After local contractors’ feedback, Springfield council rejects California company for city project

Two portable air conditioning units pumped cool air into the Springfield City Council chambers on Monday, June 22.

While staff stressed urgency in addressing City Hall’s failing heating, ventilation and air conditioning system, the City Council pumped the brakes on a contract for the work. 

“I’ve got no issue addressing the heat in this room, but I would like all the information before I make that decision,” Mayor Sean VanGordon said. 

After discussing concerns from local contractors about the city’s request for proposals process, Springfield councilors voted not to move forward with a construction contract with a California company for repairs and remodeling at City Hall, which needs a new HVAC system among other work. 

The city had posted a notice on its website Monday stating it intended to award the contract to Swinerton Builders, a commercial construction company headquartered in Concord, California, that has two dozen offices throughout the country, including one in Portland.

On Wednesday, the city posted a cancellation notice on the project page, referencing the City Council’s decision and stating all proposals were therefore rejected and the notice of intent to award was rescinded.

“The City intends to re-issue a solicitation for the City Hall Deferred Maintenance & Quad Redesign Project at a later date,” the notice read. “An opportunity will be given to all firms to compete upon re-solicitation.”

Alternative contracting method

City staff asked councilors in December to consider exempting the project from the city’s public contracting code to allow use of an alternative contracting method allowed under Oregon law. The exemption requires the council to adopt findings showing that the alternative contracting approach will not encourage favoritism or reduce competition and will likely result in time and cost savings.

Known as the construction manager/general contractor strategy, it brings a construction company into the project during design to provide technical input and cost estimating. When construction is ready to begin, the city and general contractor negotiate a guaranteed maximum price and, if agreement is reached, the company provides the construction services.

It differs from the standard design-bid-build process, during which a public entity commissions an architect or engineer to create a design, then solicits competitive bids from contractors to build it and awards contracts to the lowest responsive and responsible bidder.

In December, the City Council held a public hearing, during which no one spoke, and voted to allow use of the method. Andrew Buck was the sole councilor to vote against the resolution. 

“One of the primary reasons council authorized the CM/GC delivery method is the complexity of renovating an occupied public facility and mitigating construction cost overrun risk,” said Community Development Director Jeff Paschall at the meeting. “Our goal is to maintain City Hall operation and continue serving the public throughout the construction.”

He said that keeping the building open requires careful planning, reinforcing the value of bringing on a contractor as a partner on the project team early.

“Staff believes it is better to solve these challenges before establishing a final project price rather than after a contract has been awarded,” Paschall said.

Local companies push back

The city issued a request for proposals in April and seven companies submitted proposals, including multiple local contractors. A committee evaluated each proposal based on criteria in the RFP and chose two finalists — the California-based Swinerton and Lease Crutcher Lewis, which is headquartered in Seattle and has a Eugene office. 

According to the request for proposals, the estimated total project cost is $12.5 to $13.8 million. Paschall said Swinerton’s cost for the pre-construction phase “is less than $30,000.”

Also at the June 22 meeting, the council approved a contract amendment needed for Rowell Brokaw Architects to finish design work for the project. Paschall said designs are about 75% complete. 

Buck said during the meeting that he doesn’t think the alternative bidding process will meet the objectives the city seeks, and he’s worried the contractor could come back with a guaranteed maximum price that the council isn’t comfortable with and that they’ll have nothing to compare it to.

“I want to be clear, there’s no finger pointing here,” he said. “I think that staff has been given a lot of information that makes a lot of sense, looking from a certain standpoint, but having seen how that bidding process goes, because I watch it in my professional life, I think that there’s a lot of places where this can go sideways on us, and I’ve got some real concerns about that.”

Councilor Kori Rodley said that while mitigating risks and keeping costs low is important, so is supporting local businesses.

“Whatever the process was, in terms of what we were looking for in this, seemed to weed out a lot of local businesses, and we’re hearing from those folks,” Rodley said. 

Staff had asked the City Council to authorize the city manager to finalize negotiations with Swinerton and sign the preconstruction contract. Rodley made a motion to not authorize the city manager to do so, and the council passed the motion unanimously. 

After the motion, Councilor Jill Cuadros said she is comfortable with the construction manager/general contractor method, but feels it evaluated only technical qualifications and cost. 

“I would like for us to reflect our council’s economic development and community investment goals,” she said. “And I do feel that we can package that with criteria like local office presence, ability to respond quickly, knowledge of local conditions, relationships with local subcontractors, workforce utilization plans and economic inclusion goals.”

Jerry Valencia, owner of Bridgeway Contracting LLC, told Lookout Eugene-Springfield the construction manager/general contractor process has led to a loss of market share for local contractors. Bridgeway submitted a proposal for the City Hall project.

“Slowly but surely, all those opportunities have gone to large contractors that do excellent jobs at writing proposals and answering the questions” that smaller contractors can’t compete with, he said.

He suggests a return to the traditional design-bid-build process to ensure fair competition. He said that with the City Hall’s design documents being 75% complete, the design team could complete the drawings and the city could publicly bid the project. 

Chambers Construction, which also submitted a proposal, supports the construction manager/general contractor process but believes the city’s request for proposals was poorly written, Joy Pendowski, director of marketing and business development for the company, told Lookout Eugene Springfield.

Chambers sent a protest letter to the city this week regarding the notice of intent to award the project to Swinerton. The letter argues the request did not ask for all standard general contractor costs, such as labor rates and travel expenses, and therefore the city can’t guarantee the substantial cost savings required for the exemption. 

The letter also criticizes a requirement in the request for proposals that at least 51 percent of services be self-performed, which Chambers says encourages the contractor to potentially further exclude local businesses from the project.

Pendowski said the industry is tight right now and Chambers is not the only company that has had to lay off employees recently. 

“Watching projects like this, especially public projects, going to large, large companies that aren’t even from the area, it’s painful,” she said, noting those companies do not pay local taxes. 

City spokesperson Elyse Ditzel said city staff are assessing the council’s feedback regarding next steps for the construction manager/general contractor procurement process and the eventual construction of the project.

In other business

The City Council also revisited an annexation request from Lane County and PeaceHealth for a Springfield property proposed for a stabilization center and behavioral health hospital. 

The annexation decision is complicated because the property on International Way is zoned for light industrial use, not emergency medical facilities or a hospital, and the applicants plan to apply a new state law that allows stabilization centers to bypass city-required zone changes if they’re built alongside behavioral health hospitals.

Councilors asked Assistant City Attorney Kristina Kraaz about how the super-siting bill impacts their decision and how to apply the city’s annexation criteria to the project. 

“The council is not bound by House Bill 2005 at this point in time,” Kraaz said. “It’s relevant only because it informs why the applicants are seeking to put a use that’s not permitted in the zoning on the property.”

Kraaz said her recommendation is that the city’s comprehensive plan policies require the City Council to consider how the property will eventually be used. 

“My reading is that … if you consider its applied use, then I kind of have to consider, the house bill is telling me that that is a permitted use,” VanGordon said. “That seems most consistent with how we’ve thought about annexations in the past, but there’s other people that are going to weigh in as we work our way through this.”

The City Council is now on summer recess until Sept. 8, when councilors will begin deliberations on the annexation decision. 

As Springfield weighs annexation request, regional behavioral health needs hang in the balance