Follow Up on San Jacinto Project and Basic IDIQ

basic-idiq-nov14You might remember that back in January of this year, city council awarded a contract to Basic IDIQ for the San Jacinto Park project. There was a difference of about $2.5 million between Basic IDIQ and the number two bidder. The difference between the second and third bidder was only about half a million dollars. No sooner had the bid been awarded that commentary on the bid focused on two specific issues. The first was that the bid was irresponsible and the other was that a new contracting firm was challenging the established contractors.

As a response to the commentary, I wrote two blogs. The first one, “Who is Basic IDIQ?” focused on identifying the apparent new contractor bidding on city projects. In my second blog, “San Jacinto Park Project; the Beginning of Another Corruption Scandal?” I commented about how the reaction by David Karlsruher and the other contractors in the city seemed to be a reaction that the gravy train for the city’s contractors may be coming to an end.

As you might remember, I wrote that the significant price difference may be an indication that the city’s old established contractors had been colluding in bids in order to keep prices artificially high or that Basic IDIQ’s bid was too low and that it would be rectified through change orders or the contractor would be unable to finish the project. I promised you then that I would keep an eye on this project.

I also noticed that David Karlsruher, whose family is in the contracting business at the city, has been trying to create the illusion that the San Jacinto Park project has been a total disaster for the city. As a matter of fact on October 15, he published a blog where he tries to reinforce his original assertion that the bidder “seriously underbid by at least $3 million” the project. When the bid was awarded, he had written a blog where he said the bid was “irresponsible.”

Keep in mind that Karlsruher’s family owns a business that depends on the largesse of the taxpayers of the city to make money and therefore it makes sense that a competitor seriously underbidding city contractors is a threat to their revenue streams.

On October 14, the city council received an update on the San Jacinto Park project. In response, David Karlsruher wrote on his blog, “That project was the one I wrote about that was seriously underbid by at least $3 million bucks.  Everyone at the city assured us that no change orders would be needed and that the construction company was fine.”

David then added, “Now we learn that three change orders have been awarded to the company and that the new budget for the project is $6 million instead of the original $4 million. With the talk of a redesign that started during yesterday’s meeting, we can only discern that the city is doing whatever it takes to bail this contractor out of a bad bid.  And [sic] ‘whatever it takes’ means using your tax dollars.”

Anyone reading this would draw the conclusion that the project is now budgeted at $6 million, $2 million above the $4 million bid.

Unlike David Karlsruher, I tend to focus on the facts instead of relying on innuendo or outright lies. Therefore, I submitted an open records request asking for all change orders “requested by or issued to Basic IDIQ” and “whether such change order has been approved or not approved by city council or whether the change order is pending processing by the city or whether the change order was declined by the city.” I also limited my scope from January 1, 2014 through October 16, 2014. Keep in mind that the contract was awarded in January 2014 and therefore I believe I covered all of the possible instances that a change order for the project may exist. Before I get to the actual response I received from the city let’s take a moment to see the information city council publicly received on October 14.

City council learned that the project is within the specified delivery date. It also learned that three change orders have been requested. One was for concrete removal at about $30,000, another was for relocating utility lines for about $3,000 and the last one was to repair a street on Oregon and Mills for about $33,000. The latter appears to be for a marathon race that had been scheduled and they needed the street repaired. Cortney Niland, acting is mayor pro tempore, asked if the project was on budget. The response from the project manager was that the project “was still on budget.” We also learned that the approved budget is $6,000,000.

If you believe, what David Karlsruher writes then you would think that he was right and that Basic IDIQ substantially underbid the project and the change orders reflected that. David pointed to the $6,000,000 budget and the change orders as proof that he was right all along.

Poor David Karlsruher, he still has not learned that the truth always exposes liars.

According to the city’s presentation, there have been three purchase orders issued to Basic IDIQ totaling less than $70,000, very different from the $3 million that David insinuates proves his point. David Karlsruher also insinuates that the $6 million budget is higher than the awarded amount of $4 million conveniently forgetting, or possibly ignoring that a budget is different from the actual award of a contract. The $6 million is the amount budgeted for the project, not the amount awarded to Basic IDIQ, or the amount that will ultimately be paid to the contractor.

The other thing to keep in mind is that the marathon race was apparently an attempt by the city to fix an issue about a street for the racers. It is unclear exactly what happened on this issue however, it is important to note that during the discussion it was stated that the city felt compelled to resurface the street for the nonprofit. Some of the city representatives questioned whether this was a prudent thing to do; because the city normally helps out nonprofits with police security, permit fees, and not resurfacing a street for them. Regardless of the outcome on this specific item, it is not a Basic IDIQ driven cost to the city.

The San Jacinto Park project is only about 50% complete and there is still time for change orders to come in to validate Karlsruher’s assertion. We will not know until the project is completed and all of the checks are issued. However, I wanted to bring you up to date on the project and to point out how useful idiots try to manipulate the public discourse for certain agendas.

I am hopeful that when the project has been completed that the total amounts paid for the work is within a reasonable amount validating what I believe to be true – that local contractors have been overpricing their work in order to stay in business.

Some of you likely noticed that I didn’t share with you the results of my open records request. That is because the city, as it seems is a common practice gives me one piece of information that completely contradicts what the public record states. The response I received from the city is that one change order has been issued to Basic IDIQ for $28,898.64. Obviously, something is wrong here as the public record, according to the presentation given to the city and what I received are incompatible. On Monday, I will share with you more details about the issues I’m seeing with open records requests, and this specific one.

I fully expect David Karlsruher to jump in here and comment that the lack of a proper response from the city on my open records requests proves his point however much to his chagrin his whole commentary was based on the public meeting held at city council, not open records requests. In the meantime, remember that according to the public record there has been about $70,000 in change orders issued, not the $3 million the local contractors would have you believe. I will continue to keep an eye on this project and post updates about it as I learn more.

3 thoughts on “Follow Up on San Jacinto Project and Basic IDIQ

  1. Martin,

    “And [sic] ‘whatever it takes’ means using your tax dollars.”

    There is no error in that sentence. You can start a sentence with “and.” I’m not perfect since I don’t have an editor, but that sentence works.

    It’s hard to quibble with anything here since you restate what I stated. The budget for the project is $6 million. At the time of the award the city manager said she only had $4 million to spend on the project in total – i.e. a $4 million budget. What happened? Why the sudden change in numbers?

    The local contractor community is sensitive to the bidding environment because a high number of firms went bust between 2008 and 2012 under bidding jobs just to stay in business (most of them did not). Responsible bidders were left out of work they could have performed while the money for the jobs went to out of town bonding companies and banks to cover losses.

    Questions about Basic IDIQ first arose when city hall was moved and they were given an extremely large no-bid contract where their prices were above regional average. None of the local contractors even got a chance. We found that Basic IDIQ was not in compliance with federal apprentice laws. And by “we” I mean the Southwest Specialty Contractors – a group I’m a part of along with subcontractors from many different industries.

    Also, my parent’s firm only relies on public construction and engineering contracts for about 10 percent of their business. Some local firms survive solely on public sector work. We are not one of them. We bid frequently, but are not reliant on city or county work to stay in business. That’s something you got factually wrong because you made a guess.

  2. I hope subsequent facts prove Martin correct. Contractors here IMO have been colluding and gouging us for decades. Payback time!

  3. Sentences beginning with “and” are grammatically ok, but they are dependent clauses, no?. As such, a comma is required at the end of the clause. So You’re both wrong. On the bright side, not only is such a minor error inconsequential in the blogosphere, we’ve all seen much worse embarrassments from the so-called journalists at the El Paso Times.

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