Denver’s city auditor found transparency and oversight problems with how the Department of Transportation and Infrastructure handled the 16th Street renovation project, including when construction crews uncovered part of a historic brick sewer system that added $18 million and nearly a year of work.
Despite knowing that there are 69 miles of partially unmapped brick sewers under the city dating back to the 1880s, transportation officials did not include them as a possible factor in official documents guiding PCL Construction’s work on the project, Denver City Auditor Timothy O’Brien wrote in the report published Thursday.
This caused a strained relationship with the company after city officials insisted the extra cost should be covered by PCL. City leaders later accepted a settlement agreement and paid the additional $18 million, but those decisions were not sent to City Council for approval.
City staff say the update was a “change order,” which does not require Council approval, and not a contract amendment, which does, O’Brien wrote.
The auditor recommended city staff look at updating its project systems so the City Council reviews costly project changes, but city staff disagreed with that recommendation.
“As a result, it is possible council members do not know the true progress of several Transportation & Infrastructure projects,” O’Brien wrote. “In the case of 16th Street, council members were unaware of the deteriorating conditions on the project and the reasons for the delay, which limited their ability to make informed decisions.”
Councilmembers Shontel Lewis and Chris Hinds, who serve on the transportation and infrastructure committee, also shared concerns with the auditor’s office according to the report.
“(Lewis) said not keeping the City Council informed about it prevented them from making informed decisions around the city’s budget and matters affecting the public,” O’Brien said in the report.
Lewis and Hinds could not be reached for comment on the auditor’s report.
In a response published alongside the O’Brien’s findings, Denver transportation officials said they disagreed with the auditor’s recommendation because the department followed the rules, and the $18 million, 301-day change order didn’t alter the main purpose of the project.
O’Brien responded to that argument in an addendum published Thursday and said that the rules city staff followed are the problem. Altogether, project changes increased the 16th Street revitalization price tag from $149 million to $175 million.
City transportation spokesperson Nancy Kuhn reiterated the same position in a statement emailed to The Denver Post on Thursday.
“DOTI believes in consistent and thorough communication with City Council members on pertinent active projects,” Kuhn said. “That said, in this circumstance, a contract amendment was not required and our efforts resulted in keeping the project moving while we worked with (the State Historic Preservation Office).
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O’Brien’s report was not entirely negative, and the auditor’s office found that how Denver handles project management is generally effective, though there’s room for improvement.
Denver transportation officials agreed with seven of O’Brien’s 10 recommendations, and Kuhn said the experience with 16th Street has already improved how the city deals with unexpected hurdles in other projects.
“The 16th Street project was extremely complex and dynamic and DOTI is proud of the outcome and our performance managing the delivery of this project for Denver, which has received multiple awards from leading organizations that promote the highest level of city-building,” Kuhn said.
In a statement, PCL Construction spokesperson Angelo Dalmacio said the company is proud to have completed the 16th Street reconstruction project and that the collaboration strengthened the company’s relationship with the city and other stakeholders.
O’Brien’s report also found problems with city officials enforcing the contract terms, including not fining the company $1 million for missed deadlines because they wanted to “support the city’s relationship with PCL.”
Only one of the 14 blocks removed in the 16th Street project was completed before the required due date and the project’s final completion was 35 days late, according to the auditor’s office.
City officials agreed that the department should collect fines under the contract but pushed back on the suggestion to have formal rules on when to not fine companies because “it’s in the city’s best interest to retain maximum discretion regarding this element of contract management.”
In another instance, O’Brien found the city’s bidding process to hire a contractor was not transparent, so it is “unclear why the department chose PCL over other companies.”
In response, Kuhn said the auditor’s finding was because the department could not produce one record from 2020, which DOTI was not required to keep under Denver’s records retention policy.
Transportation officials also agreed to O’Brien’s recommendation to improve how records are handled, but disagreed with the suggestion to strengthen oversight and another recommendation for dealing with subcontractors because the department’s current practices are working.
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