R.W. Allen’s Guaranteed Money Pits

IMG_4374Owners like to use a contract delivery method called “Design Build” when they don’t know what the heck they are building, don’t want to take the time to design it before bidding it out, or have a site with too many unknown conditions.  Since they don’t know these things they put a fig leaf of protection against unlimited costs called a “Guaranteed Maximum Price” or GMP. Even in commercial or industrial construction, supposedly knowledgeable in cost controls and with fewer unknowns, GMP contracts are a challenge to administer, because the assumptions the contractor gives in quoting a GMP generally last only days or weeks. Owners would be better off with a pure cost-plus contract with great controls, but the owner’s internal politics command at least a fiction of a fixed price.

Imagine trying to catch a butterfly in a windstorm – that is how elusive the “guarantee” becomes.

In government there is no better money-hemorrhaging device than these contracts, hence perhaps GMP should automatically be understood by citizens as being “Guaranteed Money Pit.”

The City of Augusta, Georgia loves to squander money using GMP contracts, having thoroughly embarrassed itself with the things. Augusta  built a $30 million Convention Center across land the city didn’t own and then had to pay for it with Kitchen Equipment added by change order to a “guaranteed” price,  spent about $50 million on a Municipal Building Remodeling that was supposed to cost $20 million mostly covered by another GMP contract, and built houses in the Laney Walker district with maximum-price, not to exceed contracts that never were adjusted to actual cost.

There were only three finalists selected by Augusta for the Old Green Street Library remodeling, and two of the three had “Allen” in their name. The low bidder who didn’t have “Allen” in its name and who bid on the whole project in its bid, with a Guaranteed Price for all of the work, somehow didn’t get the award. RW Allen, LLC was awarded the work on a piecemeal basis, destroying any figment of a guarantee in this writer’s estimation.

John Allen, nephew and contributor to Congressman Richard W. Allen, is a principal in the Allen-Batchelor firm, which was also on the finalist listing.

District 8 Wayne Guilfoyle said it best “if all three firms are proposing this project the following including the proper scope, met the required schedule and fully capable of completing the RFP why are we selecting the highest bidder?” Then later Commissioner Guilfoyle said “So we’re approving something we don’t have a clue, only a partial.

It must be nice to be R.W. Allen LLC and to have Augusta push you into a yet another money pit where nothing is guaranteed but more profits.

 

A Crusading Chronicle Turns to Jihad

The independent media in east central Georgia fully expected the Augusta Chronicle to launch a crusade against 12th District Congressman John Barrow, the leviathan-besting survivor of six previous bouts with Billy Morris’ crumbling media empire and we were not disappointed. The salvo began with an opinion piece on September 15 and letters to the editor blasting the Democratic Congressional Campaign Committee (DNCC)’s ads on behalf of Barrow, which targeted Rick Allen’s government contracts. Allen, the Republican Party nominee opposing Barrow, quickly and adeptly incorporated the newspaper’s attack on Barrow into his own campaign ads.The crusade had begun.

The Chronicle and Allen actually were justified in ridiculing the DNCC ads, because it was RW Allen, LLC, who held those contracts, not Rick Allen, who has had a declining participation in his firm in recent years, while retaining the title of President of the Firm. Also, as Allen, the Republican campaign apparatus, local talk radio, and the Chronicle pointed out, most of those contracts were competitively bid on a hard price basis and the “cost overruns” were indeed minimal.

The DNCC baited a trap. The Allen apparatchiks, especially Morris Communications, stepped into it. John Barrow, a Harvard Law graduate, probably wasn’t an unwitting beneficiary. If he was, he won’t be much longer, for the denunciations and denials of the DNCC charges by Allen and the Chronicle will only focus attention on the scandal-plagued Tee Center project, now termed the Augusta Convention Center, where RW Allen was the construction manager and a Chronicle affiliate was the chief beneficiary. It wasn’t hard bid, but was one of those loosey-goosey “guaranteed maximum price” deals and Augusta was billed the maximum price.

Before the contract trap was even sprung by the Barrow team, the Chronicle-Allen media express derailed less than 10 days of leaving the station. Its crusade suddenly was rerouted into a jihad against Islamic US citizens of Augusta.

The Islamic Society of Augusta had gotten acceptance of an invitation to debate from both Allen and Barrow for a debate to be held at the Islamic Center in Evans on September 27. Steve Crawford, editor of the Columbia County News-Times, a Morris publication, had agreed to be the moderator. Both candidates agreed to the Islamic Society hosting the event, Crawford’s moderation, and the place.

With no warning, Morris management took its newly-found jihadi knife and backstabbed host and moderator by forbidding Crawford from moderating. The event was put into danger of cancellation. Barrow appeared at the side of the Islamic Society’s Dr. Hossam Fadel and denounced the Morris action. Rick Allen was silent with the only response being the Allen campaign’s celebration of the “gotcha” moment of capturing Barrow in the company of a Muslim “cleric,” as they put it.

The debate was ‘saved’ by moving it to the less-than-200-person capacity of the Columbia County Commission Chamber from the 800-person-capacity Islamic Center. By several accounts, hundreds were turned away who arrived on time. The Chronicle’s jihadi knife got them too.

Before the debate began, Columbia County Republican Party Chairman Dewey Galeas added fuel to outrage at Republican party tactics by refusing to take Dr. Fadel’s offered hand for a handshake. Such ugliness is sure to be linked to other recent incidents by the state and county Republican parties.

Inside there were discussions of these events and a question was asked about the threat of Islamophobia to the constitutional rights of US citizens that are supposed to exist despite race, creed, national origin, religion or political belief. Here is the video of those remarks.

The Insider at the Metro Spirit concluded:

When (talk radio show host Austin)Rhodes pressed Atkins to explain which candidate was uncomfortable with the Islamic Community Center as the venue, Atkins was honest.

“It was the Rick Allen campaign headquarters,” Atkins told Rhodes.

Someone in the Morris-Allen alliance decided that the images of knife-wielding terrorists beheading folks in Iraq would be a nice thing to pin on John Barrow, turning the law abiding, honorable citizens in the Islamic Society into victims of a back-stabbing. Newsprint won’t stanch the bleeding and electronic publication won’t heal the wound.

The Chronicle‘s express might or might not get derailed at a guaranteed maximum price to its owners, but November 4 is Judgment Day when the voters decide whose political future is decapitated and whether it will be with his own knife.

Rick, You Forgot to Call

In 2012 when you made a run for the Republican nomination for the 12th Congressional seat, the radio talker Austin Rhodes immediately attacked you for a long-ago donation to the infamous Champ Walker, a Democrat. I called in that day to defend you, recalling your teen years as a Republican.

Then Brad Owens of the Augusta Today group wrote a City Stink piece questioning added overhead charges on RW Allen LLC’s partial bill to Augusta for the Tee Center y’all were building. The contract said those costs were capped. You were incensed and maybe with justification because it wasn’t the final bill.

You and I had a lot of discussions during the 2012 primary season, but there is one worthy of recounting. We reminisced about our frequent childhood gatherings at Uncle Land and Aunt Carols’. I told you that, despite having created constructionaudits.com, I stayed out of Augusta because RW Allen had such a presence there that your company was unavoidable. A warning was that RWA operated in a cloistered environment of Augusta for decades, building complacency. Rising to executive status as you did meant not really knowing what was in the contracts RWA signed, but those would become campaign issues. We talked about the one Augusta project that my firm did at Reid Church, where RWA was contractor, doing an admirable job under tough circumstances. Finally, we got to how the epidemic of financial corruption decimating my retirement savings forced me to use Augusta as a lab to see if the old skills were still good enough to produce.

After 2 years of stunning results, that question has been answered.

Before that call concluded, this was said and is still meant. You are a very fine man, Rick Allen, and America and Georgia need fine men to step forward. There was an offer to work with you to develop positions that the people truly need, not the old tired Republican Party rhetoric. Finally there was an offer to prepare you for greater things -a run for the US Senate.

The words of warning remain the same. You have long alliances with people in whom you trust, but the people don’t. There is a record of commitments in those RWA contracts that you are oblivious to, but the two Johns, Stone and Barrow, won’t be. You have major contributors with interests in the Augusta Tee Center scam that the Augusta Chronicle can’t hide much longer. You are tied to banking in a state that was and is the epicenter of global bank fraud decimating responsible people. Perhaps the entire 12th is reluctant to yield representation and their children’s futures to the Augusta bluebloods, perhaps the most aggressively greedy plutocrats on earth
.
My promise was to help you understand and rectify those things. We last talked just before the Tee Center budget meeting in February of last year. You said the political future was undecided. You were going to call before launching another run at the 12th. That call never came.

Good luck Rick. You are going to need it.

Unraveling Rick Allen Before His Time

By: The Arrowflinger

This is your Many Arrows Moment for Tuesday, June 18, 2013

If last Friday Morning, between 7:00 and 8:30 AM, US Congressional District 12 candidate Rick Allen didn’t feel like a mouse between two cats, he should have.

Rick was on the Talk of the Town Show in Augusta with Renee and Doug to promote his newly-announced candidacy for that 12th District seat now held by the despised, at least in Republican circles, John Barrow the Democrat.

Renee and Doug are probably just plain giddy about the $6 million that the Republican Congressional Campaign Committee is said to be spending on that race. That is a lot of wampum for the media in good old Augusta, Georgia, with Renee and Doug figuring to receive a generous portion.

Before we start calling Rick the $6 million man, there is the not small matter of a primary to be fought and won. Talk of the Town figures to be in the thick of that mix on the way to Allen’s coronation as the GOP nominee……and in the flow of funds, first from Allen then from the RNCCC.

The feline grins around him will be seen in every media outlet on Augusta for the next 14 months. A poor mouse could get plumb frazzled to death being bandied and toyed with that long! Allen was on WGAC with Austin Rhodes the previous week, unwitting that the boys of Beasley were sizing up his wallet too.

Overturning Stone – rival John Stone- should be easy. What can go wrong? To the radio talkers, Rick will be more fun unraveling than a ball of yarn.

Stay tuned to Talk of the Town as this story develops Monday thru Friday from 7am – 9am streaming @ www.iTalkUS.com. And Live on 1230 AM!

Turn on the Austin Rhodes Show from 3 to 5 PM on WGAC AM 580 and FM 95.1.

Who knows, one day an Arrowflinger might call in.

TAF

Unraveling Rick Allen Before His Time

By: The Arrowflinger

This is your Many Arrows Moment for Tuesday, June 18, 2013

If last Friday Morning, between 7:00 and 8:30 AM,  US Congressional District 12 candidate Rick Allen didn’t feel like a mouse between two cats, he should have.

Rick was on the Talk of the Town Show in Augusta with Renee and Doug to promote his newly-announced candidacy for that 12th District seat now held by the despised, at least in Republican circles, John Barrow the Democrat.

 Renee and Doug are probably just plain giddy about the $6 million that the Republican Congressional Campaign Committee is said to be spending on that race.  That is a lot of wampum for the media in good old Augusta, Georgia, with Renee and Doug figuring to receive a generous portion.

Before we start calling Rick the $6 million man, there is the not small matter of a primary to be fought and won. Talk of the Town figures to be in the thick of that mix on the way to Allen’s coronation as the GOP nominee……and in the flow of funds, first from Allen then from the RNCCC.

The feline grins around him will be seen in every media outlet on Augusta for the next 14 months. A poor mouse could get plumb frazzled to death being bandied and toyed with that long! Allen was on WGAC with Austin Rhodes the previous week, unwitting that the boys of Beasley were sizing up his wallet too.

Overturning Stone – rival John Stone- should be easy. What can go wrong? To the radio talkers, Rick will be more fun unraveling than a ball of yarn.

Stay tuned to Talk of the Town as this story develops Monday thru Friday from 7am – 9am streaming @ www.iTalkUS.com. And Live on 1230 AM!

Turn on the Austin Rhodes Show from 3 to 5 PM on WGAC AM 580 and FM 95.1.

Who knows, one day an Arrowflinger might call in.

TAF

Al Gray: TEE Center GMP Construction Contract Provides No “Guarantees”

When A Guarantee Isn’t One
Originally posted on CityStink
Tuesday, Feb. 21, 2012
Augusta, GA
By Al Gray
The author, Al M. Gray is President of Cost Recovery Works, Inc., a provider of Cost Avoidance and Cost Recovery for America’s leading companies, businesses and governments desiring Superior Returns.
Augusta Commissioners on February 21, 2012, today, face a thorny vote on whether to approve a very expensive Change Order 2 (See the document here) to R.W. Allen LLC’s Construction Manager at Risk Contract for construction of the Tee Center. The contract is structured as a cost-plus arrangement with a Guaranteed Maximum Price. Such deals are commonly called GMAX or GMP contracts.
Under a cost-plus GMP contract, the construction manager starts construction before the design and specifications are complete in an effort to accelerate project completion. Otherwise all of the design, specifications and plans must be complete in order to bid the job on a lump sum or fixed price basis. Under a GMP contract, the construction manager mobilizes, awards the early sitework, underground piping, and preliminary concrete work while the architects and engineers complete packages for the various construction disciplines (steel, electrical, HVAC) that occur in later stages. When the overall design reaches majority completion, in this case 65%, the construction manager has enough data to provide the owner with a Guaranteed Maximum Price.
RW Allen and Augusta agreed to a GMP of $27,900,000 in January 2011. (See Document here)
The public highly distrusts cost-plus contracts, even those capped by a maximum price “Guarantee.” In this instance, properly done, cost-plus should have saved money and been the best choice method of project delivery. RW Allen had to deal with a brownfield site (unknown underground obstacles and conditions), coordination with ongoing operations of the hotel and convention center, in a congested area, and in conjunction with new design. Trying to force fixed price contracting intended for a set design would have resulted in risk-loaded contract prices where the real risk remained with the owner, the City of Augusta. The unknowns and variables were too great.Because the Guaranteed Maximum Price assumes set design parameters at the time the price is set, every GMP contract allows for change orders in the event that the design changes in the later stages at the recommendation of the architect and engineers. A change order increases the guaranteed maximum price.
Change Order 2 totaling $836,228 is actually the aggregation of 13 component change orders, including a controversial $399,083 change to the HVAC system to increase air turns to 8 over the base design standard of 2.5. Augusta’s architect approved this change months ago.
Some Augusta commissioners are grumbling because they confused “Guaranteed Maximum Price” with “Lump Sum.” In either contracting method there still would be change orders and they would be legitimate. The commissioners reticence to accept price increases because there is a price “guarantee” is a misunderstanding of the deal.
When a change order like this one gets to the Board of Commisioners it generally is a fait accompli. This looks to be the case in this instance. Under the RW Allen contract, the city is already bound. Look at the dates and signatures on the change order. The master change order 2 is dated October 17, 2011 and is more than four months old! The component change orders have to be of even earlier vintage. RW Allen’s contract for the Tee Center spells out that change orders increase the contract price in Article 15. (See Document Here)
There is little doubt that RW Allen was given the authority to proceed. The City of Augusta’s architect/engineer, program manager, and city administrator have all signed the authorization. (See Document Here) Under the Tee Center contract, the commissioners have no real options.
Augusta commissioners really should not want a lump sum at this point, because a lump sum contract has fewer options for cost reductions and cost recoveries as the contractors have born the risks and have earned the rewards of bearing those risks. (This doesn’t mean that lump sum contracts do not bear auditing, though!).
Commissioners can look forward to reductions in the Guaranteed Maximum Price as the Tee Center is completed. Allowances will be adjusted to actual cost both in the construction manager contract and in the component subcontracted packages. Contingency in this contract was $566,000 and that will be adjusted, too. Adjustments of ‘costs’ may or may not happen, depending on diligence.
Augusta Commissioners should be happy with the contract that they have and not yearn for a counterproductive fixed price that never would have been a lump sum. Just because a contract and change orders to it set a contract price, that does not mean that an evaluation of the scope documents cannot later reduce that price.
The administration and Board of Commissioners need to take prudent steps to verify the costs at completion. In fact, this needs to be performed for all of the various cost-plus GMP contracts the city has done in the last 3 years. Based upon the volume of these contracts, this writer projects that the costs recaptured by a comprehensive effort would range from $1.25 million to $5 million.
Nothing much is “guaranteed” in a GMP contract, just that the contractor keeps the change. Rarely is the change of the loose pocket variety. Augusta has let its contractors keep $millions in change by fruitlessly grumbling about change orders, then closing out “completed” contracts with nary a care.

That does guarantee a price.

Not if Augusta commissioners get wise.***

Al Gray

* (View pdf files of the documents referenced in this article below)

Editor’s note: City Stink contributor Al Gray is President of Cost Recovery Works, Inc., a Lincoln County, Georgia-based firm focused on construction, public administration, policy and cost recovery reviews on a guaranteed results basis.

Below are the documents referenced in this story:

Tee Center Change Order 2 R W Allen
r w Allen Gmp G-1 Tee Center
RWA – Tee Contract