A new state audit has criticized the Connecticut Port Authority for allowing the construction management company that is overseeing the redevelopment of the Connecticut State Pier in New London to recommend itself for several multimillion-dollar subcontracts for the public infrastructure project.
The State Auditors of Public Accounts, in an audit released Thursday, argued the Port Authority’s decision to allow Kiewit Corporation, a large national construction firm, to manage the bidding process while simultaneously competing for the lucrative subcontracts created an opportunity for the company to gain an “unfair competitive advantage” over other construction businesses.
The Connecticut Mirror published a story in late 2022 highlighting how Kiewit used its authority as the construction manager on the maritime project to recommend itself for a handful of subcontracts that were worth more than $87.8 million, even in several cases where another company submitted a lower bid.
In response to that story, the leadership of the Connecticut Port Authority argued that Kiewit’s position as the construction manager did not provide the company with a leg up when competing for the various work on the project.
The Port Authority, they explained, controlled for any undue influence by filtering Kiewit’s hiring recommendations through AECOM, another construction firm that was hired to advise the maritime agency on matters related to the State Pier project.
They also maintained that Kiewit did not have advance knowledge of what the other construction companies were prepared to offer prior to submitting its bids.
The leaders of the Port Authority did not respond to requests for comment for this story, but they did provide feedback to the Auditors of Public Accounts, expressing many of the same points they shared with the CT Mirror last year.
“The port authority believed the construction manager at-risk had sufficient compensating controls,” the auditors noted in their report.
Even so, the auditors argued that Kiewit’s influence on the State Pier project provided the company with inherent advantages over other businesses that wanted to build portions of the new pier, which is expected to be used as a launching point for offshore wind projects.
The auditors pointed out that Kiewit, which did not respond to a request for comment for this story, got to develop the criteria for each subcontract.
The firm was also in charge of sending out notices so other companies would know to submit a bid. Kiewit employees participated in all of the meetings where those bids were reviewed. And the company was first in line to make a recommendation to the Port Authority about who to hire.
That made it exceedingly difficult, the auditors said, for the Port Authority to avoid the appearance of a conflict or outright favoritism. And it raised questions about whether state taxpayers who were funding the infrastructure project were getting the best value for their money.
“The construction manager’s independent judgment and objectivity could be impaired when it reviews and assesses bid packages and competitor responses,” the auditors wrote.
The auditors also noted that Kiewit’s dual role as construction manager and a subcontractor created other problems once the contracts were finalized and construction was underway.
The system meant Kiewit was put in charge of monitoring its own quality, safety, price and completion schedule on the project, which has seen its overall budget balloon from an estimated $93 million in 2019 to more than $300 million this year.
The Port Authority responded to those concerns by emphasizing that officials from the state Department of Administration and the Office of Policy and Management both signed off on that setup when Kiewit was selected as the construction manager in late 2020.
This isn’t the first time the Port Authority has received pushback over Kiewit’s contracts at the State Pier.
The Port Authority’s interim director, Ulysses Hammond, and board chairman, David Kooris, also faced questions from state lawmakers during a hearing earlier this year.
During that meeting, Rep. Christine Conley, D-Groton, said she did not believe it was appropriate for Kiewit to recommend itself for tens of millions of dollars in subcontracts. And she said the situation did not help to improve public trust in the Port Authority, which has also been subject to ethics scandals and other contracting problems.
“Any contract where a general contractor is reviewing their own bids, in this legislator’s opinion, is not appropriate, and should not be approved by the Port Authority,” Conley said. “Is that well understood, Mr. Chairman.”
“We understand your concerns, and we will absolutely heed those going forward,” Kooris replied.
The Port Authority’s leadership provided a similar promise to the state auditors, saying they would seek to avoid any similar contract setup in the future.
But lawmakers ensured the Port Authority would not need to make that choice at all.
In the last days of the 2023 legislative session, Conley and other legislators passed a bill that prohibits the Port Authority from hiring any other company to serve as a project supervisor and subcontractor at the same time.
That law went into effect in July.