Fort Worth school district pays millions for bond oversight

Posted Saturday, Oct. 19, 2013  comments  Print Reprints
AECOM management fees • Year 1 (Nov. 16, 2007, to Nov. 15, 2008): $4.8 million • Year 2 (Nov. 16, 2008, to Nov. 15, 2009): $6.15 million • Year 3 (Nov. 16, 2009, to Nov. 15, 2010): $6.3 million • Year 4 (Nov. 16, 2010, to Nov. 15, 2011): $4.51 million • Contract extension using program savings (Nov. 16, 2011, to Nov. 15, 2012): $3.4 million • Pre-construction services for proposed 2013 bond: $2.63 million (includes closeout costs) Source: Fort Worth school district

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One in an occasional series about the Nov. 5 Fort Worth school district bond election.

Diane Criswell, whose grandson attends Arlington Heights High School, says her faith in the Fort Worth school district was shaken a decade ago when a string of construction and financial problems plagued a big building program.

From 1999 through 2005, questions abounded as bond money was used for projects that hadn’t been presented to voters, shoddy work was completed on schools, and a crooked Fort Worth employee and a contractor stole millions of dollars and were sent to prison.

“It’s like someone who has made a contract with you and couldn’t keep up their contract,” Criswell said. “So I’ve lost trust.”

To regain credibility, the district hired an international program manager to oversee its $552 million bond program in 2007. And now the district is once again turning to AECOM Inc. of Los Angeles to handle the $490 million bond package to be decided by voters Nov. 5. Early voting begins Monday.

District officials say they are pleased with AECOM’s work on the most recent bond program, which paid for five new schools, classroom additions, technology upgrades and school renovations. They say the company has completed projects on time and within budget.

But the company’s work hasn’t come cheap. The district has paid AECOM $27.8 million since 2007. And according to its agreement with the district, the company stands to be paid $4 million to $6 million a year for managing the new program, based on the fees it was awarded from 2007 to 2011.

Besides working with school districts such as Dallas and Houston, AECOM has been involved in many glitzy construction projects, including the Olympic Park in Rio de Janeiro, which will host the Olympics in 2016, and the Hudson Lights project connecting Fort Lee to Upper Manhattan.

Superintendent Walter Dansby said he was sold on AECOM six years ago when he conducted a statewide search for a suitable program management firm.

“I went to Pasadena, Houston,” said Dansby, who at the time was the deputy superintendent overseeing the bond project. “I went and I visited Dallas. I sat in construction meetings to see how this stuff operates.”

When the district sought to hire a program manager, AECOM emerged as a top operator, he said.

“The district has received outstanding quality services from the AECOM staff and its local subconsultants,” Dansby said.

Seeking value for taxpayers

But several industry officials, including the top construction attorney for scores of large and small general-contracting companies and subcontractors in Dallas-Fort Worth and East Texas, say school board members should go to the marketplace to ensure that taxpayers are getting the best value for their money.

“The goal isn’t to go out and [hire] the biggest and best company,” said Steve Harrison, co-counsel for TEXO, the area’s largest construction industry group. “The goal is to get the best value for the taxpayer. That’s the legal requirement of procurement rules in Texas. And the best value for taxpayers is getting the best quality for the dollars spent.”

The district has options, Harrison contends, because “Texas has a number of well-qualified program management firms.”

Widening the field could mean better value for Fort Worth taxpayers.

“It may help the district negotiate a better price for taxpayers if they seek competition,” he said. “The American way is that competition encourages providing value, which is quality per dollar. As the school board assures itself that it is getting quality, they will have more value by competition.”

Others also believe the district may have paid a “markup” because of AECOM’s international repute.

“For their average projects, they could hire a good project manager for $15,000 to $20,000 a month, that’s it,” said Barry LePatner, a construction attorney in New York who has been vocal about reforms to construction efforts for high-profile projects like the Twin Towers monument. LePatner is the author of Broken Buildings, Busted Budgets: How to Fix America’s Trillion-Dollar Construction Industry.

Reimbursement policy questioned

A taxpayer advocacy group in Austin also questions the company’s reimbursement policy, which requires that it be paid 10 percent for administrative and handling costs for a long list of reimbursements, including communication fliers, copies, newsletters, postage, maps and other deliverables.

Since the company is already being paid $2.3 million for bond planning services, it doesn’t make sense that it is receiving a premium on reimbursable expenses, said Ross Kecseg, Dallas-Fort Worth policy watchdog for Texans for Fiscal Responsibility, which seeks to educate the public about public policy and advocates for fiscal stewardship.

“That’s suspect,” Kecseg said. “To me, it doesn’t make sense how they would reimburse at a premium.”

District officials contend that the reimbursement policy is “customary in the industry.” A Star-Telegram request for copies of AECOM invoices under the Texas Public Information Act yielded no documents.

Oversight of district bonds

Fort Worth voters have approved almost $1 billion in school bonds over the last 12 years.

Dansby said the district needs a program management firm to review projects and provide oversight.

“Our organization is not set up for construction,” he said. “We are very proud of our staff, but they do maintenance and take care of what is in place.”

The program manager’s job is to “actually come in and investigate all these different things, take input from our staff … as far as getting in and doing the real investigating and doing the cost estimates and those things.”

Construction experts including LePatner, who has developed a fixed-price methodology to ensure that his client’s projects are on budget and on time, say Dansby’s concerns are valid.

“That is fine to get an experienced contractor, an owner’s rep,” LePatner said.

Fees owed to the company should also be more transparent and should be negotiated, Harrison and other construction officials contend.

The company’s contract for a lump sum fee, for example, does not provide an itemized list of proposed salaries for AECOM employees. Dansby said the company is required to present the information before “we agree on anything.” The Star-Telegram requested a breakdown of AECOM salaries, but it was not provided.

A provision in AECOM’s current contract for bond planning services contains a clause that allows the school board to hire the company as its program manager without seeking alternative proposals from other companies.

“I don’t see any reason why we wouldn’t do the same thing, but it is up to the board to make that decision,” Dansby said. “As we move forward, it is something that we have to consider after the bond is passed.”

In 2007, the district used Magellan K12 to determine construction costs for the bond program, then hired AECOM to oversee the work.

‘It is a true partnership’

Dansby believes an established relationship with AECOM personnel has helped keep the project on track.

“We insisted that you bring us the team that’s going to work with us in the next four years,” Dansby said. “That’s who I want to see and talk to.”

The same people are on board today, he said.

“We tell them what we want and they go out and make sure our facilities are going to meet those needs. It is a true partnership,” Dansby said.

Kristabel Lopez, program executive for AECOM, said the company worked on nearly 70 bid packages as part of the 2007 bond.

If the 2013 bond passes, AECOM could hire up to 26 team members, including 12 project managers, architects, engineers and other construction specialists. AECOM also hires local professionals to participate on its team.

And if school officials don’t like the work, they can cut ties, Lopez said.

“We are paid based on completion,” Lopez said. “If we are here and we have all this staff and don’t produce the deliverables, we don’t get paid.”

Yamil Berard, 817-390-7705 Twitter: @yberard

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