'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.