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Colorado Convention Center bidding scandal could be costly

December 22, 2018

DENVER (AP) — Denver’s $233 million plan to expand the Colorado Convention Center is supposed to draw $47 million in new annual spending, but that could be delayed or threatened by allegations of collusion among private companies on the project.

A potential criminal investigation is looming and city officials are racing to reboot the project, which was expected to be completed before 2023. Meanwhile, event planners around the world already are booking events through 2028, notes Sherrif Karamat, CEO of PCMA, a global events industry association.

“That really is a challenge when you get a setback like that,” Karamat told The Denver Post . “We do have to plan. It takes an enormous amount of time.”

The development company Trammell Crow had worked for 10 months and collected nearly $1 million when Denver fired it from management of the expansion project on Dec. 11, with Mayor Michael Hancock alleging a “tainted” development process.

The expansion is a complex beast meant to keep Denver internationally competitive for major events. A new ballroom and terrace will be installed on top of the existing building, and better technology and more flexibility added.

A feasibility study commissioned by city officials and nonprofit groups showed that a major expansion could draw an extra $47 million per year, including hotel and restaurant spending.

A Visit Denver analysis found that convention center events produced $543 million in economic activity in 2016.

Visit Denver spokesman Jesse Davis did not answer questions about whether the center had already booked events for the planned new space that could be affected if there are construction delays.

“It’s too early to understand the future business implications,” Davis wrote in a text message.

Denver hired Trammell Crow’s local office in February. Now, the company’s removal from the project could create chaos. The city had agreed to pay the company up to $9.3 million to shepherd the project from start to finish.

“It’s a critical role in that they really oversee the entire process,” said Caroline Clevenger, assistant director of construction engineering and management at CU Denver’s Department of Civil Engineering. Clevenger doesn’t have any involvement or direct knowledge of the project’s troubles.

In July, Trammell Crow helped the city launch bidding. It allowed general contractors to bid for a $200 million contract to finish the project’s design and build the expansion. Dozens of contractors’ employees showed up at an early meeting, but only three companies made it to the “short list” by October.

“Certainly, those three bidders were anticipating sitting for interviews and I suspect were probably preparing for interviews,” said City Attorney Kristin Bronson.

On Dec. 11, the city announced it had fired Trammell Crow on suspicions that it had improperly leaked information and even altered plans for the project, potentially to favor a bidder. City officials also said in a letter that contractor Mortenson Construction was “implicated” in the problems.

Clevenger said it’s not uncommon for construction and development companies to develop relationships, but a bidding process comes with strict requirements to protect fairness and the public interest. For example, if a bidder asks a clarifying question, the answer is supposed to be provided to everyone.

“Construction is about relationships, and managing those relationships and trust and reputation — that is a gray area in a lot of ways,” she said. “There are strict guidelines on what information you can provide, and what time you can provide (to each bidder).”

Trammell Crow has said it has fired an employee it didn’t identify. The district attorney’s white-collar crime office is looking into the case, and both Trammell Crow and Mortenson have promised internal investigations and government cooperation.

Meanwhile, the city will face difficult decisions as it untangles the mess. For example, it has asked Trammell Crow to hand over its documents for the project, but it might have to re-examine or rework those documents, because they were allegedly tampered with.

“If you change the document that you’re responding to, then it could make certain estimates or design concepts either much more efficient or effective or irrelevant,” Clevenger said.

The city now will have to decide whether to perhaps choose between the two remaining bidders — PCL Construction and Hensel Phelps — or whether it must reset the entire process.

Even with a full reboot of bidding, the city would have to grapple with the fact that some companies now have spent months studying the project, which could give them an advantage.

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