Procurement, partnering, peer review and risk management were among key topics debated by 400 attendees of the Construction Management Association of America spring meeting.
Federal agencies have become “300% more aggressive” in pursuing False Claims Act cases, Michael A. Branca, attorney with Peckar & Abramson PC, San Francisco, said at the May 20-22 event in Las Vegas. Subcontractor discounts can be considered fraud and progress payments, which are viewed as claims, are susceptible if costs are front-loaded, he said.
A national procurement-fraud task force formed last year is targeting all agencies. Last October, the Court of Federal Claims rejected a $64-million claim from Daewoo Engineering and Construction Co. Ltd., Seoul, for a 53-mile road on Palau, while assessing the firm $50 million in damages for failing to adjust its claim downward as new information became available. “The act is designed to punish, as opposed to recover monies,” said Jerry S. Regan, attorney with Turner Construction Co., New York.
The Los Angeles Unified School District noted efforts to attract more contractors to its $19.3-billion construction and rehab program, blaming a high volume of other work and a poor owner reputation for a dearth of bidders. The Belmont Learning Complex, an $87-million high school built on a contaminated site and abandoned, was “a huge failure,” said Ken Hargreaves, director of facilities operations. He described the job as a “150-pound sack we had to carry around.”
The district is trying to fix things by making progress payments within 21 days or less of receipt, releasing retention funds in 60 days and making change orders billable in 45 days. “We had a track record that was not very good,” said Fred C. Smith, LAUSD director of construction support services “Cash flow is the lifeblood in contracting.”