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Low Bid Joint Venture Team Files Lawsuit Against MSD in Deer Creek Tunneling Project

in Companies/News

The low bid joint venture team originally awarded a $145.3 million Metropolitan Sewer District (MSD) tunneling project is suing the sewer district for rescinding the award of the project and inexplicably awarding it to the second lowest bidder.  The civil lawsuit was filed May 8, 2017 in St. Louis City Circuit Court by Jay Dee/Frontier-Kemper (JDFK) Joint Venture and by two taxpayers, Eugenia Jones and Peter Pfeifer.

MSD’s professional staff awarded the Deer Creek tunneling project to JDFK as the lowest, responsive, responsible bidder on two separate occasions.  During this process, MSD’s staff, including its executive director, denied multiple protests by the second lowest bidder, SAK Construction, LLC (SAK), and repeatedly concluded that the award of the project to JDFK was proper.  Among other things, MSD concluded: “SAK did not submit the lowest and best bid, but rather it was Jay Dee that submitted the lowest and best bid and met all bid requirements, and therefore, the award in Jay Dee’s favor was appropriate and will stand.”

But, in a series of unexplained decisions, MSD’s board of trustees refused to confirm the contract with JDFK for the project.   As a result, MSD rescinded the award to JDFK and on April 19, 2017 awarded the project to SAK, whose bid was $2.5 million higher than JDFK’s bidJDFK’s protest and appeal were unsuccessful and MSD refused to provide any reason for the board of trustees’ refusal to confirm the contract with JDFK for the Project.

“MSD still hasn’t explained why it rescinded our contract which was based on a thoroughly vetted and validated bid by MSD’s professional staff,” said John DiPonio, vice president of Livonia, Mich.-based Jay Dee Contractors, Inc., one of the joint venture partners.  “We build all over the country and the lack of accountability by MSD in its bidding process is astounding.” The other partner in the JDFK joint venture is Evansville, Ind.-based Frontier-Kemper Constructors, Inc.

The lawsuit alleges that MSD acted in an arbitrary and capricious manner in refusing to confirm the contract with JDFK and asks the court to rescind the notice of award to SAK and instead award the project to JDFK.  The lawsuit also seeks injunctive relief to prevent MSD from taking any steps in furtherance of the award of the project to SAK, including but not limited to precluding MSD from voting to confirm the contract with SAK at a May 11, 2017 MSD meeting.

The JDFK joint venture was one of several contractor teams that invested countless hours to get pre-qualified with MSD and subsequently bid on the Deer Creek Tunnel project.  JDFK was awarded the contract last September after presenting a highly detailed bid that met all of MSD’s specifications including business and workforce diversity, use of a highly skilled and safe workforce, pricing, technical skills and more.  JDFK’s bid was $145.3 million or $60 million below the MSD engineer estimate and $2.5 million less than SAK’s bid.

The Deer Project is one of eight tunneling projects in MSD’s $4.7 billion Project Clear.

Jay Dee Contractors, Inc. (www.jaydee.us) has more than 50 years of experience in proficiently delivering heavy underground tunneling work.  Frontier-Kemper Constructors, Inc. (www.frontierkemper.com) traces its roots to 1907 and is equally proficient in national infrastructure projects.

The civil lawsuit filed in St. Louis City Circuit Court is Case No. 1722-CC01259.

MSD Bidding Raising Stink

in Associations/Companies/Homepage Primary/News

The Associated General Contractors (AGC) of Missouri is expressing “grave concern” about Metropolitan Sewer District’s (MSD) bidding integrity for tunneling projects in the $4.7 billion Project Clear wastewater improvement plan. At issue is what appears to be an attempt by MSD trustees to steer a validly awarded $145 million contract for the Deer Creek tunneling project from the lowest bidder to another firm that has already been awarded the first two of the eight tunneling projects for Project Clear.  Jay Dee/Frontier-Kemper (JDFK) Joint Venture was awarded the contract on Sept. 29, 2016.  However no work has been done on the project after MSD trustees inexplicably refused to follow the recommendation of its professional engineering and executive staff and chose not to enter the contract with JD/FK during a Dec. 8, 2016 meeting.  Despite reworking its bid to accommodate a request to substitute a minority contractor on the project (a contractor that was fully vetted and validated by MSD’s staff) and being awarded the contract a second time on Jan. 5, 2017, the contract approval by MSD trustees remains in doubt.

The invalidation of the contract and delays are tied to at least four protests and appeals of the award from SAK Construction – all of which have been reviewed and denied by MSD’s professional staff of engineers, procurement specialists and diversity personnel and the executive director.  SAK’s bid was nearly $2.5 million higher than JDFK’s.  SAK has also been awarded the two previous tunneling projects let.

On Feb 9, 2017, the Deer Creek Project again comes up before the MSD trustees, who could again go against its own staff’s recommendation and award the contract to SAK.

Below is a more thorough recap of events to date and attached documentation.

The integrity of the bidding process on one of the largest publicly-funded infrastructure projects in St. Louis is generating majors concerns in the construction industry, including the Associated General Contractors (AGC) of Missouri.  At issue is Metropolitan Sewer District (MSD)’s $4.7 billion Project Clear, a 23-year project “to plan, design and build system wide improvements to address water quality and alleviate many wastewater concerns in the St. Louis community.” Project Clear is anything but clear when you examine how MSD trustees have handled the bidding on the $145 million Deer Creek tunneling project.  In a series of inexplicable decisions, trustees have gone against the recommendations of its professional design and engineering staff and voided a valid project award to the lowest bidder – Jay Dee/Frontier-Kemper (JDFK) Joint Venture.  While the project remains stalled, the trustee’s maneuvers stand to benefit SAK Construction, winner of the first two tunnel bids on Project Clear.

The MSD trustee’s muddling of the bid process inhibits the St. Louis area’s ability to attract highly qualified contractors to bid on projects, limiting competition and raising construction costs.  Livonia, Mich.-based Jay Dee Contractors, Inc. (www.jaydee.ushas more than 50-years of experience in proficiently delivering heavy underground tunneling work.  Its JV partner Evansville, Ind.-based Frontier-Kemper Constructors, Inc. (www.frontierkemper.comtraces its roots to 1907 and is equally proficient in national infrastructure projects.

The JDFK joint venture was among 11 contractors that invested countless hours to be pre-qualified for the Deer Creek project last spring (see attached May 24, 2016 pre-qualification approval letter).  JDFK then presented a highly detailed bid that met all of MSD’s specifications including business and workforce diversity, use of a highly skilled and safe workforce, pricing, technical skills and more.  JDFK’s bid was $145.3 million or $60 million below the MSD engineer estimate.  It was also the lowest bid – nearly $2.5 million lower than the bid SAK submitted.  JDFK’s proposal was thoroughly evaluated by MSD’s professional staff and it was awarded the contract on Sept. 29, 2016 (see attached notification of award letter).  From there, MSD trustees inexplicably began degrading the integrity of the bid process.  Consider the following:

  • In Sept and October 2016, SAK Construction sent protest letters to MSD questioning the validity of the contract awarded to JDFK and qualifications of JDFK’s minority contractors (including a minority contractor that SAK itself had used on previous projects).
  • On Oct. 13, 2016, MSD’s professional staff advised the MSD trustees to enter a contract with JDFK for the Deer Creek work based on its thorough vetting of its lowest bid proposal (see Oct. 13, 2016 Board Meeting Journal). The trustees wanted more information on minority contractors before contract was finalized.
  • On Nov. 8, 2016, MSD denied SAK’s protest of the contract award to JDFK (see attached Nov. 8, 2016 MSD SAK protest response).  JDFK submitted a follow up letter to MSD reinforcing that the sewer district followed all its policies and procedures in awarding the contract to JDFK, including a detailed timeline of its process (see Nov. 10, 2016 JDFK Protest Objection Letter).
  • On Nov 29, 2016, MSD reaffirmed its decision in denying a SAKs appeal of the sewer district’s Nov. 8, 2016 affirmation of JDFK’s contract award (see Nov. 29, 2016 MSD Protest Response).
  • On Dec. 8, 2016, MSD trustees inexplicably voted down the contract with JDFK by a 5-1 margin going against its professional staff’s recommendation, including its denial of SAK’s appeals (see Dec. 8, 2016 Board Meeting Journal). 
  • On December 9, 2016, the AGC of Missouri sent a letter to MSD expressing grave concerns over the integrity of MSD’s bidding process and its decision to deny the contract to JDFK.  That same day MSD sent two letters to JDFK.  One notifying JDFK that MSD was rescinding its contract award.  The other notifying JDFK that MSD objected to the use of minority contractor A.L.L. Construction and that it needed to find a substitute contractor.  JDFK responded on Dec. 23, 2016 that A.L.L. was fully qualified and that MSD was not following its procedures in rescinding the contract award.  JDFK followed the contract requirements and substituted A.L.L. and the resulting outcome was to increase its contract amount to minority contractors by $230,000 without increasing its overall bid.
  • On Jan. 5, 2017, MSD notified JDFK that it accepted its substitution and awarded it the Deer Creek contract.
  • On Jan. 10, 2017, SAK filed yet another protest of the contract award to JDFK.
  • On Jan. 17. 2017, MSD again denied SAK’s protest. That same day JDFK sent a letter to MSD stating the obvious:  SAK’s continuously invalidated protests are a ploy to get the Deer Creek project “by any means.”
  • On Jan 26, 2017 SAK filed another appeal of the denial of its protest.  MSD responded the next day denying the appeal

The project remains stalled for unknown reasons.  As of Jan 31, 2017, the MSD trustees refused to  approve a thoroughly vetted and validated lowest bid proposal from the eminently qualified joint venture team of JDFK.

It is unclear where MSD is headed, but it appears the trustees are contemplating an award the contract to SAK or rebidding the project.  Its next board meeting is Feb. 9, 2017 where it may decide the fate of the $145 million project without the full board of trustees present.  A list of MSD trustees can be found at http://www.stlmsd.com/our-organization/organization-overview/board-trustees.

The JDFK joint venture team would be happy to discuss the trials and tribulations of MSD’s muddled bid process as would the AGC of Missouri.  Please contact them if you have any questions.

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