Strong objection to LA Metro bid evaluation 21 Jul 2014

Phase 1 Purple Line contract is heart of grievance

In a letter to the Construction Committee of the Metro Board of Directors, Dragados, as lead of the DAS JV with partners Astaldi and Southland, claims that Metro procurement managers unfairly compromised and misrepresented its proposal when making a recommendation to the Board that the STS JV of Skanska/Traylor/Shea be awarded the contract at the Board meeting today (Thursday 24 July).

Dragados claims that its $1.444 billion proposal for the 3.9-mile (6.25km) extension of twin-tube running tunnels and three new underground stations beneath Wilshire Boulevard is $192 million less than the $1.636 billion proposal by STS, and $127 million less than the proposal scored second by Metro from the competing Impregilo/Samsung/Salini JV. It further argues that “negative characterizations” by Metro staff in its evaluation recommendation report were either “a lack of due diligence by Metro staff” or an “intentional action meant to steer the contract award to the team pre-determined and favored by Metro staff".

Metro response
In an email response for a statement, the Metro public relations department confirmed that "Metro staff stands behind its recommendation" and that there is "not much to add before Thursday's Board meeting".

The letter of grievances however stands and goes on to make direct and personal criticism of “openly hostile, aggressive and even verbally abusive” behavior toward the DAS team by Executive Project Director of the Purple Line extension, Dennis Mori, claiming that he “specifically and forcefully told DAS to exclude innovative approaches” from its proposal and in essence converted a stated design-build procurement into a traditional design-bid-build procurement, with the best-and-final-offer pricing the works to drawings prepared by Metro’s project engineer Parsons Brinckerhoff “without deviation”. Dragados claims that as a result, the reduction of schedule risk offered by its alternative sequencing of TBM drives and the reduced amount of excavation resulting from its redesign of underground auxiliary rooms were barred from inclusion, consideration and proposal evaluation.

The Metro evaluation report states that, “although the solicitation process allowed Proposers to summit alternate proposals, none were submitted”. DAS states it requested clarification of the directive to withdraw innovative ideas from its proposal in the letter addressed to the Metro Contract Administrator and that it will be requesting disclosure from Metro as to whether the directive was delivered to all three bidders or just DAS.

Further damning indictments in the letter include:

• a demand that DAS remove three ‘added value’ personnel from its nominated management team of 50 when the reference to ‘added value’ personnel in the recommended STS proposal was cited as a strength;
• reference to the DAS construction approach as being “not supported by a thorough detailed schedule” and exposing Metro to a “high probability of cost and schedule risk”, claims that Dragados for DAS strongly objects to, stating that it presented innovations that would have reduced risk; and
• claims that the DAS proposal illustrated “a weak understanding of the overall project”, which DAS further strongly denies.

For its part, DAS claims that:

• minutes of meetings were not taken;
• recognition of the relevant experience by each of the JV teams was out of balance - with the STS experience of four project in Los Angeles, three for Metro with two including no tunneling component - were unfairly rated against the many metro tunneling projects cited by Dragados and its partner Astaldi including urban rail tunnel projects in London (Crossrail and Bank station upgrade for London Underground), New York (East Side Access tunnels and caverns), Ottawa (the Confederation Line); Toronto (Eglinton Line Tunnels); Sydney (the North West Rail Link) and the Barcelona, Madrid and Rome Subways; and
• despite being pre-qualified, Metro stated in its report that the nominated DAS project manager and deputy project manager lacked rail transit experience and project management experience, another point strongly denied by Dragados with reference to complete resumes for nominated staff included in its pre-qualification and contract proposals.

Finally, Dragados questions the decision by Metro to award three major projects to the same joint venture partners, with Skanska/Traylor awarded the Regional Connector for a contract of nearly $1 billion, and joined by Shea in the STS JV, if awarded the Purple Line Phase 1 contract for its $1.636 proposal, and with Shea in JV with Walsh on Metro’s Crenshaw/LAX transit project for its estimated project budget of $2.058 billion. This is questioned in particular, as it notes, as stated in the Metro report, that the same Project Manager for the Skanska/Traylor Regional Connector is also the nominated Project Manager in the STS proposal for the Purple Line contract.

Dragados, in different JVs, also prequalified and presented proposals for the Regional Connector and the Crenshaw/LAX Line projects and claims that its competing bid of two final proposals for the Regional Connector was more than $80 million lower on price than the winning bid by Skanska/Traylor and that it received only a verbal debriefing rather than its request for copies of supporting documents to review its proposal in reference to the evaluation process and preparing the subsequent Purple Line proposal. The prompt delivery of requested information after ranking second with its bid for the Crenshaw-LAX Line evaluation, it states, could infer that the lack of transparency concerning the Regional Connector bid “negatively impacted” its ability to present the most responsive proposal possible for subsequent projects.

It also reminded Metro, in the letter, of its fiscal responsibility, as a public authority, for spending tax payers money, stating that the money saved by its lower priced bids would help fund other projects in the Metro capital expenditure program.

In conclusion, in his letter to Don Knabe, Chair of the Construction Committee of the Metro Board of Directors, Alejandro Canga Botteghelz, President of North America West, Dragados USA, states that DAS “is ready and able to successfully build” the Westside Purple Line extension Phase 1 project at a “price less than” the two competing proposals and with further possible cost savings “based on the [alternative] design and sequencing approaches” as originally proposed.

In reporting the story from a copy of the letter and copies of other documents in its possession, TunnelTalk was unable to solicit comment or direct responses from senior managers at Metro, or at Dragados or with other joint venture competitors, and the process to report further details will continue.

Further questions to expand the reporting

It is unclear for example what the next step might be for Metro and for Dragados as lead partner of DAS JV. Will the recommendation to award the Purple Line extension Phase 1 contract to the STS JV be ratified by Metro at its Board meeting on Thursday, or will the item be withdrawn from the meeting’s agenda pending further review?

If the recommendation for award of contract is ratified by the Board on Thursday, what is the recourse for Dragados and DAS? Can it then lodge an official objection to the contract award, or is its only recourse to take its complaints against Metro to a court hearing? Can an official objection to a contract award be leveled against the evaluation process or must it be only in reference to items in the documentation of the selected proposal?

In no document or report as reviewed is there reference to the Dragados-led contract with JV partner Tutor Perini in Seattle for the Alaskan Way replacement tunnel were the project’s TBM is on standstill due to bearing seal failures. The project is one of the most technically demanding tunneling projects in the world currently, and the TBM is the largest in the world at the moment at 17.5m diameter, but the TBM troubles and the contract delay and potential cost increases must be evident, if not stated openly, in bid evaluations for Dragados. But as one of the world’s leading tunneling contractors, Dragados as leader of the STP JV in Seattle, has stated several times, and as reported by TunnelTalk, that it remains committed to the project and its client WSDOT, as well as to funding the repair of the TBM, in conjunction with the TBM manufacturer Hitachi of Japan, to resume tunneling as soon as possible and without first recourse to preparing claims or initiating legal battles.

For Metro, as the client in Los Angeles, a report by TunnelTalk last year in November 2013, and after visiting Los Angeles to interview senior managers, including Purple Line Project Director Dennis Mori, it was confirmed that while adopting design-build as “a decision to reduce procurement time, the contract documents contain several prescriptive elements to ensure compatibility and integration with the existing infrastructure”.

Also, given the checkered history of subway tunneling in Los Angeles, Metro favors a more conservative approach to design, excavation and construction. Control within the design-build procurement for the current Metro tunnel projects covers several aspects including TBMs for twin-tube running tunnels that are specified as pressurized face TBMs (EPB or slurry machine) which must have certification for gassy ground operation and have the ability to build the precast concrete bolted and gasketed segmental lining with strict control over any potential for surface movement.

Earlier proposals to adopt steel fiber reinforced segments for the tunnel linings for example were rejected in favor of traditional rebar reinforced segments and Mori confirmed in the November 2013 article that "there will be no mined alternatives” for the three open cut underground stations on the Purple Line extension.

While the contracting environment for tunneling projects in Los Angeles is known to be particular for so many different reasons, and while Dragados may well claim that it was being railroaded into playing on an uneven playing field, the situation does require Metro, as a public authority in LA, to stand up to scrutiny, be prepared to answer tough but legitimate questions, and be seen to be accountable for the expenditure of some $6 billion in local and Federal tax dollars on what is the largest-ever, single investment in public transportation projects in Los Angeles County. It must also ensure that its processes enable cost-effective and competitive bidding for the tunneling projects to come.