No bids asked on $5.2-million contract to demolish county courthouse annex

This remarkable story is from the Daily Reporter, the newspaper which covers the construction industry.

Reporter Sean Ryan's story says a $5.2-million contract to demolish the Milwaukee County courthouse annex was awarded without any bids.

Milwaukee County and the State Dept. of Transportation share the blame -- they would say responsibility -- for the no-bid contract.

They argue that this is an emergency situation, because the building needs to come down quickly because of Marquette Interchange work being done at the same time.

But the county, DOT, and the contractor, Walsh Construction Co., have been meeting since July. That makes it difficult to argue that there was not time for a bidding process.

Ryan's report:

Milwaukee County gave the $5.2 million courthouse annex demolition project to Illinois-based Walsh Construction Co. without soliciting bids.

The county spoke in private for months with the state Department of Transportation and Walsh, a lead contractor on WisDOT’s Marquette Interchange reconstruction, to make the deal. The county’s Office of Corporation Counsel has said that the deal is legal based on state and county laws waiving the competitive bidding rule under emergency situations, said George Torres, county director of transit and public works.

“We sat down with the DOT staff and my staff and Walsh and its subcontractor, I think it was Omega (Demolition Corp.), and tried to negotiate something that was livable for both of us,” he said. “We fall within all of the criteria.”

The courthouse annex hangs over Interstate 43 northbound, which Walsh is set to begin reconstructing next month as part of its Marquette Interchange contract. The county wants to trim demolition costs by ripping the annex down at the same time Walsh rebuilds I-43, Torres said. According to an Oct. 18 county legal opinion, the county was negotiating with WisDOT in the summer and fall to secure state funds for the job. By the time negotiations between the two concluded in October, WisDOT said it would only provide the funds if Walsh was the contractor.

WisDOT deal

According to the legal opinion, Torres began the funding negotiation with WisDOT at the end of July. Negotiations reached an impasse in early September. County delegates broke the stalemate by calling Walsh in for a meeting on Sept. 28.

“A WisDOT prerequisite for the meeting was having Walsh provide a proposed cost of demolishing the annex,” the opinion said. “A tentative deal was struck with the WisDOT engineers and Walsh whereby Walsh and their demolition contractor, Omega, proposed to demolish the building and abate the hazardous materials for $4.7 million, with a $500,000 contingency add-on.”

The contract supposed that the county would proceed with County Executive Scott Walker’s preferred plan to build a surface parking lot on the site after the demolition, Torres said. The County Board approved a different and more expensive plan on Dec. 16 and is scheduled to meet on Dec. 23 to discuss Walker’s promised veto. Walker’s office has said the county must reach an agreement by Friday to keep Walsh on schedule.

Walsh’s work on the Marquette is one reason the schedule is so tight. When negotiations began in the summer, WisDOT said the demolition would have to be done between July and September 2006, and wanted to charge the county $60,000 for every day the demolition delayed the interchange work. However, after losing the Marquette Interchange core contract to the Marquette Constructors LLC in September, Walsh began to fast-track its north leg work.

“Since it was not the successful bidder for the interchange core project, it is prepared to accelerate its work and complete the north leg of the interchange project early, as early as July 15, 2006,” the opinion said.

Walsh opposed bidding

The deadline shift threw off the county plan to bid a separate contract for the $2.2 million in annex asbestos-abatement work. The plan to begin the three-month abatement job in November was no longer good enough since demolition work would have to begin in January. Walsh offered to have Omega, based in Elgin, Ill., do demolition and abatement at the same time so the county could meet the interchange project’s schedule.

After announcing its advanced schedule and providing bid estimates at WisDOT’s demand, Walsh opposed any competitive bidding of the work.

“Walsh feels it would be at a competitive disadvantage if annex demolition and/or abatement went out for competitive bid, Walsh having already taken the time and expense to lay its cards on the table for all to see,” the opinion said. “Walsh, therefore, has stated it would refuse to participate in any competitive bid process.”

The opinion said WisDOT said it would not provide funds to the project unless Walsh was the contractor. The agency offered to waive the $60,000 a day delay penalty and forgive $250,000 in change-order charges it otherwise would’ve charged Milwaukee County.

Backed into corner

It said that, if Walsh didn’t get the demolition and abatement contracts, it would complete its Marquette Interchange work even earlier, “effectively removing any window for Milwaukee County demolishing and abating with its own contractors.”

“WisDOT for its part is only willing to enter into the referenced (Memorandum of Understanding) if Walsh is the general contractor,” the opinion said.

County law allows it to award a contract without publicly bidding it when there is an “immediate need for action to preserve property or protect life, health or welfare,” according to the county’s Oct. 18 legal opinion about the contract. On this project, it argues that the emergency is a matter of project scheduling for the demolition.

“The situation essentially comes down to Milwaukee County awarding the abatement and demolition contracts to Walsh or retaining the all the (sic) obligations associated with maintaining and repairing a deteriorating annex structure indefinitely,” the opinion said. “WisDOT and Walsh simply will not accommodate Milwaukee County in pursuing a competitive bid process at this late date.

“Failure to declare an emergency exception to public competitive bidding process would forfeit Milwaukee County $5.2 million in (Federal Highway Administration) funding.”

WisDOT was unavailable to comment before deadline; calls placed to Walsh’s construction trailer went unanswered.