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Kosta Diamantis advocated ‘hybrid’ school building setup despite pushback

For years, Kosta Diamantis, the former director of Connecticut’s school grants program, advocated for a policy that would allow certain construction companies to claim more of the profits from school building projects — while potentially sidestepping the state’s normal bidding process.

Diamantis used his influence to advance contracts and, ultimately, legislation that would enable construction management firms to “self-perform” some of the work on schools using their own building crews, according to documents obtained by the Connecticut Mirror.

Those construction management firms traditionally don’t get paid to excavate the sites, pour the foundations, erect the walls, wire the buildings or install the plumbing for school projects in Connecticut. Instead, they are hired to review the designs, create the construction schedules and generally oversee the project for municipalities and the state.

The physical construction work for schools has historically been put out to bid so that other subcontractors can compete for those jobs and the millions of dollars that come with them.

But Diamantis wanted that arrangement to change, and to accomplish that goal — despite pushback from contractors — he convinced lawmakers in 2019 to alter state law so that school projects could utilize the so-called “hybrid” construction model. And while implementation of the law has been delayed repeatedly, it is set to go into effect in July.

Diamantis, who previously served as a state Democratic lawmaker for 14 years, said he asked the legislature to add language to an emergency funding bill so that construction management firms could use their own employees to build portions of the state-financed schools.

That law enabled state officials and the local school building committees to award portions of a construction project to a construction management firm if they decided it was “more cost-effective than a subcontractor.”

In an interview this week, Diamantis said allowing pieces of the school projects to be built by construction management firms would save the state and municipalities money and would help to prevent change orders, which can drive up the overall price of construction.

“There is a value to that, both to the community taxpayer and the state taxpayer who is investing in these projects,” he said.

The hybrid setup, Diamantis said, would allow contractors such as O&G Industries and D’Amato Construction to serve as managers on the projects while also using their experienced construction teams to build portions of the new schools.

Diamantis stepped down from his position overseeing the school construction program on Oct. 28, 2021, after being placed on paid administrative leave.

Around the same time, the state received a federal grand jury subpoena for records related to the state’s school grants program.

Diamantis and several of the largest construction management companies are named in those subpoenas, but it’s unclear if Diamantis’ push for the new legislation is of interest to federal investigators.

Construction companies pushed back immediately

The bill Diamantis persuaded lawmakers to pass, however, had already ignited numerous complaints from officials within Connecticut’s construction industry.

Several industry groups have argued for more than three years that the law would allow construction management firms to bypass the normal bidding procedures for state building projects.

The legislation, Diamantis said, was never meant to subvert the public bidding procedures on school construction projects.

“Absolutely not,” he said. “That was never the intent of the language.”

But that’s not how the new leadership at the state Department of Administrative Services and the Office of School Construction Grants & Review explained the situation this week.

Michelle Gilman, the new DAS commissioner, asked lawmakers during a legislative hearing on March 7 to pass a new bill this session that would ban the “hybrid” construction model that Diamantis repeatedly advocated for.

Noel Petra, who took over the school grant program last year, explained that the language Diamantis helped to introduce in 2019 could allow a construction manager to perform work on a project without ever asking for bids from other companies.

“They actually wouldn’t be required to bid it,” Petra told lawmakers.

Petra’s statements to lawmakers, Diamantis said, were misleading and meant to create a false “narrative” about him and the school grant program that he ran for more than six years.

“Noel Petra doesn’t understand the school construction program, and he certainly doesn’t understand how it operates,” Diamantis said. “The school construction program is an outstanding program, and it shouldn’t be used as a tool to throw dirt.”

Lora Rae Anderson, a spokeswoman for DAS, said no construction company, to the agency’s knowledge, was ever given permission to manage a new school and build part of the same project.

But that wasn’t for a lack of trying.

Taking over

Even before the legislation passed in 2019, Diamantis was pitching his new construction model to municipalities.

In early 2018, he sent an email to officials in Bristol informing them that he had a new construction plan, which he claimed would drastically limit price changes and delays on the city’s new Memorial Boulevard Arts Magnet School.

“I believe this is going to take over … and reduce costs and time,” Diamantis wrote. “We think, as a team here, you should use it given the nature of the work involved.”

The city and the state would benefit, Diamantis argued, if Bristol let the construction manager self-perform a significant portion of the work on the more than $60 million school renovation project.

Emails, letters and meeting minutes obtained by CT Mirror show Bristol’s school building committee went along with that plan for months, as the city’s staff worked to adopt the specific contract language that Diamantis wanted.

But those plans came to an abrupt halt in the fall of 2018, just as Bristol was preparing to choose a construction manager for the project.

Roger Rousseau, Bristol’s purchasing agent, informed Diamantis that the city received a “variety of questions” from contractors about the new requirement that 20% of the project be built by the construction manager.

“The city is requiring the (construction manager) to self-perform with its own employees,” one of the contractors wrote. “Is there a state or other requirement requiring the city to do this?”

In an attempt to answer those questions, Rousseau asked Diamantis to provide some examples where other towns or cities allowed a construction management firm to build part of a school.

The city also requested legal opinions from Diamantis to confirm that the new “hybrid” model would comply with the state’s bidding laws.

Those emails went unanswered, according to city officials.

Instead, Bristol hired Donald Doeg, an attorney specializing in construction law, to provide the city with his legal opinion on the matter.

Doeg, who is well known in the state’s construction industry, pointed out that state law required all of the physical construction work on school projects to be awarded to the lowest qualified bidder.

And he warned that automatically awarding 20% of that work to the city’s chosen construction manager would open the city up to legal challenges.

Bristol eventually hired D’Amato Construction, a Bristol-based company, to manage that school project. But the school building committee stripped out the requirement that the company build 20% of the projectwith its own construction workers.

Diamantis said he disagreed with the legal advice that Bristol received, and the next year he took his proposals to the Connecticut legislature.

‘Beyond unorthodox’

The language that Diamantis helped to tuck into the legislation in 2019 didn’t draw much attention when it passed.

It was little more than a footnote on an annual appropriations bill that also approved more than $160 million in state funding for eight different school construction projects.

With several school projects on the line, the bill sailed through the House and Senate in less than a day and was signed by the governor shortly after.

But in the years that followed, those legal changes prompted several groups to issue warnings to state lawmakers and Gov. Ned Lamont’s administration.

Talking points that were drafted in preparation for a meeting with Lamont in July 2020 show leaders within the state building trades were deeply concerned with the law and the influence that Diamantis asserted on school projects.

“We have emails between the (Office of School Construction Grants & Review) and municipal officials stating that they are creating this ‘hybrid’ method,” they wrote. “This is beyond unorthodox.”

Lamont, in the wake of the federal investigation into the school grant program, said that he was never presented with those talking points and that the perceived problems with Diamantis never came up at that meeting.

But the opposition to the 2019 law wasn’t isolated to a single meeting with the governor.

Similar complaints continued to be shared with Diamantis and other state officials into the summer of 2021, not long before Diamantis left his position at the Office of School Construction Grants & Review.

Groups like the Associated General Contractors of Connecticut warned state officials and the legislature that allowing construction management firms to use their own crews to build parts of the projects could be problematic.

That was especially true, they argued, if there weren’t more adequate protections put in place to ensure every company had an equal chance at performing work on the school projects.

John Butts, the executive director of the Associated General Contractors, drafted numerous letters and legislative testimony, protesting the “ill-conceived” legislation that Diamantis championed.

The law, Butts argued, needed to be repealed or significantly reformed in order to “protect the sanctity of the public bidding system” and the interests of the state.

The general contractors association and other groups successfully lobbied lawmakers in 2020 and 2021 to prevent any municipalities from utilizing the “hybrid” model until the law could be reformed. It is set to go into effect in July.

And they provided legal recommendations to lawmakers that would ensure every aspect of a school project was put out to bid and that the construction managers wouldn’t have an advantage over subcontractors in that bidding process.

Those recommendations were introduced in a bill last year, but the legislation stalled during the session.

Diamantis said he had no objections to the protections those groups wanted to add.

But he said it would be a mistake to prohibit construction management firms from building any part of the schools in the future. Doing so would only cost taxpayers more money, he argued.

The new leaders at DAS don’t see it that way.

The policies Diamantis enacted need to be repealed, the agency said, in order to level the playing field and ensure every contract for school construction projects is competitively bid.

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