 1:07 pm

It is a 120 year old building.  It is not functional by today's standards.  Demolish it.  It would be cheaper.  Use the space for a new building, or a parking lot. 

Fromthearea wrote on July 17, 2012 at 2:07 pm

For once UI was going to use somebody local, and now that's been screwed up by the state?  Ridiculous. What a waste of money to rebid.

ddf1972 wrote on July 17, 2012 at 4:07 pm

And what sort of building, architecture, and build quality would we get for anywhere close to $5 million?

Sid Saltfork wrote on July 17, 2012 at 5:07 pm

"Historic" buildings are not green.  They require continued, and costly care.  When new buildings on campus are built sometimes someone wants to pay part of the cost to have their name on it.  Renovation of "historic" buildings generally has the state paying the cost.  Yes, a new building would cost more money.  However; it would be energy efficient, and less costly to maintain not counting the regular renovations.  The present building is a dinosaur.  How many times has it been "renovated"?  It will continue to cost after this renovation.  How many "historic" buildings do you want renovated on campus?

pattsi wrote on July 17, 2012 at 10:07 pm

Sid Saltfork, I do not know where you get your information about the ability to turn an old building into an energy efficient building. You might check the abundance of information on this topic on the UIUC Building Research Council web site indicating that this can be accomplished plus do a search on the internet for examples where this has been done . Next as another person mentioned to build a new building with the qualiy of materials that presently exist in the old building for the monies quoted could not happen. Further, Bruce Hannon, now retired from the university, wrote the seminal article published in Science about embodied energy. It is so convenient to say just scrape a building and build new with total disregard of the cost of the embodied energies in the old buildng plus the cost of road wear to take out old materials and bring in new along with the landfill issues and maybe contamination. When these values are added to the cost of building new, all of a sudden that cost far exceeds renovation costs.

Look at what Doug Farr, Chicago architect, was able to do with an already existing building in Chicago to turn the building into the premier example of renovating this building and making it sustainable along with doing the same with the grounds, two 2-story high cisterns, and recycled right on site all of the rubble that had been dumped there. Read about the building here   http://www.chicagogreentech.org/

Sid Saltfork wrote on July 17, 2012 at 10:07 pm

How long do you want to keep it?  Do you want to keep it for it's historic value, or for functionality?  The "embodied energies", and "maybe contamination" are not going to go away.  They will remain until the building crumbles.  The place was falling down a few years ago.  The "quality of materials" cost money to replace, or repair.  The "quality of materials" is not a necessary concern.  A replacement building would hopefully not use the same "quality of materials".  It is no different than a 120 year old house.  It will continue to be a money drain.  One thing after another will need repair, or replacement.  Face it... the U. of I. campus is not Oxford, or the University of Florence.  

pattsi wrote on July 18, 2012 at 7:07 am

Very interesting response because of your assumptions, mainly that any rrric newly built building will not have problems, maintenance costs, a 50-100 year building life--none of these are accurate. Rather than focus on historic value, which it does have for the university, focus, instead, on embodied energies and all of the costs involved that are huge. Why do you prefer to spend more of the taxpayer dollars rather than be economically efficient. The first step toward being green is building reuse rather than what tends to be built in this comunity for a building life of 10-20 years and is architecturally uninspiring.

One last point since we here like to emulate those institutions of higher education that are held in high regard--Harvard over a decade ago made a policy decision to reuse the buildings presently on the campus rather than tear down and build new because it was discovered that it cost much less to do so.

rsp wrote on July 18, 2012 at 8:07 am

My house is about a 100 years old. It's pretty solid. Was neglected before I bought it so it needed a lot of work. It stays fairly cool in the summer without ac, because window placement was designed for airflow. They don't do that anymore. With 1 1/2 in. thick plaster on the walls if the heat goes out we don't notice it for days. I even have hardwood floors in the bathroom. They don't make old buildings like they used too.

ddf1972 wrote on July 18, 2012 at 12:07 am

Not sure where you get your info, SS, but what you propose is penny wise and pound foolish.  The Natural History Bldg., like many older buildings on campus, has suffered from deferred maintenance, not obsolescence, or poor build quality.  We'd probably be lucky to get something today to replace that building for $50 million, and likely have to replace it sooner.  Many universities have found ways to adaptively re-use buildings.

Sid Saltfork wrote on July 19, 2012 at 2:07 pm

Hey, ddf1972;  The cost of the project is $70 million according to today's article.  Gee, if your "lucky"; you could save $20 million by building a new one for $50 million based on your estimate.