A new state audit has criticized the Connecticut Port Authority for permitting the construction management company that is overseeing the redevelopment of the Connecticut State Pier in New London to recommend itself for several multimillion-dollar subcontracts for the public infrastructure project.
The State Auditors of Public Accounts, in an audit released Thursday, contended that the Port Authority’s decision to allow Kiewit Corporation, a large national construction firm, to manage the bidding process while simultaneously competing for the lucrative subcontracts created an opportunity for the company to gain an “unfair competitive advantage” over other construction businesses.
“The construction manager could gain an unfair competitive advantage over other firms, when it bids for subprojects for which it developed bid requirements, invitations of bids, or requests for proposals. The construction manager’s independent judgment and objectivity could be impaired when it reviews and assesses bid packages and competitor responses,” the auditors wrote.
The Port Authority maintains it had the appropriate controls in place.
Last month, the state Bond Commission approved another $30 million for the project after questioning members of the authority about why they needed the additional funds following promises they wouldn’t need anymore.
When it was announced by Gov. Ned Lamont in 2019, the cost of the project was estimated at $93 million. As of last month, the expected cost had swollen to more than three times that amount.
“This is like ‘Groundhog Day’. From an unfair contracting process to red flags regarding the selection of paid consultants, one thing is for certain: the lack of transparency at the Connecticut Port Authority endures. Year after year, we as lawmakers work in a bipartisan fashion to craft and pass legislation to reform the authority, yet it seems we will always have more reforms to make,” Sen. Heather Somers, R-Groton, said.
A report in 2022 shed light on how Kiewit used its authority as the construction manager on the maritime project to recommend itself for a handful of subcontracts worth more than $87.8 million, even in several instances where another company submitted a lower bid.
In response to this information, the leadership of the Connecticut Port Authority maintained that Kiewit’s position as the construction manager did not provide the company with an advantage when competing for various work on the project.
“It’s not like somebody awarded something to themselves,” Lamont said Friday. “It’s my understanding that some of these are very specialized skills and there’s only so many folks who do it. Perhaps the general contractor was able to move the dial there.”
The Port Authority explained that they controlled for any undue influence by filtering Kiewit’s hiring recommendations through another construction firm that was hired to advise the maritime agency on matters related to the State Pier project. They also argued that Kiewit did not have advanced knowledge of what other construction companies were prepared to offer before submitting its bids.
“The port authority believed the construction manager at-risk had sufficient compensating controls,” the auditors noted in their report.
Nevertheless, the auditors contended that Kiewit’s influence on the State Pier project provided the company with inherent advantages over other businesses that wanted to build portions of the new pier, expected to be used as a launching point for offshore wind projects.
The auditors highlighted that Kiewit got to develop the criteria for each subcontract, was in charge of sending out notices for other companies to submit bids, participated in meetings where those bids were reviewed, and was first to recommend to the Port Authority whom to hire. This, they said, made it extremely challenging for the Port Authority to avoid the appearance of a conflict or outright favoritism. It also raised questions about whether state taxpayers were getting the best value for their money.
“The construction manager’s independent judgment and objectivity could be impaired when it reviews and assesses bid packages and competitor responses,” the auditors wrote.
The auditors also indicated that Kiewit’s dual role as construction manager and a subcontractor created problems once the contracts were finalized, and construction was underway. The system meant Kiewit was put in charge of monitoring its own quality, safety, price, and completion schedule on the project, which has seen its overall budget grow from an estimated $93 million in 2019 to over $300 million this year.
The Port Authority responded to those concerns by stressing that officials from the state Department of Administration and the Office of Policy and Management had approved that setup when Kiewit was selected as the construction manager in late 2020.
However, lawmakers ensured the Port Authority would not need to make that choice at all. In the last days of the 2023 legislative session legislators passed a bill prohibiting the Port Authority from hiring any company to serve as both project supervisor and subcontractor simultaneously. That law went into effect in July.