June 14, 2012

$50 million in federal funding for Mid-Continent Airport at risk in dispute, Wichita officials say

Wichita city officials say $50 million in federal funding for a new airport terminal could be lost due to a growing dispute between the two lowest bidders hoping to build the project.

Wichita city officials say $50 million in federal funding for a new airport terminal could be lost due to a growing dispute between the two lowest bidders hoping to build the project.

Letters and e-mails between the city and the federal government, obtained Thursday by The Eagle, make it clear that the Federal Aviation Administration supports a city finding that the low bidder, Wichita-based Dondlinger & Sons and partner Hunt Construction, failed to meet, or demonstrate good faith efforts to meet, the Wichita Airport Authority’s Disadvantaged Business Enterprise (DBE) goals.

Those goals are a federal requirement that at least 7.11 percent of the project work be shared with disadvantaged business enterprises, such as minority-owned firms, or that the project bidders demonstrate a good-faith effort to reach that number.

As a result, the city disqualified Dondlinger-Hunt’s low bid of $99.4 million and awarded the project to the second-lowest bid, by Wichita-based Key Construction. Key and its partner, Walbridge Aldinger Co., a Detroit construction firm, submitted a bid of $101.5 million.

City Council members wouldn’t speak on the record Thursday, saying the dispute is in the middle of an internal administrative review that will culminate later this summer with an appeal hearing before the council.

But several expressed confidence privately in the city staff’s finding that Dondlinger didn’t meet the requirements to include disadvantaged businesses. They also voiced fear that any council decision to go with the Dondlinger group now would lead the FAA to pull its $50 million, effectively killing the $100 million terminal project.

“Our hands are tied,” one council member said.

Jim Anderson, the Foulston Siefkin attorney representing the Dondlinger group, doesn’t think the city’s hands are tied at all. He wants the city to rebid the project or turn the dispute over to arbitration. Some city officials fear that even a rebid could cause the FAA to pull its funding.

“There’s nothing in this series of correspondence that tells me they’ve (the FAA) done nothing but read the conclusions the airport authority reaches,” Anderson said. “If the city goes through its administrative review process and our bid protest and concludes an error has been made, that we were responsive to DBE, then it’s our feeling the FAA has to award funding.”

Exchange of letters

The council members’ fears are based on an exchange of letters earlier this month between Victor White, the city’s director of airports, and the FAA’s Wayne Halter.

In a June 7 letter to Halter, White asks whether the FAA thinks it is too late for Dondlinger-Hunt to fix the problems with its bid.

“Dondlinger-Hunt offers assurances that it will meet the DBE goal at contract execution, although it did not do so or provide evidence of its good faith efforts to do so, as required by the bid documents, at time of bid opening,” White wrote to Halter.

On June 8, Halter states twice that his organization has no interest in proceeding with Dondlinger-Hunt due to the city’s findings regarding participation by disadvantaged businesses.

“Dondlinger-Hunt’s bid was found to be non-responsive because it failed to demonstrate good faith efforts ... ,” Halter writes. “Therefore, FAA cannot participate in an award to Dondlinger-Hunt regardless of an arbitration finding.”

FAA spokeswoman Liz Corey confirmed that determination Thursday.

Halter’s next paragraph was more chilling to some council members, reminding the city that it could “apply local procurement options” to the project, taken by some council members as a warning to proceed with Key-Walbridge as the builder or risk losing federal funding.

The letters last week wrap up almost six weeks of correspondence between the city and the feds over the bid flap. Other letters and e-mails reveal that Dondlinger sought and received “administrative reconsideration” from a three-member panel of the original bid decision, and also received an appeal of that panel’s verdict with White, the city’s airport director.

Anderson, the attorney for Dondlinger, said his clients met the 7.11 percent requirement and any “reasonable definition” of good-faith efforts.

“It’s in the eye of the beholder,” Anderson said. “We submitted many pieces of evidence to them about meeting with various DBEs, an opening meet-and-greet inviting lots of them to come and receive a presentation about the project and the kind of work we’re looking to sub. They were very well attended, as I understand it.”

In a May 3 letter to White, Patricia A. Wright, representing FAA’s civil rights and DBE compliance office, outlined the “eye of the beholder.”

“Mere pro forma efforts are not good faith efforts to meet the DBE contract requirements,” she wrote. “We emphasize, however, that your determination concerning the sufficiency of the firm’s good faith efforts is a judgment call; meeting quantitative formulas is not required.”

Officials at Key Construction declined to elaborate on the controversy. But Rick McCafferty, Key’s executive vice president, said he thought the terminal bid process was “completely fair and transparent, and the bid documents were clear.”

Anderson said a lawsuit remains a possibility if Dondlinger-Hunt loses its appeal before the council. He blamed city staffers for much of the controversy and said his client deserves reconsideration from the council.

“A lot of this problem has arisen due to the ambiguity of the bid documents,” he said. “I don’t know what more, frankly, that Dondlinger-Hunt could have shown them.”

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