In the years since minority purchasing programs moved from set-a-sides to goals, federal contracts and projects remained the rare bright light. Projects with Federal funds had strong DBE participation requirements and the $32 million Federal Aviation Administration grant to help build the new Wichita Airport terminal meant minority and DBE contractors were going to be in the mix. With the DBE participation goal set at 7.1% for the terminal project, contractors knew they had to come to the table with solid minority participation. On a $100 million contract, that meant a healthy $7 million to help small, minority and DBE contractors grow.
In fact, minority and DBE participation became a deciding factor in the award of the airport terminal construction contract. At just over $100 million, the construction bid submitted by Dondlinger/Hunt, — a joint venture that included Wichita-based Dondlinger Construction — was the low bid. Their bid was $2 million less than the next closest bid submitted by Key/Walbridge (KW), a joint venture that included Wichita-based Key Construction. Even though Dondlinger/Hunt was the low bidder, the City of Wichita staff recommended awarding the contract to Key/Walbridge, saying Dondlinger/Hunt failed to make a “good faith effort” to reach the 7.1% DBE goal. Dondlinger/Hunt appealed the recommendation all the way to the Wichita City Council with the council ultimately siding with staff. KW, whose bid included a commitment to 6.54% minority and DBE participation, was awarded the contract.
According to the two largest minority subcontractors on the project, KW’s commitment to minority participation didn’t go much further than the paper it was written on. In fact, in a lawsuit filed in Federal District Court late last year, one of the two subcontractors calls KW’s DBE participation program a sham, “strategically” arranged to create the appearance of substansial minority participation that didn’t actually exist.
Together, the two subcontractors – Terrazzo USA and Win Construction – accounted for 86% of KW’s DBE participation program. However, by the end of the three-year construction project, both of the subcontractors were financially devastated, one having filed for bankruptcy and the other out of business.
The story of two subs
Terrazzo USA, an Oklahoma City based firm was awarded a $1.89 million subcontract to lay approximately 100,000 sq. ft of terrazzo flooring in the terminal. Win Construction, out of Lawrence, KS, was awarded a $3.89 million subcontract to purchase and install “interior architectural woodwork, access flooring, and interior metal wall panels” in the terminal.
Within months of arriving on the project, and with just 1,500 sq. ft. of the contracted 100,000 sq. ft. of flooring installed, Terrazzo USA was fired, or walked off the job (depending on whose perspective you consider.) Terrazzo’s early exit revolved around their complaint that KW was asking them to accept and install their covering over uneven subfloors.
Terrazzo USA owner Dwayne Hill says, “I saw where this (the project( was going. I knew this wasn’t going to be good.”
Win Construction owners Cynthia and Willone Eubanks agree things didn’t go well, but as the largest subcontractor on the job and with a 20-year business reputation to uphold, they were determined to stick it out. “On several occasions, they told me I was going to lose a lot of money on the job.” “…you need to quit right now.” Willone was told.
Nearly a year after the airport terminal opened, KW’s projections have come true. The Eubanks are out of business, and they’re in the midst of a lawsuit with the KW and another non-DBE subcontractor who was part of what Win describes as a shell game created to create the appearance of minority participation.
In addition, the Wichita Airport Authority has paid KW $3.8 million for work Win completed, but Win is till waiting to be paid. In violation of both Federal and State statuses that require prompt payment to subcontractors, Win has only received $2.1 million from the contractor even though the Wichita Airport Authority has paid KW at least $3.8 million for services Win provided.
In an effort to differentiate his flooring company from others in the industry, in 1995 Dwayne Hill made the decisions to become a terrazzo specialty firm. He attended terrazzo school in 2000 and trained under a specialist in the Dallas Fort Worth area. By 2005, he felt competent to work on his own, and his company began to grow.
“For the last 10 or 11 years, it (Terrazzo USA) has been productive,” says Hill. “We’ve been able to make a profit.”
He regularly employs 15 workers in the field and a staff of five in the warehouse and office. Wichita was definitely a large job for the firm, but not their larges ever. He showed up on the Wichita job with his 15 workers plus 10 from another firm, they were ready and competent to perform as contracted.
At the Wichita airport, things fell apart quickly for Hill and his crew.
“Before we take the job, we come in and we take measurements to make sure they flooring is within the specifications,” says Hill.
The measurements for the first 1,500 sq. ft. of flooring identified the floors were wavy and uneven.
“They (KW) told us we had to accept the floor as it was and they would tell us how to our floor down so there wasn’t an issue,” Hill says.
Hill and his team proceeded as directed but then The City’s inspectors saw the job, they told Hill what he already knew – the floor wasn’t even. The City refused their work. In the meantime, Hill and his team were preparing to move to another section. They took measurements and once again the floor was uneven. They invited KW on-site management out to take a look, took out their lasers, and showed them problems with the floor.
“They (KW) started screaming and cussing at our team, telling us we’re idiots and that that’s not how you do it (measure if a floor is even,)” Hill continues.
KW agreed to have a professional surveyor check the floor. Two days later the surveyor came to the same conclusion, the floor was uneven. At this point, Hill thought things would get better, but they didn’t. Hill refused to accept the new area until they fixed and floor and KW refused to move forward until Terrazzo USA corrected the first 1,500 sq. ft. area the City refused to accept.
“They’re giving me directives that I need to proceed on the first area, I’m like, ‘that’s not our problem.’”
Hills says he did try to fix the first area by grinding out some of the unevenness, but with the covering only 3/8” thick, his team could only grind so far to try to compensate for the unevenness. KW insisted that Terrazzo USA chip out the floor and re-pour it at their expense. (estimated cost $50,000)
KW stopped paying the company, saying they wouldn’t pay them any more money until the first area was fixed, then terminated Terrazzo USA for nonperformance. The company had already purchased and had on site 30% of the material for the job. KW refused to give them the material or equipment they left on the job.
If the contractor hired to replace them cost more than Terrazzo’s original contract, Terrazzo USA could have been held liable for the additional amount. That’s why Hill returned to Oklahoma and immediately filed for bankruptcy. It was his way of protecting his company from potential future liability.
Cynthia and Willone Eubanks are experienced contractors with decades of successful contacting experience. A Federal 8a certified firm, the company was a preferred Federal contractor and had completed numerous Federal construction jobs including projects for the Corps of Engineers, Department of the Army, FAA, and the General Services Administration. They were the single largest DBE contractor on the Wichita airport project.
During the project pre-bid phase KW met with Win to negotiate its participation. In addition, KW met with Environmental Interiors, Inc. a non-DBE design-build subcontractor of specialty architectural finishes. Eii was contracted to provide architectural metal wall panels, architectural woodwork, access flooring and for installation of these products for the Wichita terminal.
To help meet their DBE goals, KW encouraged Eii to “break up their” intended scope of services for the project and to find a Kansas Department of Transportation certified DBE ‘strategic alliance partner.” Win Construction became that partner, taking on a portion of Eii’s work.
For consistency purposes, Win was to purchase all of the “specialty architectural finishes” required for the job from Eii.
In effect, Eii was only giving up a portion of the installation work, since they were still the source of the architectural products. However, Eii didn’t give up a portion of their contract without conditions. Eii insisted that that Key require Win to “cooperate with Eii and proceed as we (Eii) direct.” In fact, Eii and KW signed a second contract – without Win’s knowledge – that in essence gave Eii control over Win’s subcontract performance and put Win at a considerable financial disadvantage.
Some of the issues Win had with Eii include:
1.Eii insisted that Win only hire installers that they agreed upon. According to the contract, the manufacturer (Eii) had the right to approve the installers. “They flat out told me they were not going to accept any of my people,” says Willone. The company forced Win to sign an agreement to hire union workers, who were considerably more expensive.
When the union didn’t have any people, KW intervened and allowed Win to use workers provided by Tradesmen International. Win’s representative from Tradesmen International turned out to be the brother-in-law of a Key Construction Vice-president.
“So, they essentially made me over pay money to TI and the union,” says Willone.
2.The separate Eii/KW agreement gave Eii control over Win’s “schedule of values,” the contractual arrangement that establishes the amount of money Win was to receive for their scope of services. Even though Win signed a contract directly with KW, Eii made revisions to that contract increasing the amount Win was to pay Eii for the architectural products by $480,000 and decreasing the amount of money Win was to receive for the installation by $200,000.
“The proposal Eii sent to KW for material to be purchased between me and Eii was different from my proposal,” says Willone. His signature was on the agreement, but Willone says he didn’t sign it. “It was a pdf stamp, a cut and paste signature. You could click on it and move it all around the page,” says Willone about “his signature” that was submitted on the proposal.
3.Eii provided Win with panels that did not meet the job specifications. Instead of being rear mounted panels, the panels were side mounted panels, which Willone says took twice the labor to install. In addition, Willone says the panels weren’t the specified thickness, and some were not square, which also made them more difficult to install. In addition, Willone noted the project was an “American job,” which required all of the products used on the job to be manufactured in America. According to Willone, at one point Eii was shipping material to China for fabrication.
When he questioned the quality of the product he received Willone says KW told him the Airport Authority accepted the product and so should he. He was told, “‘shut up and put it (the wall panels) up.” Not satisfied with that answer, Wilone took his complaints to another level. He complained to AECom, the Wichita Airport Authorities representative on the project, and to Wichita Airport Authority representatives, including the projects DBE coordinator.
A meeting was held. In attendance were Eubanks, AECom, Win’s attorney, KW representatives and city staff. There were a number of issues on Win’s list, but the decisions makers concluded, this was a contract dispute between Win and KW and they refused to become involved.
Where’s the money?
Almost a year after the airport opened, the Eubanks are left wondering, where’s the money?
In October 2015, Eii filed a lawsuit against Win Construction seeking $1.9 million in payments they say the company owes them.
In December, Win shot back a counter lawsuit, and added KW as an additional party. Their lawsuit outlines all of the issues they had in the contract and Win disputes the amount owed to Eii.
According to Willone, his bid was to purchase a Louis Vuitton, but Eii delivered an inferior “knockoff.”
“The savings they realized on the basis of giving me defective material, they don’t get to keep that,” Willone says. “I’m not paying full price for that.”
In addition, Win also wants a price adjustment based on the increased cost it took to install the products that failed to meet the original specifications.
“We had to go through extraordinary efforts to figure out how to make a straight line out of those panels that were not rectangular, Willone objects.
In addition, Win says he doesn’t have the money to pay Eii, because he hasn’t been paid by KW.
Of his nearly $4 million contract, Win has only been paid $2.1 million although KW has been paid $3.8 million for his services. There is a check for $826,701.52 written jointly to Win and Eii that Win refuses to endorse. If Win endorses the check, the money would go to Eii.
That still leaves another $900,000 KW has received from the City that they haven’t paid Win for.
Federal Dot regulations, Wichita Airport Authority DBE manual, and the Airport Terminal specifications all requires KW to pay its subcontractors within 30 days after receiving payment from the City. State law requires payment within seven days. Willone insists the City knows about the $826,000 check and feels certain the City of Wichita confirmed the remaining $900,000 has been paid to the contractor.
“Why isn’t the City doing anything about it,” questions Willone.
DBE Support and Compliance
Minority and DBE contractors are expected to come to the job prepared to work. However, recognizing that these are small businesses often interacting with major corporations, DBE programs generally provide some degree of DBE support. According to both Terrazzo and Win, City employee Linda Turley, was the designated DBE liaison for the Wichita Airport Project, but she provided little if any support.
“I’ve never had a minority business liaison who never call or reached out on her own volition,” says Willone.
Hill says the local DBE support was non-existent. Turley never returned his calls and the only time he ever saw her was at one meeting when the GC was “all over” them.
“She saw how the contractor talked to us and treated us and said absolutely nothing.”
It is because of this lack of support that both Win and Terrazzo elevated their concerns. Their outreach and documentation of problems on the project was enough to encourage the Department of Transportation to investigate the airport’s project for potential DBE violations.
Eric Weems, congressional public affairs officer, Department of Transportation, says it is the department’s policy to neither confirm nor deny the existence of an investigation. However, in two seperte written statements, the City of Wichita confirmed to The Community Voice that they are cooperating with the investigation.
An FAA investigation would look for violations of contract terms, including DBE participation terms, and make a determination if criminal or civil charges should be filed. Besides criminal charges, other possible recourse could include: levying fines, sanctions against the contractor and/or civil penalties.
Weems says in general, the investigation would be of the contractor and not necessarily the city.
However, since the completion of the airport, Win reports the City of Wichita has contracted with a private DBE consultant to help improve their DBE program. The City’s statement appears to support the fact that there were shortcomings with DBE participation on the Wichita Airport Project.
There is still a lot to be resolved. ••