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Pacts: Firm to get $1.8
million
By EDDIE CURRAN
Staff Reporter
Two unsigned contracts provided by Gov.
Don Siegelman's office indicate a recently formed company picked to oversee state warehouse project was to get
a 12 percent fee for every dollar spent, including payments to architectural and engineering firms.
That would give the company, G.H. Construction, a total fee of $1.78 million - not including bonus payments exceeding
$250,000 that the contracts say the company likely would receive if the two warehouses were finished ahead of the
proposed Sept. 1, 2002, completion date.
Since the $250,000 bonuses potentially could be paid for each building, the Montgomery company could be eligible
for an additional $500,000, bringing its total fees to $2.28 million.
When added to design fees, lawyers' fees and investment banker fees, the total amount spent on things other than
construction and land purchase could run between $4 million and $8 million, raising questions about what taxpayers
would be getting for their money.
The project has a construction budget of $16.5 million. A Siegelman spokeswoman on Wednesday said the total amount
proposed to be borrowed for the project was in excess of $20 million.
The construction management contracts, released after negotiations with a lawyer for the Mobile Register, suggest
that a rush atmosphere surrounded the project, which was intended to save the state money in the long run by replacing
rental facilities with state-owned buildings.
"The parties acknowledge that time is of the essence in the completion of the project," the contracts
state before setting out a time frame for bond sales and construction, both of which were put on hold by the state
after Register inquiries.
The administration was unable Wednesday to explain why G.H. Construction - with "G.H." reportedly short
for Goat Hill, a sometimes-pejorative nickname for the seat of state government -- deserved payments equal to 12
percent, a figure considered abnormally high in the industry.
Administration officials have said that, as a result of the Register's questions, the governor ordered a review
of the fees to make sure they were reasonable, and to change them if they weren't.
Construction managers don't carry out the actual construction, but instead are hired as watchdogs over the scheduling
and performance of the companies that perform the construction.
Administration officials interviewed by the Mobile Register have given varying answers as to whether G.H. Construction,
which has political ties to Siegelman, would be paid based on the total cost of the construction alone, or the
cost of the construction plus the design fees and other professional services fees.
G.H. Construction, whose owners have not responded to the Register's repeated requests for comment, may argue it
deserved to be paid based on professional fees as well as contractor fees because it was to have a role in working
with the architects.
The contracts released Wednesday assign to G.H. Construction the role of the "scheduling, coordination and
management of the design professionals." Other records obtained by the Register show that engineering and
architectural firms were directed to submit bills to G.H. Construction.
The contracts obtained by the Register show that an account was to be established for "construction manager
reimbursable," including "architectural, engineering, legal, insurance, consulting, and other costs reasonably
incurred in connection with the project."
A Register review of the contracts and other documents related to the project, however, raises questions about
whether some of the design professionals' services were unrelated to G.H. Construction's role in the project and
whether some of the firms had finished their work prior to G.H.'s hiring.
The project involves construction of warehouses for the Alabama Department of Economic and Community Affairs and
the state Alcoholic Beverage Control Board on a 256-acre tract in an economically depressed area just north of
downtown Montgomery.
G.H. Construction owns the site and was to sell it to the state after the Downtown Montgomery Redevelopment Authority
sold bonds to fund the project. That means that, until that sale went though, the company was to be managing construction
on its own property.
David Green of Alabaster, Ala., and Bryan Broderick of Montgomery formed G.H. Construction in February, according
to Alabama secretary of state incorporation records. The company was formed for the purpose of overseeing this
project, after Montgomery landfill developer and political consultant Lanny Young, a Siegelman supporter, recommended
the company, Young has said.
For the past three weeks, the Register has cited the state's Public Records Law in asking the administration to
produce the contracts, and numerous other records. Some records have been provided, but many have not. One reason,
said Nick Bailey, the ADECA director and one of Siegelman's closest advisers, was that there are no contracts with
engineering and architectural firms, but only "handshake agreements."
A lawyer for Siegelman has maintained the contracts with G.H. Construction were not public record because they
were unsigned. Officials in the governor's office also have said that the contracts were still subject to negotiation,
though they were scheduled to have been signed at a bond closing originally scheduled to have taken place Monday.
A separate contract, provided to the Register last week, shows that the lead architect on the project, Sherlock,
Smith & Adams, is to be paid $713,311 for a variety of roles, including the design of the ABC warehouse. That
total includes $270,000 for "construction observation."
A second architectural firm is due to be paid about $210,000 for designing the ADECA warehouse, state records show.
Sherlock, Smith's president, Roland Vaughan, who has said that he selected G.H. Construction, said last week that
his firm was asked to oversee the construction manager by the Montgomery Downtown Redevelopment Authority.
A draft of the Sherlock, Smith contract, dated last week, shows it was also to be paid $21,000 for "pre-construction
scheduling and coordination" - a task that G.H. Construction's contract shows that it is responsible for.
The Sherlock, Smith contract states that the total construction cost for the two-warehouse project is projected
to be $13.5 million. Unlike the G.H. Construction contract, though, the Sherlock, Smith contract doesn't include
professional fees in that total.
Vaughan said in an interview two weeks ago that his firm has a responsibility to keep project costs down.
"Everything we've tried to do is to not have this thing gouged by fees, so those savings will be passed on
to the state," Vaughan said.
© Mobile Register.
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