Manager at CT State Pier recommended itself for $87M in contracts
The company hired to oversee the redevelopment of the State Pier in New London recommended itself for tens of millions of dollars in subcontracts under the project, even in some cases where another construction firm submitted a lower-priced bid to the state.
That arrangement is now drawing criticism from a few state lawmakers who are concerned about the potential for a conflict of interest.
Public records show the Connecticut Port Authority selected Kiewit Corporation to serve as the construction manager on the multimillion-dollar infrastructure project, which is expected to operate as a launching point for offshore wind turbines.
That position gave Kiewit the authority to sort through bids from various subcontractors and to make recommendations about which construction companies should build portions of the new pier.
At the same time, Port Authority leaders gave Kiewit the ability to submit bids of its own and to compete with other businesses to perform the physical work on the project.
That setup, which is prohibited under Connecticut law for many state-funded building projects, placed Kiewit in an influential position: The company got to develop the criteria and rules for each subcontract. And it helped judge the offers submitted by its competitors.
According to records from the Port Authority, Kiewit captured a large portion of the money being spent on the State Pier project, which has become the focus of a federal investigation and has seen its budget balloon from an estimated $93 million to more than $255 million.
Kiewit, which is headquartered in Nebraska, is being paid millions of dollars to serve as the construction manager — responsible for reviewing the building designs, developing the construction schedule, controlling the overall project cost and supervising all of the work at the State Pier.
And the company has also recommended itself for at least five subcontracts under the project, which are worth roughly $87.8 million. It won five of the six contracts for which it submitted bids, according to records from the project.
The Port Authority selected Kiewit to do everything from installing new electrical lines, building new drainage systems, demolishing the old pier and driving new steel pilings into the edge of the Thames River.
But some lawmakers are now questioning whether it was appropriate for the Port Authority to give one company that amount of influence over a taxpayer-funded infrastructure project.
Sen. Paul Formica, a Republican who represents the district where the new pier is being built, argued it was a poor business practice to allow Kiewit to both manage the public bidding process and submit offers for work at the site.
“I definitely think there is an opportunity for an extreme conflict of interest here, and it should have been avoided at all cost,” said Formica, who has been a supporter of the redevelopment effort.
Not always the low bidder
Documents obtained by the CT Mirror through a request under the state’s Freedom of Information Act show that Kiewit was the lowest bidder for several of the subcontracts it was awarded.
But not all of them.
In two cases, the records show Kiewit’s bids came in above offers submitted by JT Cleary, a New York-based company that specializes in marine construction.
Yet after reviewing those offers, records show Kiewit employees sought to convince the Port Authority to skip over JT Cleary and to hire their company instead.
In one of those cases, Kiewit pushed state officials to set aside the bid from JT Cleary even after the Port Authority had already voted to award the subcontract to that company.
Emails and other correspondence show Kiewit used its position as the construction manager to meet with state officials, where it critiqued JT Cleary’s offers and persuaded those officials that Kiewit itself was the better choice.
During one such gathering on June 30, 2021, Kiewit staffers made their pitch directly to former state deputy budget director Konstantinos Diamantis, whom Gov. Ned Lamont put in charge of the State Pier project in 2019.
In an email following that meeting, Peter Maglicic, a manager for Kiewit, reiterated why he believed hiring JT Cleary would cost the state more money, despite the company’s bids coming in below Kiewit’s.
Maglicic provided Diamantis and other state officials with two reports that Kiewit employees created. Those reports picked holes in JT Cleary’s bids and predicted the work would cost roughly $6.2 million more than the New York-based company had quoted the state.
“We continue to believe that Kiewit offers the best value to the CPA on these two packages,” Maglicic told Diamantis. “The equipment required to perform this work has already been sourced, putting us in a position for expeditious mobilization.”
Maglicic also complained that JT Cleary was holding up negotiations over the subcontract that had already been awarded to the company. Those negotiations, he claimed, could affect the tight construction schedule for the State Pier.
But that’s not how JT Cleary interpreted the situation. In an email, Alfonso Perez, the president for JT Cleary, argued Kiewit was unfairly setting aside his company’s bid to build one of the retaining walls at the new pier.
“It is unfortunate news that the Combi Wall project will not be awarded to the apparent low bidder, without explanation nor cause,” Perez wrote.
Perez, who declined to comment for this story, accused Kiewit in the email of stifling the negotiations with his company, and he announced that he was withdrawing both of his company’s bids as a result.
Managing the manager
It’s unclear from the records if Diamantis, who stepped down from his posts in state government in late 2021 amid multiple investigations into his conduct, responded to the bid dispute and Kiewit’s recommendations.
Diamantis told the CT Mirror that any questions regarding Kiewit’s subcontracts would be better directed to David Kooris, the chairman of the state Port Authority, and his fellow board members.
The records show that the Port Authority and AECOM, another consulting firm hired to advise state officials on the pier project, eventually signed off on Kiewit’s recommendations.
Those decisions allowed Kiewit to win two of the larger subcontracts for the project, which are worth at least $47.7 million.
Prior to approving those deals, several members of the Port Authority noted how Kiewit was participating in the same bidding process it controlled.
One of the board members also recognized the large number of subcontracts that Kiewit was being awarded as part of the redevelopment of the State Pier.
“I see that Kiewit is getting a lot of these major contracts,” Thomas Patton, a board member, said during the meeting on July 13, 2021. “Are we getting the benefit of them, with mobilization or other on-site matters, because of the volume of work that they are getting?”
The Port Authority’s leaders did not raise any concerns about Kiewit advising the state on subcontracts from which the company stood to profit.
The CT Mirror provided the Port Authority records to the governor’s office, but Lamont, through his staff, declined to answer questions about whether he thought it was appropriate for Kiewit to recommend itself for the state contracts.
Kooris and other officials with the Port Authority told the CT Mirror that Kiewit’s recommendations on the subcontracts did not present a conflict because AECOM also reviewed the bids and made the same recommendation to the board.
AECOM was there, they said, to look over Kiewit’s shoulder and scrutinize its work.
Marlin Peterson, AECOM’s leader on the state pier project, said his company made sure that Kiewit submitted its bids before reviewing the offers from other contractors. And he said AECOM’s recommendations on which firms to hire were made independently of Kiewit.
Teresa Shada, a spokeswoman for Kiewit, told the CT Mirror that her company followed all of the required bidding procedures for the State Pier. And she said Kiewit was performing its duties as the construction manager when it recommended that the Port Authority reject the two offers from JT Cleary.
“Kiewit’s role is to look at every subcontract and ensure the scope of work from the client aligns with the costs and information that the contractors put in their bid documents,” Shada said. “If our analysis reveals that the low bidder cannot achieve the scope of work based on the costs and numbers it included, or if it excluded certain scope of the work in its bid, we evaluate this along with the next bid, and so on.”
The overall cost of the bid, she said, was only one part of that review.
“We take our role as (construction manager) and reputation as an industry-leading construction contractor very seriously,” she said. “We operate with the highest levels of integrity and ethics — and continue to be focused on helping the CPA deliver the highest-quality project for the region.”
Kiewit, Shada pointed out, was entitled to “self-perform” work at the state pier because of the contract terms created by the state and the Port Authority.
The type of contract created for the State Pier work is expressly prohibited for many other state-financed building projects in Connecticut.
A state law, which was passed in 2006, banned construction management firms from submitting a bid on any work they were overseeing as part of the construction or alteration of a state building.
That law, however, does not apply to state-funded highway, aviation or maritime projects, state officials told the CT Mirror.
As a result, officials at the Port Authority chose to give Kiewit the opportunity to demolish and rebuild sections of the pier themselves. That decision was made, they said, in the expectation that it would ultimately save the state money.
When Kiewit was announced as the construction manager for the project, several Port Authority board members celebrated the firm’s size and experience on large construction projects.
At that same Dec. 15, 2020 meeting, Mark Rolfe, a deputy commissioner at the state Department of Transportation, offered a word of caution for his fellow board members: The Port Authority, he said, would need to have proper oversight for Kiewit.
“I will say this. They are a very aggressive contractor. They require active project management,” Rolfe said, according to an audio recording of the meeting.
“If there is an advantage to be gained, they’ll take it,” he added.
John Henshaw, the former executive director of the Port Authority, later explained to board members how Kiewit would be empowered to both manage and construct parts of the project.
But he promised the setup, which was developed in consultation with the state Department of Administrative Services and the state Office of Policy and Management, would not disadvantage other contractors.
Kiewit, Henshaw explained, “is able to bid to self-perform work, but it will be treated the same as any other bidder.”
“The lowest-priced, qualified bidder will get the work,” he told board members.
Connecticut lawmakers, who have monitored the progress on the State Pier project in recent years, are not confident the Port Authority has followed through on that pledge.
Sen. Henri Martin, a Republican who sits on the State Bond Commission, which has approved roughly $178 million for the project, said he is not inherently opposed to Kiewit constructing parts of the pier.
But he is concerned about whether Kiewit’s control over the bids and the negotiations over the subcontracts created an unfair advantage for that company.
“Is the process being done the right way?” Martin asked. “Was JT Cleary treated fairly? If I were them, this would seem suspicious.”
Martin said he may consider asking the State Contracting Standards Board, which has oversight powers for the Port Authority, to open an audit into all of the subcontracts that Kiewit won at the State Pier.
Formica, the Republican senator from New London, argued there wouldn’t be any reason to question the process if Kiewit wasn’t given the authority to recommend itself for subcontracts.
All of it could have been avoided, he said, had the state hired a construction manager for that role and chosen other companies to build the project.