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0001 1 STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS 2 3 PROCEEDINGS AT HEARING IN RE: : : 4 SENATE COMMITTEE ON : GOVERNMENT OVERSIGHT : 5 CONSTRUCTION MANAGEMENT AT : RISK - CENTER OF : 6 BIOTECHNOLOGY AND LIFE : SCIENCES, URI : 7 : : 8 June 9, 2008 9 3:30 P.M. State House 10 Room 35 Providence, Rhode Island 11 MEMBERS PRESENT: 12 SEN. J. MICHAEL LENIHAN, CHAIRPERSON SEN. FRANK A. CICCONE, III, VICE CHAIRPERSON 13 SEN. JAMES C. SHEEHAN, SECRETARY SEN. PAUL E.. MOURA, MEMBER 14 LINDA GEORGE, ESQ., COUNSEL TO THE COMMITTEE 15 16 STAFF PRESENT: 17 KELLY M. CARPENTER, LEGISLATIVE FISCAL ANALYST HERB COUPER, CLERK 18 19 20 RHODE ISLAND COURT REPORTING 21 747 NORTH MAIN STREET PROVIDENCE, RHODE ISLAND 02904 22 (401)437-3366 23 24 RHODE ISLAND COURT REPORTING (401) 437-3366 0002 1 (COMMENCED AT 3:50 P.M.) 2 SEN. LENIHAN: If the meeting of 3 the Senate Committee on Government Oversight could 4 come to order, please. 5 We're resuming this afternoon on review of 6 the timeline of documents and asking questions 7 relative to those documents, all of which pertain 8 to the University of Rhode Island Center for 9 Biotechnology and Life Sciences as a case study 10 for the use of construction manager at risk 11 technique for construction. 12 First off, could I ask the URI delegation to 13 once again patiently come forward and take your 14 seats. 15 We have a different venue today, but it's a 16 lot cooler than it would have been if we stayed in 17 the Senate lounge. 18 We're going to use the same approach that we 19 used last time around; that is, our counsel, Linda 20 George, will refer to the documents and then we'll 21 be asking some questions relative to those 22 documents. If you could begin, please. 23 MS. GEORGE: Thank you, Senator. 24 We're up to Exhibit ZB from the last hearing dated 0003 1 March 16, 2007. The following three exhibits are 2 a series of exhibits concerning the reduction and 3 negotiations of the guaranteed maximum price for 4 the contract between Gilbane and URI on the CBLS 5 building. This is the construction manager at 6 risk. The series of reductions to the GMP 7 included deleting or removing from the contract 8 the demolition of the Biological Sciences Center. 9 It also excludes the north campus district 10 utilities, and it excludes the bond on the 11 construction manager. The total cost for this 12 contract is $75,000 for the construction document 13 phase. The anticipated finish date for the total 14 project, the completed construction, is April 20, 15 2009. 16 Senator, you have some questions? 17 SEN. LENIHAN: I do. Thank you. 18 Did the Department of Administration review 19 the proposed guaranteed maximum price between URI 20 and Gilbane? 21 MR. WEYGAND: I believe they did, 22 but, again, Mr. Chairman, I think that would be 23 most appropriate to be answered by them, but I 24 believe we provided generally this information 0004 1 before we submitted our recommendation for 2 contract for the guaranteed maximum price. 3 SEN. LENIHAN: To your knowledge, 4 was DOA involved at all in the negotiation process 5 to arrive at a GMP? 6 MR. WEYGAND: No, they were not. 7 That was done by the Office of Capital Projects 8 and the contractual firm, Gilbane Company. 9 SEN. LENIHAN: This may seem like 10 an obvious question, but if they were not involved 11 and your testimony is they were not, why were they 12 not involved? 13 MR. WEYGAND: I'm not sure exactly 14 why legally they would have been involved in that 15 negotiation. Certainly, the information is sent 16 up to them for their review and their questions, 17 and we provide them with any kind of advice on 18 that, but I don't know if there's a legal 19 requirement for them to be involved in that 20 negotiation of the pricing at that point in time. 21 If you recall, Senator, last week I presented 22 to the committee a series of some 26 to 30 23 packages of prepared bids that were submitted as 24 part of this project, and I think it's important 0005 1 for us to realize that this was actually an open 2 bid project for the entire process. Initially, 3 there is an RFP that was out for construction 4 management at risk services which included a 5 preconstruction or construction document fee, 6 $75,000, that was referred to by legal counsel 7 and, also, a construction services fee, post-bid 8 guaranteed maximum price fee. All of the people 9 who submitted submitted prices for all of them, 10 Whiting-Turner, Walsh Brothers, Gilbane. None of 11 the subcontract prices were known at that time. 12 Those were all sent out to a bid. The bids were 13 solicited, they were reviewed by us and Gilbane, 14 and then they were approved by us prior to any 15 movement going forward. 16 Once those were all packaged together as 17 publicly reviewed bids, I say that outside. It 18 was not through DOA. It was through Gilbane, a 19 public process, although it was noticed on the DOA 20 Division of Purchases web site. Once that was all 21 reviewed and we found the best, lowest price for 22 all those trades, then and only then was a 23 guaranteed maximum price agreed to. It's very 24 similar to a filed sub-bid contract we used to 0006 1 have many years ago or to a bid that would have 2 been done by a general contractor, all of it being 3 reviewed publicly, very transparent, and then and 4 only then did we give them approval on the GMP. 5 At that point in time, we sent our request or 6 recommendation up to the Department of 7 Administration for a modification in the contract, 8 a change order, advice of change, as we refer to 9 it, for the $44 million. 10 SEN. LENIHAN: Just by way of 11 explanation, this is -- the question really gets 12 at the matter of policy, not just as it pertains 13 to this particular contract, but also a pattern 14 that we follow or wish to follow as we go forward 15 and whether or not the existing policy which 16 appears to be in this case in the negotiations, 17 anyway, hands off from DOA if that is, in fact, 18 something we want to see in the future; not just 19 for the University of Rhode Island, but for any 20 other quasi-public that's out there. 21 If you could go on to Exhibit ZE, please. 22 MS. GEORGE: Thank you. Exhibit ZE 23 is a letter dated March 21, 2007. It's a letter 24 from the Gilbane senior project executive to Paul 0007 1 DePace, the director of capital projects at URI 2 asking to extend the construction document phase 3 by 26 weeks and also seeking a 5 percent raise for 4 Gilbane personnel. 5 Senator, you have some questions? 6 SEN. LENIHAN: Yeah. First off, 7 why was the construction phase extended by 26 8 weeks? 9 MR. DePACE: During the -- one of 10 the purposes of going construction management at 11 risk is that we evaluate the project during the 12 construction documents phase to ensure whether the 13 project as designed can be built and does it fit 14 within our budget. That meant during that phase 15 that we had to wrestle with the scope of work, 16 wrestle with the design as put forth by the 17 architect and the needs of the College of Life 18 Science and the Environment. That in this 19 particular project, because of demands of the 20 program, took us longer than we had originally 21 projected and longer than the phase that we 22 published in the RFP. 23 Gilbane made an approach to us, asking for 24 additional compensation for the period of time 0008 1 extended that it took to value engineer and bring 2 the project down within the resources that we had 3 available. That's what this item speaks to. 4 SEN. LENIHAN: As it pertains to 5 the 5 percent salary increase for Gilbane, did URI 6 agree to pay that as part of that additional fee? 7 MR. DePACE: Yes, we did. 8 SEN. LENIHAN: During the course of 9 the contract, was it your understanding that 10 Gilbane employees were to get this raise every 11 year of the contract or project? 12 MR. DePACE: It was over the course 13 of the project, over the two years of the project. 14 MR. WEYGAND: There was a lump sum 15 increase of 5 percent, but not 5 percent, 16 5 percent, 5 percent every year after that. 17 SEN. LENIHAN: So it was a one time 18 only? 19 MR. WEYGAND: One time only. 20 SEN. LENIHAN: I'm not sure what 21 the answer to this is, but wouldn't raises and 22 bonuses generally be paid out of the company's 23 profit? 24 MR. DePACE: I would guess some 0009 1 companies would handle it like that, yes. I can't 2 speak specifically to how Gilbane uses its profit. 3 MR. WHITNEY: If I could clarify, 4 Mr. Chairman. 5 SEN. LENIHAN: Please. 6 MR. WHITNEY: If I understood this 7 correctly, and I wasn't actually intimately 8 involved at this time, at this stage of the 9 project, but I think they were talking about an 10 extension of six months in the project schedule in 11 Gilbane's personnel being on that project during 12 that six month period of time and it coincided 13 with the time when there would be a raise in the 14 wages which ordinarily one would expect to be 15 passed on to the owner. Since the owner was 16 responsible for pushing the project into the 17 additional six month period where the contractor 18 is incurring higher wage costs, I would not expect 19 that to come out of the contractor's profits. I 20 would expect that to be paid by the owner, if I 21 understand your question correctly. 22 MR. WEYGAND: Mr. Chairman, I would 23 also suggest if you look at subparagraph three in 24 that letter dated March 21 to Mr. DePace. It 0010 1 says, "Our personnel have regular salary increase 2 at which a rate of 5 percent annum adds $82,582 3 for the anticipated six month delay." 4 What they were referring to is this was 5 planned by them, anyways. We, as the owners, were 6 asking for it to be extended, the project, by six 7 months. Therefore, they had additional costs 8 which they were anticipating they would normally 9 have anyways. So, therefore, they were asking to 10 be compensated for that. 11 SEN. LENIHAN: Then just to make 12 sure I understand, forgive me if I'm beating this 13 to death, but if there had not been an extension 14 of 26 weeks, then the 5 percent additional would 15 not have been present? 16 MR. WHITNEY: That's my 17 understanding. 18 MR. WEYGAND: That is correct. 19 None of the addition would be required. 20 SEN. LENIHAN: ZF, please. 21 MS. GEORGE: Yes, Senator. Exhibit 22 ZF is the contract signed for the CBLS building 23 with Gilbane as the CMAR, and it is dated 24 March 23, 2007. Senator? 0011 1 SEN. LENIHAN: Is this the only 2 contract signed by both Gilbane and URI for any 3 development in the north district? 4 MR. DePACE: Yes, sir. 5 SEN. LENIHAN: Well, is performing 6 work without a signed contract a potential 7 weakness in the procurement process that might 8 expose the state to unnecessary liability? 9 MR. DePACE: Excuse me. Performing 10 work without a signed contract? 11 SEN. LENIHAN: Yeah. 12 MR. DePACE: There was no work 13 performed without a signed contract here. Did I 14 understand your question correctly? 15 SEN. LENIHAN: Bear with me for a 16 moment. I'm going to ask Ms. George to speak to 17 the work that we're referring to. 18 MS. GEORGE: The work we're 19 referring to, Mr. DePace, is Gilbane in the 20 construction document phase and also the 21 preconstruction document phase did extensive work 22 you testified to in earlier hearings. You may 23 misunderstand the question. But the sub-packages, 24 the subcontractor bid packages had been sent out, 0012 1 there was a value engineering log done, 2 constructability. There was quite a bit of work 3 performed, not construction work, but Gilbane did 4 quite a bit of work for URI in preparation for 5 this. 6 MR. DePACE: Thank you. I 7 understand the question. Thank you for clarifying 8 that. 9 Yes, this was a -- they were providing 10 service during value -- during the construction 11 documents phase which was value engineering, 12 estimating, and pre-bidding of the packages. It 13 is my understanding and my experience with my 14 years in public service here, it's not unusual to 15 engage a contractor based on a consultant, this 16 was the consultancy phase of the work, based on 17 the RFP covered by a purchase order which was 18 authorized by the Division of Purchases. 19 Senator Sheehan advised me last week not to 20 speak to legal issues, but to pass those off to an 21 attorney, but it is my understanding, and my boss 22 has also asked me to do the same thing, but it is 23 my understanding that the purchase order and the 24 RFP, when taken together, constitute an agreement 0013 1 or a contract for services at that point. We 2 would certainly not start the construction phase 3 of the project without a signed agreement in 4 place. 5 MR. WEYGAND: If I could summarize, 6 Mr. Chairman. The preconstruction services, 7 construction document services were done as a 8 contract under a purchase order. The construction 9 services were done as a written contract and 10 signed contract. 11 SEN. SHEEHAN: Mr. Chairman. I 12 just felt as if your counsel was being left out of 13 the whole discussion and didn't want any hurt 14 feelings. 15 MR. WHITNEY: Thank you, Senator. 16 SEN. LENIHAN: We're going to 17 return to this because I do have a potential 18 problem with the references to purchase orders as 19 being contracts. They are not exactly the same 20 thing. I'm not asking you to respond to it now, 21 but you can anticipate that will come up as we go 22 forward on the question. 23 All right, Ms. George. 24 MS. GEORGE: The next documents in 0014 1 our timeline include Exhibit ZG dated March 26, 2 2007 which is a purchase agreement amendment 3 increasing the purchase order for the CMAR 4 services from 75,000 to 44.7 million, 5 approximately. On March 27, 2007, there is a 6 breakdown of costs, Revision 4 of the total GMP. 7 That amount is 44.6 million. And on March 28, 8 2007, there is a purchase order change order for 9 the CMAR contract, increasing the PO from 44.6 10 million to 44., approximately, 7 million. Senator 11 Lenihan? 12 SEN. LENIHAN: The increase in the 13 purchase order from 75,000 to 44.7 million is for 14 different services under the contract from the 15 document phase to the construction phase. That's 16 a correct understanding on my part? 17 MR. DePACE: Yes, sir. 18 SEN. LENIHAN: Okay. Did this 19 increase or transition from one phase to the other 20 ever go before the AE&C selection committee or did 21 they get specific approval from the director at 22 the Department of Administration? 23 MR. DePACE: First, I can tell you 24 that we did not bring it to the A&E consultant 0015 1 selection committee. That had not been my 2 understanding of the process or has been typical 3 previously. Whether the director of 4 administration saw the document or not, I can't 5 say. I at that time was dealing with a purchasing 6 agent. 7 SEN. LENIHAN: Well, I guess the 8 question was to your knowledge, was specific 9 approval from the director ever given? Does 10 anyone know from URI? 11 MR. DePACE: For this change order? 12 SEN. LENIHAN: Yeah, from the 75 to 13 44.7, this I call it a transition. 14 MR. DePACE: I believe -- we have a 15 copy of the agreement for services that was signed 16 by the university, Gilbane Building Company, and I 17 believe it was signed by Director Najarian. So 18 that would be the answer to your question, sir. 19 SEN. LENIHAN: Thank you. Was the 20 north district utility work planning or 21 construction, was that included in this GMP? 22 MR. DePACE: It was not. 23 SEN. LENIHAN: Again, because of a 24 cost factor? 0016 1 MR. DePACE: That's correct, sir. 2 SEN. LENIHAN: Ms. George? 3 MS. GEORGE: I have a question, 4 Mr. DePace. If you look at Exhibit ZG dated -- 5 I'm sorry, ZH dated March 27, 2007. That's the 6 breakdown of costs for the GMP. It's the final 7 revision, and it's Revision Number 4. Yet the 8 contract that that revision is about was dated 9 March 23, 2007. How can a revision that is 10 postdated from the signed contract be incorporated 11 into the contract? 12 MR. DePACE: I believe that we may 13 have answered this to you in writing previously. 14 There was an error in the document as it was 15 presented to us. Revision 3 was an error and 16 needed to be corrected in order to proper reflect 17 the agreement between the university and the 18 Gilbane Building Company. So Revision 4 is the 19 one that was intended to be part of the document. 20 MR. WEYGAND: If I recall 21 correctly, we did answer this a few meetings 22 before. The number was originally 44,615,000 and, 23 if I recall, something like $242. And one 24 document had the 242 in, another one did not. We 0017 1 eliminated the $242 out of it to clear it up so 2 that both reconciled properly to the benefit of 3 $242 for the university. That's what was the 4 cause of that revision. 5 MR. DePACE: It was the difference 6 between the cover letter that transmitted the 7 agreement to us and the actual backup page. 8 That's what the difference was. Thank you. 9 SEN. LENIHAN: I wish all those 10 distinctions were that simple. 11 MS. GEORGE: Thank you. 12 SEN. LENIHAN: Continue, please. 13 MS. GEORGE: Continuing on the 14 timeline, Exhibit ZJ dated May 11, 2007, the 15 director of capital projects at URI approved bid 16 packages for the purchase of electrical equipment 17 totalling approximately $386,000 for the north 18 district utilities. Exhibit ZK is a requisition 19 from URI seeking to increase the PO, the purchase 20 order, for the CBLS building contract, the 21 construction management at risk contract, for 22 $1.2 million. Exhibit ZL is the purchase 23 agreement amendment from DOA authorizing that 24 increase of 1.2 million. Senator? 0018 1 SEN. LENIHAN: Let's first return 2 to something I mentioned a few minutes ago. Could 3 you please explain for the committee your 4 understanding of how a purchase agreement 5 amendment differs from a change order? 6 MR. WEYGAND: You're referring to 7 an advice of change versus a change order? 8 SEN. LENIHAN: The first term you 9 gave me again was what? 10 MR. WEYGAND: Advice of change. 11 SEN. LENIHAN: Let me check the 12 document on that before I respond. Bear with us 13 for just a moment. 14 The document I'm looking at at the top is 15 titled Purchase Order - Change Order - Changes 16 Only, and the material that's supplied by way of 17 filling in below, there is a use of a term that 18 you just used, "Advice of change to increase the 19 PO in the amount of 44.6 per the attached price 20 agreement." 21 MR. WEYGAND: Yes. That's Exhibit 22 ZI. 23 SEN. LENIHAN: No, that would be 24 ZJ. I'm sorry. It's labeled ZI. You're correct. 0019 1 The document is labeled ZI. 2 MR. DePACE: We have the document, 3 yes. 4 SEN. LENIHAN: All right. I'm 5 informed by staff that the exhibit we're referring 6 to here is ZL, even though it looks like ZI at the 7 top. It's the one that is marked or stamped 8 received March 30, 2007, Office of Capital 9 Projects. 10 MR. DePACE: I guess we're 11 alphabetically challenged. 12 SEN. LENIHAN: I'd also just by way 13 of making sure we're talking about the same 14 document, it's also stamped that this was faxed 15 3/29/07. 16 MR. DePACE: Yes, we have it. May 17 I ask you to repeat the question then? 18 SEN. LENIHAN: Okay. The question 19 I asked initially was how does a purchase 20 agreement amendment differ from a change order? 21 MR. DePACE: I would think that the 22 Division of Purchases staff would be best to 23 discuss the nuances of that, but I can tell you 24 the process from the user's point of view, from 0020 1 our point of view. 2 An advice of change is the document that 3 amends a purchase order. So that's the 4 terminology the way we understand it. A purchase 5 order is placed on a project and should there be a 6 change in increase or a decrease, then an advice 7 of change is the title that is given that document 8 to change. 9 A change order, again, for construction 10 purposes, is the document that identifies the 11 change, is generally signed by the architect, 12 construction manager, and the owner, and is backup 13 to the advice of change to the purchase order. 14 Did I thoroughly confuse you, sir? 15 SEN. LENIHAN: No. I started 16 pretty well confused to begin with. 17 MR. DePACE: Okay. Did I help at 18 all? 19 SEN. LENIHAN: Yes, I think. Would 20 I be wrong in saying that the purchase agreement 21 amendment differs with the amount where the change 22 orders deals with the specifics of what exactly is 23 being changed? 24 MR. DePACE: I would suggest that 0021 1 the Department of Administration might be the best 2 one to speak specifically to that, but I can tell 3 you process wise what we have come to use as a 4 method of addressing changes in a project. 5 Specifically, the law and the regulation and the 6 nuances that you're asking about, I think they 7 would be best to answer that. 8 SEN. LENIHAN: Okay. This new 9 amount that you're asking for, why wouldn't this 10 come out of one of the contingencies? 11 MR. WEYGAND: The 44 million? 12 MR. DePACE: A million two. 13 MR. WEYGAND: Oh, you're talking 14 about the ZL? 15 MR. DePACE: The 1,219,000? 16 SEN. LENIHAN: Referring to ZL. 17 Referring to the exhibit that deals with the 18 electrical equipment of $386,000. And then below 19 in ZL increasing the purchase order by 20 1.2 million. 21 MR. DePACE: May I refer you back 22 to Exhibit ZH which is the GMP? 23 SEN. LENIHAN: Bear with us while 24 we dig it out. 0022 1 I have that document in front of me. 2 MR. DePACE: Yes, I have it. 3 SEN. LENIHAN: No, I said I have 4 it. 5 MR. DePACE: Item 02C, North 6 District Utilities. You remember my previous 7 testimony we had stated that for a number of 8 reasons, what was originally presented in the GMP 9 as an allowance for the north district utilities 10 we decided to strike out of this agreement because 11 we did not have enough definition of what the 12 north district utilities would be. They were 13 still in the conceptual and then design phase. 14 So you will see for that Item 2C and the last 15 item, Item 16D, Flagg Road Electrical 16 Distribution, NIC is not in contract, owner's 17 allowance. 18 So we took those out of this GMP because we 19 did not have enough definition of them to go 20 forward. We certainly knew that we had to do 21 upgrades of utilities as we had said before, both 22 in steam and electrical. North district utilities 23 2C would be site work steam and 16D is an 24 electrical division that would be the substation 0023 1 on distribution. 2 SEN. LENIHAN: What does the owner 3 allowance term refer to? 4 MR. DePACE: Meaning that it is an 5 account -- an allowance means there is a number 6 specific put in the contract against which charges 7 will be agreed upon. So you might say it's a bank 8 line number specific in the contract, and the way 9 that we manage it is that change orders are 10 written against that line. 11 SEN. LENIHAN: This owner allowance 12 is, am I correct in saying, it's separate and 13 apart from either of the two contingencies? 14 MR. DePACE: In the case of this 15 particular contract, the owner's contingency is an 16 allowance, meaning it is a certain -- it is a 17 number that we have placed in the contract that is 18 only accessed by the approval of the university 19 through a change order. It's a very documented 20 process. 21 SEN. LENIHAN: Again, so that this 22 particular case, the owner allowance is something 23 which would be applied against what we've been 24 referring to up to now as the owner's contingency? 0024 1 MR. DePACE: There are a number of 2 allowances in construction contracts, typically. 3 There are allowances because specific numbers may 4 not be put against them at that particular time. 5 For instance, one typically put in a contract is 6 testing allowances. You need to be able to test 7 concrete, you need to be able to test soils to 8 make sure the compaction is correct, you need to 9 be able to test wells or sometimes bolt torque on 10 a structure, and typically that is done by an 11 independent laboratory, and you cannot necessarily 12 predict the specific charges of what they'll be in 13 advance, even when you're at this stage of the 14 contract. 15 So an allowance is set up of some certain in 16 the contract against which a draw will be made. 17 It's not done specific just at the request of the 18 construction manager. Each draw is done by a 19 change order which we approve. So it's a managed 20 account. 21 SEN. LENIHAN: I'm just trying to 22 make sure I can follow the terminology from one 23 hearing to the other. Is this what has been 24 referred to as the owner's contingency allowance? 0025 1 MR. DePACE: No. The owner's 2 contingency allowance. There were a number of 3 allowances in the contract. Owner's contingency 4 is one of them. This line was meant to be the 5 allowance for the north district contract. You 6 may remember in a previous document, we had a much 7 larger GMP originally proposed. 52 million, I 8 believe, was the number. We couldn't address 9 that. We didn't have resources to touch that. We 10 zeroed out these lines. One, because we couldn't 11 afford it at the time. Two, because we didn't 12 have enough definition to truly put numbers on 13 them. 14 This GMP that we have agreed upon are all 15 hard bid numbers. This was after all the bids 16 were received for these lines, except for the ones 17 that say NIC owner's allowance. We pulled those 18 out because we couldn't specifically attach 19 numbers to them. The change that you talked 20 about, the 1,219,000 was added back. So it was 21 removed from the scope. It was added back in 22 later once we had definition. A million 219 was 23 for a new steam line from our current steam plant 24 at the university to the north district which will 0026 1 feed, among other buildings, will feed the CBLS 2 building. 3 SEN. LENIHAN: Where would one look 4 to find those various allowances in the contract? 5 MR. DePACE: The allowances in the 6 contract. You'd look for them here in the GMP. 7 MR. WEYGAND: Mr. Chairman, if I 8 could. 9 SEN. LENIHAN: Sure. 10 MR. WEYGAND: In this particular 11 case within the GMP which is Item Exhibit ZH, once 12 those were zeroed out, there is no line item 13 within the GMP for these owner allowance items of 14 north district utilities or the electrical work. 15 What the intent was and what was done was to get 16 further definition by completing plans and 17 specifications on the electrical and steam work, 18 to place it out to bid which was done, to review 19 the best bids, all the bids submitted, best 20 qualified bids, and then to add that to the 21 existing contract by us finding funds which we 22 didn't have at the time of the GMP for those 23 additional work items. 24 SEN. LENIHAN: Where did that money 0027 1 then come from to cover these additional funds 2 that weren't sufficiently funded to begin with? 3 MR. WEYGAND: They were taken from 4 two different projects. 5 There are four projects, actually five 6 projects in which the north district utilities 7 would provide the utility systems; nursing, 8 pharmacy, chemistry, biotechnology, and 9 miscellaneous other related items in the north 10 district. 11 SEN. LENIHAN: Could you go through 12 those one more time? Nursing, pharmacy. What was 13 the other? 14 A. As part of the 2002 master plan, as part of 15 our 2004, '5, '6, '7, '8 capital improvement plan, 16 we have included a series of buildings in the north 17 district of the campus which are conforming to the 18 master plan. One, the first one was the Center for 19 Biotechnology and Life Sciences, the biotech 20 building, second is the College of Pharmacy 21 building, third is the Chemistry Department 22 building, fourth is the Nursing building, and also 23 as part of -- there are miscellaneous other 24 buildings, as well as the Research Park which is on 0028 1 the north side of the campus which we hope to 2 service by the north district utilities. All of 3 them were to pay for a piece of the north district 4 utilities, but we need to build them now before 5 these buildings are actually built so that we can 6 service them. So we're actually borrowing from one 7 project to pay for another project until such time, 8 as you know, this year we've asked for, as we did 9 last year, a Cushner to actually pay for these 10 north district utilities. 11 SEN. LENIHAN: The other projects 12 you're referring to, the chem department, the 13 pharmacy, the nurses, at the time that you went to 14 these to find the money to complete these previous 15 not in contract owner allowance items, these all 16 had funding behind it? 17 MR. WEYGAND: Pharmacy did. That 18 was the only project we could borrow the money 19 from to do the utilities. We're in essence 20 borrowing money to do utilities in anticipation of 21 a Cushner resolution being passed by the General 22 Assembly. 23 SEN. LENIHAN: But specifically 24 then, you were borrowing from the pharmacy 0029 1 funding. And I'm judging from the comments you 2 made prior to that, that as you went farther along 3 the line, if necessary, when funding became 4 available for the chem department and the nurses 5 department, you would also take funds from them? 6 MR. WEYGAND: No. The Cushner 7 would have resolved all of that and placed the 8 total cost for all of the utilities within the 9 Cushner which would be paid for by the general 10 fund from the university and not the specific 11 projects. 12 SEN. LENIHAN: And if the Cushner 13 amendment does not go forward -- 14 MR. WEYGAND: We would have to 15 reduce the scope of the project for the pharmacy 16 building to accommodate the cost of the utilities. 17 As I mentioned to you, we had submitted the 18 Cushner last year for approval late in the session 19 and it was too late in the session to be 20 considered. And so, therefore, it was brought 21 back again this year. 22 SEN. LENIHAN: But the work that 23 was to be done, all of that was bid? 24 MR. WEYGAND: Absolutely. 0030 1 SEN. LENIHAN: Am I correct in 2 understanding that the bid was the typical RFP 3 closed bid? 4 MR. WEYGAND: It was the same 5 process that we used for all the other trade 6 packages under the GMP. It was done in the same 7 fashion where we reviewed them, they were publicly 8 or solicited by Gilbane, posted on, I believe it 9 was posted on the state web site? 10 MR. DePACE: Not this one. 11 MR. WEYGAND: Not this one. Well, 12 it was solicited, bids were submitted, we reviewed 13 them, and it was based upon that solicitation and 14 that review that the utility subcontracts were 15 approved. 16 SEN. LENIHAN: Were they awarded on 17 the basis of lowest responsible bidder? 18 MR. WEYGAND: Yes. 19 SEN. LENIHAN: One more question. 20 Then I'm going to call some other committee 21 members for their questions. 22 Did any of that $1.2 million increase, was 23 any of that going to be going towards Gilbane 24 Construction or was it going to be going to the 0031 1 bidders on the work that you've alluded to? 2 MR. DePACE: The 1.2 million was 3 the sum of the bid, the subcontractor bid for 4 performing the work, steam line. This was the 5 extension of the steam line and the 1.2 -- 6 SEN. LENIHAN: And who would 7 oversee the construction of that? 8 MR. DePACE: The same staff that 9 was already on board for the CBLS project. 10 SEN. LENIHAN: In other words, it 11 would fall within the contracted amount that 12 Gilbane had agreed to to, for want of a better 13 term, oversee the project? 14 MR. DePACE: That's correct. 15 SEN. LENIHAN: And there was no 16 increase in that fee to incorporate that 17 additional work for overseeing the steam line? 18 MR. DePACE: That is correct. 19 SEN. LENIHAN: Senator Ciccone. 20 MR. DePACE: May I say that you 21 actually have the bid for the steam work here on 22 the back side of Exhibit ZK. 23 SEN. LENIHAN: Thank you. Senator 24 Ciccone. 0032 1 SEN. CICCONE: Thank you. Just a 2 follow-up question. It's based on your previous 3 answer. If I'm correct from what I wrote down, 4 you began the building on the life sciences, 5 construction on the life sciences, and then made a 6 determination as to what upgrades were needed to 7 do utilities; is that correct? 8 MR. DePACE: We then completed the 9 definition of it. We always understood that there 10 needed to be upgrades to the utilities to feed the 11 north district. 12 SEN. CICCONE: Okay. And you 13 received a bond for $50 million for the Life 14 Sciences building, correct? 15 MR. DePACE: A general obligation 16 bond, yes, sir. 17 SEN. CICCONE: So what would have 18 happened if the upgrades necessary totaled more 19 than $5 million? 20 MR. DePACE: We would have had to 21 find the utility work from other sources at the 22 university. 23 SEN. CICCONE: Thank you. 24 SEN. LENIHAN: Yes, Ms. Carpenter. 0033 1 MS. CARPENTER: You testified that 2 you borrowed money from the pharmacy account to 3 cover this 1.2 million? 4 MR. WEYGAND: We utilized money 5 from the College of Pharmacy for it. We didn't 6 really borrow it. We utilized money from the 7 College of Pharmacy. 8 MS. CARPENTER: Was that general 9 obligation bond funds? 10 MR. WEYGAND: Yes. 11 SEN. LENIHAN: Ms. George. 12 MS. GEORGE: I have a question. 13 What authority does URI have to take money 14 dedicated to a general obligation bonds dedicated 15 to the pharmacy building and apply those towards a 16 separate contract for the CBLS building? 17 MR. WEYGAND: We understand the 18 authority exists within the language for the 19 general obligation bond to do so. 20 MS. GEORGE: What specific 21 language? 22 MR. WEYGAND: I'd be happy to get 23 it for you and ask my legal counsel to provide 24 that for you. 0034 1 MS. GEORGE: Okay. Thank you. 2 MR. DePACE: I'd also like to add 3 to that that the utilities that we're doing, both 4 the steam line and the electric work, will also 5 feed the College of Pharmacy. So it is 6 preparatory work for the College of Pharmacy as it 7 is a funded project. 8 SEN. LENIHAN: Senator Sheehan. 9 SEN. SHEEHAN: Actually, the 10 question I was going to ask was just requested, 11 but just to follow on. If there's language in 12 this general obligation bond that allows one to 13 transfer monies back and forth or one way in this 14 case, has this been done before? Is this a first 15 precedence or is that something that's been 16 exercised in the past at the university with G.O. 17 bonds? 18 MR. WYMAN: This was somewhat of an 19 unusual case where we had such a large demand for 20 infrastructure to support multiple projects. So I 21 would say in my experience with the capital budget 22 which expands over 25 years, this was a unique 23 situation for us. 24 SEN. SHEEHAN: So over the past 25 0035 1 years, this here seems to be a unique situation? 2 MR. WYMAN: I say that because of 3 the scale of the utility work. But for every 4 project we have undertaken in the past, if there 5 are utility connections, and quite often they're 6 of a much lower scale because we're tying into 7 existing infrastructure in the nearby street. But 8 in this case, we did have to actually upgrade the 9 infrastructure to a whole sector of the campus in 10 advance of many of the buildings that we've 11 mentioned here actually coming to fruition through 12 the G.O. bond process. So it did put the burden 13 on the first two projects to share that cost at a 14 higher level. 15 MR. WEYGAND: It has been unusual 16 that we have G.O. bonds, I think that's really 17 what we're getting at, G.O. bonds that are in 18 repetition to service one sector. Generally, what 19 has happened in the past is there has been a 20 general obligation bond for a specific building or 21 a specific section of the campus. This was a -- 22 this program that we have in the CIP is a series 23 of general obligation bonds for four different 24 buildings, that's unusual. And they're all in one 0036 1 sector, that's unusual to see that. I don't 2 recall that being the norm at the campus. 3 SEN. SHEEHAN: Is it anyone's legal 4 opinion that any particular item that was present 5 in the contract at one point, maybe at the 6 beginning of the process, could be stricken from 7 the contract and those monies hence become 8 quasi-contingency funds? Is there any limitation 9 in doing that? 10 MR. WEYGAND: Could you repeat 11 that, please, Senator? 12 SEN. SHEEHAN: Did I understand 13 that correctly, Linda? 14 Okay. I'll withhold on that question just 15 for now. I'll look at something. Thank you. 16 SEN. LENIHAN: Actually, Senator 17 Sheehan's question causes me to ask. At what 18 point, if any, are you prohibited or stopped or 19 restrained from borrowing from the next building 20 along the line to fund the needs of the building 21 that you're currently considering? 22 MR. WEYGAND: I apologize for using 23 the term borrowing because it's not a correct 24 term. 0037 1 SEN. LENIHAN: Whatever the correct 2 term is. 3 MR. WEYGAND: It is permittable use 4 of the funds under either one of the obligation 5 bonds, the general obligation bonds, to construct 6 these utilities and we're virtually using those 7 bonds to do so to construct the utilities. 8 SEN. LENIHAN: One more question. 9 Ms. George. 10 MS. GEORGE: Mr. DePace, you stated 11 that each of the buildings, or Mr. Weygand, that 12 each of the projects would support a portion or 13 pay for a portion of utilities. What portion of 14 the pharmacy general obligation bond did you 15 anticipate would be used towards the utilities? 16 In other words, not all of the 11 million or so 17 that you have taken from the pharmacy building to 18 use for the utilities will be -- the 11 million 19 won't be returned back to the pharmacy, am I 20 correct? A portion of that pharmacy money belongs 21 with the utilities or is the utilities a 22 standalone? I'm confused on your testimony and 23 maybe you're confused on my question. 24 MR. DePACE: Okay. 0038 1 MS. GEORGE: Your testimony, if I 2 understand it correctly, is that there were five 3 projects in the north district utilities -- at 4 north district development, north district campus. 5 MR. DePACE: Slow down. Yes. 6 MS. GEORGE: A portion of each of 7 those projects, a portion of those funds from each 8 of those projects would be used to pay for the 9 north district utility. CBLS can't support the 10 development of all the north district utilities. 11 It's too expensive. 12 MR. DePACE: That's correct. 13 MS. GEORGE: So URI has taken the 14 full amount of the north district utilities from 15 the pharmacy G.O. bond, correct, 10 million, 16 11 million. Do you plan on returning all 17 11 million to the pharmacy? I'm asking you for a 18 number. What portion of the pharmacy funds will 19 go to support the north district utilities? 20 MR. DePACE: I think if I can take 21 it back one step, you are correct that the CBLS 22 project underway could not carry the entire 23 utilities for the north district. 24 Second of all, at one point in time while we 0039 1 were and we are continuing to plan the north 2 district, one way to approach it would have been 3 to assess each of the four projects, major 4 projects, in the north district with a share of 5 the utilities based on gross budget, based on 6 square footage, based on some algorithm. That 7 would work if all four projects were funded at the 8 same time. Obviously, CBLS was funded first, two 9 years later pharmacy was second, the other two 10 projects were not funded. We needed some way to 11 advance the north district because CBLS could not 12 operate unless the utilities and pretty much the 13 final utilities were in place, a new substation, a 14 major steam line coming from the central plant. 15 So, and I hazard to use the right terminology 16 here, but we are utilizing the G.O. bond 17 associated with pharmacy, allocated by pharmacy, 18 but intend to make pharmacy whole based on when 19 the RIBEC fundings, the item before the 20 legislature currently, we hope is approved and we 21 will use that funding to make pharmacy whole. 22 Obviously, most -- all of the utilities will 23 be in place by the time we hope the voters give us 24 a new chemistry building and a new nursing 0040 1 building, but the utilities and the infrastructure 2 will be in place. 3 MS. GEORGE: So then you're 4 abandoning the original plan that each project of 5 the north district will pay for a portion the 6 utilities? The Cushner that you're seeking will 7 cover the full cost of the utilities and you won't 8 take money from each of the projects to support 9 the utilities? 10 MR. DePACE: Yes, Counselor, that's 11 correct. 12 MS. GEORGE: Okay. Thank you. 13 SEN. LENIHAN: Ms. Carpenter. 14 MS. CARPENTER: Did you discuss 15 this shifting of funds with anyone at DOA? 16 MR. WYMAN: No, we did not, but we 17 did share -- obviously, the process on a 18 procurement document is that the general 19 obligation bond accounts are identified and those 20 go forward for approvals prior to them reaching 21 state purchasing to execute an amendment to the 22 purchase agreement. 23 What I meant by that, the Department of 24 Administration, actually, that those approvals 0041 1 occur on the commitment of funds at the budget 2 office level, State Budget Office. 3 MS. CARPENTER: So the purchase 4 agreement -- 5 MR. WEYGAND: Please? 6 MS. CARPENTER: So what you're 7 saying is that the purchase agreement that would 8 have approved this would have an account number 9 for the G.O. bond account specific to the pharmacy 10 building, specific to the CBLS building? 11 MR. WYMAN: Yes. 12 SEN. LENIHAN: Ms. Carpenter, you 13 want to return to that at a future time? 14 MS. CARPENTER: Yes. 15 SEN. LENIHAN: Okay. Now, if we 16 can go to the next exhibits. 17 MS. GEORGE: The next exhibit, ZM. 18 A month after DOA authorized the 1.2 million for 19 electrical work, utility work, on September 7, 20 2007, URI made a requisition to increase the 21 purchase order for the CBLS by 5.4 million for the 22 north district electrical allowance. This would 23 include 148,000, approximately, for Gilbane 24 supervision and a 10 percent electrical 0042 1 installation allowance contingency for 488,000. 2 Exhibit ZN dated October 29, 2007, is a 3 corresponding purchase agreement amendment which 4 is signed by DOA official, Jerome Moynihan, 5 increasing the purchase order by 5.4 million from 6 45.9 million to 51.3 million. Senator? 7 SEN. LENIHAN: The 5.4 million will 8 increase the purchase order for CBLS from 45.9 to 9 51.3 for the electrical allowance. Is that 10 potentially part of the $10 million Article 4 11 amendment to the budget? 12 MR. WEYGAND: Yes, it is. 13 SEN. LENIHAN: Is this electrical 14 installation allowance contingency a separate 15 contingency, separate from the two main 16 contingencies we've talked about, the owner's 17 contingency and the builder's contingency? 18 MR. WEYGAND: Yes, it is. 19 SEN. LENIHAN: How was 10 percent 20 arrived at as a contingency figure? 21 MR. DePACE: Agreed upon between us 22 and the construction manager. 23 SEN. LENIHAN: So it was a 24 negotiated amount? 0043 1 MR. DePACE: Yes, sir. Again, an 2 allowance to be accessed only by proper procedure 3 of change order documents, backup and approval by 4 me. 5 SEN. LENIHAN: I'm sorry. I didn't 6 get that. Approval by whom? 7 MR. DePACE: Me. The university, 8 my office being the first step. 9 SEN. LENIHAN: I take it from the 10 reference to the 148,000 for Gilbane supervision 11 that this contingency allows for payment of 12 Gilbane services? 13 MR. DePACE: Yes, it is, sir. 14 SEN. LENIHAN: Can we clarify? I'm 15 just going back to a previous exhibit, one which 16 was the purchase agreement from the Department of 17 Administration increasing the purchase order for 18 CBLS by 1.2 million to add pharmacy electric 19 fee -- I'm sorry, per north campus utility 20 upgrade. 21 I believe the testimony at the time was none 22 of that money was for an increase to Gilbane? 23 MR. WEYGAND: That's correct. 24 SEN. LENIHAN: In this instance on 0044 1 the electrical allowance, there was an amount 2 provided to Gilbane for supervision? 3 MR. DePACE: That's correct. 4 SEN. LENIHAN: And how was the 5 148,000 for Gilbane supervision calculated? 6 MR. DePACE: It was based on a 7 certain number of hours for certain professions 8 based on a nine month time frame to be billed 9 against specifically for manhours on the job. 10 SEN. LENIHAN: Do any of those 11 multipliers we talked about some hearings ago bear 12 upon this $148,000 figure? 13 MR. DePACE: No, they do not. The 14 specific invoices that match these would be based 15 on hours on the job and labor rates which were 16 associated and approved in the original agreement. 17 SEN. LENIHAN: I'm assuming, once 18 again, it was the expectation that the money to 19 pay for this was going to be coming from the 20 Cushner proposal in the current year's budget -- 21 I'm sorry, in the proposed new budget, Article 4? 22 MR. WEYGAND: In this year's 23 budget, it's Article 4. Last year, as I said, we 24 had tried to get it submitted at that time. We 0045 1 had hoped it would be in the FY '08 budget. But 2 that is correct, it would have been in Article 4, 3 the Cushner, that's in this year's budget for 4 north district utilities. 5 SEN. LENIHAN: Is it unusual for a 6 change order to include a contingency? 7 MR. DePACE: No, it's not, not 8 something of this size and scope. 9 SEN. LENIHAN: Could you explain 10 it? Because of the size, meaning very large or 11 very small? 12 MR. DePACE: The fact that it was 13 very large and while we had -- the $5 million 14 change for utilities was based on an estimate, 15 based on a design by the Maguire Group, and the 16 scope included bringing in a new 33,000-volt line 17 from National Grid's line that fed campus through 18 a lower part of the campus, underground at some 19 locations, to a new substation that was being 20 carved out of the woods in the north district, 21 north of Flagg Road, if you know the campus, sir. 22 So there were a number of areas. The woods 23 hadn't been opened up yet. The soil hadn't 24 been -- we had done some test pits, but you never 0046 1 can tell when you're trenching underground to run 2 this high voltage line through campus where you 3 might run into ledge. So we needed to create 4 certain allowances so that we could make changes 5 on the job if they were warranted. Again, as with 6 any of one of these allowances, they are not free 7 to the contractor to access. They're only 8 available by signed change order, signed, agreed 9 upon change order; and for each of those change 10 orders, there is full documentation, backup from 11 any subcontractors involved and approved by the 12 university before it's allowed. 13 SEN. LENIHAN: Was this of 14 sufficient size that a separate bid-able contract 15 should have gone out? 16 MR. DePACE: This, as with all 17 other items in the GMP, there's a line item in the 18 contract. There were bids for this work that 19 backed this up. There were hard bids for each 20 work. This was -- actually, the contractor that 21 won the main part of this work was a different 22 electrical contractor than -- we actually split 23 the north district up into three pieces which 24 construction management allows you to do different 0047 1 from a general contractor. One, as you may have 2 seen earlier, we pre-bought the substation 3 equipment, some $400,000 worth of transformers, 4 switches, et cetera. We bought that separately on 5 a separate bid, hard bid through the construction 6 manager. 7 Then we broke the rest of the work up into 8 site work which was the digging the excavation, 9 the foundations, and the electrical work, and a 10 different electrical contractor won this bid, E.W. 11 Audet won this electrical work, different 12 electrical contractor from the contractor on the 13 CBLS building itself. 14 SEN. LENIHAN: Okay. 15 MR. DePACE: It's all hard bids. 16 SEN. LENIHAN: Questions? 17 SEN. SHEEHAN: A question on the 18 10 percent contingency fund as to if that's a high 19 number or a low number. Just for comparison 20 purposes, are there any other projects you can 21 reference that had the 10 percent contingency 22 built into it, 10 percent or even higher? Just 23 for reference so we can compare it to something. 24 MR. DePACE: 10 percent is high. 0048 1 MR. WEYGAND: Normally, it's about 2 5 percent. 3 MR. DePACE: Generally, it's about 4 5 percent, in that range, that we would build in 5 any contract. 6 But, again, this is simply an allowance. All 7 the actual contracts were hard bid. And the 8 entire project for north district utilities was 9 brought in for less than this 5,300,000. 10 SEN. SHEEHAN: How much less? 11 MR. DePACE: It was about 12 3,400,000. 13 SEN. SHEEHAN: And then the 14 remaining funds go where? 15 MR. DePACE: The university. 16 SEN. SHEEHAN: The university 17 recoups that? 18 MR. WEYGAND: Yes, including any 19 unused contingency funds. In this case, there 20 were none that we used. 21 SEN. SHEEHAN: Is that consistent 22 also with the G.O. bond itself in terms of what 23 can be done with that money? Obviously, it was -- 24 MR. WEYGAND: No. The G.O. bonds, 0049 1 as you know, Senator, are not eligible to come 2 back to the university for general fund use. They 3 have to stay with the purposes that the voters 4 approved. 5 SEN. SHEEHAN: Thank you. 6 SEN. LENIHAN: Proceed, Ms. George. 7 MS. GEORGE: The next document on 8 the timeline is Exhibit ZO dated February 26, 9 2008, this year. The Governor requests an 10 amendment to Article 4 of the fiscal year 2009 11 Appropriation Act to include financing for the 12 University of Rhode Island north district 13 infrastructure in an amount not to exceed 14 $10 million. Senator? 15 SEN. LENIHAN: Does the utility 16 work represent, for want of a better term, a cost 17 overrun problem with the project? 18 MR. WEYGAND: When the project was 19 first estimated versus when it was finally 20 designed and bids came in, hard bids came in for 21 the various subcontracts, there were many items, 22 or not many items, two items that were not 23 affordable, north district utilities and the 24 demolition of the biosciences existing old 0050 1 building, the bunker building that's there now. 2 There was also, as you know, Senator, I think 3 you referred to this in the very beginning, one of 4 the first meetings we had, Mondays with Michael, 5 we talked about that there were an expectation of 6 bonds -- I'm sorry, fund raising being done by the 7 College of Environmental Life Sciences, and that 8 hasn't been fully realized. Otherwise, there 9 would be about another $6 million available for 10 the project. 11 SEN. LENIHAN: As long as you 12 brought it up, is that fund raising effort 13 ongoing? 14 MR. WEYGAND: Still. 15 SEN. LENIHAN: And the goal is 16 what? 17 MR. WEYGAND: An additional 18 6 million. They have been successful in raising 19 to date approximately 4 million. So that's 20 40 percent of their goal is there, but they 21 realized all of it. 22 SEN. LENIHAN: You testified the 23 utilities will support all of the buildings in the 24 north district. 0051 1 MR. WEYGAND: The ones that I 2 identified. 3 SEN. LENIHAN: Right. I just need 4 to have this reinforced for me. And the budget 5 for each building will include a portion of the 6 cost? 7 MR. WEYGAND: Not anymore, Senator. 8 If the Cushner is passed -- 9 SEN. LENIHAN: Let's assume for the 10 moment we're dealing with current law which 11 doesn't include that. Then of the money that 12 needs to be paid to implement the utilities in 13 that end, how much of the 65 million G.O. pharmacy 14 building would have to go to those utilities? 15 MR. WEYGAND: That would be hard to 16 say without really just guessing right now. I can 17 give you a general picture of what we anticipate, 18 though. 19 SEN. LENIHAN: A general picture 20 would be fine. 21 MR. WEYGAND: Okay. We tried to do 22 an analysis, as Paul had mentioned, about how do 23 we divide or properly apportion the cost of all of 24 the utilities in the north district to each 0052 1 building, and we felt the most fair way of doing 2 that would be based upon square footage of 3 building rather than construction cost. In doing 4 that and also realizing that we have had very 5 successful hard bids that are now lower than cost 6 estimates, we anticipate the cost of utilities 7 will now be more in the neighborhood of 8 million 8 rather than 10 million, and that's because of 9 successful good bidding we've been able to get out 10 of this kind of contract, that it would be 11 reasonable if, indeed, a general obligation bond 12 is passed for chemistry and a general obligation 13 bond is passed for nursing, that approximately 14 30 percent of it would be the cost of CBLS, 15 30 percent of it would be the cost of pharmacy, 16 and the remaining 40 percent shared by the other 17 two buildings of chemistry and nursing. 18 That's without knowing all the square 19 footages, but I'm giving you a rough picture about 20 what it will be. 21 SEN. LENIHAN: I know this is going 22 to disappoint you, but we're coming to the end of 23 the exhibits, and I only have a few more questions 24 to go. 0053 1 MR. WEYGAND: My mother is going to 2 miss me being on cable TV in the afternoon. 3 SEN. LENIHAN: Ms. George. 4 MS. GEORGE: The last two exhibits. 5 Exhibit ZP dated April 16, 2008. As of this date, 6 a total of 22.3 million has been paid to Gilbane 7 for the CMAR contract for the CBLS building. The 8 remaining account balance is 29 million for a 9 total purchase order amount of 51.3 million. On 10 may 16, 2008, the Governor again requested an 11 amendment to Article 4 for the fiscal year 2009 12 Appropriation Act to include financing for the URI 13 north district infrastructure in an amount not to 14 exceed approximately $11.2 million. Senator? 15 SEN. LENIHAN: Okay. If one 16 assumes -- not assume. This was projected 17 initially as an $180 million project, albeit at an 18 early stage. But we've committed, based upon the 19 Governor's capitol budget proposal, 54 and half a 20 million for the CBLS, pharmacy 75.2 million, and 21 now an additional 11.2 for utilities. That totals 22 140.9 million. That leaves a 39.1 million figure 23 for the remaining buildings, assuming the validity 24 of the $180 million estimate. 0054 1 Where does URI go from here with regard to 2 the remaining buildings, given the amount of money 3 that's left, at least theoretically, in your pot 4 of money? 5 MR. WEYGAND: The original number 6 that you quoted, the 180 million was, as you said, 7 a very early estimate. Since that point in time 8 and over the last few years that I can recall as 9 part of our capital improvement plan that's 10 submitted to the General Assembly, to the House 11 Finance, and the Senate Finance Committees, as 12 well as to the State Budget Office, those numbers 13 have been revised and updated based upon the most 14 reasonable estimates we have, and I can summarize 15 for you. 16 The general obligation bond for the Center 17 for Biotechnology and Life Sciences was a G.O. 18 bond for 50 million with an expected fund raising 19 effort of about 10 million. We have realized 54 20 which is the $54 million you just quoted. For the 21 College of Pharmacy building, the general 22 obligation bond is $65 million with an anticipated 23 fund raising effort of 10 million. We have 24 revised our construction cost and project cost 0055 1 down on the College of Pharmacy to a $70 million 2 project than a $75 million project based upon 3 previous experience and we think that's a 4 reasonable goal for fund raising, five, although 5 they may indeed raise ten because they're doing 6 very well, but we don't know that as of this date. 7 The cost of the utilities which was originally 8 planned for about ten, we anticipate now, as I 9 mentioned, someplace in the neighborhood of about 10 $8 million for the north district utilities, a 11 little bit less. The bids have come in good over 12 the last year or so and that's because, I think, 13 of the way -- the flexibility that we have with 14 the CMAR contract. For the Department of 15 Chemistry which is the College of Arts and 16 Sciences, the anticipated cost of that, the 17 request for that is a $50 million bond issue. 18 Quite frankly, that will not get anywhere near the 19 program that chemistry would like to have. And 20 for the College of Nursing, while it's listed as 21 35 million, the College of Nursing and the College 22 of Pharmacy were intended to be accelerated from 23 where they presently are. Right now, we 24 anticipate the Governor now is pushing back 0056 1 chemistry to 2010, nursing to 2012. That will add 2 inflation to both of those. So I anticipate if 3 pharmacy is done in 2012, it will be more in the 4 neighborhood, quite frankly, of closer to 5 50 million than it will be 35 million. 6 SEN. LENIHAN: Okay. And where is 7 the money coming from to demolish the biological 8 science buildings that was also initially included 9 in your RFP? 10 MR. WEYGAND: As part of the north 11 district utility in Cushner, resolution in Article 12 4. 13 SEN. LENIHAN: That's part of that? 14 MR. WEYGAND: Yes, it is. 15 SEN. LENIHAN: How do you propose 16 to finance the remaining cost to complete the 17 north district as you now envision it? 18 MR. WEYGAND: The Cushner 19 resolution -- 20 SEN. LENIHAN: I'm not talking 21 about the district utilities. I'm talking about 22 the district in the sense of new buildings, at 23 least the two new buildings for chemistry and 24 nursing? 0057 1 MR. WEYGAND: Our intent as it has 2 been put into the budget as part of our C.I.P. and 3 I think, also, the Governor is have general 4 obligation bonds fund those buildings. 5 SEN. LENIHAN: I know you gave me, 6 and admitted, this is just an approximation, you 7 gave me a figure for the increase in the cost of 8 the nursing building based upon the delay in 9 considering it. The chemistry building which was 10 envisioned at 50 million, will that also grow in 11 terms of its cost because of the inflation in 12 time? 13 MR. WEYGAND: The key to both of 14 those, and I'm hoping, I guess we'll know by 15 Wednesday, as we did with biotechnology, is to do 16 early planning. Right now, the capital 17 improvement plan is our best professional 18 estimates based upon what we know. It is critical 19 for us to do early planning by having professional 20 architectural, engineering, and estimating firms 21 on board to really refine the program, to look at 22 the square footage, look at the current 23 construction prices, material prices, and then 24 really give us those numbers. We did that with 0058 1 pharmacy. It's worked out well, and I think that 2 this budget this year will provide us with some 3 small amount of money to be able do that for 4 chemistry and then for nursing. And with that, we 5 will refine those numbers. 6 SEN. LENIHAN: Any other questions 7 from the committee at this time? Ms. George. 8 MS. GEORGE: Mr. Weygand, you 9 stated the Cushner would cover the north district 10 utilities for approximately $8 million and that -- 11 MR. WEYGAND: 10 million is in the 12 Cushner. We're hoping that will be only eight. 13 MS. GEORGE: Eight. And that you 14 would use the Cushner also to demolish the 15 biological sciences building. Will those funds be 16 used for anything else? 17 MR. WEYGAND: The Cushner is very 18 specific. They're to be used for primary utility 19 infrastructure, utility connections, drainage 20 systems which includes surface drainage systems in 21 the roadways, et cetera, around the north 22 district, telephone data, security systems, 23 demolition. It's listed specifically in Article 4 24 of what is allowed under that Cushner. 0059 1 MS. GEORGE: Okay. Thank you. 2 SEN. LENIHAN: Okay. At this point 3 on behalf of the committee, I want to thank you, 4 Mr. Weygand, Vice-President Weygand and your 5 staff. You've been forthcoming and very helpful 6 to us in providing us materials and documents and 7 testimony. It's been a good working relationship. 8 And I'm assuming if we have further questions that 9 arise along the way, we can once again approach 10 you for your good officers and your assistance. 11 MR. WEYGAND: Certainly, 12 Mr. Chairman. And I want to thank you and the 13 members of the committee for allowing us the 14 flexibility and a good working relationship in 15 providing the information that we have, all the 16 documentation that we have provided you and having 17 the staff review our files, as well as I know the 18 committee, some of the members of the committee 19 were able to view the building. 20 I would like to offer, if I could, not to 21 delay testimony by the Department of 22 Administration, but just briefly if I could say 23 that we're very appreciative of the opportunity to 24 provide this information. I know at times it may 0060 1 seem very complicated and sometimes different than 2 the standard of design-bid-build. But what I 3 would like to do if, it's all right with the 4 committee, is to submit a summary letter stating 5 our position on construction manager at risk, 6 design build, design-bid-build which is general 7 contractor, as well as other forms or alternative 8 forms of contracting. 9 And if I could, Mr. Chairman, I'd like to 10 summarize by saying that the committee has 11 reviewed, really, two things here on construction 12 manager at risk. One is the content of our 13 contract and also the process, at least that's to 14 date, that's really where you have been. 15 The content of the contract is very 16 important. As we stated from the very beginning, 17 the majority of our contracts are what we would 18 refer to as design-bid-build. They are general 19 contractor form contracts. But there are times 20 that we, as many of our colleagues across the 21 state and across the country, utilize alternative 22 forms of contracting that give us and provide to 23 us what we feel is far greater flexibility on a 24 complex project, more efficiency, and, quite 0061 1 frankly, a better project and a cheaper project, 2 less costly project than the traditional 3 design-bid-build. 4 We reviewed with you the complexity issue of 5 the project, the scope of work, the coordination 6 that goes on, the team effort that goes on between 7 the owner, the university, the architectural firm, 8 the engineering firms that we hire separately to 9 design the facility, and this construction manager 10 at risk. Pricing, we think, has been fully 11 transparent. All of the subs, all of those bids 12 are publicly or openly bid, and we can see them 13 and review them. We can't see those with general 14 contractor form of contracts. They're not open to 15 us. Here we have the flexibility of having hard 16 bids before a guaranteed maximum price is ever 17 delivered, and we also have the ability to reject 18 that price if we disagree. 19 Risk is certainly an issue which you brought 20 up which is important. This project is fully 21 bonded to the full extent of the construction. 22 And we fully understand that there's some concerns 23 about, rather than having one big umbrella policy, 24 having small pieces of policy. That's understood, 0062 1 and we hear the message loud and clear. We 2 understand clearly that capital projects now 3 recognizes that we should never have allowed for a 4 waiver of liability on mold or hazardous waste. 5 We understand that clearly. But the risk of the 6 contract is clearly on the burden of the 7 contractor and the subcontractors and we're 8 indemnified or we have insurance to cover the 9 entire cost of the work. 10 The status as of this date, this budget is on 11 budget and on time and will be delivered at the 12 end of this calendar year. It's a quality, 13 complex project, and CMAR is not what we would use 14 in every project that we do. 15 And, lastly, this technology or this method 16 of contracting is used by peers throughout Rhode 17 Island, Bryant College, Providence College, Rhode 18 Island School of Design, Brown University, Salve 19 Regina, colleges across the country use this 20 methodology in the same way we're using it here 21 today. This is not a unique standard of 22 construction management or contracting for complex 23 projects. We are not unique, the university, in 24 trying to use this. 0063 1 The process of the contract you've gone over 2 very thoroughly. As you know, we've gone through 3 a lot of these documents twice and three times and 4 you all asked some very pointed questions, and we 5 appreciate you giving us the opportunity to 6 respond and to hopefully clarify it. 7 Program management was one form of 8 construction review or oversight that we used. 9 That was a publicly bid process through the 10 Department of Administration. It was 11 transparently reviewed by us, scored, it was 12 brought to the A&E selection committee in the way 13 that the statute and regulations require and it 14 was awarded appropriately by the Department of 15 Administration. 16 Construction manager at risk, we went out 17 publicly and bid that. It was a publicly bid 18 process. It was reviewed and scored in a 19 transparent fashion. It was reviewed by the A&E 20 selection committee and then awarded by the 21 Department of Administration. 22 As far as we can tell, we conformed to all 23 the statutory and regulatory responsibilities that 24 we have as an university and the Department of 0064 1 Administration did the same. We hope that we've 2 answered all of your questions, Mr. Chairman; and 3 if we haven't, we'd be happy to clarify or come 4 back at a later point in time to answer those. 5 And I want to thank you on behalf of the 6 university and all the staff that have worked 7 diligently on this, many, many, many hours of 8 preparation for these testimonies, and we stand 9 willing and able to try to help in any way to 10 clarify any other questions you may have. 11 SEN. LENIHAN: Thank you very much. 12 I was informed, by the way, that there was one 13 outstanding document request which we'll be glad 14 to provide you that we haven't yet received. 15 Before we leave today, Ms. George can provide you 16 what that is just to see what the status is. 17 MR. WEYGAND: Certainly. 18 SEN. LENIHAN: Now, for the benefit 19 of the audience, we're going to take a brief pause 20 to do two things; number one, to give our 21 stenographer time to undo her incipient carpal 22 tunnel syndrome; and then secondly, also to allow 23 us to change the program we have on the computer 24 for our questions. 0065 1 So at this point, the Committee will be in 2 recess for five minutes. Thank you again. 3 (RECESS TAKEN) 4 SEN. LENIHAN: If the Committee on 5 Government Oversight would return to order, 6 please. We have been in the last several hearings 7 asking questions based on some documents of the 8 officials at the University of Rhode Island. Now 9 we turn our questions and documents to the 10 Department of Administration so we get a better 11 understanding of the process, what it's supposed 12 to do, how it's supposed to do work, and how we 13 can make it better. 14 To that end, we have four people from the 15 Department of Administration, Division of 16 Purchasing, and I suppose the easiest way if you 17 don't mind, would you stand and take the oath, 18 please. 19 MR. MITCHELL: If I may, 20 Mr. Chairman. 21 SEN. LENIHAN: Go right ahead. 22 MR. MITCHELL: My name is Michael 23 Mitchell. I'm an attorney at the Department of 24 Administration, Division of Legal Services. I'm 0066 1 here today not as a fact witness, but in an 2 advisory capacity for the witnesses. And as such, 3 I would ask that I not be required to take an 4 oath. 5 SEN. LENIHAN: If you're not going 6 to be offering testimony, you're not required to 7 take the oath. 8 MR. MITCHELL: Thank you, sir. 9 LOUIS DeQUATTRO, ESQ., JEROME WILLIAMS, 10 & LORRAINE HYNES (SWORN) 11 SEN. LENIHAN: And for the benefit 12 of the committee and also those who are watching 13 us on Capitol TV, could I ask you each to identify 14 yourself to the committee, please, starting with 15 Mr. DeQuattro. 16 MR. DEQUATTRO: Louis DeQuattro, 17 chief legal counsel, Department of Administration. 18 MR. WILLIAMS: Jerry Williams, 19 Director of the Department of Administration. 20 MS. HYNES: Lorraine Hynes for the 21 Division of Purchasing, the Interim Purchasing 22 Agent. 23 SEN. LENIHAN: For the benefit 24 especially of our television audience, please be 0067 1 aware of the fact that your microphone has to be 2 on. Otherwise, you're going to be on TV, but 3 you're going to be very silent. 4 Okay. Let's begin again with the 5 introduction of the reference to the documents we 6 want to consider first. By the way, I should tell 7 you that we're still having problems with the 8 computer, but we're going to go ahead and do the 9 best we can. Ms. George. 10 MS. GEORGE: I'm going to read from 11 the timeline that I e-mailed to Mr. DeQuattro last 12 week. So if you'd like to follow along, you can 13 look at the timeline on page one, I'll give a 14 summary of the exhibits and then Senator Lenihan 15 will follow up with some questions. 16 We'll start with Exhibit B, November 2, 2004. 17 That's the date when voters approved a $50 million 18 general obligation bond for the construction of 19 the URI CBLS building, Center for Biology and Life 20 Sciences. Exhibit C is an RFP -- I forgot to turn 21 my mike on. I apologize, after those comments. 22 Exhibit C is the RFP dated February 28, 2005 for 23 program management services at the URI Kingston 24 campus. The project includes demolition, 0068 1 construction, and renovation of buildings. It's a 2 very broad RFP and states the scope of work will 3 include the CBLS building and planning for the 4 Pharmacy, New Science and Allied Health buildings 5 with URI having the sole discretion to extend the 6 PM agreement to services to develop and construct 7 the Pharmacy, New Science and Allied Health 8 buildings. Exhibit D is an addendum dated 9 March 16, 2005, an addendum to the RFP, further 10 clarifying the RFP. And Exhibit E dated June 9, 11 2005 is the date when the director, former 12 director of DOA approved the selection of Gilbane 13 Building Company for the program management 14 services for the CBLS building for $3.3 million. 15 Senator Lenihan? 16 SEN. LENIHAN: Again, I'll direct 17 the questions, I suppose, to Director Williams, 18 but in any particular case, if it's wise to ask 19 someone else or if you want to call on someone 20 else to augment your comments, please go ahead and 21 do so. 22 MR. WILLIAMS: That's fine. Thank 23 you. 24 SEN. LENIHAN: First, in a general 0069 1 way, could you please explain for us the 2 procurement process that takes us from a 3 construction manager at risk from the RFP to the 4 awarding of the contract? 5 MR. WILLIAMS: For the specific 6 contract? 7 SEN. LENIHAN: No, in general. If 8 you have an RFP, how do you get to a construction 9 manager at risk ending? What are the steps? 10 MR. WILLIAMS: Okay. An RFP for a 11 construction manager at risk contract? 12 SEN. LENIHAN: Yes. 13 MR. WILLIAMS: Okay. I'll ask 14 Lorraine to go through that for you. 15 MS. HYNES: Under normal process, 16 we would go out for a public solicitation with an 17 RFP which would be a pretty well-defined scope of 18 work that we're looking for these services to be 19 provided. That would go through the public bid 20 processes, posted for at least 30 days. And then 21 after that, we receive all the bids, all the 22 proposals back in. Once the proposals come in, 23 the agency, along with a team of people, would 24 evaluate the criteria that has come back in with 0070 1 the proposals. Once they have gone through their 2 evaluation process along with a scoring method 3 that they use, they would then submit a letter to 4 the Division of Purchasing that would come back to 5 us with a recommendation based on the scoring and 6 the meetings that have occurred. When that is 7 completed, that then comes to Purchasing and then 8 we would then made a recommendation -- we would 9 review all the documents, review everything that's 10 occurred, and then that would go to the 11 administrator in the Division of Purchasing for 12 the final processing. 13 If it is an RFP that requires an A&E, 14 Architects & Engineer Committee review, that 15 recommendation would then, and I can refer that to 16 Mr. DeQuattro at that point, but that RFP proposal 17 would then go to the A&E committee for evaluation 18 for a public hearing, public process. Once that 19 process is completed, recommendation goes from the 20 committee to the director of DOA or the chief 21 purchasing officer as documented. It would go to 22 the officer for a recommendation on what the 23 proposals were. Once that's signed, it would come 24 back to the Division of Purchasing for us to 0071 1 proceed with an award. 2 SEN. LENIHAN: What happens if the 3 project starts out with one thing in mind, the 4 customer wants to start with a certain type of 5 construction model, but along the way decides that 6 maybe CMAR is the best way to proceed which is 7 pretty much the situation here at URI with regard 8 to the initial building. What then is the 9 process? 10 MS. HYNES: Normally, that would be 11 where the scope of work would define and allow the 12 ability for the agency along with Purchasing to 13 make some varied decisions. The final decision is 14 based on the CPO, chief purchasing officer, a 15 recommendation would go to the chief purchasing 16 officer, and that would be signed off and 17 forwarded back to us. 18 SEN. LENIHAN: Anywhere in all of 19 this process, are there requirements for what is 20 referred elsewhere in the bidding procedure as a 21 determination letter? 22 MS. HYNES: Yes. 23 SEN. LENIHAN: Where does that 24 determination letter or letters come to play? 0072 1 MS. HYNES: Once the letter of 2 recommendation comes in from the CPO, that would 3 come to the Division of Purchasing. We would get 4 prepared to do a, say, tentative award. The 5 tentative award would then go out to the vendor. 6 We would compile the different insurance 7 certificates, requirements for MBE, EEO, and so 8 forth. Once that's all completed, that would then 9 come in to us. We would then be ready to do an 10 award or a determination that we now have a vendor 11 that has met all the criteria of RFP and we're 12 ready to make an award to the particular vendor 13 that has gone to the A&E committee and so forth 14 and provided all the appropriate documentation, 15 insurance certificates and so forth. Then a 16 determination would be made and forwarded to 17 myself as the purchasing agent for all of this 18 information compiled to sign off. 19 SEN. LENIHAN: I'm really not 20 trying to pick an old scab, but where is that 21 determination letter or letters? Where are they 22 retained? 23 MS. HYNES: They're retained in the 24 contract file. 0073 1 SEN. LENIHAN: Do we now have a 2 system in place? 3 MS. HYNES: We have a perfect 4 system now, Senator. I'm happy that you've asked 5 me that question. I've been waiting for this 6 opportunity. 7 Yes, we now have, based on a lot of our 8 hearings in the new process, we have a new 9 contract file in compliance with the laws as you 10 state. It has the requisition in it, it has the 11 RFP in it, it has the bid documents, it has the 12 proposals, it has the purchase order, everything 13 is now contained in one file. Much easier for all 14 of us. It's the process we needed to go through. 15 It is in existence. We've been doing it for this 16 current year and only improving it as we go along. 17 MR. WILLIAMS: I certainly attest 18 to that as I go down there about three days a week 19 and review those. So it is being followed. 20 MS. HYNES: Yeah. Thank you for 21 asking, though. 22 SEN. LENIHAN: That's quite all 23 right. 24 This particular procurement we're talking 0074 1 about regarding the Center for Biology and Life 2 Sciences, why did that go through the AE&C 3 committee? I'm not addressing it to you 4 necessarily, but why in this case? We're talking 5 about the program management services at this 6 stage. 7 MR. WILLIAMS: Right. I'm going to 8 pass this along to Lou DeQuattro since I wasn't 9 there when this went through. 10 MR. DeQUATTRO: Okay. And, 11 actually, I wasn't personally involved in the 12 program management piece when it came about. But 13 I believe it went through the A&E committee for 14 the purpose that it was for consulting services. 15 The program manager acts as consultant to the 16 owner, in this case URI, to manage the 17 construction project. The statute requires all 18 architects, engineering, consulting services to go 19 through the A&E process. That's why it went 20 through A&E. 21 SEN. LENIHAN: Who was involved 22 with the AE&C committee at that time? 23 MR. DePACE: At that time -- I 24 guess I have to go through the documents. I think 0075 1 the chairperson at the time was Bill Anderson who 2 worked for the Division of Purchasing. The public 3 member, I believe, was Gerry Bedrick, and then 4 whomever was representing URI at the time. 5 Probably, Paul DePace was the other voting member 6 on the A&E committee at that time. 7 SEN. LENIHAN: Do you know who made 8 the decision to bring this procurement before the 9 AE&C committee? 10 MR. DeQUATTRO: Well, the way the 11 statute reads, when a solicitation goes out, 12 again, this is by statute, the chief purchasing 13 officer through the Division of Purchasing makes a 14 determination at that time whether it's going to 15 go through A&E or not. So that's done per statute 16 at the beginning of the process. 17 SEN. LENIHAN: So your testimony is 18 that at the time this went through, that would 19 have been Ms. Najarian? 20 MR. DeQUATTRO: Ms. Najarian, but 21 through the Division of Purchases. So whomever 22 was the buyer at the time at the time would have 23 probably made that determination whether it would 24 have went through A&E or not. 0076 1 SEN. LENIHAN: But according to 2 statute, because you mentioned that specific, 3 according to statute, who has to approve or 4 direct? 5 MR. DeQUATTRO: If I could refer 6 right to the statute, it might be helpful. 7 SEN. LENIHAN: By all means. 8 MR. DeQUATTRO: I'll just quote 9 directly from the statute. This is 37-2-60. It 10 says, "The chief purchasing officer shall give 11 public notice of the need for architectural, 12 engineering or consulting services which are 13 reasonably estimated to exceed $20,000. The 14 public notice shall be published sufficiently in 15 advance of the date when responses must be 16 received in order that interested parties have an 17 adequate opportunity to submit a statement of 18 qualifications and performance data. The notice 19 shall contain a brief statement of the services 20 required, describe the project, and specify how a 21 solicitation containing specific information on a 22 project may be obtained. The notice shall be 23 published in the newspaper or general circulation 24 in the state and in any other publications as in 0077 1 the judgment of the committee shall be desirable." 2 SEN. LENIHAN: To your knowledge, 3 was that statute complied with? 4 MR. DeQUATTRO: I believe so. It 5 was a public solicitation for the PM services. So 6 I believe so. The spirit of the law was complied 7 with. 8 SEN. LENIHAN: Well, I was 9 satisfied with your answer until you got to the 10 end. 11 MR. DeQUATTRO: I believe it was 12 complied with, yes. 13 SEN. LENIHAN: I guess more for the 14 benefit of the people who are, watching, what is 15 the current composition on the AE&C Committee and 16 what constitutes a quorum in a meeting? 17 MR. DeQUATTRO: Sure. Well, the 18 A&E currently constitutes myself as the chairman 19 who was appointed by the purchasing agent, a 20 public member, Mr. Jim Higgins, and then, by 21 statute, whomever the agency is that comes before 22 the committee is that additional voting member. 23 And a quorum is all three members of the 24 committee. So it would be three. 0078 1 SEN. LENIHAN: And the purchasing 2 agent currently is? 3 MR. DeQUATTRO: Interim purchasing 4 agent is Lorraine Hynes. 5 SEN. LENIHAN: Now, again, I'll 6 open this up to anybody who wants to answer. 7 Could you explain again by way of broad 8 background, could you explain how the AE&C 9 committee reviews a project? What does it look 10 for? 11 MR. DeQUATTRO: Well, by statute, 12 the A&E committee is required to determine who is 13 technically and professionally qualified to 14 perform the services. And by statute, we can 15 select up to three firms that actually are 16 professionally technically qualified. And then 17 once approved, it goes up to the chief purchasing 18 officer for a decision. And at that level, by 19 statute, the costs and what have you are 20 negotiated. 21 From a practical standpoint, most RFPs that 22 come before the A&E committee or most projects 23 that come before the A&E committee go out as 24 request for proposals which include technical and 0079 1 professional qualifications and they require 2 bidding of the cost. So, normally, both of those 3 items come to the A&E committee and we make a vote 4 on both of those items and then make a 5 recommendation to the chief purchasing officer. 6 SEN. LENIHAN: What if the nature 7 of the building is such that it's outside the 8 normal expertise of your three members? I'm 9 inventing something off the top of my head. 10 Suppose URI decided, for example, to upgrade and 11 vastly expand its atomic reactor? 12 MR. DeQUATTRO: Well, the A&E 13 committee relies on technical review committees. 14 I'm sorry. It sounds like you didn't hear 15 me. The A&E committee relies on technical review 16 subcommittees that are formed normally by the 17 agencies who are experts in that field who provide 18 us with written detailed recommendations and full 19 scoring of the vendors who responded to the 20 solicitations for a particular project. 21 SEN. LENIHAN: Those subcommittees, 22 how are they formed? Who selects those people? 23 MR. DeQUATTRO: Normally, they're 24 formed by the agencies themselves. And 0080 1 periodically, we'll receive notification of who 2 are on those committees prior to them coming to 3 the A&E. It doesn't come right to A&E, but it 4 would go through the Division of Purchases to 5 notify who was going to be on the selection 6 committee. 7 SEN. LENIHAN: Does the AE&C 8 committee every say or could it ever say to one of 9 these subcommittees or to the recommending body 10 for the subcommittee, "We really think you need to 11 expand this. We really think you need to have 12 somebody involved in this that has a background 13 that isn't reflected in the people you're 14 suggesting to us"? 15 MR. DeQUATTRO: It's not 16 specifically stated in the statute, but we 17 probably could invoke an inherent power to do 18 that. If not, certainly the chief purchasing 19 officer who is responsible for all contracts for 20 the state could probably intercede and request 21 that other expertise be required for a particular 22 project. 23 MR. WILLIAMS: Mr. Chairman, if I 24 can add to that. 0081 1 SEN. LENIHAN: Please. 2 MR. WILLIAMS: Obviously, one of 3 the most important issues that we have in any of 4 the procurements we do is to make sure we're 5 getting the best value for the state. So as part 6 of A&E committee or as part of my review, if there 7 are questions that should be brought up in the A&E 8 committee, I expect the A&E committee to do that 9 because, again, they're receiving information from 10 the evaluation committee. If there's additional 11 information that's needed before a decision can be 12 made, I would expect that to happen. And, 13 certainly, as items, and as Mr. DeQuattro knows, 14 when there are items that come up to me for my 15 signature, I usually ask a lot more questions the 16 first around. So I would expect that of the A&E 17 committee, as well. 18 SEN. LENIHAN: I guess one of the 19 things I'm going to be driving for from speaking 20 just personally as we review the policies here is 21 that we have in place something which is 22 institutional in nature as opposed to something 23 which is just dependent upon a particular 24 personality who happens to occupy a slot at a 0082 1 given time, that there's a safeguard there 2 institutionally and not just because we get lucky 3 with the person put in place. 4 Are the meetings of the AE&C committee open 5 to the public? 6 MR. DeQUATTRO: They are, in part. 7 Normally, we would go into executive session 8 exclusively to go over the cost proposals that 9 have been submitted by the vendors, and, actually, 10 the cost proposals that have been analyzed by the 11 subcommittee. We usually do that in executive 12 session and then take a vote and then bring that 13 outside into the public domain. 14 SEN. LENIHAN: At what point would 15 the public know, if ever, what the proposals were, 16 what the bids were? 17 MR. DeQUATTRO: Normally, when a 18 final award is made, then the public would have 19 access to all the records in connection with that 20 solicitation. 21 SEN. LENIHAN: What would be 22 typical? Let's assume, for example, there's a 23 hearing this week on a particular project. The 24 committee meets, goes into executive session to 0083 1 review the material. How long would it take 2 between that meeting and the announcement of the 3 award bid? 4 MR. DeQUATTRO: Well, normally, at 5 that meeting, we'll announce right after the full 6 session the vote that was actually taken and it's 7 notification right at that time who is going to be 8 the recommended vendor of choice at that time. So 9 the public should know right there and then who 10 the vendor of choice is. It's a question of what 11 documentation can the public have access to, and 12 we normally don't allow access to the solicitation 13 information until a final contract and award has 14 been made so the state isn't at any particular 15 disadvantage while they're working through those 16 final contractual pieces with that selected 17 vendor. 18 SEN. LENIHAN: By way of providing 19 me maybe with some examples, could you explain why 20 that cautionary withholding of information 21 regarding the bid? 22 MR. DeQUATTRO: Sure. Well, a good 23 example is although you've selected a vendor who's 24 provided cost information to you, the scope of the 0084 1 services may not be completely defined and you 2 want to sit down with the vendor to go over 3 components of their bid. There may be changes 4 with it, there may be some negotiation on the 5 price, maybe the price was not as good as the 6 state wanted but was the right vendor and the 7 right product. And they should be given some 8 flexibility to negotiate that price without 9 allowing the other vendors to know what that price 10 is; because if, in fact, negotiations fell 11 through, we want to be able to go to the next 12 vendor in line to try to work something out if 13 that's deemed in the best interest of the state at 14 that time. 15 SEN. LENIHAN: What result would I 16 have if I were a vendor who was not awarded the 17 bid, but upon learning of the terms and learning 18 the changes that were put in there, say, "Gee if I 19 had known about these changes, if this was part of 20 the RFP, I would have bid a different product and 21 I could have done a better job." What resort does 22 a vendor like that have? 23 MR. DeQUATTRO: A vendor could 24 certainly file, if they believe they were unfairly 0085 1 treated, could file a bid protest with the 2 Department of Administration and then they could 3 also go directly to court to try to overturn a 4 decision based on what the department did. 5 SEN. LENIHAN: And what's the 6 threshold that you have to take to use to satisfy 7 the court, rather, that what was done was done 8 appropriately? 9 MR. DeQUATTRO: It's a statutory 10 presumption of correctness that's in the statute. 11 SEN. LENIHAN: For a non-attorney, 12 would you explain that? 13 MR. DeQUATTRO: The way the courts 14 interpret it, you have to show bad faith, 15 corruption or they call it a palpable abuse of 16 discretion. So it's a fairly high standard that 17 the courts impose. 18 SEN. LENIHAN: So it couldn't be 19 just a simple error? 20 MR. DeQUATTRO: No, nor should it 21 be. 22 SEN. LENIHAN: How would the public 23 know about a meeting of the AE&C committee? 24 MR. DeQUATTRO: There's public 0086 1 notice posted for each and every A&E committee 2 meeting. I think it's posted at least 48 hours in 3 advance of the meeting. Usually, we post it about 4 a week in advance. 5 SEN. LENIHAN: Ahead of time, can 6 the public review the items that are listed on the 7 agenda? 8 MR. DeQUATTRO: The public can have 9 access to the request for proposals that went out 10 that vendors were allowed to utilize to submit 11 solicitations, but certainly they wouldn't be 12 allowed to review the solicitations of the 13 vendors. 14 SEN. LENIHAN: For example, how do 15 you get the documents, that RFP? Is that 16 available off the web site? Can you simply print 17 it off the web site? 18 MR. DeQUATTRO: I don't believe so. 19 I'll defer to Lorraine to talk about the web site. 20 MR. WILLIAMS: Right now, it's not 21 currently on the web site. However, that is a 22 document that can be released since it obviously 23 is placed on for bidding at the time of the bid. 24 So it is available. However, right now it's not 0087 1 available on the web site. 2 SEN. LENIHAN: Is it your intention 3 to place it on the web site? 4 MR. WILLIAMS: It is. As a matter 5 of fact, I was reviewing our ability to place that 6 on the web site over the last few weeks, and we're 7 in progress for doing that. We are just not at 8 that point at this point. 9 SEN. LENIHAN: Under the current 10 situation for the improvements you envision, how 11 long would it take for the committee to respond to 12 a request for meeting documents? 13 I look on the web site. I see there's a 14 meeting coming up that's posted 48 hours from now. 15 I want to look at the RFP. I can't get it from 16 the web site. How long before I can get it from 17 you through some other means? 18 MS. HYNES: Senator, we would have 19 them fill out an access to public records. When 20 they fill out the access to public records, the 21 RFP is very easy for us to get right away. It's 22 not like they're looking for very specific 23 documents within a contract file. But the RFP 24 itself would be fairly easy for us to get. And if 0088 1 they came right to Purchasing, we would probably 2 give them something like that right away. It 3 wouldn't require any research. 4 Right now on the web site, when the bid is 5 actually open, the web sites takes that document 6 down so that no one else will download it and try 7 and start bidding or send in a late bid. But 8 we're looking at other provisions that we can get 9 that posted and everything, but right now it would 10 be a very simple request to fill. 11 SEN. LENIHAN: So, in other words, 12 if someone wants that and notices a meeting that's 13 coming up, they would have to come to the Division 14 of Purchasing and fill out a form to receive a 15 copy of the RFP? 16 MS. HYNES: Or, Senator, they could 17 fax us the form. Many times, we have them fax the 18 form and we can either e-mail them the documents 19 or they could pick the documents up. 20 SEN. LENIHAN: So it is available 21 for electronic transmission? 22 MS. HYNES: Yes. 23 MR. WILLIAMS: Yes, it is. 24 SEN. SHEEHAN: Mr. Chairman, if I 0089 1 could. 2 SEN. LENIHAN: Go ahead, Senator 3 Sheehan. 4 SEN. SHEEHAN: Thank you. Is that 5 typical with DOA in terms of any public documents, 6 a document that's deemed to be in the public 7 realm, that you have to fill out one of these 8 records -- one of these documents, rather? 9 MS. HYNES: After an award is made 10 on a particular contract file, we do have them 11 fill out an access to public records request, 12 Senator, simply because they might have many 13 different issues or many different documents 14 within the contract file they would like to see. 15 For me, for processing the access to public 16 records, that allows us the ability to make sure 17 we can have somebody go and retain all those and 18 copy them. 19 SEN. SHEEHAN: By definition, is it 20 not a public record, part of the public realm and, 21 therefore -- is this a necessary step? You're 22 saying it's more administrative in scope just to 23 determine what they want, but then they still -- 24 is this a legal document they have to fill out? 0090 1 MS. HYNES: Yes. 2 MR. WILLIAMS: Well, it is a form 3 that they fill out. But to be honest with you, we 4 got quite a number of requests that are voluminous 5 and one of my concerns, I want to make sure that 6 we're getting the documents and getting those 7 requests fulfilled within the regulatory time 8 frame, the statutory time frame. So I want to 9 make sure that we have the ability to do that 10 without just having someone call up or come in and 11 say, "Well, I requested a document," and not any 12 record of it being requested and then finding out 13 that we're beyond the statutory time frame. I 14 want to make sure that we get the information out 15 to people within that time frame. 16 SEN. SHEEHAN: My concern then is 17 if you're looking at having some idea of what's 18 going to be discussed at the public forum, if you 19 have any -- if you can get that document prior to. 20 It's equivalent at least in our line of business 21 of going to a committee hearing and not having 22 access to one of the bills and you're a lobbyist 23 or you're going to give testimony or something 24 like that or you have an interest in that 0091 1 legislation. You've got to fill out a request for 2 public record and hopefully you get a copy of the 3 bill in time. By then, the hearing is over. One 4 bill died. One got passed on. This is the way 5 I'm approaching it and I know it's not the same 6 animal, but I think the principle is the same. 7 Would you agree? 8 MR. WILLIAMS: Well, let me add to 9 that. And that's the reason why to me, if it's a 10 public document, especially in relation to a 11 procurement process, I would rather have it on our 12 web site. So that you or anyone else goes on the 13 web site and say, all right, I want to click on 14 RFP such and such, click on that and see it right 15 there. If it's a public document, that's the 16 easiest way to get or they can contact the 17 Division of Purchases for a hard copy. So that's 18 where we're headed. 19 SEN. SHEEHAN: And you're currently 20 complying with the 48 hours prior notice? 21 MR. WILLIAMS: Yes. 22 SEN. SHEEHAN: So if someone were 23 to have to go in, come here to Providence, fill 24 out this request for public record, there's a good 0092 1 probability that they might get access to those 2 records until the day of the hearing or possibly 3 even after the fact? 4 MR. WILLIAMS: Actually, if they 5 came in the day before and it was a public 6 document, it's something coming through for the 7 A&E committee, I'm sure we could provide it to 8 them right then and there. 9 SEN. LENIHAN: Could I add from the 10 observation of some staff who made such requests, 11 that it's not unusual for us to submit a request 12 and get the documents late in the afternoon before 13 the day of the hearing or the morning of the 14 hearing which is, I think you can understand, is 15 problematic. 16 MR. WILLIAMS: Well, we'll strive 17 to do better. 18 SEN. SHEEHAN: Thank you, sir. 19 SEN. LENIHAN: Let me ask this. I 20 know it's a two-edged question because my 21 experience with you, Mr. Williams, is that your 22 view of public records is that they're just that, 23 they're public records and there's no reticence on 24 your part to supply a legitimate public record to 0093 1 a member of the public. 2 Is the 48 hours posting for the meetings 3 sufficient time for a member of the public to know 4 there's a hearing and then request any necessary 5 documents under the current system? I'm not 6 talking about your proposed online. 7 MR. WILLIAMS: Right. Under the 8 current system without having that online 9 capability, it's probably a tight structure. 10 Again, it's one of the things that if someone has 11 the ability to come in and -- again, it depends on 12 the nature of the request, also. As I say, 13 sometimes we get voluminous requests and, within a 14 48 hour time period, that can be rather difficult, 15 depending on the size of the request. I mean, our 16 objective is to make sure that if there's a 17 meeting coming up, that if people want documents 18 prior to the meeting, they're public information, 19 then they should get them. What I want to do is 20 make it as easy as possible to get those 21 documents. 22 As for the 48 hour notice, again, under our 23 current structure, it can be somewhat difficult, 24 but we will make sure we get them in time, but it 0094 1 may be 24 hours later. 2 SEN. LENIHAN: Where does the 3 committee meet? 4 MR. DeQUATTRO: Normally, the 5 committee meets twice a month on a Thursday. 6 SEN. LENIHAN: Where? 7 MR. DeQUATTRO: In the Division of 8 Purchases. 9 SEN. LENIHAN: I've been to one 10 meeting which is either a testimony to my sanity 11 or my laziness, but in order to get to the hearing 12 room, and I'm assuming that's one of the ones you 13 use all the time, you have to go from an entry 14 desk through a work area back into the department 15 to a room. Is that the room we're referring to 16 when you talk about the hearing room? 17 MR. DeQUATTRO: Yes. 18 SEN. LENIHAN: Is that by itself 19 problematic? 20 MR. DeQUATTRO: Well, we've never 21 received a complaint about the room, but we could 22 probably move it to a different location to make 23 it more accessible to the public if we needed to. 24 SEN. LENIHAN: I was just thinking. 0095 1 I mean, I know there are rooms that are in the 2 administration building that basically have 3 district access off the central atrium as opposed 4 to going back through the department. 5 MR. DeQUATTRO: Yeah. 6 Interestingly, but the meetings aren't well 7 attended by anybody from the public which I'm not 8 sure why, to be honest with you. So, normally, we 9 just use that small room and then bring each 10 agency in one by one to go through their items. 11 SEN. LENIHAN: Okay. As to the 12 reason for the turnout or lack of turnout, I would 13 speculate there are number of reasons. Number 14 one, that the matter before you is, in many cases, 15 highly technical and, unless you're in the 16 business, may be difficult to grasp. 17 But in addition to that, let me just ask you, 18 the public is allowed to speak at each of these 19 hearings? 20 MR. DeQUATTRO: If somebody from 21 the public is in attendance, we would give an 22 opportunity for the public to make a comment if 23 they'd like to. We don't allow them to ask 24 questions directly to the vendors -- not the 0096 1 vendors, I'm sorry, the agencies who are there, 2 but if they want to make a public comment on what 3 has occurred at the meeting, we will allow that. 4 SEN. LENIHAN: Why wouldn't you 5 allow a member of the public to ask the 6 representative of the agency a question about the 7 terms of an RFP? 8 MR. DeQUATTRO: Well, it's a public 9 meeting rather than a public hearing. So a public 10 meeting is intended for somebody to come and view 11 the meeting that's taking place amongst the voting 12 members whereas if it was a public hearing, we 13 would probably allow questioning from the public. 14 SEN. LENIHAN: And your reticence 15 to go to a public hearing is based on what? 16 MR. DeQUATTRO: It's a statutory 17 requirement that it's a public meeting, not a 18 public hearing. So it's not a personal issue. 19 It's what the statute requires. 20 SEN. LENIHAN: Does the statute 21 define public hearing versus public meeting? 22 MR. DeQUATTRO: Does this statute 23 define it? I don't think it's defined here, but 24 it's traditionally -- I think it's defined in 0097 1 another statutory section. I'm not sure. I could 2 look into that for you, though. 3 SEN. LENIHAN: I'd be interested in 4 knowing that. If it is defined and it does 5 prohibit the asking of questions because of some 6 special distinction between public meeting and 7 public hearing, that might well be something that 8 the committee would want to look into in terms of 9 changing legislation in the future. 10 When a member of the public wishes to speak, 11 you're the chair, is there any criteria you use in 12 deciding whether or not the person can speak just 13 because they're there and they raised their hand? 14 MR. DeQUATTRO: If a person wants 15 to speak, then I'll allow them to speak and 16 basically talk about whatever they want that's 17 germane to the issue at hand. So if they want to 18 talk about issues that are unrelated to the RFP or 19 decision that we're making, then I'm not going to 20 allow them to speak. 21 SEN. LENIHAN: If I were that 22 public member and wanted to ask, again, the 23 representative of the agency a question about the 24 RFP, why this is in, why that isn't in, you would, 0098 1 as the chairman under current rules, rule me out 2 of order? 3 MR. DeQUATTRO: I would. 4 SEN. LENIHAN: Forgetting for a 5 moment about any possible statutory reference or 6 any traditional reference is the term you used, 7 how do you feel about that policy? 8 MR. DeQUATTRO: How do I personally 9 feel about that? 10 SEN. LENIHAN: Yes. 11 MR. DeQUATTRO: Well, I feel I'm 12 just following the statutory requirements. So 13 personally? I mean, I'm not here on a personal 14 basis. I'm here as chief legal counsel. So I'd 15 rather comment on it as my position in the 16 department. 17 SEN. LENIHAN: Let's assume there 18 is no statutory reference that clearly delineates 19 between a hearing and a meeting. 20 MR. DeQUATTRO: If there's no 21 reference to it -- if there was no reference to 22 it, then I would probably allow somebody to ask 23 questions. 24 SEN. LENIHAN: Senator Sheehan, you 0099 1 had a question? 2 SEN. SHEEHAN: Just a quick 3 follow-up question, Mr. Chairman. 4 Ms. Hynes, relative to the public records 5 that you have dutifully all on file now, and you 6 described it, it sounds good and I was pleased to 7 hear that, but are they digitally accessible also 8 those records that you have letter determination, 9 for example? 10 MS. HYNES: We're getting there. 11 This is part of what Director Williams had 12 mentioned that we're working on, getting 13 everything so it is going to be public and 14 accessible on the web site. 15 SEN. SHEEHAN: Scannable documents? 16 MS. HYNES: Yes. That's exactly -- 17 SEN. SHEEHAN: So it's just kind of 18 administrative. You're working up to get those 19 onto the web site. Any particular goal date you 20 have in mind for that? 21 MS. HYNES: Well, as a matter of 22 fact, I was discussing this with Director Williams 23 today. We have already participated and worked on 24 various reports that we're extracting from RIVANS 0100 1 (phonetic) right now, and I did bring some samples 2 of the things that have already been worked on 3 which will allow the public to access the bids 4 based on the bid number, the requisition number, 5 the vendor name, an NPA number, a purchase order 6 number, a determination, and so forth. So we've 7 come together. We put this report together. This 8 report will then, once we move forward over the 9 next few months, be able to put this on the web 10 site. It's also a helpful tool internally, as 11 well. 12 We've been working on this for a period of 13 time to get all of these different fields so that 14 we could do search on them, as well, as well as 15 we're working on a tabulation sheet that's on the 16 web site, as well. We've improved that so that a 17 public member, anyone could go in and kind of pull 18 this information up. So we're quite excited about 19 the other report we're working on. 20 SEN. SHEEHAN: And you said 21 currently the form you have to fill out, the 22 request for public record, is more of a pro forma, 23 a boilerplate type of request to determine kind of 24 essentially what you want to pinpoint as a 0101 1 document that they request. 2 MS. HYNES: Yes. 3 SEN. SHEEHAN: To the best of your 4 knowledge in your tenure in your capacity at DOA 5 and Purchasing, has anyone ever had to -- has 6 anyone contested or was there ever, in the first 7 instance, a refusal of public record? 8 MS. HYNES: No, not to my 9 knowledge, Senator, no. In particular, when a 10 member of the public is asking for the RFP, we do 11 need to make sure they get all the addendums, as 12 well. So sometimes they might be asking for the 13 RFP, but I like to make sure if there were two or 14 three other addendums, they're getting all that 15 which would be the complete package. So that's 16 part of doing our due diligence. If they're 17 asking for the RFP, we need to make sure they're 18 getting the RFP and all the addendums. 19 SEN. SHEEHAN: It sounds like to me 20 as soon as this stuff goes online, that would save 21 a lot of people a lot of work. 22 MS. HYNES: It is, and it's already 23 there available prior to the bidding process. 24 Just once it goes out to bid, the bid opens, it 0102 1 comes down. We need to build that in the system 2 to keep it accessible to the public. 3 SEN. LENIHAN: The AE&C committee 4 makes its recommendations to the director of 5 Department of Administration. Does that committee 6 have any further involvement in the procurement? 7 MR. DeQUATTRO: No. 8 SEN. LENIHAN: So if the director 9 had a question relative to the recommendation, to 10 whom would he or she direct that to? 11 MR. DeQUATTRO: I apologize. If 12 she did have questions, certainly she could ask 13 questions to me as chairperson of the committee 14 and I could try to answer those questions for her. 15 SEN. LENIHAN: More specifically, 16 the AE&C committee recommended the selection of 17 Gilbane for program management services for the 18 CBLS building at URI. The amount was 19 $3.3 million. Were you aware that the RFP for the 20 project management services was rather broad and 21 permitted at URI's discretion to extend the 22 program management services to develop and 23 construct the Pharmacy, New Science, and Allied 24 Health buildings? 0103 1 MR. DeQUATTRO: From reviewing the 2 RFP, I'm aware of that, yes. 3 SEN. LENIHAN: If URI extended the 4 contract to include additional program management 5 services, would URI need to return to the AE&C 6 selection committee? 7 MR. DeQUATTRO: I don't believe so 8 because statutorily the A&E committee is voting on 9 whether the firm that's hired is professionally 10 and technically competent. Once it goes to the 11 cost, that goes on to the chief purchasing officer 12 for a determination. So if they're going to 13 change the scope of the work, add items to the 14 contract within their realm of services, then that 15 certainly wouldn't come back to the A&E committee. 16 SEN. LENIHAN: Let's assume that 17 the amendment to include additional program 18 management services involved not only expansion of 19 the work and, therefore, the cost, but also the 20 areas of expertise that they would be involved 21 with. Would that all go back to the AE&C 22 committee? 23 MR. DeQUATTRO: If it's expanding 24 on the expertise of Gilbane. You mean something 0104 1 that wouldn't be in their expertise? It should be 2 a new RFP. It should go out for a new RFP and 3 solicit new vendors if that's the case. 4 SEN. LENIHAN: It may not fall 5 within the purview of the AE&C committee, but I 6 can tell you that I have a reluctancy because with 7 a case of a previous contract which was done with 8 Smart Staffing and Datalogic, over the course of 9 time, the contract which was set at a relatively 10 low level, $2 million, expanded to a much larger 11 contract and the only approvals necessary were on 12 the administrative level. 13 I guess my concern here is the AE&C committee 14 considers a project, excuse me, program management 15 services at one level and then what is going to 16 come to pass actually is a much larger scope of 17 services than what was initially proposed. 18 MR. WILLIAMS: Let me add to that. 19 It may well -- something like that may not come 20 back to the A&E committee. One of things that 21 must happen, any time there's a change order and 22 if it is a revised change of scope, then change 23 orders would come to the Division of Purchasing 24 and be reviewed by the chief purchasing officer. 0105 1 And that's where I know you and I have had 2 discussions, Mr. Chairman, about the fact that if 3 the scope of services changes dramatically 4 relative to a particular contract where it's a 5 much different scope than originally planned, then 6 that should be a new bid process and that would be 7 something where if the scope expanded so 8 dramatically that it would go to another 9 procurement, and that's something we're, you know, 10 from the perspective of what was the original RFP, 11 what was the scope of services associated with it. 12 If it's a modification that is embedded in the 13 original services, then fine. But if it's a 14 complete change of scope of services, then it 15 should be another procurement and that would be 16 reviewed by Division of Purchasing and reviewed by 17 the chief purchasing agent. 18 MR. DeQUATTRO: I think a good 19 example is actually what happened here. URI 20 started out with program management services under 21 a specific RFP selection process. Then made a 22 determination that, well, program management isn't 23 the right project or the method of construction 24 that we want to use. So they wanted to move 0106 1 forward with a CM at risk. The decision was made 2 to go out to a new RFP for services of CMAR. 3 MS. GEORGE: Mr. Williams, does DOA 4 have a policy or procedures in place to assure 5 that if a contract or change order comes in that 6 is greatly beyond the scope of the original 7 contract, it will, in fact, be treated as a new 8 contract and put out to bid? I understand your 9 position as director would be to do that, but a 10 subsequent director may have a different view. Is 11 there an institutional process to ensure that that 12 happens? 13 MR. WILLIAMS: Well, the 14 institutional process is that any change order has 15 to come into the Division of Purchases for review, 16 and it's up to the Division of Purchases to review 17 it to see whether or not that change of scope is 18 dramatic enough where there should be another 19 procurement and, obviously, that then has to be 20 signed off by the chief purchasing officer. 21 So when you look at the structure and, again, 22 I understand the issue with personalities and who 23 has different views on things, but the structure 24 is in place to be able to have an analysis of the 0107 1 change order that comes through to determine 2 whether that scope has changed, and then it's a 3 determination of the chief purchasing officer at 4 this point as to whether that requires a new bid 5 process. 6 MS. GEORGE: Is there any public 7 process involved? Is the public notified that a 8 smaller contract has been greatly expanded? It 9 could be done in piecemeal, small change orders 10 over a year or two, resulting in an enormous 11 contract. Do you have a policy that says if it 12 exceeds a certain value or a certain percent 13 increase, we want a new contract bid out on this? 14 MR. WILLIAMS: Again, I know 15 there's legislature that's passed the Senate 16 relative to that, and I know we had provided 17 comments relative to that. Obviously, the better 18 criteria there are associated with change orders, 19 then we have better control as to what truly is a 20 change of scope. 21 Again, in my mind, it's the nature of the 22 scope. If the scope truly changes, there are 23 reasons why that should be rebid. It could be 24 that the scope has expanded to a great degree 0108 1 where we may get better pricing associated with 2 it. There may be other issues relative to 3 qualifications of the prime vendor if the scope is 4 changed dramatically. So I think that the 5 legislation that's been promoted and proposed, I 6 think, would add those criteria to the change 7 order process. 8 MS. GEORGE: I have another 9 question related. Mr. DeQuattro, would you 10 have -- if you were chairman of the AE&C committee 11 when the program management contract came before 12 you, would you have had problems with that RFP and 13 the broad nature of that scope to include anything 14 in the north district? 15 MR. DeQUATTRO: Well, as chairman 16 of the A&E committee, the scope of the committee, 17 like I said, is to determine who is professionally 18 and technically qualified. So we're not -- we 19 don't deal with the development of the actual 20 procurement and the solicitation. So I think, you 21 know, the people who would be making those 22 decisions at that point in time, those would be 23 the appropriate people to ask that question. The 24 A&E committee wouldn't get into the scope of the 0109 1 services and, you know, whether it's too broad or 2 too limited. 3 MS. GEORGE: Would anybody at DOA 4 review an RFP and say this is much too broad, you 5 need to break it up, it leads to an enormous -- 6 could lead to an enormous change in the scope of 7 services? 8 MR. DeQUATTRO: I mean, I know 9 whoever the buyer is on a particular project will 10 work together with the agency that's putting 11 together the RFP and, hopefully, they would have 12 some material input on whether there's an issue 13 like you point out or not. 14 MS. GEORGE: Do you think that RFP 15 for the program management services raises an 16 issue of possibly too broad a scope? 17 MR. DeQUATTRO: I mean, it was very 18 broad in nature, but I understood what they're 19 trying to do. I think what URI was attempting to 20 do was have a private program manager, an owner's 21 representative to help them get through 22 development of the whole north district. So even 23 though it is broad, it's broad for a specific 24 purpose and at the time, at least, to have a 0110 1 consultant help them get their hands around this 2 whole development of the north district. 3 So I don't believe it was unreasonable, but, 4 I mean, I think what you're trying to point out is 5 what control valves could you have in place to 6 make sure it doesn't get out of hand. 7 MR. WILLIAMS: Let me add to that. 8 I mean, obviously, with the procurements the state 9 does, whether it's capital or operating or 10 day-to-day, not everything is cut and dry. There 11 are various times when a broader perspective may 12 be appropriate. There are other times when a very 13 narrow focus should be assigned to it, whether 14 it's project or a procurement. It's just 15 difficult to make a broad brush and say that it's 16 too broad in certain instances when there could be 17 something comes out that you do need a broad scope 18 associated with it. 19 I would say, as Lou said, that it is the 20 responsibility of the buyer to review that, to 21 have discussions with the department or agency to 22 make sure we're going out with the appropriate 23 procurement. 24 MS. GEORGE: Thank you. 0111 1 SEN. LENIHAN: Senator Sheehan. 2 SEN. SHEEHAN: Thank you, 3 Mr. Chairman. My question relates specifically to 4 the AE&C selection committee process, and this is 5 kind of a new animal, so I'm certainly coming up 6 the curve here, learning curve that is. But it 7 seems to me when I look at various deliberative 8 bodies and those bodies particularly dealing with 9 money, how we follow kind of the purse strings and 10 that always leads me to very interesting topics. 11 One of the questions I had for you is could 12 you give this committee an idea of the amount of 13 money or investment capital per annum on any given 14 year or the average about that flows through the 15 AE&C selection committee process? 16 MR. DeQUATTRO: I don't have that 17 data in front of me. 18 SEN. SHEEHAN: Are we talking about 19 a million dollars? Are we talking about a billion 20 dollars? Are we talking about $500 million? What 21 are we talking? 22 MS. HYNES: There has been a 23 request to have the Division of Purchasing try and 24 do a list of all the expenditures. So we're going 0112 1 through that right now, and I should be able to 2 get that done for you tomorrow. 3 SEN. SHEEHAN: So you've been the 4 purchasing agent for how many years? 5 MS. HYNES: About a year and a 6 half. A little over a year. 7 SEN. SHEEHAN: Okay, but you've 8 been in this division for some time? 9 MS. HYNES: Yes. 10 SEN. SHEEHAN: But nobody on this 11 panel has any idea just to ballpark, I'm not 12 asking for an exact dollar figure, of 13 approximately how much money would flow through in 14 terms of decisions being affected by the AE&C 15 selection committee? 16 MS. HYNES: I don't, off the top of 17 my head. The only thing I was going to do is work 18 with the different agendas that we have and there 19 is a dollar amount on each one of the line items 20 of the agenda. 21 SEN. SHEEHAN: So in this instance, 22 we're talking about a $50 million general 23 obligation bond. So I'm guessing, but probably 24 upwards -- higher than $50 million, given at least 0113 1 maybe this one project, maybe some years it's 2 more, some it's less. And I ask that question 3 because what we have here is a process wherein we 4 have one public member, as I understood it, one 5 member being appointed by yourself; is that 6 correct? 7 MS. HYNES: Yes. 8 SEN. SHEEHAN: And one member from 9 the agency who's actually seeking to construct a 10 project. And then you also have the question of a 11 quorum. A quorum was three of the three. 12 Whenever you have a 100 percent number, any 13 number, that requires a -- that constitutes a 14 quorum, that is, I think you run into 15 institutional problems. 16 But my question then would go to Director 17 Williams. You seem to be a pretty circumspect 18 kind of guy in your grasp of many different public 19 issues and so forth, and I've discussed other 20 issues in the past, I do value your opinion. Do 21 you think that having a three person committee is 22 a good number or do you think the process would 23 improve measurably or marginally or not at all if 24 you had additional members? 0114 1 In other words, my philosophy would be the 2 more eyes and ears kind of focusing on these 3 projects, perhaps we can improve the process. 4 And, of course, you don't want to go too far 5 because then there's too many chefs in the 6 kitchen. Is there another number that you might 7 recommend? 8 MR. WILLIAMS: To be honest with 9 you, you're right. I mean, it really depends on 10 the makeup of the committee, because right now 11 you've got a public member, you've got the person 12 representing the department. You mention whether 13 three is the appropriate number. I mean, five may 14 be a good number, but it will depend on the makeup 15 of the committee to make sure it's not overloaded 16 one way or the other. 17 Obviously, this is a committee that should be 18 asking questions of the agency bringing it 19 forward. This committee is not doing the 20 evaluation, but they're reviewing what was done by 21 the evaluation committee at the agency. So we 22 want to make sure that there's due diligence 23 performed by the A&E committee on that. So if 24 there were additional members from the agency, 0115 1 voting members, you may have a problem in trying 2 to -- you may ask questions, but may find out that 3 you have votes that wouldn't occur today. 4 You know, to me, having a quorum of three out 5 of three, that could be problematic in itself 6 because, and, again, I don't believe it's been a 7 problem, but it could be problematic in trying to 8 get a quorum. And then if you have to postpone a 9 meeting, it may delay decisions that truly need to 10 be made. So having a quorum of three out of three 11 doesn't leave you much -- 12 SEN. SHEEHAN: A quorum of three 13 out of five maybe or something like that might be 14 a better process? 15 MR. WILLIAMS: Right. 16 SEN. SHEEHAN: And then, of course, 17 that's only for the normal process. If we talk 18 about an order, a change of order, then we're only 19 talking about the purchase agent, Ms. Hynes, 20 yourself? 21 MS. HYNES: Hm-mmm. 22 SEN. SHEEHAN: You would handle 23 that unilaterally. So one person would determine 24 that. And I think kind of the theme that was 0116 1 underscored here was that we kind of have contract 2 creep, if you will, of contracts that started out 3 with something very defined and limited that grow 4 into a larger project over time, not necessarily 5 through even the AE&C which, I think, is a process 6 we probably could improve upon as you just 7 elucidated, but also when it only comes back to 8 one person, and saying nothing of one person, I'm 9 not saying you individually, I'm saying just 10 having one individual sign off on that could be 11 problematic. 12 MR. DeQUATTRO: If I could just add 13 to help you out. The A&E committee is limited to 14 determine who's professionally and technically 15 qualified. Even though we do receive the cost 16 evaluations that come into the committee, it is 17 limited. So the committee doesn't necessarily 18 have the statutory mandate to deal with the 19 finances. That goes up the food chain beyond the 20 committee. 21 And, also, the statutory threshold is pretty 22 low for the committee. It's $20,000. Any 23 solicitation above that amount would come before 24 the committee, and that's something maybe should 0117 1 be looked at, increasing it or what have you. 2 SEN. SHEEHAN: Do you have any idea 3 of any estimates as to how much money flows 4 through that committee in any given year? 5 MR. DeQUATTRO: It's pretty 6 significant because the threshold is so low, 7 $20,000, but as far as what the total dollars, 8 I -- 9 SEN. SHEEHAN: So we're talking 10 about pretty much many of the capital investment 11 projects that would be contained in the budget 12 would flow through -- 13 MR. DeQUATTRO: Well, it is limited 14 to architectural, engineering, and consulting 15 services. This project gets a little bit 16 confusing because it's two components. You have 17 the construction management fee component of it 18 which is about $3.3 million and then you have the 19 construction work which is 44 million which that 20 piece of the project doesn't fall within the 21 domain of the A&E committee. That's actually 22 outside of it. 23 SEN. SHEEHAN: All right. That was 24 helpful. Thank you very much. Thank you. 0118 1 SEN. LENIHAN: Ms. George. 2 MS. GEORGE: Moving along on the 3 timeline to March 16 -- no, September 6, 2005, 4 Exhibit F. This is a letter from a Gilbane 5 project executive to Mr. DePace at URI providing 6 alternates for consideration to modify the 7 proposed project management agreement. We had a 8 few questions concerning this letter. Senator? 9 SEN. LENIHAN: Yeah. 10 Mr. DeQuattro, did you discuss modifying the PM 11 contract with anyone at URI? 12 MR. DeQUATTRO: No. 13 SEN. LENIHAN: To your knowledge, 14 were there any other DOA officials aware that URI 15 was considering modifying the program management 16 contract? 17 MR. DeQUATTRO: Based on my 18 recollection at the time, I believe -- I think it 19 was Bill Anderson at that time who was 20 administrator of purchasing. He was involved with 21 URI and discussed issues in connection with this 22 project and converting it, either expanding PM or 23 converting it to an alternative method. 24 SEN. LENIHAN: Who made the 0119 1 decision, again, this goes back to 2005 in 2 September, who made the decision that the project 3 manager contract could not be modified into a CMAR 4 contract? 5 MR. DeQUATTRO: Well, I think there 6 was a letter that Exhibit I, February 16, 2006, 7 from Vice-President Weygand to Beverly Najarian 8 requesting that they move from a PM project to a 9 CM. So it appears as though there was some 10 discussions with those folks on that front. 11 SEN. LENIHAN: I understand, but 12 between September of 2005 and February of 2006, 13 somebody changed their mind, and I'm just curious 14 as to who made the initial decision that the PM 15 contract couldn't be modified into a CMAR? Who 16 would have been in such a position? 17 MR. DeQUATTRO: Probably at the 18 time Bill Anderson who was dealing with that 19 particular project at the time. 20 SEN. LENIHAN: Anyone else who 21 might have been in that position? 22 MR. DeQUATTRO: I'm not sure who 23 was involved at that time, Senator. 24 SEN. LENIHAN: Do either of the 0120 1 other two people? I know you're brand new to it, 2 but I guess you're the veteran here. 3 MS. HYNES: That's scary. 4 Bill Anderson who was the administrator at 5 that time certainly would have had the ability to 6 work with URI on what options were available, and 7 I don't believe there was really any documentation 8 in the file, Senator, that referenced any of that 9 further discussions that might have occurred. 10 MR. DeQUATTRO: And I do recall, 11 Senator, at the time they were making a decision 12 to convert from PM to CM, I did get involved to 13 discuss what the compliance requirements were to 14 do that. That was basically complying with 37-2, 15 I believe, 39 and Regulation 811 that was valid at 16 that time. 17 SEN. LENIHAN: Are there any 18 documents or correspondence or memorialization of 19 any of that decision making process between 20 September 6 and the letter that came out later 21 from Mr. Weygand first to Brian Stern and then 22 later to Director Najarian? Anything between 23 those two? 24 MS. HYNES: No. 0121 1 SEN. LENIHAN: E-mails, for 2 example? 3 MS. HYNES: I don't believe so, 4 Senator, on that. 5 MR. WILLIAMS: We can go back and 6 check. I mean, I'm hearing from Lorraine that she 7 doesn't believe so, but we certainly can go back 8 and check one more time. 9 SEN. LENIHAN: All right. Just 10 some followup then, please. 11 MS. GEORGE: Mr. DeQuattro, you 12 stated that you were involved in the decision to 13 change from a program management to a construction 14 management at risk, you were asked a legal 15 opinion. At that time, what was your position at 16 DOA? Were you chief legal counsel then? 17 MR. DeQUATTRO: I believe at that 18 time, it was either deputy chief or chief legal 19 counsel. 20 MS. GEORGE: So as part of your 21 job, someone approached you to do that. Who would 22 have approached you to ask for your legal opinion? 23 MR. DeQUATTRO: At that time, I 24 recall it was Bill Anderson at that time. 0122 1 MS. GEORGE: Bill Anderson. Did 2 you have anything in writing? Did you correspond 3 through e-mails? Did you prepare a written 4 decision? Is there any written record of a change 5 in a delivery method for a $50 million contract at 6 DOA? 7 MR. DeQUATTRO: Well, I think the 8 ultimate final product was that letter from 9 Vice-President Weygand to Beverly. So whatever 10 discussion they had with Bill Anderson at the 11 time, it probably moved up the food chain to make 12 decisions from that point. 13 MS. GEORGE: So you're telling me 14 you have no documentation whatsoever, no 15 correspondence, no e-mails, no memos concerning 16 your legal opinion or discussions with Bill 17 Anderson or anybody else at DOA -- 18 MR. DeQUATTRO: Well, it was 19 probably, if I recall correctly, it was probably a 20 phone call that said, "Lou, what are the 21 requirements if I want to select a different 22 alternative method of construction?" And I 23 probably talked to him on the phone and said the 24 requirements are in 37-2-39 and Regulation 11 0123 1 which is very self-explanatory. 2 So probably a phone call. It's not something 3 at that time to give that type of advice required 4 that I put a memo or an e-mail together. 5 MS. GEORGE: So that -- I want to 6 establish a record here. So there are no written 7 records concerning DOA's input discussions about 8 modifying or changing from a PM to a CMAR? 9 MR. DeQUATTRO: Not that I have. I 10 went back as far as my e-mails went. I don't keep 11 all my e-mails that far back. So there could have 12 been something at the time that I don't have a 13 record of personally. If there was something that 14 I provided to Purchasing, it would ultimately roll 15 up, I would assume, in the Purchasing file if 16 there was something. 17 MS. GEORGE: Fair enough. 18 SEN. LENIHAN: Just so we don't 19 leave off any of the possibilities. Any phone 20 log? 21 MR. DeQUATTRO: A phone log? I 22 mean, I communicated with Purchasing on a daily 23 basis numerous times. I may have a phone log. I 24 actually do keep phone logs going back quite a 0124 1 long time. So I might have a note that I spoke to 2 Bill Anderson on a particular day, but... 3 SEN. LENIHAN: Question, Senator 4 Sheehan. 5 SEN. SHEEHAN: Thank you, 6 Mr. Chairman. 7 Question, how often do -- this can go to any 8 one of the committee members, Mr. DeQuattro, best 9 qualified to answer it. How often do PMs versus 10 CMARs crop up in terms of request to do one versus 11 the other? Is this a unique situation? Can you 12 quantify that for me, please? 13 MR. DeQUATTRO: It doesn't come up 14 often at all. 15 SEN. SHEEHAN: What would you mean 16 by that? Once a year? Once every millennium? 17 MR. DeQUATTRO: No. The only two 18 CMAR projects that I've worked on so far is the 19 College of Pharmacy which is currently under 20 discussions and then the CBLS project. Those are 21 the only two that I've been involved with. 22 SEN. SHEEHAN: And how long have 23 you been involved as you've described it? What is 24 your base of knowledge? How many years do you go 0125 1 back? 2 MR. DeQUATTRO: As far as? 3 SEN. SHEEHAN: Your knowledge of 4 this type of project. 5 MR. DeQUATTRO: Oh, working with 6 Purchasing? I started working with Purchasing 7 back in 2004. 8 SEN. SHEEHAN: So the last four 9 years, you said there's only been like two that 10 you actually witnessed? 11 MR. DeQUATTRO: Yes. 12 SEN. SHEEHAN: Okay. So this is 13 not something that's commonplace? 14 MR. DeQUATTRO: No. 15 SEN. SHEEHAN: And the question I 16 have is did you render an opinion on this 17 yourself? Did you make a judgment as to perhaps, 18 I guess, the wisdom of doing a PM versus CMAR? 19 In your estimation -- I'll clarify the 20 question. In your estimation, is there a 21 qualitative difference between doing a PM versus a 22 CMAR type of project? 23 MR. DeQUATTRO: Well, the question 24 that I was asked as chief legal counsel was what 0126 1 are the statutory requirements to seek another 2 alternative method of construction. So that was 3 my counsel, limited to the statutory requirement 4 37-2-39 and the Regulation 811 that existed at the 5 time, what an agency needed to comply with in 6 order to move forward with a particular project. 7 SEN. SHEEHAN: So it was more of a 8 functionary type of question, legal question, as 9 opposed to -- 10 MR. DeQUATTRO: Oh, yeah. If your 11 question is did I personally evaluate whether it 12 was best to go from a PM to a CMAR? I didn't do 13 that and I'm not qualified to do that. 14 SEN. SHEEHAN: So if someone were 15 to ask you or any member of the panel today if 16 they would prefer or believe one method is 17 preferable over the other, could anybody on the 18 panel answer that or would they answer with it's 19 six of one, half dozen of the other; they're 20 really about the same? Anybody on the panel can 21 address that. 22 MR. WILLIAMS: Well, let me -- I'll 23 address it. 24 SEN. SHEEHAN: Thank you. 0127 1 MR. WILLIAMS: There are -- well, 2 let me start by saying the state needs flexibility 3 when it does projects, construction projects, and 4 I've had experience at DOT and obviously in my 5 past at DOA, I've seen program management, I've 6 seen straight design-bid-build, and there are 7 times when a particular project may have 8 advantages associated one over the other. 9 For example, with program management, in many 10 cases, you're bidding the subs out as you go which 11 means you really don't know what the true cost of 12 that project is until you get closer to the end of 13 the project. To me, I just have a bias against 14 that because I don't know what that project cost 15 is until later in the project. And as you're 16 doing that, then you find out that you have to 17 either do value engineering on what's remaining 18 because some of the bids may come in higher than 19 expected. 20 With construction management at risk, as I 21 think you heard earlier, is that you have the 22 ability to have a GMP so that you know what that 23 construction is going to be, barring any 24 unforeseen circumstances where you might have a 0128 1 change order. 2 Same thing with design-bid-build. If you 3 designed it properly and it's structured well, 4 then you can at least get a bid that tells you 5 what the cost of that project is. You can make a 6 determination as to whether you have funding for 7 that project or you need to move back. That's 8 similar to construction management at risk because 9 you can determine whether you have enough funding 10 to do the job as the bids have come in, but you 11 know that up front. 12 So I guess that's a longwinded answer to say 13 that at times, you do need flexibility relative to 14 projects, some are smaller than others, some are 15 less complex than others, and then some are very 16 complex where you may need some flexibility. I 17 can't sit here today and tell you one is always 18 more favorable than the other, but there are times 19 when at least my personal preference is to make 20 sure I know what I'm going to be spending as best 21 I can so that I don't find out a year into the 22 project that I've all of a sudden got an overrun 23 that I can't handle. 24 SEN. SHEEHAN: So between the 0129 1 second and the third, do you have a preference? 2 MR. WILLIAMS: Let's put it this 3 way. My preference is always to know what I'm 4 going to spend up front. 5 SEN. SHEEHAN: Is there a 6 qualitative difference between the two that you 7 would express in terms of your educated opinion? 8 MR. WILLIAMS: Well, between the 9 two, construction management at risk and 10 design-bid-build -- 11 SEN. SHEEHAN: Yes. 12 MR. WILLIAMS: -- or between 13 program management? I just want to make sure. 14 SEN. SHEEHAN: Design. 15 MR. WILLIAMS: To be honest with 16 you, in some cases, they are similar from the 17 perspective I can know what that cost is going to 18 be and that's important, at least from my 19 perspective. If I'm going to do a capital 20 project, I want to know what's important which is 21 what is the total cost. I don't want to find out 22 that I've got overruns that I know have to deal 23 with that I didn't have enough funding for. I 24 think both of those structures allow me to do that 0130 1 or allow the state to do that prior to moving 2 forward. 3 SEN. SHEEHAN: So in your educated 4 opinion, you would say your primary concern is 5 knowing what the final cost would be and, roughly 6 speaking, between those two models or methods of 7 approaches, you would deem both equally 8 preferable, depending upon the circumstances? 9 MR. WILLIAMS: Relative to cost, 10 yes. And I also want to make sure that, you know, 11 no matter what method is selected, that we have a 12 qualified vendor to be able to provide the 13 services, whether it's a contractor, whether it's 14 a contractor and architect. Those are things I 15 want to make sure, as well. 16 SEN. SHEEHAN: Because I've heard 17 in testimony that there were many of these CMARs, 18 other institutions are doing it. Kind of 19 everybody is doing it type of thing. You know, it 20 reminds me of things going on on Wall Street. 21 Everybody was doing real estate and so forth, but 22 that didn't work out too well. I'm not making 23 that comparison here. I'm just being jocular. 24 But there do seem to be very few of them, and 0131 1 I'm just trying to put my finger on maybe there's 2 a reason for that. Maybe there's some wisdom 3 behind those decisions or maybe we're discovering 4 a new animal that is going to change the way we do 5 business. 6 MR. WILLIAMS: That's right. 7 SEN. SHEEHAN: Thank you. 8 SEN. LENIHAN: Mr. DeQuattro -- I 9 defer now to Senator Moura first. 10 SEN. MOURA: Thank you. I've been 11 trying to be relatively quiet so we could move 12 along. 13 So in followup to Senator Sheehan, Director 14 Williams, so instead of -- let me take it another 15 way, instead of determining between the two, your 16 least preferable method of construction would be 17 out of all of them? 18 MR. WILLIAMS: Well, I know under 19 program management, in many cases you're bidding 20 as you go. And while I don't want to say -- you 21 know, there's no reason why program management 22 couldn't happen, but it's similar to design build. 23 In some cases, there is a very good reason why 24 you'd want to go the design build route because 0132 1 maybe there's a window of opportunity to get a 2 project done. But even in design build, you're 3 designing it and building along the way, so you 4 don't know that total cost. 5 Obviously, I guess it's more my nature since 6 I'm a numbers person, but I like to know what I'm 7 going to spend beforehand. 8 SEN. MOURA: And that's good, too, 9 because I think that's in the best interest of the 10 taxpayers, also. 11 MR. WILLIAMS: That's why we're all 12 here. 13 SEN. MOURA: Ultimately at the end 14 of the day, yes. Thank you. 15 SEN. LENIHAN: Mr. DeQuattro, I 16 believe you said in the course of your testimony 17 that somewhere along the line, you were asked 18 about your opinion relative to CMAR contracts and 19 whether or not we could do that. What was your 20 conclusion? 21 MR. DeQUATTRO: My conclusion was 22 as long as it complied with Regulation 811 at the 23 time, and I can't remember the exact words of the 24 regulation, but as long as we comply with that, 0133 1 then we can select alternative methods of 2 construction. 3 SEN. LENIHAN: I can get this 4 obviously by doing the research, but without 5 holding you to a particular terminology, what is 6 811? What does it say, basically? 7 MR. DeQUATTRO: 811? At the time, 8 I think it said that the generally preferred 9 method of construction was general contractor. 10 And then in order to select a different method of 11 construction management, I believe it said that 12 the agency or purchasing agent had to set forth in 13 writing the rationale for selecting the different 14 method of construction. 15 SEN. LENIHAN: What's referred to 16 as a letter of determination? 17 MR. DeQUATTRO: A letter of 18 determination? I'm not sure. I think we've 19 always interpreted a letter of determination to 20 mean final award. 21 SEN. LENIHAN: I used the term -- I 22 explained the term as I've been using it. 23 MR. DeQUATTRO: Oh, okay. 24 SEN. LENIHAN: The letter of 0134 1 determination is the agency explaining why you 2 deviated from the, quote, normal bidding method, 3 what was the interest of the state who was being 4 served in doing it some other way. 5 MR. DeQUATTRO: Yeah. I wouldn't 6 say the bidding method. That statute is limited 7 to selecting a method of construction contracting, 8 irregardless of the type of bid method that you're 9 going to utilize. 10 SEN. LENIHAN: But did provide that 11 rationalization, that argument, as to why CMAR 12 would be preferable? 13 MR. DeQUATTRO: Well, the statute 14 is pretty clear on what you needed to do to move 15 towards a different method of construction. So I 16 just advised follow the statute, put it in 17 writing, get approval from the chief purchasing 18 officer, and move forward. 19 SEN. LENIHAN: But ultimately, you 20 said the CMAR was an allowable -- could be an 21 allowable process? 22 MR. DeQUATTRO: Yes. 23 SEN. LENIHAN: Any other questions? 24 SEN. SHEEHAN: So that, what did 0135 1 you say, 811 doesn't require a rationale for why 2 something would be preferable or in the best 3 interest of the state, but allowable? Is that -- 4 if you could can speak to that. 5 MR. DeQUATTRO: Well, I'm guessing. 6 If we could go -- if you want to read through what 7 the whole regulation said, I'd be more than happy 8 to do that. 9 SEN. SHEEHAN: But is it your 10 experience that if we deviate from the normal 11 construction and contracting method, that it's 12 something that is done because it's preferable for 13 the state or because it's allowable to the state 14 agency? 15 MR. DeQUATTRO: I'd have to read 16 the regulation. I think it's what's allowable. 17 SEN. SHEEHAN: Allowable. So what 18 we're looking at here is not necessarily something 19 that would benefit the state, but certainly 20 something that someone may have argued was 21 beneficial, but we're just looking to see if it 22 was permissible by law or right? 23 MR. DeQUATTRO: We can read it 24 right here. It's Regulation 811.2. It says, "The 0136 1 generally preferred method of construction 2 contract and management for all projects shall be 3 the general contractor selected as the lowest 4 responsive bidder based on a lump sum fixed 5 contract type, and projects utilizing this method 6 shall not require an individual written 7 determination of such preference. The use of any 8 other method must be justified in writing to the 9 purchasing agent by the requesting agency stating 10 the reasons why the preferred method may not be 11 used and the purchasing agent may approve or 12 reject such requests at his discretion." 13 So you need to explain why the other method 14 isn't being used and why you're going to use this 15 method, basically. 16 SEN. SHEEHAN: Right. But at the 17 beginning of that reg, it sounds like it's talking 18 about preference. The generally preferred method 19 is the general contractor method, but if you're 20 not going to use that, you have to make the case 21 that this method is allowable? I didn't hear that 22 last part. Perhaps you could refresh my memory. 23 Allowable or preferable? 24 MR. DeQUATTRO: It says, "The use 0137 1 of any other method must be justified in writing 2 to the purchasing agent by the requesting agency 3 stating the reasons why the preferred method," 4 which was general contractor at the time, "may not 5 be used and the purchasing agent may approve or 6 reject such requests at his discretion." 7 SEN. SHEEHAN: Okay. So you would 8 view the word justified as being legally 9 permissible, is that correct, is the way you read 10 that? Or do you see justified and the reasons 11 therefore, meaning should be able to do it is 12 preferable or is desirable? 13 MR. DeQUATTRO: The way I read it 14 is that you have to justify in writing why you're 15 doing what you're doing, basically. 16 SEN. SHEEHAN: Because I see 17 juxtaposition. That's just the way I see it. 18 Juxtaposing the reasons -- these reasons over here 19 to my right supersede why this traditional method, 20 if we can call it that, which is usually 21 preferable, we're not using it. But in this 22 instance, I understand, I guess it's more just 23 giving the reasons why we didn't use it. 24 MR. WILLIAMS: I think, the way -- 0138 1 when I read through the -- as I read through so 2 many of our statutes and regulations over the past 3 couple of months, to me, the justification should 4 be why it's being requested of the chief 5 purchasing agent relative to the construction 6 method and that should include benefits associated 7 with it. 8 SEN. SHEEHAN: And did they, in 9 fact, include that in their reasons, the benefits? 10 MR. DeQUATTRO: Are you talking 11 about this project here? 12 SEN. SHEEHAN: This particular 13 project, URI. 14 MR. DeQUATTRO: I believe they did. 15 SEN. SHEEHAN: They did. Okay. 16 Thank you. 17 SEN. LENIHAN: One thing I forgot 18 to ask you as part of my question was in the 19 opinion that you rendered relative to CMAR -- 20 MR. DeQUATTRO: I should take it 21 back. It's not that I rendered an opinion on 22 whether you should or should not use CMAR. It was 23 just what are the statutory requirements to go 24 from one method to another. 0139 1 SEN. LENIHAN: To whom did you give 2 that information? 3 MR. DeQUATTRO: I believe it was 4 Bill Anderson at the time. 5 SEN. LENIHAN: Was Mr. Stern part 6 of that information loop? 7 MR. DeQUATTRO: He may have been 8 through Bill Anderson. I didn't talk to Brian 9 directly about that opinion that I gave to Bill. 10 SEN. LENIHAN: Okay. Ms. George. 11 MS. GEORGE: Moving along on the 12 timeline. On October 24, we have Exhibit G, a 13 letter dated October 24 from Mr. DePace to 14 Mr. Anderson, Division of Purchasing, recommending 15 that a purchase order be awarded to Gilbane in the 16 amount of 3.3 million from the current requisition 17 of 68,000 for program management services. This 18 letter references two executed originals of the 19 program management agreement. Prior testimony is 20 that there was never a fully executed program 21 management agreement and this letter was not sent. 22 Mr. DePace stated that he did not send this letter 23 to DOA, but it's included in the timeline because 24 we have a few questions about it. Senator? 0140 1 SEN. LENIHAN: First, was the P.O. 2 for $68,000 ever issued? 3 MS. HYNES: Senator, I do not 4 believe it was issued because I went back through 5 and looked at all the purchase orders for that 6 particular project and I did not see one for 7 68,000. 8 SEN. LENIHAN: At this point, was 9 the Department of Administration aware that the 10 program management agreement wasn't signed? 11 MS. HYNES: Was not signed? I'm 12 not sure of that time frame. 13 SEN. LENIHAN: Well, in late 14 October of 2005. The unsent letter was dated 15 October 24. 16 MS. HYNES: Of 2005? 17 SEN. LENIHAN: Yes. 18 MS. HYNES: I'm not sure on that 19 because I know when the question came to us, we 20 did diligently search the file to see if we could 21 find that letter and that becomes very difficult. 22 So I did end up contacting URI and saying we're 23 looking everywhere for this letter and an executed 24 contract, as well, and we did not have that in the 0141 1 file. Well, after I communicated with Mr. DePace, 2 that letter had not been sent to us. So it did 3 send us into quite an area looking for that to see 4 if we were missing a signed contract. 5 SEN. LENIHAN: Let me ask a policy 6 question; that is, is it DOA's policy to allow or 7 issue a P.O. without a fully executed contract? 8 MS. HYNES: No. When we issue the 9 P.O., the contracts are usually already executed 10 or it's drafted and pretty much in its final form. 11 We usually try to reference in the purchase order 12 itself that there is an agreement that should be 13 attached to the purchase order. Quite a few of 14 the times, we do not document all of the items 15 within the agreement. We try and just reference 16 that there is an existing agreement in place that 17 would be attached to the P.O. 18 SEN. LENIHAN: You used the word 19 "usually" several times during your response; we 20 usually do this, we usually do that. More 21 particularly, does the Department of 22 Administration -- historically, does the 23 Department of Administration allow issuance of a 24 P.O. without a fully executed contract? 0142 1 MS. HYNES: Our normal business 2 practice would be that we have the agreement in 3 place in our hands prior to issuing the P.O. 4 SEN. LENIHAN: Have you come across 5 abnormal circumstances where that hasn't been the 6 case? 7 MS. HYNES: Yes, Senator, I have 8 seen that in the past where we actually had to go 9 and get the agreement from the agency and attach 10 it to the P.O. 11 SEN. LENIHAN: When you say you 12 have, is that only once? Is that something which 13 is -- 14 MS. HYNES: It's happened a couple 15 of times. It's not something that happens all the 16 time, but I have seen that happen where we had to 17 go and get the agreement from the agency and 18 attach it to the P.O. But our normal practice 19 would be to have that agreement because, 20 obviously, that agreement needs to work with our 21 terms and conditions. It needs to be attached to 22 the purchase order. Quite often, it does add to 23 the scope of work to make sure all the documented 24 time frame is there and so forth. So it's an 0143 1 important part of the purchase order. So that's 2 our normal practice is to have that with the 3 purchase order. 4 SEN. LENIHAN: On these infrequent 5 times when that hasn't been there, has the 6 department gone ahead and issued a P.O. without 7 having the executed contract at hand? 8 MS. HYNES: No. If we know we have 9 an agreement that needs to come into the office, 10 we would wait for that agreement. We would wait 11 for the agreement to be there and then we would 12 issue the P.O. 13 SEN. LENIHAN: So whenever you've 14 been aware of the fact that there is no fully 15 executed contract, you do not issue a P.O.? 16 MS. HYNES: Right. Right. 17 SEN. LENIHAN: Ms. Carpenter? 18 MS. CARPENTER: You just testified 19 that you would review the agreement to make sure 20 it complies with the terms and conditions. Who at 21 DOA would review? 22 MS. HYNES: The buyer. When the 23 buyer is receiving, and in most cases it would be 24 the RFPs which would be Gerry Moynihan, he would 0144 1 receive the contract, executed contract, he would 2 also be participating with the agency as they're 3 putting the contract together. Once everything 4 has been compiled, once we're doing the tentative 5 letter of award, Jerry Moynihan as the 6 administrator would be working with the agency to 7 get all of the compliance certificates together 8 from the vendor, as well as working with the 9 agency to put the contract together. And then 10 quite often on the larger contracts, we do work 11 with legal, as well, to make sure everything is 12 incorporated. 13 MS. CARPENTER: Would part of that 14 review also be to confirm whether or not the 15 agreement complies with the RFP? 16 MS. HYNES: Absolutely. I'm sure 17 legal could state that, as well. Quite often, we 18 basically take the itemization within the RFP and 19 that's basically put into our contract. 20 MS. CARPENTER: Is it normal, I 21 don't want to say general practice, but does it 22 happen frequently that you have an RFP that is 23 extremely broad such as the one we have here, but 24 then a contract that is much narrower in scope? 0145 1 MS. HYNES: Do you want to? 2 MR. DeQUATTRO: Sure. Absolutely. 3 I mean, you typically would have, depending on the 4 type of services, a broad RFP, and then usually 5 the solicitations that come in would be pretty 6 narrow in focus as to the work that a vendor is 7 going to do and normally we incorporate the 8 vendor, assuming we accept the vendor's 9 solicitation in our contracts to make sure that 10 what they've promised they're going to give us, 11 that that's what's embodied in the contract. 12 MS. HYNES: That would also include 13 the time frame. It would include when the 14 starting date would begin, when it would end, and 15 the different services they needed to provide. 16 MS. CARPENTER: Could you limit the 17 scope of an RFP just with a purchase order? 18 MS. HYNES: Limit the scope of 19 work? 20 MR. DeQUATTRO: I think you have a 21 decision. Depending on, say, you didn't have 22 enough money to spend on a particular project, you 23 could certainly limit what you're going to do with 24 that particular vendor. Absolutely. 0146 1 SEN. LENIHAN: Senator Sheehan? 2 SEN. SHEEHAN: Thank you, 3 Mr. Chairman. 4 So you prefer then, not prefer, it's practice 5 to have a contract, an agreement in hand before 6 issuing a P.O.? 7 MS. HYNES: Yes, it would be, 8 Senator. Then also keep in mind, not every single 9 purchase order that we issue has a separate 10 contract. Quite often, our purchase orders will 11 not have an agreement or a contract within it, but 12 the purchase order itself will entail everything 13 that we need within that document. So there are 14 some that have separate agreements that are 15 attached. There are others that we would include 16 pretty much all of the information that we need 17 within the purchase order. 18 SEN. SHEEHAN: Okay. Let me ask 19 you this. Why is that, if we can say it's policy 20 or common practice? Why? What's the problem if 21 -- why can't we just allow a P.O. to be issued and 22 not ask any questions? Why is that practice 23 within the Division of Purchasing? What type of 24 benefits does it have? What type of -- you know, 0147 1 are there liabilities? What's the problem with 2 that? 3 MS. HYNES: Do you mean the 4 benefits of having a signed agreement attached to 5 the purchase order? 6 SEN. SHEEHAN: That's correct. 7 MS. HYNES: As Mr. DeQuattro had 8 mentioned, that usually outlines much more of the 9 particulars, the time frame, the design 10 deliverables, reports that are required, much more 11 in detail. Your RFP will say certain items that 12 are required, but that actual agreement will 13 really get down to different reports that are 14 required and so forth. So purchasing wise, that 15 assists the agency, as well as us, to make sure 16 the deliverables are there. 17 SEN. SHEEHAN: The scope of the 18 project, the terms? 19 MS. HYNES: Absolutely. 20 SEN. SHEEHAN: Are there any other 21 legal implications in terms of liabilities or -- 22 MS. HYNES: You're the lawyer. 23 MR. DeQUATTRO: Senator Sheehan, 24 what we do have attached to our purchase 0148 1 regulations, we have general terms and conditions 2 that usually embody the bulk of the contract if 3 it's just a simple purchase order being issued. 4 SEN. SHEEHAN: So those general 5 terms of agreement are engaged when there's a 6 agreement and they are not engaged if it's just a 7 P.O.? 8 MR. DeQUATTRO: No. No. I 9 apologize. When you issue a P.O., the state 10 standard general terms and conditions that apply 11 to all contracts unless we otherwise accept them 12 out -- 13 SEN. SHEEHAN: And you do consider 14 that lawfully a contract? 15 MR. DeQUATTRO: Absolutely. 16 Absolutely. 17 SEN. SHEEHAN: Okay. Thank you. 18 SEN. LENIHAN: If we could go now 19 to documents H and I. 20 MS. GEORGE: Documents H and I are 21 essentially the same language. One is an e-mail 22 from Mr. Weygand to Mr. Brian Stern formally 23 requesting permission to secure a CMAR. Exhibit I 24 dated February 15, 2006 -- I'm sorry. I didn't 0149 1 have the mike. 2 I'll start again. Exhibit H and Exhibit I 3 are correspondence. The first dated February 4, 4 2006, is an e-mail from Mr. Weygand to Mr. Brian 5 Stern formally requesting permission to secure a 6 CMAR for the CBLS building. Exhibit I is 7 essentially the same language dated February 15, 8 2006, and it's a letter instead of an e-mail from 9 Mr. Weygand to Beverly Najarian, then director of 10 DOA, requesting permission to secure a CMAR for 11 the proposed CBLS building. We have several 12 questions concerning these exhibits. 13 SEN. LENIHAN: Prior to these 14 formal written requests, the e-mail and then the 15 letter, did anyone at DOA have any discussions 16 with anyone at URI concerning CMAR for this first 17 building? 18 MR. DeQUATTRO: Under program 19 management? 20 SEN. LENIHAN: Specifically, I'm 21 asking about conversations regarding the procuring 22 of a construction manager at risk arrangement for 23 the CBLS building. Was there any discussion 24 between anyone at DOA and URI regarding that prior 0150 1 to these in one case an e-mail, in the other case 2 a letter? 3 MR. DeQUATTRO: There may have 4 been. Not to my personal knowledge. 5 SEN. LENIHAN: Who would have been 6 in a position to do something like that? Who 7 would serve as the, liaison is probably the wrong 8 term, but who is the person responsible for a 9 working relationship on this matter with the URI 10 from DOA's side? 11 MR. DeQUATTRO: Well, just from 12 reading the letter dated February 15, 2006, 13 obviously it's from Bob Weygand to Beverly 14 Najarian and there's some reference to Arn Lisnoff 15 in our Division of Capitol Projects who appeared 16 to have some conversations about this particular 17 project going from project management to CMAR. 18 That's what I can construe from here. 19 And then from the prior e-mail, obviously 20 there was some discussion between Mr. Weygand and 21 Brian Stern. I'm sure there had to be some 22 conversation that precipitated that e-mail. 23 I'm just construing that from the document. 24 SEN. LENIHAN: I understand. But 0151 1 no one else to your knowledge? 2 MR. DeQUATTRO: Well, and likely 3 Mr. Anderson who I gave that advice to on 4 compliance with the statute. 5 SEN. LENIHAN: Okay. Then let me 6 ask you, Mr. DeQuattro. When did you first learn 7 that URI wanted to procure a CMAR for that CBLS 8 building? 9 MR. DeQUATTRO: It may have been 10 around the time that I was asked to discuss the 11 compliance procedures of Regulation 811.2. 12 SEN. LENIHAN: And when was that? 13 MR. DeQUATTRO: I mean, I'm 14 assuming it was around this time period because 15 those conversations probably precipitated this 16 letter to comply with that provision of the 17 regulations. So I'd say anywhere between 18 January of 2006 and the date of this letter. 19 That's my guess. 20 SEN. LENIHAN: When you learned 21 about what URI wished to do to procure that CMAR 22 for the building, do you recall whether or not you 23 were concerned at all about the existing project 24 manager contract and the consequences of 0152 1 terminating that contract? 2 MR. DeQUATTRO: At that time, I 3 wasn't consulted with the determination of the 4 project management contract and how to proceed on 5 that, actually. 6 SEN. LENIHAN: You were not 7 concerned because you were not aware of it? 8 MR. DeQUATTRO: I wasn't -- as 9 legal counsel, I provide support to the program 10 people that make decisions in connection with 11 certain types of projects, and I wasn't brought 12 into the loop to give advice or counsel in 13 connection with that particular matter. 14 SEN. LENIHAN: These documents 15 contain, as you've seen them, they're almost 16 identical language, the initial e-mail and the 17 follow-up letter, first to Brian Stern and then 18 the former letter to Director Najarian. The 19 correspondences state that, "We," in this case 20 that means URI, "agree with you that the expedited 21 competitive negotiation method of building would 22 be the proper process to follow. We understand 23 that we can complete this process in less than 24 three weeks." 0153 1 Now, first off, the understanding that is 2 referred to in this quotation I've given, "We 3 understand we can complete the process in less 4 than three weeks," that would seem to me to 5 reflect some prior discussion here that URI didn't 6 invent that three week figure themselves, that 7 they had some advice that they could deal with 8 that within a three week period. Did DOA initiate 9 the process to change from program manager to a 10 CMAR? 11 MR. DeQUATTRO: Did we initiate the 12 process? Well, the request came from URI to 13 actually do that. If your question is did we 14 initiate the process to solicit the bids -- 15 SEN. LENIHAN: If it came from URI 16 to you, the answer is no? 17 MR. DeQUATTRO: No. 18 SEN. LENIHAN: This reference to a 19 competitive negotiation, that's not a vague term. 20 That's a particular terminology. In fact, the 21 administration has been very proud of its use of 22 competitive negotiation, especially with regard to 23 the acquisition of automobiles, fleet vehicles. 24 The reference in this letter, does that mean the 0154 1 process outlined in Rhode Island General Laws 2 37-2-19? 3 MR. DeQUATTRO: I didn't write the 4 letter, so I'm not sure what he meant by that. He 5 could have meant 37-2-19. 6 SEN. LENIHAN: I'm just sort of 7 dancing around in circles here. I asked before 8 about competitive negotiation as a term of art and 9 whether or not that was something which URI wanted 10 to utility specifically, and I was told, if memory 11 serves me correctly, the best people to ask about 12 that were people from the Department of 13 Administration. Someone came up with the idea of 14 competitive negotiation as a purchase methodology, 15 and I'm just trying to find out where that came 16 from and what it meant. 17 MR. DeQUATTRO: Well, like I said, 18 I'm not sure if that's what he was referring to in 19 this letter, but, yes, competitive negotiation is 20 outlined in 37-2-19 and there's procedures that 21 you follow to go that route, and that's the 22 typical request for proposal route that DOA uses 23 significantly. 24 SEN. LENIHAN: Are you aware of any 0155 1 use of the terminology competitive negotiation 2 elsewhere in the Division of Purchasing? I mean, 3 is there some other meaning that's attached to 4 competitive negotiation? 5 MR. DeQUATTRO: Other than? 6 SEN. LENIHAN: Is there another 7 procurement process that has that nametag attached 8 to it? 9 MR. DeQUATTRO: Well, unless you 10 look at the A&E process, I guess that would be 11 considered a form of competitive negotiation, I 12 guess. 13 SEN. LENIHAN: Can you explain 14 that, please? 15 MR. DeQUATTRO: Well, the way the 16 statute reads, there's a solicitation of vendors 17 for A&E services. The A&E committee, and this is 18 by statute now, would select who is technically 19 and professionally qualified and then it would 20 move on to the director of administration for, and 21 under the statute, it says negotiation of a price 22 based on a vendor's proposal and particular 23 expertise and qualifications. And then if 24 negotiation of price didn't work out, they could 0156 1 go on to the next vendor to try to work out a 2 negotiated price, and that's by statute. 3 SEN. LENIHAN: Is there any reason 4 that you're aware of that this procurement needed 5 to be taken and completed within three weeks? 6 MR. DeQUATTRO: That I'm aware of, 7 no. 8 SEN. LENIHAN: Or anyone else who's 9 joining you at the table. 10 MR. WILLIAMS: Unfortunately, I 11 wasn't part of this process back then, but I'm not 12 aware of anything, Mr. Chairman. 13 SEN. LENIHAN: I guess it goes to a 14 question I asked earlier of the folks from URI, 15 and that is that relative to the three week 16 requirement, couldn't Gilbane simply continue in 17 their role as project manager? And you don't seem 18 to have an answer because you weren't involved in 19 it. I know you weren't, Mr. Williams. 20 MR. WILLIAMS: Right. 21 SEN. LENIHAN: And you don't know 22 what the writer intended in the letter. We'll 23 post that up to one of the mysteries to be 24 resolved. Yes, please. 0157 1 MS. GEORGE: Mr. DeQuattro, you 2 stated you don't have personal knowledge of any 3 conversations between URI officials and DOA 4 officials concerning the decision to seek a CMAR, 5 URI's decision to seek a CMAR. Am I missing 6 something? 7 MR. DeQUATTRO: I mean, from the 8 best of my recollection. I'm sure there were 9 conversations back then. But that I was 10 personally involved with, like I said, the best I 11 can recall, I did talk to Bill Anderson about it, 12 but it was on the compliance component of it. 13 That was quite a while ago. So I'm just going 14 based on memory. I looked at all my old e-mails 15 and tried to see if I had some other involvement 16 with the project at the time, and I don't recall 17 that I did. 18 MS. GEORGE: Where in DOA or who in 19 DOA could this committee go to to find out these 20 kinds of answers to establish a factual record of 21 how this particular procurement went from program 22 management to CMAR? Who would we talk to? Who 23 would we ask? 24 MR. WILLIAMS: Well, the other 0158 1 thing I would mention is that in the letter by 2 Vice-President Weygand, it does say, "After 3 conversations with you and Arn Lisnoff, we agreed 4 the expedited competitive negotiation method of 5 bidding would be the proper process to follow." 6 So we can certainly go back to Arn Lisnoff 7 and get information from him as to what 8 conversations he had relative to the change 9 between program management and CMAR. 10 MS. GEORGE: Okay. And then I have 11 one other question. Thank you. 12 Mr. DeQuattro, you said you have no personal 13 knowledge. Do you have knowledge other than 14 personal knowledge as to what transpired around 15 this time concerning the decisions on the 16 procurement of the CMAR? 17 MR. DeQUATTRO: Just based on the 18 documents that you have presented in your 19 timeline. 20 MS. GEORGE: And that was the first 21 time you ever saw these documents right here 22 today? 23 MR. DeQUATTRO: I believe so. I'm 24 not -- yes, I believe so. Well, not all of the 0159 1 documents, but the documents from this point in 2 time, 2005, those dates. 3 MS. GEORGE: It's a frustrating 4 situation for this committee to be looking at a 5 procurement of this magnitude, $50 million, with 6 decisions being made, as Ms. Hynes has said, some 7 unusual, to go from program management to possibly 8 competitive negotiation to then the contract 9 proceeded through AE&C and there's no written 10 documentation, there's no record of the decision 11 making process here. That's a comment, really not 12 a question posed to anybody, and I'll give the 13 mike back to the Senator. 14 SEN. LENIHAN: Were there any other 15 methods of procurement discussed by DOA with URI, 16 internally in DOA, other than competitive 17 negotiation? 18 MR. DeQUATTRO: I'm not aware of 19 anything at that time. 20 MR. WILLIAMS: I guess -- let me 21 ask, if I may, ask a question myself. My 22 understanding, and, again, I wasn't around for 23 this part of the process back then, but if the 24 CMAR was actually bid, I guess what I'm trying to 0160 1 get at is, relative to competitive negotiation, I 2 don't believe that was followed relative to the 3 change for CMAR because it was a bid process. 4 SEN. LENIHAN: We're trying to 5 understand the thinking that got us to go that 6 route; that was this, in fact, the best method we 7 could have utilized, we being the state, to get 8 the best arrangement for the University of Rhode 9 Island and, therefore, the State of Rhode Island, 10 and we're trying to take and match up the CMAR as 11 a procurement vehicle with others that are out 12 there because ultimately this is a case study of 13 the use of that CMAR. And so we're looking at all 14 the other options that could have come into place 15 here. 16 So, yes, the fact that the CMAR eventually 17 was bid, that's fine, but along the way we'd like 18 to know the other considerations that were given 19 to other alternative methods, who made those 20 decisions, and upon what criteria they were made. 21 MR. WILLIAMS: Mr. Chairman, that I 22 understand. I was getting lost on the competitive 23 negotiation since that was not followed. In other 24 words, there was reference to that in a letter, 0161 1 but it wasn't followed and that's where I was 2 going off base, I guess. 3 MR. DeQUATTRO: You know, if I 4 could make a comment. Some of the statutes are 5 worded very strangely, and that section that talks 6 about competitive negotiation, that is the section 7 where we utilize to go out to RFP for a lot of 8 solicitation. So it says competitive negotiation, 9 but the whole concept that's outlined in that 10 statutory scheme talks about selecting vendors 11 based on sealed bids, technical qualifications, 12 and cost factors that they submit that evaluation 13 committees would evaluate to determine who's the 14 best vendor. 15 So I think in this case, it was probably 16 reasonable to be an RFP process for the type of 17 services they were looking to select than any 18 other process because there needed to be some 19 judgment involved in selecting a vendor and 20 evaluating the cost. Hopefully, that's helpful. 21 SEN. LENIHAN: Ms. George? 22 MS. GEORGE: This came about 23 because when we came to these exhibits with URI 24 officials, they said, "We're not really sure what 0162 1 competitive negotiation meant. That was a DOA 2 term. You need to speak to DOA officials." So we 3 come before you. 4 Maybe it was determined competitive 5 negotiation isn't the right approach and the right 6 approach is the AE&C committee. We're not 7 alleging there's anything improper or wrong here. 8 We just want to know why a document references 9 something if it does, in fact, reference 10 competitive negotiation under this statute 11 37-2-19, why it was abandoned. Maybe there's a 12 reason. 13 MR. DeQUATTRO: I don't think it 14 was actually abandoned. What actually happened 15 was they did follow that statutory scheme. 16 MS. GEORGE: Through the AE&C 17 committee? 18 MR. DeQUATTRO: Yeah, exactly. So 19 it's almost like there was, I want to say, double 20 coverage with the process and maybe a little 21 bureaucratic, also. They did follow 37-2-19 to go 22 out to RFP. And once they compiled all their 23 technical scores and evaluations, they brought all 24 of that to the A&E committee in addition to who's 0163 1 technically qualified. So that did go to A&E and 2 then go off to the director. 3 So I guess the confusion is why did this 4 whole process take place and then it go before the 5 A&E. Yeah, somebody made a decision at some point 6 to add that in the solicitation, that it shouldn't 7 go before A&E, even though they followed 37-2-19 8 which under the A&E statute, if you do follow 9 37-2-19, you're not necessarily required to go 10 through the A&E process. So that's probably the 11 confusion that you see and I understand it. 12 MS. GEORGE: Well, there's one more 13 bit of confusion. This letter references a three 14 week time period which would make it appropriate 15 for competitive negotiation under 37-2-19; time 16 restrictions, you want to bid something as quickly 17 as possible, three weeks would seem to be 37-2-19. 18 So that was the confusion. That coupled with the 19 reference to competitive negotiation. Would it 20 make sense that the reference is to the AE&C 21 committee? Maybe it would, but since you have no 22 personal knowledge of either of these letters, you 23 can't answer that question, correct? 24 All right. Thank you. 0164 1 SEN. LENIHAN: When did the issue 2 of whether or not Rhode Island law authorized or 3 allowed CMAR delivery systems, when did that first 4 become an issue for you? 5 MR. DeQUATTRO: When did it first 6 become an issue? 7 SEN. LENIHAN: For you, yes. 8 MR. DeQUATTRO: I believe at the 9 time we were sued by Armand Lusi, Lusi 10 Construction. I don't remember the date. 11 Actually, I did put a timeline down. 12 Well, March 2007 when we received a complaint 13 to invalidate the regulation that then existed, 14 stating that it wasn't a valid regulation. So at 15 that time that it became an issue because we had 16 to go to court to litigate it. 17 SEN. LENIHAN: Prior to that, 18 however, the department internally had no problem 19 with CMAR as a potential delivery mechanism? 20 MR. DeQUATTRO: The department 21 didn't have an issue with selecting different 22 alternative methods of construction. And from 23 what I understand, since the regulation existed 24 back in 1990 or '91, there have been alternative 0165 1 methods of delivery that have been utilized over 2 the years, construction management, design build, 3 or what have you. CM at risk, I believe this was 4 the first time the bio-life science building, that 5 that form was used, but construction manager 6 without the risk was used on prior occasions. 7 SEN. LENIHAN: So neither you nor 8 anyone else that you're aware of in the 9 Department of Administration or Purchasing had any 10 concern about CMAR as a legally viable 11 alternative? 12 MR. DeQUATTRO: No. 13 SEN. LENIHAN: Do you know, did URI 14 terminate the project manager contract in writing? 15 MR. DeQUATTRO: I don't know that. 16 MS. HYNES: Senator, there were 17 different communications going back and forth 18 through a change order process on that where they 19 started to bring closure to. They had actually -- 20 we had issued a purchase order in the amount of 21 $280,000 and then that purchase order was then -- 22 there were issues that were going on with account 23 changes, account number changes and so forth, but 24 I don't see where they actually made a request to 0166 1 actually close this out. 2 SEN. LENIHAN: Do you have any 3 record of whether or not URI had to pay any 4 damages for terminating the PM contract? 5 MS. HYNES: No, I do not, Senator. 6 SEN. LENIHAN: The next question, 7 it's sort of one of those things that sort of 8 hangs out there and it's been niggling at me and I 9 just want to know. If we have a contract out 10 there, in this case for the PM contract, and now 11 we're going to go with another form of contract, 12 wouldn't it occur to somebody that there ought to 13 be some form of termination of what was there to 14 begin with? 15 MS. HYNES: Normally, the agency 16 would contact the Division of Purchasing and 17 usually through the fiscal year close, as well. 18 If they had not utilized all of the funding and so 19 forth, they would contact us and let us know this 20 particular contract is ended. It's a little 21 difficult with URI because they do have their own 22 computer system, as well. So that's where you 23 find it a little difficult kind of matching up 24 different systems. 0167 1 Normal practice would be the agency would 2 contact us and let us know everything had been 3 completed and we would close at the end of the 4 fiscal year. 5 SEN. LENIHAN: Did that happen? 6 MS. HYNES: What actually happened, 7 Senator, is that they actually used up the 8 $280,000 and we actually created a P.O. with a 9 control value of $100 to basically leave the 10 purchase order out there should anything else 11 occur. I don't know whether that's tying into any 12 kind of damages that you're referring to or 13 anything like that. I would have to go back and 14 find out a little bit more about that. 15 SEN. LENIHAN: I'm just reminded of 16 the fact, this contract really didn't end. It was 17 simply stopped before it was completed. It's a 18 little bit different situation. 19 MS. HYNES: Yeah. See, normally, 20 we would get a document come in from the agency 21 that would say everything has been completed and 22 then the purchase order at the end of the fiscal 23 year would close out. 24 SEN. LENIHAN: Is there any kind of 0168 1 a mechanism out there, a check mechanism, that 2 says at the end of the year or whenever that 3 review process comes up, that we have a problem 4 here? Does purchasing do an outreach as opposed 5 to waiting for someone else to tell them? 6 MS. HYNES: During our normal 7 fiscal year close, we have memos that go out to 8 all the agencies in April. We ask them to review 9 all of their outstanding purchase orders. We ask 10 them to review all of their master releases, make 11 sure they reduce them. So that's the normal 12 course. And that also reminds the agency to make 13 sure their contracts are current, if you need the 14 purchase order rolled over into the new fiscal 15 year, and it also ties into the dollars that they 16 would need to complete by June 30 and if there 17 were new dollars that were required for the new 18 fiscal year. So that is part of when we bring 19 everything forward in the new fiscal year. 20 SEN. LENIHAN: Yes, Ms. Carpenter? 21 MS. CARPENTER: The purchase order 22 to which we're referring for the program manager, 23 I believe that the period of it is from January 1, 24 2006 through December 31, 2008. So would this 0169 1 come up as part of your annual review process if 2 the period isn't annual? 3 MS. HYNES: Exactly. What will 4 happen is June 30 which is what we're going 5 through right now, the agency would take a look at 6 something like this, see if they needed that 7 brought over for the new fiscal year, and at the 8 same time they would make sure, if necessary, that 9 there was sufficient monies in that purchase 10 order. In this case, they made it for $100. I'm 11 not sure quite why they've done it, but they did 12 it to leave that purchase order out there to see 13 if they needed any other activity on it. And, 14 again, when the next fiscal year comes around, 15 they would then look at it and probably just 16 liquidate the $100 if they did not need it. 17 SEN. LENIHAN: Senator Sheehan? 18 SEN. SHEEHAN: Thank you, 19 Mr. Chairman. 20 So currently, there is no law or regulation 21 requiring that you have an agreement in hand 22 before issuing a purchase order? 23 MS. HYNES: There's no law that 24 requires us. It requires us to make sure the 0170 1 purchase order includes the terms and conditions 2 by the State of Rhode Island and any other 3 applicable agreements that we would require. 4 SEN. SHEEHAN: So there is a 5 regulation that requires you to include those 6 items? 7 MS. HYNES: The standards are terms 8 and conditions. 9 MR. DeQUATTRO: Right. I'm sorry. 10 Hopefully, I'm answering the question that you're 11 asking. The chief purchasing officer has the 12 power to bind the state via contract without a 13 purchase order. For anybody else who doesn't have 14 binding authority specifically by statute or 15 through delegation through the chief purchasing 16 officer, they would need a purchase order to 17 actually bind the state legally. If no purchase 18 order is issued and somebody moves forward with 19 work, they're not going to get paid. 20 SEN. SHEEHAN: At what point does 21 it become a binding contract with the agent that 22 you're having a contract with? When they cash the 23 check? 24 MR. DeQUATTRO: No. When the 0171 1 purchase order is actually issued. 2 SEN. SHEEHAN: So when the purchase 3 order is issued, is it under statute that says 4 that's a legally binding contract? 5 MR. DeQUATTRO: Regulation. 6 SEN. SHEEHAN: Regulations say it's 7 legally binding at that point. 8 So what happened in this instance? Is there 9 a check sent out when you do a purchase order like 10 this? Or you give them permission, so that 11 permission itself is a binding contract? 12 MS. HYNES: Actually, it's a 13 document which is the purchase order itself. The 14 purchase order itself would outline the time frame 15 that the contract was going to go for, all the 16 standard terms and conditions, and, if needed, it 17 would have an agreement attached to it. When 18 that's issued, a copy is given to the agency. The 19 agency then knows they can now contact the vendor 20 and the vendor can now proceed with working, as 21 well as we mail a copy out to the vendor. So 22 that's the vendor's purchase order number as they 23 were going to start proceeding with work that they 24 should have on all of their invoices and so forth 0172 1 before they do any work. 2 SEN. SHEEHAN: So they haven't up 3 to this point -- if there is no agreement in hand 4 prior to this point, one could still take them to 5 court with this purchase order if they didn't 6 fulfill their obligations? 7 MS. HYNES: That's true. 8 MR. WILLIAMS: That's right. In 9 some cases, for example, if we were ordering 10 uniforms for our Capitol Police, that would be a 11 purchase order. It probably wouldn't have an 12 agreement attached to it. For consulting 13 services, it would have an agreement spelling out 14 the scope of services, the timeline, the 15 deliverables, et cetera. But in the first 16 instance, there would be a purchase order that 17 would be an order to proceed and that would have, 18 in other words, you're ordering goods and 19 services, and then if they did not fulfill those 20 goods and services, then there could be action 21 taken by the state. 22 SEN. SHEEHAN: So you had such an 23 agreement or, excuse me, a purchase order with 24 Gilbane? 0173 1 MS. HYNES: Yes. 2 SEN. SHEEHAN: Did they fulfill 3 their obligations as outlined in that purchase 4 order to the best of your knowledge? 5 MS. HYNES: I'm not sure of that. 6 This is the first time that I've heard that 7 there's any options with damages or anything like 8 that. So we did not receive anything from the 9 agency that this had been completed. 10 SEN. SHEEHAN: So, therefore, they 11 are right now significantly, we might say, in 12 breach of that purchase order agreement which you 13 consider binding in terms of being a contract, 14 legally binding contract? Unless there was a 15 recision on your behalf, I would assume that that 16 contract is still legally binding at this time? 17 Is that a misread on my part? 18 MR. WILLIAMS: Well, rather than 19 speculate as to whether there's something still 20 remaining, I'd like to go back and verify whether 21 or not there was either some form of termination 22 letter sent to Gilbane relative to those services, 23 the program management services, or did we issue 24 another purchase order that basically reverts it 0174 1 back down to $100. I'd rather confirm that rather 2 than make a statement that one of the two things 3 happened. 4 SEN. SHEEHAN: If we could get that 5 documentation, that would be helpful, I think, to 6 clear that up. I know that question has been 7 asked before. 8 And just the second follow up I had, 9 Mr. Chairman, was it doesn't seem to be that 10 Purchasing had an issue with this CMAR type of 11 contract. Is there anything in this particular 12 contract here as it's been written for URI or URI 13 has written it up and, of course, been agreed to 14 by the contractor, is there anything in there 15 currently that gives anyone on this panel pause to 16 say, boy, if they were to do it again, I might 17 suggest this or that could be an improvement over 18 what they had; you know, you wouldn't want to do 19 it the same way again? 20 We've heard some testimony from URI saying 21 there's some things they might not have placed in 22 that contract that they did. Is there anything 23 from this panel that you could point to, perhaps 24 being a little more familiar with that contract, 0175 1 that you might say, well, we probably shouldn't do 2 it that way next time? 3 You're still comfortable with CMAR in 4 general, and then, secondly -- in light of URI; 5 and secondly, is there something specifically in 6 this contract as it's been revised and tweaked and 7 changed that you think is possibly ill advised? 8 MR. WILLIAMS: I'll answer the 9 first question relative to CMAR. Do I think it's 10 a viable option? At times, I do. Relative to 11 what may be embedded in their current contract 12 with Gilbane? I have not reviewed the entire 13 contract, so I can't state that. 14 MR. DeQUATTRO: As far as the 15 contract, I didn't read it in great detail. So 16 I'm not sure. I'd have to go back and look at it 17 to see what issues are in there that are not 18 favorable to the state. 19 SEN. SHEEHAN: Did the committee 20 not review this contract, the particular language, 21 before? 22 MR. DeQUATTRO: You mean the A&E? 23 SEN. SHEEHAN: Yes. 24 MR. DeQUATTRO: No, it did not. 0176 1 That doesn't fall under the statutory mandate of 2 the committee. As I said earlier, the committee 3 is there to determine who's technically and 4 professionally qualified to move forward with a 5 particular procurement and then makes a 6 recommendation to the director of administration. 7 In this particular case, the University of 8 Rhode Island hired outside counsel to assist with 9 them in negotiating a contract for the services to 10 be rendered. So we relied on URI and its outside 11 counsel to execute the contract. 12 SEN. SHEEHAN: Okay. So you gave 13 them permission, basically, to execute the 14 contract without having to come back or they just 15 didn't have to come to that committee to begin 16 with? 17 MR. DeQUATTRO: No, they did not 18 have to come to the committee to begin with. 19 SEN. SHEEHAN: Okay. Thank you. 20 SEN. LENIHAN: One final question 21 for now. In what capacity was, if you know this, 22 in what capacity was Brian Stern, former 23 purchasing agent, involved in any way from 24 shifting from a project management contract to a 0177 1 CMAR? 2 MR. WILLIAMS: Well, I'll start. I 3 can't speak to what involvement Mr. Stern had. 4 MR. DeQUATTRO: I mean, other than 5 e-mail that you have here, I'm not sure what other 6 prior involvement he had in that decision making 7 process. 8 SEN. LENIHAN: We're not trying to 9 do any back door work here. It's just that we had 10 consciously not called Mr. Stern because, 11 obviously, he has a different job, a lot of 12 responsibilities and it's a very hectic time of 13 the year, and we thought that the questions we did 14 have might be best answered by people who are 15 currently in place in Purchasing and 16 Administration. It may be that we have to issue 17 an invitation to him at a future date, but, 18 anyway, we tried. 19 I think what I'm going to do at this point. 20 I know our stenographer is tired. It's now 7:30 21 in the evening. There is no way we're going to 22 finish the questions tonight. It's just not 23 possible. I think what I'm going to do at this 24 point is I'm going to call an end to the hearing 0178 1 this evening and we'll resume this on the 23rd. 2 Just for people's information, next week on 3 the 16th, we are bringing in a consulting firm who 4 will be speaking to the specific issue of 5 construction management at risk as a procurement 6 technique as to what are the strengths, the 7 weaknesses, the kinds of things that you would be 8 looking for when you consider that as a technique 9 by a way of building up the background of the 10 committee so when we issue our findings, we have 11 an impartial third party source. 12 I'll also be announcing that we will be 13 reserving a date subsequent to the 23rd where 14 we'll be inviting in any firms that are out there 15 who would like to come and offer us their 16 testimony relative to CMAR or other construction 17 procurement vehicles that they'd like to speak to 18 by a way of helping us to understand. Those 19 invitations have -- that's right. They haven't 20 gone out because we didn't have the date, but you 21 can anticipate that. And if you are a 22 construction firm and you don't receive an 23 invitation, it is not intentional. If you have 24 something to offer us, we'd be glad to listen to 0179 1 you. The only thing we do ask is you notify us 2 because we want to do it in a way that allows for 3 not everyone sitting here for endless hours to a 4 point where you never get to testify. If 5 necessary, we'll break it up. 6 Is there anything further to come before the 7 committee this evening? If not, then I thank you 8 very much for your contributions thus far. We 9 look forward to your resumed testimony on the 10 23rd. 11 MR. WILLIAMS: It sounds good. And 12 we also appreciate the movement of the location. 13 I'm sure it was much cooler here tonight. 14 SEN. LENIHAN: We'll try and keep 15 the air conditioning. At this point, the 16 committee is in recess. 17 (HEARING ADJOURNED AT 7:33 P.M.) 18 19 20 21 22 23 24 0180 1 C E R T I F I C A T E 2 3 I, Linda S. Taylor, a Notary Public in 4 and for the State of Rhode Island, hereby certify that 5 the foregoing pages are a true and accurate record of my 6 stenographic notes that were reduced to print through 7 computer-aided transcription. 8 In witness whereof, I hereunto set my hand 9 this 25th day of June, 2008. 10 11 12 ______LINDA S. TAYLOR, NOTARY PUBLIC/CERTIFIED COURT REPORTER 13 14 15 My Commission Expires 7/2/09 16 17 18 19 20 21 22 23 24

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