Finance Bd. Discusses Options For Restitution On NHS Project

By John Voket &

Eliza Hallabeck

The Board of Finance this week discussed whether the town might be eligible to recover damages from the architect or construction management firm in relation to over-budget bids that came in on the proposed high school expansion. Following more than 20 minutes of sometimes heated dialogue, the board agreed to keep options open, but to carry on any further deliberations on the matter during future meetings in closed session.

After making a motion to add it to the agenda near the end of the November 10 meeting, finance board member Martin Gersten said the town should put the Morganti Group and Fletcher Thompson, Inc on notice.

“The town Board of Ed is still using these people to rebid and move forward,” Mr Gersten said. “I think ... they should get the message we’re not happy; we’re going to be watching more closely; and were going to exercise our rights. Perhaps that will tighten up the process going forward.”

Michael Portnoy then asked School Superintendent Janet Robinson whether the school board had discussed the performance of the architect or Morganti Group in relation to the project cost overruns. Dr Robinson replied that discussion involving the discrepancy between the estimates and the actual bids has occurred.

School Business Manager Ron Bienkowski said Fletcher Thompson, the architectural firm on the project, has already been compensated for work done on the project, amounting to $480,000 of the $2.7 million in fees due to the company.

Dr Robinson added that some of the fees that have been paid involved compensation to several subcontractors for the architect.

Finance Chairman John Kortze pointed out there were several additional contingencies built into the project estimates just before the high school renovation originally went out to bid.

“The overage was actually $6 million plus the contingency, less the million and a half that was left,” Mr Kortze said. “I can remember a ten percent [contingency] number, and I believe when we got into it further, it was higher than that.”

He pointed out that in the final project contingency estimates just before the bids solicitation opened was around five percent, measurably lower than what the town normally builds into capital building projects.

“Per Morganti contract requirements, project contingency was $1,457,000, and was listed as approximately five percent,” Mr Bienkowski explained, adding that an extra one percent contingency was built-in for a bid review.

Following a query from fellow finance board member Harrison Waterbury, Mr Gersten explained that based on his experience with building project administration in the private sector, nobody would believe there could be such a discrepancy if a construction manager was doing the job correctly.

“If you missed by that much, you must be in nonperformance of the agreement. If you are in nonperformance, we overpaid you and we have been damaged,” Mr Gersten said. “We want to recover that, or you walk away from the agreement and we want to get part of our fees back.”

Mr Gersten suggested the margin of error between bid estimates and the eventual bid results, which were $6.045 million over budget, is so dramatic it amounts to “malpractice” on the part of the construction manager.

Finance board Vice Chair James Gaston said he strongly opposed supporting the motion, saying it is the position of the Board of Selectmen or the school board to pursue such action, not the finance board.

Creating Adversaries

“If you do this, you immediately put the Board of Education and the town in an adversarial situation with Fletcher Thompson and Morganti. Personally, if I were their counsel, if this went forward, I would tell Fletcher Thompson and Morganti that anytime you show up at a meeting you come with counsel,” Mr Gaston said. “You don’t freely consult, you don’t do anything.”

In addition, Mr Gaston pointed out the town would incur attorney fees to review the case, hire architect and construction experts to determine probable cause for malpractice, and the ramifications of such action would mean Morganti and Fletcher would have to notify their malpractice carriers.

He added that if eventual project rebids come in at or below the $38.8, the companies may turn around and take action against the town for possibly damaging the companies’ reputation.

“It’s totally premature,” Mr Gaston said. “[Rebids] may come in at $38 million, or $37 million. You may have spent all kinds of fees, and incurred all kinds of costs, and you may have injured the reputation of Fletcher Thompson or Morganti.”

Mr Gaston said he would not favor the finance board putting the town at risk at this point in the process.

Dr Robinson said the school board has already voted to rebid the project, and the Public Building and Site Commission has to “actualize” the procedure.

“The statute says town builds the building,” Mr Kortze said. “So [the Board of Selectmen] has the final word on the rebid.”

Mr Gersten argued that since the bid outcome is already public, the architect and building manager have “already besmirched themselves.”

“I’ve been to four meetings when they’re asked why it happened, and each time it’s a different answer,” Mr Gersten said. “They should be giving answers that are accurate, and if they need counsel there, they damn well should have counsel there. We’ve paid a lot of money for this, and as best as I can tell, this delay is a $4 million bill based on appreciation of the numbers. We may get damaged more.”

Saber Rattling

Mr Gaston equated any action coming from Mr Gersten’s motion amounted to “saber rattling.”

“To say you are going to use this for leverage when there are no damages, is frivolous,” Mr Gaston said, adding that the board should convene into executive session. “Because this is going to be used against us. And bringing a frivolous suit and it’s vexatious, it’s double damages in this state.”

Mr Gersten replied that his motion simply would inquire what the town’s rights are. “It doesn’t suggest anyone is authorized to commence an action,” he said.

Mr Kortze said both points were valid, and he asked to move forward by withdrawing the motion pending discussion of the issue in executive session, which is permissible under the state Freedom of Information Act, as a legal matter.

Mr Gersten then asked for a vote on his motion, and if it failed he would agree to initiate further discussion in a closed session.

Mr Portnoy pointed out that Mr Gersten’s motion would simply be “helping us as a town to get some legal counsel as to what our rights are under these agreements — that we have never seen.”

Mr Gaston said the motion, if approved, requires conclusions be made about the performance of the architect and construction manager. He said experts would have to be retained to make numerous determinations to arrive at whether or not damages are due, and the extent of what those damages might be.

“This isn’t just ‘give us an opinion and get back to us in a week.’ This could take six months,” Mr Gaston said. Mr Gersten maintained he is just seeking an opinion as to whether or not the town has an avenue to consider pursuing damages.

After a few more moments of discussion, it was agreed the board would table the motion in progress and move to executive session on the matter. That discussion is expected to resume in executive session when the finance board meets again Monday, November 24.

At press time Thursday, calls for comment and messages left with representatives at Morganti and Fletcher Thompson had not been returned.