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Old Posted Oct 30, 2009, 8:49 PM
kaneui kaneui is offline
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Subcontractors have largely been cut out of the $106 million Health and
Learning Center construction project at Northern Arizona University.
(photo: Jake Bacon)

Locals losing campus contracts
Despite receiving 43 local bids, the Phoenix-based general contractor for the $106M Health and Learning Center at NAU has hired just two local subcontractors.

Arizona Daily Sun
October 30, 2009

NAU officials are touting the $106 million Health and Learning Center construction project as a boon for the sagging local construction industry. Over the course of 21 months, the project will create an estimated 2,500 jobs, officials say. But despite receiving 43 bids from local subcontractors, most of the contracts so far have gone to Valley-based firms, not local companies. A representative for the Phoenix-based general contractor Mortenson Construction, which is in charge of the project, confirmed that only two contracts have gone to Flagstaff-based firms: Auza Construction and Ignace Drywall. The news has left several local businesses that were qualified to bid on the construction contracts wondering why most of the contracts were primarily given to out-of-town firms.


One of the local bids came from Ron Boyer of Boyer Metal Company. He said he was disappointed in the process, saying he learned only after going through a lengthy pre-qualification process that Mortenson had opted to use a highly unusual bidding process. It essentially barred his company from formally bidding on the project because Boyer Metal didn't receive the top score as part of the interview process. Mortenson Construction had asked only the company with the highest rating, a Phoenix-based contractor named Interstate Mechanical Corp., for a formal bid. It was then compared to prices offered by three independent estimators. The contract was worth up to $12 million, according to Boyer.

This is different than how most bids for state contracts are typically handled. Usually, the top prequalified companies are asked to submit their bids, with the lowest bidder typically getting the contract. Boyer said he has never seen such a process in the decades he has worked as a heating and air conditioning contractor. Ron Wilson with Mortenson Construction, said the process might be unusual, but it is legal under Arizona law. Both NAU and Mortenson separately sought legal advice to ensure that the process was following state guidelines for issuing contracts, Wilson said.


But what happened next is what was even more confusing. Out of the blue, Boyer Metal was asked directly by Mortenson to formally bid on the contract. It turned out that Interstate gave an initial bid that was deemed to be too high by Mortenson's estimators. Gary Dial with Dial Mechanical Company, which partnered with Boyer Metal on the bid on the Health and Learning Center contract, said he immediately started work on drafting a detailed bid. "We just dropped everything for a shot like that," Dial said. He said this company's share of the contract would have been worth as much as $1 million, roughly twice the size of the typical job for Dial Mechanical. Working on the bid late into the night over the weekend, the two companies were abruptly told the following week that they didn't need to submit a bid after all. Mortenson Construction had allowed Interstate to submit a new, lower bid. The two local companies have a long history with NAU, building countless buildings on the Mountain Campus. Recent projects worked on by both firms include the High Country Conference Center and the Applied Research and Development building at NAU.


Another local contractor, N.J. Shaum & Son, opted not to bid on the Health and Learning Center. The owner of the electrical contracting company, Frank Patton decided after pre-qualifying to bid on the project that the short time frame set by Mortenson would be next to impossible for his company to meet. However, Patton believes that Mortenson was never really interested in hiring local subcontractors. He said in the weeks after Mortenson awarded the contract to another Phoenix-based firm, he saw ads encouraging local firms to apply. So he called. He was told the contracts were already awarded. Two weeks later, he saw the same ads again. He again called and was told again that the electrical contractor had been picked. "To me, that was a sham," Patton said.


Wilson of Mortenson said that although most of the major contracts have been awarded, a job fair to be held today at the High Country Conference Center would be inviting companies to bid on contracts for weatherproofing, temporary security services and site cleanup. The Health and Learning Center will replace the 40-year-old Fronske Health Center, renovate and expand the 20-year-old Recreation Center and replace the 49-year-old stadium when completed in the fall of 2011.
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